Federal Register, Volume 76 Issue 9 (Thursday, January 13, 2011)

[Federal Register Volume 76, Number 9 (Thursday, January 13, 2011)]
[Proposed Rules]
[Pages 2494-2570]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-485]

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Part III

Department of Agriculture

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7 CFR Parts 210 and 220

Nutrition Standards in the National School Lunch and School Breakfast
Programs; Proposed Rule

Federal Register / Vol. 76, No. 9 / Thursday, January 13, 2011 /
Proposed Rules

[[Page 2494]]

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DEPARTMENT OF AGRICULTURE

Food and Nutrition Service

7 CFR Parts 210 and 220

[FNS-2007-0038]
RIN 0584-AD59

Nutrition Standards in the National School Lunch and School
Breakfast Programs

AGENCY: Food and Nutrition Service, USDA.

ACTION: Proposed rule.

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SUMMARY: This rule proposes to revise the meal patterns and nutrition
requirements for the National School Lunch Program and the School
Breakfast Program to align them with the 2005 ``Dietary Guidelines for
Americans,'' as required by the Richard B. Russell National School
Lunch Act. The proposed changes are based on recommendations from the
National Academies' Institute of Medicine set forth in the report
``School Meals: Building Blocks for Healthy Children.'' This proposed
rule would increase the availability of fruits, vegetables, whole
grains, and fat-free and low-fat fluid milk in school meals; reduce the
levels of sodium and saturated fat in meals; and help meet the
nutrition needs of school children within their calorie requirements.
Implementation of this proposed rule would result in more nutritious
school meals that improve the dietary habits of school children and
protect their health.

DATES: To be assured of consideration, written comments must be
postmarked on or before April 13, 2011.

ADDRESSES: The Food and Nutrition Service, USDA, invites interested
persons to submit comments on this proposed rule. Comments may be
submitted through one of the following methods:
Preferred method: Federal eRulemaking Portal at http://www.regulations.gov. Follow the online instructions for submitting
comments.
Mail: Comments should be addressed to Julie Brewer, Chief,
Policy and Program Development Branch, Child Nutrition Division, Food
and Nutrition Service, Department of Agriculture, 3101 Park Center
Drive, Room 640, Alexandria, Virginia 22302-1594.
Hand Delivery or Courier: Deliver comments to the Food and
Nutrition Service, Child Nutrition Division, 3101 Park Center Drive,
Room 640, Alexandria, Virginia 22302-1594, during normal business hours
of 8:30 a.m.-5 p.m.

All comments submitted in response to this proposed rule will be
included in the record and will be made available to the public. Since
USDA is anticipating a large volume of comments, we request that
commenters submit comments through only one of the methods listed
above. Please be advised that the substance of the comments and the
identity of the individuals or entities submitting the comments will be
subject to public disclosure. FNS will make the comments publicly
available on the Internet via http://www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: William Wagoner or Marisol Benesch,
Policy and Program Development Branch, Child Nutrition Division, Food
and Nutrition Service at (703) 305-2590.

SUPPLEMENTARY INFORMATION:

I. Overview

The 2005 ``Dietary Guidelines for Americans'' (referred to as the
Dietary Guidelines from here on) recommend that a person's diet supply
all of the nutrients needed for growth and development, and emphasize
the consumption of a variety of nutrient-dense foods. To align the
meals served under the National School Lunch Program (NSLP) and the
School Breakfast Program (SBP) with the 2005 Dietary Guidelines, this
proposed rule would require schools to offer more fruits, vegetables
and whole grains; offer only fat-free or low-fat fluid milk; reduce the
sodium content of school meals substantially over time; control
saturated fat and calorie levels; and minimize trans fat. These
proposed changes, based on the 2009 Institute of Medicine (IOM) report
``School Meals: Building Blocks for Healthy Children,'' are intended to
result in school meals that are nutrient-rich and supply appropriate
calorie levels. This proposed rule is expected to bring about several
positive outcomes:
Update the NSLP and SBP meal requirements according to the
latest nutrition science;
Increase the availability of key food groups (fruits,
vegetables, whole grains, and fat-free and low-fat fluid milk and milk
products) in school menus;
Allow the NSLP and SBP to better meet the nutritional
needs of children, improve their eating habits, and safeguard their
health;
Simplify the administration and operation of the NSLP and
SBP; and
Reinforce the nutrition education messages provided by
schools.
This proposed rule also alerts the public about possible additional
changes to the school meal requirements based on the upcoming 2010
Dietary Guidelines, and invites public comments on how to incorporate
those possible changes into the NSLP and SBP. Three areas addressed by
the advisory committee for the 2010 Dietary Guidelines that may have
significant impact on the meal requirements are sodium, saturated fat,
and vegetable subgroups. The ``Report of the Dietary Guidelines
Advisory Committee on the Dietary Guidelines for Americans, 2010''
(which precedes the release of the Dietary Guidelines' policy)
recommends:
Lower saturated fat consumption (<7% of total calories),
Lower sodium consumption (<1500 mg per day), and
A new red/orange vegetable subgroup.
Because the 2010 Dietary Guidelines policy was not available to IOM
for consideration, USDA has decided to issue this proposed rule and
seek public comments on ways to incorporate the above possible
recommendations (without including them in the proposed regulatory
text). Delaying the many critical updates necessary to align school
meals with the 2005 Dietary Guidelines would undermine nationwide
efforts to improve the health of school children. Public comments on
the areas identified above are requested as part of this proposed
rulemaking. USDA will also publish a notice in the Federal Register
when the 2010 Dietary Guidelines official policy is issued to
facilitate comment on how it may impact this proposal.

II. Background

The NSLP was established in 1946 upon enactment of the National
School Lunch Act (NSLA), now the Richard B. Russell National School
Lunch Act, to safeguard the health and well-being of the nation's
children. At that time, nutritional concerns in the United States
(U.S.) centered on nutrient deficiencies and issues of under
consumption. To facilitate the planning of well-balanced meals in
schools across the nation, the U.S. Department of Agriculture (USDA)
established meal patterns with minimum food component requirements
based on nutrition science at that time. The Type A lunch, designed to
provide one-third to one-half of the daily food requirements of a 10-
to 12-year-old child, was the primary meal pattern for all children for
the first three decades of the lunch program. This meal pattern allowed
school foodservice managers to choose from a wide variety of foods, and

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served as a tool for teaching children about nutrition and good eating
habits.
Over time, the NSLP changed to ensure that children receive
adequate nutrition for proper growth and development. The Type A lunch
was updated to reflect new knowledge about the nutritional needs of
children and their consumption habits. In 1975, the SBP was established
as a permanent program. By 1980, USDA phased out the Type A lunch and
specified different portion sizes for different age/grade groups of
children.
In the late 1980s, scientific evidence showed that diets high in
fat, saturated fat, and cholesterol have adverse health consequences.
USDA's ``School Nutrition Dietary Assessment'' (SNDA-I), published in
1993, indicated that the meals served under the NSLP and SBP were
effective in delivering micronutrients but exceeded recommended intakes
of total fat, saturated fat, cholesterol and sodium. (See the SNDA-I
report at http://www.fns.usda.gov/oane/menu/Published/CNP/cnp-archive.htm.) Consequently, Section 106(b) of the Healthy Meals for
Healthy Americans Act of 1994, Public Law 103-448, added section
9(f)(1) to the NSLA, 42 U.S.C. 1758(f)(1), to require that school meals
not only provide a percentage of the Recommended Dietary Allowances
(RDAs) \1\ but are also consistent with the goals of the most recent
Dietary Guidelines. In 2004, the NSLA was again amended by Section 103
of the Child Nutrition and WIC Reauthorization Act of 2004, Public Law
108-265, which added Section 9(a)(4), 42 U.S.C. 1758(a)(4), requiring
the Secretary to promulgate rules revising nutrition standards, based
on the most recent Dietary Guidelines, that reflect specific
recommendations, expressed in serving recommendations, for increased
consumption of foods and food ingredients offered in school nutrition.
The Dietary Guidelines reflect the current science-based consensus on
proper nutrition, a vital element in promoting health and preventing
chronic disease, and provide the nutritional basis for Federal domestic
nutrition assistance programs such as the NSLP and SBP.
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\1\ The RDAs, developed by the Food and Nutrition Board of the
Institute of Medicine, reflect the average daily dietary nutrient
intake levels sufficient for meeting the nutrient requirements of
nearly all (97 to 98 percent) healthy individuals in particular age
and sex groups.
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In response to section 9(f)(1) of the NSLA, USDA adopted the School
Meals Initiative for Healthy Children (SMI), a comprehensive plan to
promote the health of school children. On June 13, 1995, USDA issued
program regulations (60 FR 31188) that required school meals to reflect
the 1990 Dietary Guidelines and established three menu planning options
that schools may choose from, including two methods based on
computerized nutrient analysis (Nutrient Standard Menu Planning and
Assisted Nutrient Standard Menu Planning) and a food-based menu
planning system. On May 9, 2000, USDA issued program regulations (65 FR
26904) that further expanded the existing menu planning approaches to
the five current options. At present, the five menu planning approaches
are:
The traditional and the enhanced food-based menu planning
(FBMP) approaches, which follow specific meal patterns;
The nutrient standard menu planning and the assisted
nutrient standard menu planning (NSMP) \2\ approaches, which are based
primarily on a computer analysis of the nutrient and energy
contributions of planned meals; and
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\2\ The NSMP approach requires a School Food Authority to
conduct a weighted analysis to assess the nutrient profile of the
meals selected by students. Weighted analysis gives more weight to
nutrients supplied by more frequently selected food items and
correspondingly less weight to nutrients supplied by items less
frequently selected. This requirement is currently waived until
September 30, 2010.
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One alternate menu planning approach that is an
individualized modification of either FBMP or NSMP.
Currently, schools using any of the five menu planning approaches
must offer lunches and breakfasts that provide one-third and one-
fourth, respectively, of the 1989 RDAs. Program regulations require
that school meals provide at least minimum calorie and nutrient levels
for protein, calcium, iron, vitamin A, and vitamin C. These are key
nutrients that promote growth and development and are readily
identifiable on the nutrition labels of all food products. In addition,
schools must decrease the levels of sodium and cholesterol, increase
the amount of dietary fiber, and limit meals to not more than 30
percent of total calories from fat and less than 10 percent of total
calories from saturated fat consistent with the 1995 Dietary
Guidelines. Compliance with these nutrition standards is determined by
averaging nutrients in meals offered over a school week. This allows
menu planners flexibility to plan nutritious and appealing meals that
vary from day to day, but that provide appropriate levels of nutrients
and calories over a five-day school week.
School lunches and breakfasts were not updated when the 2000
Dietary Guidelines were issued because those recommendations did not
require significant changes to the school meal patterns.

III. Need To Revise the Nutrition and Meal Requirements

The current nutrition standards and meal requirements for the NSLP
and SBP are inconsistent with the 2005 Dietary Guidelines. Further, as
noted, section 9(a)(4) of the NSLA was amended in 2004 requiring that
meals be consistent with the most recent Dietary Guidelines, so
modifications are needed to align school meal patterns with the Dietary
Guidelines. The 2005 Dietary Guidelines call for significant changes in
dietary habits for persons ages 2 years and older, and emphasize the
importance of a nutritious diet to maintain health and reduce the risk
of chronic diseases, such as overweight and obesity. New dietary
concerns have emerged since the establishment of the NSLP. The overt
nutritional deficiencies in children's diets that led to the NSLP's
inception have largely been eliminated. In turn, overweight and obesity
are now major health concerns affecting children and adolescents.
Studies indicate that excess food consumption, poor food choices, and
decreased physical activity are contributing to childhood overweight
and obesity, and related chronic health conditions. According to
Centers for Disease Control and Prevention's 2003-2006 National Health
and Nutrition Examination Survey (NHANES) data, almost 32 percent of
children 6 to 19 years of age are overweight or obese. NHANES data
indicate that 17 percent of children age 6-11 are obese, while 17.6
percent of adolescents age 12-19 are obese. Obese children and
adolescents are at risk for health problems during their youth and as
adults. They are more likely to have risk factors associated with
cardiovascular disease (such as high blood pressure, high cholesterol,
and Type 2 diabetes) than other children and adolescents.
A basic premise of the 2005 Dietary Guidelines is that nutrient
needs should be met primarily by consuming a variety of nutrient-dense
foods from the basic food groups. In comparison with the 2005 Dietary
Guidelines, current school menus are not required to offer the
recommended quantities of fruits, vegetables (including vegetable
subgroups), and whole grains. These foods, along with low-fat fluid
milk and milk products, supply many of the key nutrients of concern for
children: Calcium, fiber, potassium, magnesium and vitamin E.

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Current regulations also allow schools to offer whole and reduced-
fat (2 percent milk fat) fluid milk as part of a reimbursable school
lunch or breakfast. Those types of milk may contribute to high
saturated fat in school meals. The SNDA-III report issued by USDA in
2007 indicates that less than one-third of school lunches offered in
school year 2004-2005 under the current menu planning approaches met
the requirement of less than 10 percent of total calories from
saturated fat.
SNDA-III also shows that school lunches are high in sodium. This is
consistent with IOM's findings. With regard to fiber intake, the IOM
report indicates that children's consumption of whole grains is
extremely low in comparison with the Dietary Guidelines recommendation
that half of all grains consumed are whole grains, which are excellent
sources of fiber.
Another reason for updating the school meals is that new
applications for dietary planning are available. RDAs, which are
currently used as the basis for requirements in the School Meal
Programs, are no longer a primary value for planning the diets of
groups and individuals. Beginning in 2000, IOM issued the Dietary
Reference Intake (DRI) reports providing new guidance for planning
dietary intakes for individuals and groups. The DRI reports for
vitamins, minerals, energy, and macronutrients provide recommended
intake levels aimed at improving long-term health by preventing typical
nutritional deficiencies and reducing the risk of chronic disease
through nutrition. The DRIs represent a more comprehensive
recommendation for appropriate nutrient levels than the former RDAs and
are the recommended tool for dietary planning.\3\
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\3\ The DRIs for vitamins and minerals consist of four reference
standards that include the RDAs as well as Estimated Average
Requirements (EAR), Adequate Intake levels (AI), and the Tolerable
Upper Intake Level (UL). For energy and macronutrients, the DRIs are
expressed as Estimated Energy Requirements (EERs) and Acceptable
Macronutrient Distribution Ranges (AMDRs), respectively.
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In light of the changes in nutrition science and current dietary
concerns, USDA is seeking significant improvements in the NSLP and SBP
to ensure that these programs continue to meet their goal to safeguard
the health of school children. The changes proposed in this rule are
necessary to align school lunches and breakfasts with the 2005 Dietary
Guidelines and be consistent with the DRIs. Implementation of the
proposed changes would amend program regulations in 7 CFR 210 for the
NSLP and 7 CFR 220 for the SBP as stated in the regulatory text.
The 2009 IOM report that serves as the basis for the nutritional
provisions of this proposed rule provides recommendations for the meals
planned for school-aged children only (grades K and above). This rule
addresses the proposed meal requirements for school-aged children in
Sec. 210.10 and Sec. 220.8 of the regulatory text. However, this
proposed rule would retain the current meal requirements for children
in preschool (ages 1-2 and 3-4) and infants pending changes to the
Child and Adult Care Food Program (CACFP). Consistent with the IOM's
selection of a food-based meal pattern for Kindergarten and above, this
rule would allow only the traditional FBMP approach to plan meals for
preschoolers. This rule allows a school serving meals to school-aged
children and preschoolers to use a single menu planning approach to
plan meals for all children. The meal requirements for preschoolers are
addressed separately in Sec. 210.10(p) and Sec. 220.8(n) of the
proposed regulatory text.

IV. IOM Recommendations for Implementing the 2005 Dietary Guidelines

This proposed rule seeks to update the school meals for school-aged
children to align them with the 2005 Dietary Guidelines and make them
consistent with the DRIs, as described in the IOM final report ``School
Meals: Building Blocks for Healthy Children,'' which was published
October 20, 2009 (see the report at http://www.nap.edu). As recommended
by IOM, this proposed rule focuses on revising the meal requirements
for the NSLP and SBP. The new meal requirements seek to ensure that the
meals planned by school foodservice providers and selected by students
reflect the food groups emphasized by the 2005 Dietary Guidelines and
meet the nutrient targets identified by IOM.
The IOM final report on school meals was issued in response to
USDA's request for recommendations to align lunches and breakfasts with
the 2005 Dietary Guidelines. Prior to the IOM study, USDA had explored
a range of alternatives to implement the 2005 Dietary Guidelines in the
School Meal Programs in a scientifically sound and practical manner.
Due to the complexity of this task, USDA decided to seek help from IOM.
USDA had previously sought IOM's expertise to update the food package
for the Special Supplemental Nutrition Program for Women, Infants and
Children and that expertise proved extremely valuable.
To conduct a review of the School Meals Programs, IOM assembled a
committee of scientists in various disciplines and school foodservice
professionals. The committee conducted an independent review and
assessment of the nutritional needs of school-aged children in the U.S.
using the 2005 Dietary Guidelines and the DRIs. The committee used that
scientific review as the basis for recommending revisions to the NSLP
and SBP meal requirements.
In the course of the study, IOM analyzed scientific evidence,
deliberated in closed sessions, and held open meetings (July 8, 2009
and January 28, 2009) to obtain stakeholders' input. Representatives
from many entities provided oral testimony, including nutrition
advocates, health professionals, and many others listed in the final
IOM report. In addition to the oral testimony, the committee received
written comments from numerous stakeholders.
IOM issued two reports during the study. ``Nutrition Standards and
Meal Requirements for National School Lunch and Breakfast Programs:
Phase I, Proposed Approach for Recommending Revisions'' was issued
December 17, 2008. The Phase I report describes the approach used by
the IOM committee to make recommendations for revising the School Meal
Programs. The final report ``School Meals: Building Blocks for Healthy
Children,'' dated October 20, 2009, provides the scientific basis for
this proposed rule. It contains recommendations for meal requirements,
nutrient targets, and implementation and monitoring. In addition, the
report explains the rationale for each of the committee's
recommendations and includes several appendices that provide technical
justification. Appendix D of the final report provides a summary of the
public comments received in response to the Phase I report.

V. Proposed Meal Requirements for NSLP and SBP

The IOM final report recommends that emphasis be placed on revising
the NSLP and SBP meal requirements to align school lunches and
breakfasts with the 2005 Dietary Guidelines. The IOM report addresses
standards for menu planning and standards for meals as selected by the
student.

Standards for Menu Planning

The proposed standards for menu planning improve the school meals'
alignment with the 2005 Dietary Guidelines by offering more fruits at
breakfast; increasing the amount and variety of vegetables at lunch;
offering

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more whole-grain rich foods; limiting fluid milk choices to fat-free
(unflavored or flavored) and unflavored fluid low-fat milk;
establishing minimum and maximum calorie levels for each age/grade
group; increasing the emphasis on limiting saturated fat; seeking
gradual but major reductions in the sodium content; and minimizing
trans fat. The intent of these proposed changes is to offer school
meals that are nutrient-rich and calorie-appropriate.
In developing its recommendations, IOM set targets for 24 nutrients
and other dietary components that serve as a scientific basis for the
proposed standards for menu planning. To align the school meals with
the Dietary Guidelines, the IOM committee found it necessary to
consider a large number of nutrients and replace the concept of
nutrition standards with a new concept of ``nutrient targets.'' IOM
established nutrient targets for the school meals based on the DRIs.
Compared to the current nutrition standards, the nutrient targets
identified by IOM are higher for protein, and selected vitamins and
minerals. The recommended nutrient targets were set at 32 percent of
the School Meal-Target Median Intake for lunches and at 21.5 percent of
the School Meal-Target Median Intake for breakfasts. (These percentages
correspond to the means of the values used by IOM for the minimum and
maximum calorie levels.) The Target Median Intake method combines
information about a population group's nutrient requirements (Estimated
Average Requirements or Adequate Intakes) and Tolerable Upper Intake
Levels. The selected Target Median Intake distribution aims to minimize
predicted prevalence of nutrient inadequacy and excessive intakes. (See
chapter 4 of the IOM final report for additional information on the
development of the nutrient targets.)
Schools would not use these 24 nutrient targets for planning or
monitoring menus. Instead, they would follow the food-based meal
patterns developed by IOM, as set forth in the following table. Meals
that meet the proposed meal patterns and other meal requirements are
expected to supply most of the nutrient targets set by IOM.
The proposed meal patterns designed by IOM and set forth in this
proposed rule offer more fruits, vegetables, and whole grains
consistent with the recommendations of the Dietary Guidelines. As the
following table indicates, the proposed meal pattern for breakfast
would consist of fruits, grains, meats/meat alternates, and fluid milk.
The proposed meal pattern for lunch would consist of fruits,
vegetables, grains, meats/meat alternates, and fluid milk.
BILLING CODE 3410-30-P

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[GRAPHIC] [TIFF OMITTED] TP13JA11.001

BILLING CODE 3410-30-C
The greatest change in breakfast foods is the increase in fruits,
which doubles from the current requirement. In addition, grains
increase by nearly 80 percent over current levels, with a shift to
whole grains. For lunch, the greatest change is the increase in fruits
and vegetables, an increase of nearly four half-cup servings a week.
The following tables compare the types and amounts of foods required
under the current and the proposed meal patterns for breakfast and
lunch.

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Changes in Minimum Amounts and Types of Food: Breakfast
------------------------------------------------------------------------
Current Proposed
requirement requirement
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Fruit........................... \1/2\ cup per day. 1 cup per day.
Grains and Meat/Meat Alternate.. 2 grains or 2 meat/ 1.4-2 grains per
meat alternates day plus:
or 1 of each per
day.
..................
1-2 meat/meat
alternates per
day.
..................
(Range reflects
difference by
grade group.)
Whole Grains.................... Encouraged........ At least half of
the grains to be
whole grain-rich.
Milk............................ 1 cup............. 1 cup, fat content
of milk to be 1%
or less.
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Changes in Minimum Amounts and Types of Food: Lunch
------------------------------------------------------------------------
Current Proposed
requirement requirement
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Fruit and Vegetables............ \1/2\-1 cup of \3/4\-1 cup of
fruit and vegetables plus
vegetables \1/2\-1 cup of
combined per day. fruit per day.
Vegetables...................... No specifications Weekly requirement
as to type of for dark green
vegetable. and orange
vegetables and
legumes and
limits on starchy
vegetables.
Meat/Meat Alternate............. 1.5-3 oz 1.6-2.4 oz
equivalents equivalents
(daily average (daily average
over 5-day week). over 5-day week).
Grains.......................... 1.8-3 oz 1.8-2.6 oz
equivalents equivalents
(daily average (daily average
over 5-day week). over 5-day week).
Whole Grains.................... Encouraged........ At least half of
the grains to be
whole grain-rich.
Milk............................ 1 cup............. 1 cup, fat content
of milk to be 1%
or less.
------------------------------------------------------------------------

USDA recognizes that these proposed changes are significant and may
pose a particular challenge to implement. We solicit comments on how
these changes may affect take-up and participation rates.

Menu Planning Approach and Age/Grade Groups

The 2005 Dietary Guidelines stress the importance of increasing the
consumption of key food groups: Fruits, vegetables, whole grains, and
fat-free/low-fat fluid milk or milk products. Consistent with the
Dietary Guidelines' emphasis on food groups, IOM developed a food-based
meal pattern for each of the School Meal Programs. This proposed rule
would require that all schools follow a food-based menu planning
approach to plan school lunches and breakfasts for all children. No
alternate menu planning approaches would be allowed.
Currently, approximately 70 percent of schools use the FBMP
approach. Using a single FBMP approach would simplify program
management, training, and monitoring by State agencies (SAs). It would
also give schools a practical and easy tool to plan well-balanced and
nutritious meals. More importantly, this change would ensure that all
school children participating in the NSLP and SBP nationwide have
access to more healthy foods in key food groups that contribute to a
nutritious diet and protect health.
Another change proposed in this rule involves the age/grade groups
used for menu planning. Today, childhood overweight and obesity are
major public health concerns. To avoid excessive calories and provide
age-appropriate meals, new age/grade groups recommended by IOM would be
established. All schools would be required to use the following age/
grade groups to plan lunches and breakfasts:

Grades K-5 (ages 5-10 years)
Grades 6-8 (ages 11-13 years)
Grades 9-12 (ages 14-18 years)

These age/grade groups are consistent with the current age-gender
categories used in the DRIs and with widely used school grade
configurations. Use of these age/grade groups would enable schools
operating under a food-based menu planning system to provide meals that
meet the nutrition needs of school children in various grade groups and
are conducive to healthy weight.
IOM recognizes that some schools have different grade
configurations and numerous logistical problems that may interfere with
the reasonable use of the proposed age/grade groups. Those schools
would be allowed to use the same breakfast and lunch meal patterns for
students in grades K through 8 as food quantity requirements for the
proposed age/grade group K-5 and 6-8 are comparable. However, schools
choosing to use one meal pattern for students in these two age/grade
groups would continue to be responsible for meeting the calorie,
saturated fat, and sodium standards for each of the proposed age/grade
groups. This would mean meals would have to meet very precise targets
for calories and sodium.
For example, a school could offer all students in grade groups K-5
and 6-8 the same breakfast choices for the fruit, meat/meat alternate,
and milk components because the quantity requirements are the same. The
requirements for the grains component are not the same but they overlap
(for grades K-5 is 7-10 oz eq per week, and for grades 6-8 is 8-10 oz
eq per week). A school could offer 8-10 oz eq per week to meet the
requirements for both grade groups. Similarly, the calorie requirements
for grades K-5 (350-500 average calories per week) and grades 6-8 (400-
550 average calories per week) overlap. Therefore, a school could offer
both grade groups a range of 400-500 average calories to meet the
requirement for each grade group. While the saturated fat and trans fat
requirement are the same for both grade groups, the school must
carefully consider the sodium requirements. The school would have to
comply with a standard of <430 mg, which was developed for grades K-5,
but would also meet the requirement for students in grades 6-8.
USDA acknowledges that schools offering the SBP may face barriers
when grouping students by age/grade group for breakfast service.
Children typically participate in the breakfast service as they arrive
at school, rather than by grade level. In addition, some schools

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provide breakfasts by methods such as ``grab-and-go breakfasts'' from
kiosks. In instances where schools serve K-12 students on the same
line, the IOM committee suggests that the SFA work with the SA to find
a solution that ensures that basic elements of the meal requirements
are maintained: Inclusion of required food components and food
subgroups, moderate calorie levels, and an emphasis on reducing
saturated fat and sodium. USDA will provide technical assistance to the
SAs to assist them with this issue. Schools in these situations have
the option to serve breakfast in the classroom to each grade group, use
one meal pattern for grades K to 8 that meets the standards for each
age/grade group, or work with the SA to find a feasible solution that
meets the meal requirements.

Fruits and Vegetables

The proposed food-based meal patterns for the NSLP and SBP were
designed by IOM to improve the nutrient density of school meals and the
nutrient intake by students, especially with regard to nutrients of
concern. The proposed meal patterns offer fruits and vegetables as
separate components and increase the quantities of these key food
groups to promote children's intake of fiber and other important
nutrients such as potassium and magnesium.
To facilitate school's compliance with the fruits requirement,
schools would be allowed to offer fruit that is fresh, frozen without
sugar, dried, or canned in fruit juice, water, or light syrup. To
confer fiber benefits, it is important to meet the fruits component
with whole fruit whenever possible. However, schools would be able to
offer pasteurized, full-strength (100 percent) fruit juice, as
currently defined, to meet up to one-half of the fruits requirement.
Products that contain less than 100 percent juice would not be allowed.
The volume of products that would be necessary to meet the fruits
requirement may be relatively large for consumption by children and can
displace the intake of nutrient-rich foods in the meal. Requiring 100
percent fruit juice in the NSLP would be consistent with the current
requirements in the SBP and the Child and Adult Care Food Program.
For breakfast, schools would have the option to offer non-starchy
vegetables in place of fruits. For some schools, vegetables may be more
affordable than whole fruit. For example, schools may add tomatoes and
green peppers to a breakfast omelet or a breakfast burrito.
In addition to establishing fruits and vegetables as separate food
components in the NSLP, this proposed rule would require that schools
offer specific vegetable subgroups at lunch over the school week to
encourage variety in children's diets. Schools would be required to
offer weekly at lunch at least \1/2\ cup equivalent of each of the
following vegetable subgroups: Dark green, orange, and legumes (dry
beans). As recommended by IOM, starchy vegetables (e.g., white
potatoes, corn, lima beans, and green peas) would be limited to 1 cup
per week to encourage students to try new vegetables in place of the
familiar starchy ones. In addition, schools would be allowed to offer
other vegetables (as defined in Appendix A-2 of the 2005 Dietary
Guidelines) over the course of the week as specified in the proposed
meal pattern. Schools using canned vegetables would have to select
products with low sodium to stay within the proposed sodium limits.

Whole Grains

The Dietary Guidelines recommend that all age groups consume at
least half their grains as whole grains.\4\ In light of concerns such
as whole grain product availability, product labeling, and student
acceptability, IOM recommends the following staged approach to align
school meals with the Dietary Guidelines' whole grains recommendation:
---------------------------------------------------------------------------

\4\ Whole grains are (1) grain foods whose grain ingredients are
whole grains only (100 percent whole grains), or (2) whole grain
ingredients, such as rye flour, and whole wheat flour. (Virginia A.
Stallings, Carol West Suitor, and Christine L. Taylor, Editors;
Committee on Nutrition Standards for National School Lunch and
Breakfast Programs; Institute of Medicine. School Meals: Building
Blocks for Healthy Children.)
---------------------------------------------------------------------------

Upon implementation of the proposed rule, at least half of
the grains servings offered in the NSLP and SBP should be whole grain-
rich.\5\
---------------------------------------------------------------------------

\5\ Whole grain-rich foods may contain less than 100 percent
whole grains but, generally, contain at least 51 percent whole
grains. IOM's recommended criterion requires that whole grain-rich
foods meet serving size requirements defined in the Grains/Breads
Instruction for Child Nutrition Programs, and can be easily
identified as containing at least 51 percent whole grains. Please
see Box 7-1 in the IOM report for details on the recommended
temporary criterion for whole grain-rich foods (available at: http://books.nap.edu/openbook.php?record_id=12751&page=124).
---------------------------------------------------------------------------

Within three years post-implementation, menu planning
standards should be revised so that the proportion of whole grains to
refined grains will exceed 50 percent.
This proposed rule is consistent with IOM's recommended temporary
criterion for whole grain-rich foods, which encompasses the HealthierUS
School Challenge criteria. However, this rule slightly modifies IOM's
suggested timeline to minimize the frequency of changes to menus and
vendor requirements. This proposed rule would align the whole grains
implementation timeline with the phased-in sodium reductions.
Therefore, this proposed rule would implement the IOM whole grains
recommendation as follows:
Upon implementation of the final rule, half of the grains
offered during the school week must be whole grain-rich.
Two years post-implementation of the final rule, all
grains offered during the school week must be whole grain-rich.
The IOM report also recommends that the FDA take action to require
labeling for the whole grain content of food products. USDA will
provide support to FDA to help implement the labeling recommendation.
In the interim, the criteria used to identify whole grain-rich foods
served in school meals would be established in FNS guidance, and could
be revised in policy as more information becomes available on the food
label by the voluntary addition of whole grain information by industry
or by FDA action to require labeling for the whole grain content of
food products. USDA will also work with industry and other stakeholders
to ensure that program operators can identify and purchase whole
grains.
IOM expects that the availability of whole grain-rich products will
increase over time nationwide. At the Federal level, USDA commodity
foods (now known as USDA Foods) will continue to expand the list of
whole grain products available to schools. USDA Foods now include brown
rice, and whole grain tortillas, pancakes, and pasta. In addition, USDA
will issue an updated Grains/Breads Instruction and develop practical
guidance to help schools incorporate more whole grain-rich products
into school menus.
This proposed rule would continue to allow schools the option to
meet part of the weekly grains requirement with a grain-based dessert.
Up to one serving per day of a grains-based dessert would be allowed as
part of the grains component. When offered in moderation, grain-based
desserts may present an opportunity to add variety to the grains
component, incorporate more whole grains into the menu, and encourage
student participation. Schools would need to refer to the Grains/Breads
Instruction to identify creditable grain-based desserts.
To accommodate cultural food preferences and due to product
availability concerns, current regulations allow schools in outlying
areas (American Samoa, Puerto Rico, and the Virgin Islands) to serve a
vegetable such as yams, plantains, or sweet potatoes to meet the grains
requirement. This proposed rule would

[[Page 2501]]

continue to permit this meal pattern exception.

Meats/Meat Alternates

The Dietary Guidelines recommend selecting and preparing lean meat
and poultry, or low-fat and fat-free meat alternates, and limiting the
intake of saturated fats, trans fat, and cholesterol. The meal pattern
designed by IOM includes meats and meat alternates (such as beans,
cheese, whole eggs, nuts, seeds, peanut butter, other nut or seed
butters, and yogurt) and the recommendation to control saturated fat
and trans fat. To meet this food component as well as the dietary
specifications for saturated fat and trans fat, schools would have to
offer lean meats/meat alternates. The use of processed meats would be
discouraged because those available at this time are usually high in
sodium. If offered, processed meats would have to be low in fat. USDA
guidance and technical assistance materials will emphasize strategies
for purchasing, planning, and preparing lean meats/meat alternates.
As currently done, the quantity of meats/meat alternates offered
daily could vary if at least a minimum amount (1 ounce) is provided
daily and the total offered over the school week meets the weekly
component requirement. This proposed rule would also retain the current
requirement that all creditable meats/meat alternates be offered in the
main dish or as part of the main dish and up to one other food item
other than a dessert.
USDA is aware of a growing interest to expand the list of allowable
meat alternates to include tofu, a whole soybean food. We recognize
that soybean foods are increasingly being incorporated in the American
diet as nutrient-dense meat alternatives. This rule is not proposing to
credit commercially prepared tofu as an allowable meat alternate at
this time. However, USDA is interested in receiving comments from the
child nutrition community proposing a methodology that could be used
for crediting commercially prepared tofu.
A longstanding concern regarding tofu is the lack of an FDA
standard of identity. An FDA standard of identity defines what a given
food product is, its name, and the ingredients that must be used or may
be used in the manufacture of the food product. Without a standard of
identity, USDA cannot assure nutritional consistency across brands and
types of tofu in a food-based menu planning approach. Although tofu
does not have a standard of identity, the USDA National Nutrient
Database for Standard Reference, Release 22 (2009) provides nutrient
profiles for different types of tofu.
Other soy-based products are currently allowed as alternate protein
products (APP) if they meet the requirements in Appendix A to 7 CFR
part 210, and Appendix A to 7 CFR part 220. Examples of allowable APPs
include products that are formulated with ingredients such as soy
concentrates, soy isolates, soy flours, whey protein concentrate, or
casein. Tofu is not an allowable APP because it does not meet the
established minimum requirement to consist of at least 18 percent
protein by weight when fully hydrated or formulated.

Fluid Milk

As recommended by IOM, only fat-free fluid milk (unflavored or
flavored) and unflavored low-fat fluid milk (1 percent milk fat or
less) would be allowed in the School Meal Programs in order to reduce
the saturated fat and calorie content of school meals. Flavored low-fat
fluid milk would not be allowed because it increases both saturated fat
and calories. However, flavored fat-free fluid milk would be allowed
because calcium is a nutrient of concern for children and the use of
flavors to encourage children to drink more fluid milk could help
mitigate this problem. USDA anticipates that the proposed calorie
maximum would drive schools to select flavored fat-free fluid milk with
the lowest sugar content.
This proposed rule would no longer allow schools to offer whole
milk or reduced-fat (2 percent milk fat) fluid milk as part of the
reimbursable meal. This rule would also remove the existing regulatory
requirement that schools offer milk in a variety of fat content.
Section 203 of the Healthy, Hunger-Free Act of 2010, which amended the
NSLA, requires that schools offer a variety of milk consistent with the
Dietary Guidelines recommendations.

Calories, Saturated Fat, Sodium, and Trans Fat

Because the proposed meal pattern alone cannot ensure appropriate
amounts of calories, saturated fat, sodium and trans fat, IOM
recommended specific standards for these dietary components. This
proposed rule would implement the IOM-recommended standards for
calories, saturated fat, sodium, and trans fat as follows:

Calories

When recommending the calorie levels that should be provided by
school meals, the IOM committee was mindful of the childhood obesity
trend and the food choices available to school children outside of the
NSLP and SBP. The committee recommended minimum and maximum calories
for lunches and breakfasts based on evidence about children's intakes
at meals and snacks. The proposed minimum and maximum calorie levels to
be required for each age grade group on average over the course of the
week are:

Lunch--Proposed Minimum and Maximum Calorie Levels
------------------------------------------------------------------------
Grades K-5 Grades 6-8 Grades 9-12
------------------------------------------------------------------------
550-650 600-700 750-850
------------------------------------------------------------------------
\a\ The average daily amount for a 5-day school week is not to be less
than the minimum or exceed the maximum.
\b\ Discretionary sources of calories (solid fats and added sugars) may
be added to the meal pattern if within the specifications for
calories, saturated fat, trans fat, and sodium.

Breakfast--Proposed Minimum and Maximum Calorie Levels
------------------------------------------------------------------------
Grades K-5 Grades 6-8 Grades 9-12
------------------------------------------------------------------------
350-500 400-550 450-600
------------------------------------------------------------------------
\a\ The average daily amount for a 5-day school week is not to be less
than the minimum or exceed the maximum.
\b\ Discretionary sources of calories (solid fats and added sugars) may
be added to the meal pattern if within the specifications for
calories, saturated fat, trans fat, and sodium.

The intent of this proposed change is not to reduce children's
intake of food, but to avoid excessive calories. The meal patterns
proposed in this rulemaking would require increased amounts of fruits,
vegetables, and whole grains. Combined with calorie maximums, USDA
believes that these increased food requirements leave relatively few
discretionary calories for fats and added sugars. Therefore, to stay
within the calorie ranges specified in this proposed rule, schools
would have to offer lean meats/meat alternates, fat-free or low-fat
fluid milk, and other nutrient-dense foods, as recommended by the 2005
Dietary Guidelines.
While the 2005 Dietary Guidelines do not recommend discrete limits
on added sugars, they do encourage the consumption of foods and
beverages low in added sugars.

Saturated Fat

The 2005 Dietary Guidelines continue to recommend that all
individuals consume less than 10 percent of total calories from
saturated fat. This is the current standard in both the NSLP and SBP
and this proposed rule would retain it as recommended by IOM.

[[Page 2502]]

Schools have made a recognizable effort to reduce the saturated fat
levels of meals. SNDA-III data indicate that, on average, three-
quarters of schools offered breakfasts that met the requirement to
provide less than 10 percent of total calories from saturated fat. At
lunch, however, only one-third of schools offered meals that met this
required level.
A variety of food sources contribute to saturated fat levels in
school meals; however, fluid milk is a primary contributor. As stated
earlier, this proposed rule would no longer allow schools to offer
whole fluid milk or reduced-fat fluid milk as part of a reimbursable
lunch or breakfast for children ages five and older. To meet the new
statutory requirement that schools offer a variety of milk consistent
with the Dietary Guidelines (established by the Healthy, Hunger-Free
Act of 2010), schools would have to offer students at least two fluid
milk options. For example, schools could offer fat-free milk (both
unflavored and flavored), or fat-free milk (unflavored and/or flavored)
along with low-fat milk (unflavored). By limiting the choices to fat-
free and low-fat milk, schools would limit saturated fat in the school
meals while maintaining key nutrients for growth and development found
in fluid milk.

Sodium

Reducing the sodium content of school meals is one of the key
objectives of this proposed rule. Research suggests that modest
population-wide reductions in dietary salt could substantially reduce
cardiovascular events and medical costs (see, for example, Smith-
Spangler, 2010; Bibbins-Domingo, 2010). More specifically, a
forthcoming study suggests that reducing dietary salt in adolescents
could yield substantial health benefits by decreasing the number of
teenagers with hypertension and the rates of cardiovascular disease and
death as these teenagers reach young and middle age adulthood (Bibbins-
Domingo, 2010b).
USDA has encouraged schools to reduce sodium since the
implementation of SMI in 1995. According to the SNDA-III study, the
average sodium content of school lunches (for all schools) is more than
1400 mg. IOM recommended a gradual but significant reduction in sodium
over time and suggested that USDA establish intermediate targets to
help schools progress to the final sodium standards developed by the
IOM expert committee for each age/grade group. This proposed rule would
require that schools meet the final sodium standards established by IOM
no later than ten years after the final rule is implemented by reaching
intermediate sodium targets as follows:
[GRAPHIC] [TIFF OMITTED] TP13JA11.002

[[Page 2503]]

USDA recognizes that there are barriers to reducing the sodium
content of meals to the levels recommended by IOM without having an
impact on student acceptance and participation, practicality, and cost.
The proposed intermediate sodium targets were developed after carefully
reviewing scientific literature, consulting with U.S. and international
public health professionals involved in sodium reduction efforts, and
applying information from expert presentations by industry
representatives at the IOM Strategies to Reduce Sodium Intake
information gathering session in March 2009. Findings showed that
school menu planners can reduce sodium by approximately 10 percent
through menu modification. Industry can reduce sodium in school food
products by approximately 20 to 30 percent using current technology.
The remaining reduction requires innovation.
Establishing intermediate targets was complicated because two
intermediate targets set at 10 percent and 20 percent reductions from
baseline levels yield reductions for school breakfasts beyond IOM
recommendations (school breakfasts require a sodium reduction of
approximately 25 percent). If applied to school breakfasts, this
strategy also places a disproportionate responsibility for reduction on
school menu planners. Industry reductions and innovation necessary to
meet school lunch targets will affect all foods served in all school
meals, and the intermediate targets must account for this and
distribute reductions required more evenly across the 10-year period.
Therefore, simply applying 10 percent and 20 percent reductions to
baseline levels was not an ideal way to establish intermediate targets.
Instead, USDA applied the same proportional reductions (20 percent
and 40 percent, respectively, for the first and second intermediate
targets) to the total amount of sodium reduction required for each age/
grade group. This method distributes reductions more evenly across the
10-year period and yields reasonable intermediate targets that align
with feasible reductions for menu planners (approximately 10 percent)
and industry (approximately 20-30 percent), and sodium reduction
efforts currently underway.
Taking baseline measures from SNDA III, intermediate targets were
established two years and four years post-implementation to initiate
change using current resources:
(1) Two years post implementation of the final rule, schools would
need to reduce sodium in school lunches by approximately 5-10 percent
from baseline levels (SNDA-III). This is the estimated amount that
schools can reduce sodium through menu and recipe modification using
currently available foods and technology.
(2) Four years post implementation of the final rule, schools would
need to reduce sodium by approximately 15-30 percent from the baseline.
This is the estimated amount industry can reduce sodium in foods using
currently available technology.
(3) Ten years post implementation of the final rule, school lunches
would need to meet the final targets recommended by IOM. This would
require schools to reduce sodium in school meals by approximately 25-50
percent from the baseline. A significant amount of time is allotted for
this final reduction, which will likely require innovation, such as new
technology and/or food products.
These reductions are consistent with public health initiatives
aiming to reduce sodium in the nation's food supply over the next 10
years, or a reduction of approximately 5 percent per year. Such
reductions are widely supported by the American Public Health
Association and by efforts such as New York City's National Sodium
Reduction Initiative.
Nearly all schools would need to reduce the sodium content of
school meals to meet the proposed intermediate and final sodium
targets. The changes necessary will vary by school/district because
currently there is no sodium limit for school meals and each school/
district will be starting from a different baseline. Schools can use
SMI data or review their meals to determine changes needed to meet the
sodium targets.
It is important to note that approximately 75 percent of the sodium
in foods consumed in the U.S. comes from salt (sodium chloride) added
to processed foods. Processed foods and convenience items are often
used in the school food service operation to save time and labor.
Gradual implementation of the sodium restriction is intended to give
schools and industry time to lower the sodium content of the foods used
in the school meals.
The availability of high sodium foods in and outside of the School
Meal Programs has resulted in a preference for salty foods at a young
age. The proposed intermediate standards should help children reduce
their salt preference and develop healthier eating habits. However, a
simultaneous reduction of sodium levels in foods available outside the
NSLP would be important to foster a change in students' taste
preference.
USDA plans to develop practical guidance and technical assistance
resources to help schools achieve the proposed sodium standards while
avoiding a negative impact on student participation. USDA resources
would also emphasize strategies for increasing potassium in schools
meals. Adequate potassium intake can help offset some of the adverse
health effects of high sodium levels.
USDA will continue to make low-sodium USDA Foods available to
schools. USDA has targeted specific commodities to be made available at
lower sodium levels, including canned items (beef, pork, poultry,
salmon, and tuna), chicken fajita strips, and ready-to-eat cereal. Most
commodity canned vegetables already meet FDA's requirements for use of
the term ``healthy,'' which means that, in addition to meeting other
requirements, these foods contain no more than 480 mg sodium per
labeled serving. USDA plans to gradually phase-in low sodium canned
vegetables for donation to all of the domestic nutrition assistance
programs. USDA Foods now offer low sodium canned tomato products and
canned dry beans. In school year 2010, the sodium levels in all USDA
canned vegetables are being reduced to 140 mg per serving.
While the proposed regulatory requirements discussed above are in
line with the 2005 Dietary Guidelines and the IOM final sodium targets,
USDA acknowledges further reductions in recommended sodium levels are
possible in the upcoming 2010 Dietary Guidelines. The 2010 ``Dietary
Guidelines Advisory Committee Report'' recommends that both children
and adults should reduce their sodium intake to 1,500 mg per day
(compared to the 2,300 mg per day recommended in the 2005 Guidelines).
USDA is seeking public comment on how to address further reductions
in recommended sodium levels, in the event that the 2010 Dietary
Guidelines include sodium targets lower than those reflected in this
proposed rule. USDA invites public comments on how possible further
reductions could be incorporated into the NSLP and SBP, including the
timeline for achieving reductions; how intermediate targets, if any,
should be established; and the impact that further reductions may have
on participation levels, implementation feasibility, and costs.

Tracking Calories, Saturated Fat, and Sodium

Under this proposal, all schools would plan lunches and breakfasts
using the food-based meal patterns

[[Page 2504]]

developed by IOM. Similar to the current FBMP system, schools would be
responsible for offering meals that meet the meal pattern, as well as
specific standards for calories, saturated fat, and sodium for each
age/grade group on average over the school week. However, this rule
would not require that schools conduct a nutrient analysis to determine
compliance with the standards for calories, saturated fat, and sodium.
SAs would be responsible for monitoring compliance with these three
dietary specifications in schools selected for administrative reviews.
(Currently, SAs conduct nutrient analysis for FBMP schools to determine
the levels of eleven dietary specifications (calories, protein, vitamin
A, vitamin C, iron, calcium, total fat, saturated fat, sodium,
cholesterol, and dietary fiber). This proposal would support IOM's
recommendation to limit and monitor calories, saturated fat, and sodium
in school meals without burdening schools or SAs.
Although not required, schools that have the resources to conduct a
nutrient analysis would be able to continue to do so to assess how well
they are meeting calorie, saturated fat, and sodium standards. SNDA III
found that, in school year 2004-2005, about two-thirds of schools were
in districts that conducted ongoing nutrient analysis of their menus.
This finding suggests that many districts have the capability to
conduct nutrient analysis.
USDA intends to develop practical tools to help schools calculate
the levels of calories, saturated fat, and sodium in school meals. The
SAs are encouraged to develop practical calculation methods and provide
technical assistance to schools when they are developing school menus
to help align the planned meals with these three dietary
specifications.

Trans fat

This proposed rule would require schools to minimize trans fat in
school meals to be consistent with the 2005 Dietary Guidelines. The IOM
report provides a practical method to minimize the trans fat content of
school meals. To help schools reach the goal of zero grams of trans fat
per serving, IOM recommended that schools only be allowed to use food
products or ingredients that contain zero grams of trans fat per
serving, as indicated on the nutrition label (FDA defines zero as less
than 0.5 grams per serving) or manufacturer's specifications. Foods
that contain minimal amounts of naturally-occurring trans fat (such as
beef and lamb) would be excluded from this requirement. Schools would
also be required to add the trans fat specification and request the
necessary documentation in their procurement contracts.
If a product or ingredient used to prepare school meals has no
nutrition labeling (e.g., institutional products) schools would be
responsible for obtaining information, such as manufacturer or
nutrition specifications, that confirms that the product contains zero
grams of trans fat per serving. The trans fat information would be
examined during an administrative review.

Standards for Meals Selected by the Student (Offer Versus Serve)

To achieve a reasonable balance between the goals of reducing food
waste and preserving the nutritional integrity of school meals, the IOM
committee recommended standards for meals as selected by the student.
The committee formulated two offer versus serve options: A preferred
option and a secondary option.
Under IOM's preferred option, a student may decline 1 food item at
breakfast but must select 1 fruit or juice. For lunch, the student may
decline 2 food items but must select 1 fruit or vegetable.
The secondary option formulated by IOM also requires the student to
select 1 fruit or juice at breakfast and 1 fruit or vegetable at lunch
but allows the student to decline more food items. Under the secondary
option, the student may decline 2 food items at breakfast and 3 food
items at lunch.
Although both options formulated by IOM promote the selection of
fruits and vegetables, the preferred option is more conducive to
preserving the nutritional integrity of the school meal. We are
concerned that the secondary option allows the student to decline more
food items than the current offer versus serve regulations. Therefore,
this proposed rule would adopt IOM's preferred option for offer versus
serve with a slight modification that would allow a reimbursable
breakfast to include a serving of fruit or a vegetable offered in place
of fruit:
Student may decline 1 food item at breakfast but must
select 1 fruit or vegetable.
Student may decline 2 food items at lunch but must select
1 fruit or vegetable.
This slight modification is consistent with the Dietary Guidelines
emphasis on increasing the consumption of fruits and vegetables.
Offer versus serve would be required at the high school level, as
is currently the case, and it would continue to be available to middle
and elementary schools at the discretion of the SFA or the SA.

Summary of Proposed Meal Requirements

Implementation of the proposed meal requirements (standards for
menu planning and standards for meals selected by the student) would
affect the following changes in the NSLP and SBP:
On a daily basis:
Meals offered to each age/grade group would meet the meal
pattern designed by IOM;
Fluid milk offered would be fat-free (unflavored or
flavored) or unflavored low-fat (1 percent milk fat or less) and would
include variety that is consistent with the Dietary Guidelines;
Food products and ingredients used to prepare school meals
would contain zero grams of trans fat per serving (less than 0.5 grams
per serving) according to the nutrition labeling or manufacturer's
specifications; and
Meals selected by the students would include at least a
fruit or vegetable, and students would not be able to decline more than
two food items at lunch and one food item at breakfast.
Over a 5-day school week:
Average calorie content of the meals offered to each age/
grade group would fall within the minimum and maximum calorie levels
specified by IOM;
Average saturated fat content of the meals offered to each
age/grade group would be less than 10 percent of total calories; and
Average sodium content of the meals offered to each age/
grade group would meet the intermediate targets established by USDA and
not exceed the maximum level specified by IOM ten years post
implementation of the final rule.
This proposed rule includes several existing meal requirements that
are restated without change in the proposed regulatory language. Such
requirements include the provisions on meal choices, lunch periods,
meal exceptions and variations, and fluid milk substitutes. In
addition, some requirements for specific food components, such as
meats/meat alternates, are retained in the proposed regulatory text.
The meal patterns and nutrition standards for preschoolers and
infants also remain unchanged; however, only the traditional FBMP
approach would be allowed to plan meals for preschoolers. The State
agencies would not be required to analyze the menus for preschoolers
pending changes to the CACFP regulations.

[[Page 2505]]

Proposed Changes in Monitoring Procedures

This proposed rule would establish new procedures for monitoring
implementation of, and compliance with, the new meal requirements and
the dietary specifications for calories, saturated fat, sodium, and
trans fat. As recommended by IOM, monitoring would focus on meeting the
relevant Dietary Guidelines through the proposed meal requirements. The
new monitoring procedures would also allow the opportunity to provide
information and technical assistance to school foodservice staff for
continuous quality improvement.
Currently, SAs conduct two reviews to ensure compliance with
program requirements. The SMI nutrition review assesses the nutritional
quality of school meals. The Coordinated Review Effort (CRE) focuses on
eligibility certification, meal counting and claiming, and meal
elements. This proposed rule would discontinue the SMI reviews under
Sec. 210.19 and strengthen CRE administrative reviews under Sec.
210.18 to enable SAs to monitor the quality of school meals and assist
schools in continually improving performance. As part of the CRE
Performance Standard 2, the SAs would be required to monitor compliance
with the meal patterns, including ensuring that sufficient quantities
of each component are offered. The SAs would also be responsible for
calculating the levels of calories, saturated fat, and sodium for the
meals offered by the school(s) selected for review and ensuring that
the food products and ingredients used to prepare school meals contain
zero grams of trans fats. To accomplish this, the following changes are
proposed:
(1) Establish a three-year review cycle--The IOM report recommends
frequent monitoring to assess how well the new meal requirements are
being implemented at the local level. This proposed rule would expand
the ability of the SAs to monitor the quality of the meals offered at
the local level by changing the review cycle from 5 years to 3 years,
and by requiring SAs to monitor compliance with the meal pattern and
the requirements for calories, saturated fat, sodium, and trans fats.
More frequent monitoring would also expand opportunities to provide
technical assistance and mentoring to local operators as recommended by
IOM.
(2) Establish a two-week review period--In order to give the SAs a
more complete view of the meals offered at the local level, this
proposed rule would expand the review period from one to two weeks. SAs
would review menu and production records for a two-week period to
assess compliance with the meal pattern; conduct a weighted nutrient
analysis to determine the average levels of calories, sodium, and
saturated fat in the planned meals; and confirm that food products and
ingredients used to prepare school meals contain zero grams of trans
fat.
(3) Include breakfasts in the CRE review--This proposed rule would
require SAs to review the breakfast meal during the 2-week CRE review.
Due to the many important meal requirements that IOM recommended for
both the NSLP and the SBP, USDA believes that it is desirable to
monitor the quality of breakfasts as part of the CRE review.
In addition, SAs would continue to monitor the serving line and
lunches counted at point of service to determine if the meals offered
and selected the day of the onsite review contain the required food
components and food quantities. If food quantities offered by the
reviewed school appear to be insufficient or excessive, SAs would
provide technical assistance and guidance, apply corrective action, and
follow up to assess improvement in the quality of meals. The on-site
visit, the nutrient analysis, and other information obtained from
direct observation during the review period would give the SA a
comprehensive view of the quality of the school meals and compliance
with the meal requirements.
USDA anticipates that the State monitoring activities will focus on
technical assistance and corrective action following implementation of
the new meal requirements. As currently done, SAs would be required to
apply immediate fiscal action if the meals offered are completely
missing one of the food components established in the new meal pattern.
In addition, SAs would be required to take fiscal action for repeated
violations of the vegetable subgroups and milk type requirements when
(1) technical assistance has been provided and (2) corrective action
has not resolved these specific violations. These requirements are
easily understood by school food authorities and can be quickly
identified by visual inspection without having specialized nutrition
knowledge or training. However, because not all schools currently have
knowledge or accurate tools to calculate the average levels of
calories, saturated fat, sodium and trans fat in the meals offered
during the week, this proposed rule would give SAs discretion to take
fiscal action for such violations, as well as for food quantity and
whole grain violations, provided that technical assistance and
corrective action have taken place. The SAs would also be required to
first use technical assistance and corrective action to address these
deficiencies.
Since the new requirements for calories, saturated fat, sodium, and
trans fat would only apply to the meals for school-aged children, the
SAs would not have to conduct a nutrient analysis of the meals offered
to preschoolers (ages 1-2 and 3-4) in a school selected for an
administrative review pending changes to the CACFP regulations.
Likewise, the proposed whole grains and fluid milk requirements would
not apply to preschoolers' meals.
Technical Assistance
IOM recommended technical assistance to help school foodservice
staff develop and continuously improve menus, order appropriate foods,
and control costs while maintaining quality. USDA intends to provide
training and develop technical assistance resources to facilitate the
transition to the new meal requirements. This would be accomplished by
updating USDA menu planning resources; guidance materials on fruits,
vegetables, and whole grain foods; the Child Nutrition Database; and
requirements for nutrient analysis software. USDA will continue to
collaborate with the National Food Service Management Institute to
develop and provide appropriate training. In addition, USDA would
disseminate information about the new requirements in public forums,
such as the School Nutrition Association and American Dietetic
Association meetings, and other national, regional and state
conferences; and through the USDA Regional nutritionists who work with
the School Meal Programs.
Miscellaneous Proposed Changes
USDA is using this opportunity to propose additional program
changes that would support IOM's recommendations or enhance the overall
school nutrition program.

Identification of a Reimbursable Meal

USDA is proposing to require schools to identify the foods
composing the reimbursable meal(s) for the day at or near the beginning
of the serving line(s). Students and parents often do not know what
food or menu items are included in the NSLP or SBP meal. Identifying
the Program meal may avoid higher costs to the students from their
unintentional purchase of a la carte foods, rather than the unit-priced
school meal. This additional information would promote nutrition
education by teaching students what foods are included in a balanced
meal. Schools

[[Page 2506]]

would have discretion to identify the best way to provide this
information on the meal serving line(s).

Crediting

Foods served as part of the School Meal Programs should be
wholesome and easily recognized by children as part of a food group
that contributes to a healthy diet. To support the Dietary Guidelines'
emphasis on whole fruits and vegetables, this proposal would disallow
the crediting of any snack-type fruit or vegetable products (such as
fruit strips and fruit drops), regardless of their nutrient content,
toward the fruits component or the vegetables component. USDA does not
currently allow snack-type foods such as potato chips or banana chips
to be credited toward meeting the fruits/vegetables requirement;
however, certain snack-type fruit products have been allowed to be
credited by calculating the whole-fruit equivalency of the processed
fruit in the product using the FDA's standards of identity for canned
fruit nectars (21 CFR 146.113). The standard of identity for canned
fruit nectars, however, has since been removed from the CFR. Therefore,
this rationale for allowing certain snack-type fruit products to be
credited in the meal pattern is no longer established in regulation.
In addition, this proposal would require that all fruits and
vegetables (and their concentrates, purees, and pastes) be credited
based on volume as served with two exceptions: (1) Dried whole fruit
and dried whole fruit pieces would be credited for twice the volume
served; and (2) leafy salad greens would be credited for half the
volume served. These exceptions are highlighted in the IOM report and
the 2005 Dietary Guidelines. This proposal would specifically change
the current practice of crediting tomato paste and puree. Currently
tomato paste and puree are credited as a calculated volume based on
their whole-food equivalency using the percent natural tomato soluble
solids in paste and puree, while other fruit paste and purees (such as
blackberries puree) are credited based on actual volume as served.
Under this proposal, schools would credit tomato paste and puree based
on actual volume as served. Schools would not be allowed to credit a
volume of fruit or vegetables that is more than the actual serving
size.

Fortification

A basic premise of the Dietary Guidelines is that nutrients should
come primarily from the consumption of whole foods that are not highly
processed or heavily fortified. Current nutrition science suggests that
a variety of factors in whole foods work together to generate health
benefits. While certain nutrients in foods have been identified as
being linked to specific health benefits, the effects are not always
comparable when the nutrient is isolated from the food in which it is
naturally present.
This proposed rule seeks to reduce schools' reliance on highly
fortified foods. To promote consumption of naturally nutrient-dense
foods, such as whole grains, fruits and vegetables, this proposed rule
would eliminate the use of formulated grain-fruit products as defined
in Appendix A to 7 CFR Part 220. Formulated grain-fruit products are
(1) grain-type products that have grain as the primary ingredient, and
(2) grain-fruit type products that have fruit as the primary
ingredient. Both types of products must have at least 25 percent of
their weight derived from grain. These food products typically contain
high levels of fortification, rather than naturally occurring
nutrients, and are high in sugar and fat. Such products do not support
the Dietary Guidelines' recommendation to consume fruits as a separate
and important food group. Furthermore, formulated grain-fruit products
are no longer necessary in the school meal programs. This product
specification was originally adopted in response to the limited access
that some schools faced in procuring or storing traditional breakfast
foods. Today, schools can procure other breakfast options with similar
shelf-life (e.g., ready-to-eat cereals and whole grain or enriched
grain products) that would meet the operational needs of the school and
the nutrient needs of children.
USDA recognizes that fortification of some foods is an accepted
practice to enhance or add nutrients. Often in such cases,
fortification is an effective way to preserve nutrients lost during
preparation or processing, or to increase the nutrient intake in
consumer diets that normally may be lacking the added nutrients.
Examples of such foods are enriched grain products, fortified cereals,
and fluid milk (with added vitamins A and D). In most other instances,
however, the use of highly-fortified food products is inconsistent with
the Dietary Guidelines.
Technical Changes to Appendices A and B
This proposed rule would update Appendices A and B to 7 CFR Parts
210 and 220. USDA is proposing to amend Appendix A to Part 220 by
removing Formulated Grain-Fruit Products in its entirety for the
reasons previously stated in the discussion of Fortification.
Appendix B to Part 210 would be amended by removing the statement
that affirms that Appendix B will be updated to exclude individual
foods that have been determined to be exempted from the categories of
Foods of Minimal Nutritional Value. Although USDA has published Notices
in the past to inform the public of exempted foods, Appendix B has not
been amended subsequently to reflect these exemptions. A list of these
exempted foods is maintained and available to all State agencies
participating in the Programs. There have been no changes to the
categories of exempted foods and USDA will maintain the requirement to
publish a Notice and update the regulations to reflect any changes to
the categories.
Implementation of Proposed Changes
Until the final rule is implemented, meal reimbursement will be
based on compliance with current program regulations in 7 CFR Part 210
and Part 220. However, schools are strongly encouraged to take steps
within current Program regulations to provide meals that are consistent
with the 2005 Dietary Guidelines, such as reducing sodium and saturated
fat, and increasing the availability of fruits, vegetables, whole
grains, and fat-free and low-fat fluid milk in the menus. Team
Nutrition has developed practical guidance to help schools provide
meals that reflect the Dietary Guidelines. (See http://teamnutrition.usda.gov/Resources/dgfactsheet_hsm.html.)
Since the 2005 Dietary Guidelines were issued, USDA has provided
technical assistance and guidance to help schools offer meals that
reflect the recommendations of the Dietary Guidelines. USDA recognizes
that changing children's dietary habits is indeed a challenge for
schools. Nutrition education is essential to help children accept new
foods, change preferences, and make healthy choices. USDA's Team
Nutrition initiative will continue to assist SAs with their nutrition
education efforts.
The HealthierUS School Challenge is a voluntary certification
initiative that recognizes schools that are providing nutritious food
and beverage choices and nutrition education, physical education and
opportunities for physical activity. The Challenge criteria help
schools move closer to the new meal pattern requirements related to
whole grains, fruits, vegetables, and low-fat and fat-free fluid milk.
USDA is working with partner organizations and stakeholders to double
the number of HealthierUS schools during school year

[[Page 2507]]

2010-2011 and to add 1,000 schools per year for two years thereafter.
Team Nutrition and the HealthierUS School Challenge, and our joint
efforts with the National Food Service Management Institute, have
helped schools move in the right direction. USDA is confident that
State and local program operators have made and will continue to make
progress to further improve the quality of school meals and the dietary
habits of school children.

I. Procedural Matters

Executive Order 12866

This proposed rule has been determined to be economically
significant and was reviewed by the Office Management and Budget in
conformance with Executive Order 12866.

Regulatory Impact Analysis

As required for all rules that have been designated as significant
by the Office of Management and Budget, a Regulatory Impact Analysis
(RIA) was developed for this proposed rule and is included in the
preamble. The following summarizes the conclusions of the RIA:
Need for action: Section 9(a)(4) of the NSLA, 42 U.S.C. 1758(a)(4),
added to the statute in 2004, requires the Secretary of Agriculture to
issue regulations that increase the availability of foods recommended
by the most recent ``Dietary Guidelines for Americans'' in the Federal
school meals programs. In addition, Section 9(f)(1) of the NSLA, 42
U.S.C. 1758(f)(1), requires schools that participate in the NSLP or SBP
to offer lunches and breakfasts that are consistent with the goals of
the most recent Dietary Guidelines. This proposed rule implements
recommendations of the National Academy of Science's Institute of
Medicine (IOM). Under contract to the United States Department of
Agriculture (USDA), the IOM proposed changes to NSLP and SBP meal
pattern requirements consistent with the 2005 Dietary Guidelines and
the IOM's Dietary Reference Intakes.
Benefits: The proposed rule implements recommendations of the IOM
that are designed to better align school meal patterns and nutrition
standards with the IOM's Dietary Reference Intakes and the goals of the
Dietary Guidelines. In developing its recommendations, the IOM sought
to address low intakes of fruits, vegetables, and whole grains among
school-age children, and excessive intakes of sodium and discretionary
calories from solid fats and added sugar. The proposed rule addresses
these concerns by increasing the amount of fruit, the amount and the
variety of vegetables, and the amount of whole grains offered each week
to students who participate in the school meals programs. The rule
would also replace higher fat fluid milk with low fat and skim fluid
milk in school meals. And it would limit the levels of calories,
sodium, and saturated fat in those meals.
The linkage between poor diets and health problems such as
childhood obesity are also a matter of particular policy concern, given
their significant social costs. One in every three children (31.7%)
ages 2-19 is overweight or obese.\6\ Along with the effects on our
children's health, childhood overweight and obesity imposes substantial
economic costs, and the epidemic is associated with an estimated $3
billion in direct medical costs.\7\ Perhaps more significantly, obese
children and adolescents are more likely to become obese as adults.\8\
In 2008, medical spending on adults that was attributed to obesity
increased to an estimated $147 billion.\9\ In addition, a recent study
suggests reducing dietary salt in adolescents could yield substantial
health benefits by decreasing the number of teenagers with hypertension
and the rates of cardiovascular disease and death as these teenagers
reach young and middle age adulthood. Because of the complexity of
factors that contribute both to overall food consumption and to
obesity, we are not able to define a level of disease or cost reduction
that is attributable to the changes in meals expected to result from
implementation of the rule.
---------------------------------------------------------------------------

\6\ Ogden, C.L., Carroll, M., Curtin, L., Lamb, M., Flegal, K.
(2010). Prevalence of High Body Mass Index in U.S. Children and
Adolescents 2007-2008. Journal of American Medical Association,
303(3), 242-249.
\7\ Trasande, L., Chatterjee, S. (2009). Corrigendum: The Impact
of Obesity on Health Service Utilization and Costs in Childhood.
Obesity, 17(9).
\8\ Whitaker, R.C., Wright, J.A., Pepe, M.S., Seidel, K.D.,
Dietz W.H. Predicting obesity in young adulthood from childhood and
parental obesity. N Engl J Med 1997; 37(13):869-873; Serdula, M.K.,
Ivery, D., Coates, R.J., Freedman, D.S., Williamson, D.F., Byers, T.
Do obese children become obese adults? A review of the literature.
Prev Med 1993;22:167-177.
\9\ Finkelstein, E., Trogdon, J., Cohen J., Dietz, W. (2009).
Annual Medical Spending Attributable to Obesity: Payer-And Service-
Specific Estimates. Health Affairs, 28(5).
---------------------------------------------------------------------------

As the rule is projected to make substantial improvements in meals
served to more than half of all school-aged children on an average
school day, we judge that the likelihood is reasonable that the
benefits of the rule exceed the costs, and that the proposal thus
represents a cost-effective means of conforming NSLP and SBP
regulations to the statutory requirements for school meals. Beyond
these changes a number of qualitative benefits--including alignment
between Federal program benefits and national nutrition policy,
improved confidence of parents and families in the nutritional quality
of school meals, and the contribution that improved school meals can
make to the overall school nutrition environment, are expected from the
rule.
Costs: FNS estimates that the total costs of compliance with this
rule will reach $6.8 billion over the five years ending in FY 2016.
Year by year costs in millions, assuming implementation of a final rule
at the start of SY 2012-2013 are summarized below.

--------------------------------------------------------------------------------------------------------------------------------------------------------
Fiscal year
Costs (millions) -----------------------------------------------------------------------------------------------------
2012 2013 2014 2015 2016 Total
--------------------------------------------------------------------------------------------------------------------------------------------------------
Food Costs........................................ $91.8 $626.5 $704.9 $968.9 $1,028.2 $3,420.4
Labor Costs....................................... 89.6 611.4 687.9 945.6 1,003.4 3,337.9
-----------------------------------------------------------------------------------------------------
Total......................................... 181.3 1,237.9 1,392.8 1,914.5 2,031.7 6,758.2
--------------------------------------------------------------------------------------------------------------------------------------------------------

The increases reflect increased costs to purchase the types of foods
required by the proposed rule beyond those required to comply with
current program rules--primarily increased fruits, vegetables, and
whole grains--as well as increased labor costs due to more on-site food
preparation, training for food service professionals, and some
additional administrative costs.
Alternatives:

[[Page 2508]]

In response to NSLA Section 9(a)(4) amended into law in 2004, USDA
contracted with IOM to assemble an expert panel to undertake a review
of the nutritional needs of children, the recommendations of the
Dietary Guidelines, and IOM's Dietary Reference Intakes. USDA asked IOM
to develop recommendations for updating NSLP and SBP meal patterns and
nutrition requirements based on that review of need and nutrition
science, with consideration given to operational feasibility and cost.
The USDA contract with IOM called for the creation of a panel with
representatives from the fields of public health, epidemiology,
pediatrics, child nutrition and child nutrition behavior, statistics,
and economics. The contract also called for representatives with
knowledge of cultural differences in food preference and eating habits,
experience in menu planning, and experience in managing and operating a
school lunch and breakfast program. IOM held workshops at which the
panel heard presentations from invited speakers, and solicited public
input. The panel also accepted public comment on its planned approach
to the project.
The process undertaken by IOM was designed to consider different
perspectives and competing priorities. The panel necessarily weighed
the merits of alternatives as it developed a preferred option. USDA's
commitment was to implement IOM's recommendations where feasible. This
commitment is driven by the statutory requirement that schools serve
meals that are consistent with the goals of the Dietary Guidelines.
We did not consider alternatives that depart significantly from
IOM's recommendations and cannot satisfy our statutory obligation.
Nevertheless, the proposed rule makes a few small changes to IOM's
recommendations. In addition, the rule contains a handful of provisions
that are not addressed by IOM. The RIA provides a discussion of
alternatives considered, including a Phase-In Implementation of IOM
Recommendations.

Regulatory Flexibility Act

This proposed rule has been reviewed with regard to the
requirements of the Regulatory Flexibility Act of 1980 (5 U.S.C. 601-
612). Pursuant to that review, it has been determined that this
proposed rule would have a significant impact on a substantial number
of small entities. The proposed requirements would apply to school
districts, which meet the definitions of ``small governmental
jurisdiction'' and ``small entity'' in the Regulatory Flexibility Act.
A Regulatory Flexibility Act analysis is included in the preamble.

Unfunded Mandates Reform Act

Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public
Law 104-4, establishes requirements for Federal agencies to assess the
effects of their regulatory actions on State, local, and Tribal
governments and the private sector. Under section 202 of the UMRA, USDA
generally must prepare a written statement, including a cost/benefit
analysis, for proposed and final rules with Federal mandates that may
result in expenditures by 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 USDA 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. The Regulatory Impact Analysis conducted by FNS
in connection with this proposed rule includes a cost/benefit analysis
and explains the options considered to implement the 2005 Dietary
Guidelines in the school meal programs.
Prior to developing this proposed rule, FNS sought the assistance
of the Institute of Medicine (IOM) of the National Academies to
implement the 2005 Dietary Guidelines in the NSLP and SBP in the least
burdensome and costly manner. However, this proposed rule contains
Federal mandates (under the regulatory provisions of Title II of the
UMRA) that could result in costs to State, local, or Tribal governments
or to the private sector of $100 million or more in any one year if
State and local operators do not develop strategies to absorb the cost
increases associated with increasing the availability of fruits,
vegetables, and whole grains in the school menu. To meet the proposed
requirements in a cost-effective manner, program operators would need
to optimize the use of USDA Foods and adopt other cost-savings
strategies in various areas of the food service operation, including
procurement, menu planning, and meal production. Program operators have
flexibility within the Federal requirements to run the School Meal
Programs in a manner that fits local circumstances.
Because childhood overweight and obesity are growing public health
issues in the United States, schools should take a leadership role in
helping students adopt healthy diets. Many schools are already
providing more fruits, vegetables and whole grains as part of their
efforts to enhance the school nutrition environment. Over 840 schools
nationwide have been recognized by FNS as part of the HealthierUS
School Challenge (HealthierUS) for improvement in the quality of the
meals served and the food choices. HealthierUS schools offer fresh
fruits or raw vegetables, whole grain foods, legumes, and low-fat or
fat-free fluid milk, and provide students with nutrition education and
opportunity for physical activity.

Executive Order 12372

The NSLP is listed in the Catalog of Federal Domestic Assistance
under No. 10.555 and the SBP is listed under No. 10.553. For the
reasons set forth in the final rule in 7 CFR part 3015, Subpart V and
related Notice published at 48 FR 29114, June 24, 1983, this Program is
included in the scope of Executive Order 12372, which requires
intergovernmental consultation with State and local officials.
Since the NSLP and SBP are State-administered, Federally funded
programs, FNS headquarters staff and regional offices have formal and
informal discussions with State and local officials on an ongoing basis
regarding program requirements and operation. This structure allows FNS
to receive regular input which contributes to the development of
meaningful and feasible Program requirements.

Federalism Summary Impact Statement

Executive Order 13132 requires Federal agencies to consider the
impact of their regulatory actions on State and local governments.
Where such actions have federalism implications, agencies are directed
to provide a statement for inclusion in the preamble to the regulations
describing the agency's considerations in terms of the three categories
called for under section (6)(b)(2)(B) of Executive Order 13132.
Prior Consultation With State Officials
Prior to drafting this proposed rule, FNS staff received informal
input from various stakeholders while participating in various State,
regional, national, and professional conferences. The School Nutrition
Association, School Food Industry Roundtable, National Alliance for
Nutrition and Activity, Association of State and Territorial Public
Health Nutrition Directors, and the Center for Science in the Public
Interest shared their views about changes to the school meals in
writing. Numerous stakeholders also provided input at the public
meetings held by IOM in connection with its school meals study.

[[Page 2509]]

Based on its independent research and information gathered from
stakeholders, IOM issued recommendations which are the basis for this
proposed rule.
Nature of Concerns and the Need To Issue This Rule
State Agencies and school food authorities want to provide the best
possible school meals through the NSLP and SBP but are concerned about
program costs and increasing program requirements. While FNS is aware
of these concerns, section 9(a)(4) and section 9(f)(1) of the National
School Lunch Act, 42 U.S.C. 1758(a)(4) and (f)(1), require that school
meals reflect the most recent ``Dietary Guidelines for Americans'' and
promote the intake of the food groups recommended by the Dietary
Guidelines.
Extent To Which We Meet Those Concerns
FNS sought the assistance of the Institute of Medicine to update
the school meals in a practical and sound manner. FNS has considered
the impact of this proposed rule on State and local program operators
and has attempted to develop a proposal that would implement the 2005
Dietary Guidelines in the most effective and least burdensome manner.
This proposed rule would simplify management and operation of the
School Meal Programs by establishing a single food-based menu planning
approach and the same age/grade groups in the NSLP and SBP, as
recommended by the Institute of Medicine. The food-based menu planning
system is currently used by approximately 70 percent of program
operators. This proposed rule would retain the requirement that school
meals meet nutrient requirements on average over the course of the
week, and the offer versus serve provision, which helps schools control
food cost and minimize food waste. This rule would also retain other
existing regulatory provisions to the extent possible.

Executive Order 12988

This rule has been reviewed under Executive Order 12988, ``Civil
Justice Reform.'' This rule, when published as a final rule, is
intended to have preemptive effect with respect to any State or local
laws, regulations or policies which conflict with its provisions. As
proposed, the rule would permit State or local agencies operating the
National School Lunch and School Breakfast Programs to establish more
rigorous nutrition requirements or additional requirements for school
meals that are not inconsistent with the nutritional provisions of the
rule. Such additional requirements would be permissible as part of an
effort by a State or local agency to enhance the school meals and/or
the school nutrition environment. To illustrate, State or local
agencies would be permitted to establish more restrictive saturated fat
and sodium limits. For these components, quantities are stated as
maximums (e.g., <=) and could not be exceeded; however, lesser amounts
than the maximum could be served. Likewise, State or local agencies
could accelerate implementation of the final sodium targets stated in
this proposed rule in an effort to reduce sodium levels in school meals
at an earlier date. However, State or local agencies would not, for
example, be permitted to decrease the minimum calorie level or increase
the maximum calorie level established for each grade group in this
proposed rule as that would be inconsistent with the rule's provisions.
This rule is not intended to have a retroactive effect. Prior to any
judicial challenge to the provisions of this rule or the application of
its provisions, all applicable administrative procedures under Sec.
210.18(q) or Sec. 235.11(f) must be exhausted.

Civil Rights Impact Analysis

FNS has reviewed this proposed rule in accordance with USDA
Regulation 4300-4, ``Civil Rights Impact Analysis,'' to identify any
major civil rights impacts the rule might have on program participants
on the basis of age, race, color, national origin, sex or disability.
After a careful review of the rule's intent and provisions, FNS has
determined that this proposed rule is not expected to affect the
participation of protected individuals in the NSLP and SBP. This
proposed rule is intended to improve the nutritional quality of school
meals and is not expected to limit program access or otherwise
adversely impact the protected classes.

Executive Order 13175--Consultation and Coordination With Indian Tribal
Governments

USDA will undertake, within 6 months after this rule becomes
effective, a series of Tribal consultation sessions to gain input by
elected Tribal officials or their designees concerning the impact of
this rule on Tribal governments, communities and individuals. These
sessions will establish a baseline of consultation for future actions,
should any be necessary, regarding this rule. Reports from these
sessions for consultation will be made part of the USDA annual
reporting on Tribal Consultation and Collaboration. USDA will respond
in a timely and meaningful manner to all Tribal government requests for
consultation concerning this rule and will provide additional venues,
such as webinars and teleconferences, to periodically host
collaborative conversations with Tribal leaders and their
representatives concerning ways to improve this rule in Indian country.
We are unaware of any current Tribal laws that could be in conflict
with the proposed rule. We request that commenters address any concerns
in this regard in their responses.

Paperwork Reduction Act

The Paperwork Reduction Act of 1995 (44 U.S.C. Chap. 35; see 5 CFR
1320), requires that the Office of Management and Budget (OMB) approve
all collections of information by a Federal agency from the public
before they can be implemented. Respondents are not required to respond
to any collection of information unless it displays a current, valid
OMB control number. This is a new collection. The new provisions in
this rule, which do increase burden hours, affect the information
collection requirements that will be merged into the National School
Lunch Program, OMB Control Number 0584-0006, expiration date
5/31/2012. The current collection burden inventory for the National
School Lunch Program is 11,806,566 hours. These changes are contingent
upon OMB approval under the Paperwork Reduction Act of 1995. When the
information collection requirements have been approved, FNS will
publish a separate action in the Federal Register announcing OMB's
approval.
Comments on the information collection in this proposed rule must
be received by March 14, 2011.
Send comments to the Office of Information and Regulatory Affairs,
OMB, Attention: Desk Officer for FNS, Washington, DC 20503. Please also
send a copy of your comments to Lynn Rodgers-Kuperman, Program Analysis
and Monitoring Brach, Child Nutrition Division, 3101 Park Center Drive,
Alexandria, VA 22302. For further information, or for copies of the
information collection requirements, please contact Lynn Rodgers-
Kuperman at the address indicated above. Comments are invited on: (1)
Whether the proposed collection of information is necessary for the
proper performance of the Agency's functions, including whether the
information will have practical utility; (2) the accuracy of the
Agency's estimate of the proposed information collection burden,
including the validity of the methodology and assumptions used; (3)

[[Page 2510]]

ways to enhance the quality, utility and clarity of the information to
be collected; and (4) ways to minimize the burden of the collection of
information on those who are to respond, including use of appropriate
automated, electronic, mechanical, or other technological collection
techniques or other forms of information technology.
All responses to this request for comments will be summarized and
included in the request for OMB approval. All comments will also become
a matter of public record.
Title: Nutrition Standards in the National School Lunch and School
Breakfast Programs.
OMB Number: 0584--NEW.
Expiration Date: Not Yet Determined.
Type of Request: New Collection.
Abstract: This proposed rule would implement the recommendations of
the 2005 ``Dietary Guidelines for Americans'' in the National School
Lunch Program (NSLP) and School Breakfast Program (SBP), as required by
section 9(a)(4) and section 9(f)(1) of the Richard B. Russell National
School Lunch Act, 42 U.S.C. 1758(9)(a) and (f). This rule is based on
the final report ``School Meals: Building Blocks for Healthy
Children,'' issued by the Institute of Medicine of the National
Academies on October 20, 2009 to help FNS implement the 2005 Dietary
Guidelines in the NSLP and SBP. This proposed rule would revise the
lunch and breakfast meal patterns to increase the availability of
fruits, vegetables, whole grains, and fat-free/low-fat fluid milk in
the school menu. It would also increase the frequency of administrative
reviews by State agencies from the current five-year cycle to a three-
year cycle, and change the requirements for these reviews. This rule
would impact the reporting and/or recordkeeping burden on school food
authorities and State agencies. However, this rule would not increase
or decrease the existing burden on local schools participating in the
NSLP because they are already required to maintain menu and production
records. This proposed rule would require State agencies to examine
menu and production records during administrative reviews, and to
maintain documentation related to fiscal action.
Those respondents participating in the School Breakfast Program
also participate in the National School Lunch Program, thus the burden
associated with the School Breakfast Program will be carried in the
National School Lunch Program. The average burden per response and the
annual burden hours are explained below and summarized in the charts
which follow.
Respondents for this Proposed Rule: State Education Agencies (57)
and School Food Authorities (6,983).
Estimated Number of Respondents for this Proposed Rule: 7,040.
Estimated Number of Responses per Respondent for this Proposed
Rule: 3.87217.
Estimated Total Annual Responses: 27,260.
Estimated Total Annual Burden on Respondents for this Proposed
Rule: 75,842.
BILLING CODE 3410-30-P

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BILLING CODE 3410-30-C

E-Government Act Compliance

FNS is committed to complying with the E-Government Act 2002, to
promote the use of the Internet and other information technologies to
provide increased opportunities for citizen access to Government
information and services, and for other purposes.

Regulatory Impact Analysis

Agency: Food and Nutrition Service, USDA.

[[Page 2514]]

Title: Nutrition Standards in the National School Lunch and School
Breakfast Programs.

Action

a. Nature: Proposed Rule.
b. Need: Section 103 of the Child Nutrition and WIC Reauthorization
Act of 2004 inserted Section 9(a)(4) into the National School Lunch Act
requiring the Secretary to promulgate rules revising nutrition
requirements, based on the most recent Dietary Guidelines for
Americans, that reflect specific recommendations, expressed in serving
recommendations, for increased consumption of foods and food
ingredients offered in school nutrition. This proposed rule amends
Sections 210 and 220 of the regulations that govern the National School
Lunch Program (NSLP) and the School Breakfast Program (SBP). The
proposed rule implements recommendations of the National Academies'
Institute of Medicine (IOM). Under contract to the United States
Department of Agriculture (USDA), IOM proposed changes to NSLP and SBP
meal pattern requirements consistent with the 2005 Dietary Guidelines
and IOM's Dietary Reference Intakes. The proposed rule advances the
mission of the Food and Nutrition Service (FNS) to provide children
access to food, a healthful diet, and nutrition education in a manner
that promotes American agriculture and inspires public confidence.
c. Affected Parties: The programs affected by this rule are the
NSLP and the SBP. The parties affected by this regulation are USDA's
Food and Nutrition Service, State education agencies, local school food
authorities, schools, students, and the food production, distribution
and service industry.

Contents

Abbreviations

I. Background
II. Summary of Proposed Meal Requirements
III. Cost/Benefit Assessment
A. Summary
1. Costs
2. Benefits
B. Food and Labor Costs
1. Baseline Cost Estimate
2. Proposed Rule Cost Estimate
3. Food Cost Drivers
4. Comparison of FNS and IOM Cost Estimates
5. Uncertainties
C. Administrative Impact
D. Food Service Equipment
E. Implementation of Proposed Rule--SFA Resources
F. Impact on Participation
G. Benefits
IV. Alternatives
V. References
VI. Appendix A

Abbreviations

The following abbreviations are used throughout this document:

CN Child Nutrition Programs
CPI Consumer Price Index
CRE Coordinated Review Effort
DRI Dietary Reference Intake
FNS Food and Nutrition Service
FY Fiscal Year
IOM Institute of Medicine
NSLA National School Lunch Act
NSLP National School Lunch Program
RDA Recommended Dietary Allowance
SA State Agency
SBP School Breakfast Program
SY School Year
SFA School Food Authority
SLBCS-II School Lunch and Breakfast Cost Study II
SMI USDA School Meals Initiative for Healthy Children
SNDA-III School Nutrition Dietary Assessment III
USDA United States Department of Agriculture

I. Background

The National School Lunch Program (NSLP) is available to over 50
million children each school day; an average of 31.6 million children
per day ate a reimbursable lunch in fiscal year (FY) 2010. The School
Breakfast Program (SBP) served an average of 11.6 million children
daily. Schools that participate in the NSLP and SBP receive Federal
reimbursement and USDA Foods (donated commodities) for lunches and
breakfasts that meet program requirements. In exchange for this
assistance schools serve meals at no cost or at reduced price to
income-eligible children. Federal meal reimbursements and USDA Foods
totaled $13.3 billion in FY 2010. FNS projections of the number of
meals served and Federal program costs are summarized in Table 1.\10\
---------------------------------------------------------------------------

\10\ The figures in Table 1 are USDA projections of the number
of program meals served and the value of USDA reimbursements for
those meals. These figures are baseline Federal government costs of
the NSLP and the SBP estimated for the President's budget proposal
for FY 2011. Elsewhere in this document, baseline costs refer to the
cost to schools of serving meals that satisfy current program
requirements.

Table 1--Projected Number of Meals Served and Total Federal Program Costs
[In millions]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Fiscal year
-----------------------------------------------------------------------------------------------
2011 2012 2013 2014 2015 2016
--------------------------------------------------------------------------------------------------------------------------------------------------------
NSLP:
Lunches Served...................................... 5,409.6 5,477.2 5,532.0 5,581.8 5,626.5 5,671.5
Program Cost........................................ $12,116.9 $12,513.5 $12,737.0 $12,834.8 $12,851.4 $12,940.2
SBP:
Breakfasts Served................................... 2,062.4 2,124.3 2,166.7 2,201.4 2,236.6 2,272.4
Program Cost........................................ $3,117.9 $3,270.0 $3,383.8 $3,460.0 $3,552.2 $3,669.3
--------------------------------------------------------------------------------------------------------------------------------------------------------

In FY 2010, schools served 2.9 billion free NSLP lunches, 0.5
billion reduced price lunches, and 1.8 billion full price or ``paid''
lunches. Schools served 1.5 billion free breakfasts, 0.2 billion
reduced price breakfasts, and 0.3 billion paid breakfasts. These
figures do not include non-Federally reimbursable a la carte meals or
other non-program foods.\11\
---------------------------------------------------------------------------

\11\ USDA program data.
---------------------------------------------------------------------------

Reimbursement rates for meals served under the current meal
patterns are established by law and are adjusted annually for
inflation.\12\ In school year (SY) 2010-2011, the Federal reimbursement
for a free breakfast for schools in the contiguous United States and
``not in severe need'' was $1.48; the

[[Page 2515]]

Federal reimbursement for a free lunch to schools in SFAs in the
contiguous United States that served fewer than 60 percent free and
reduced price lunches was $2.72. Schools that participate in the NSLP
also receive USDA Foods for each free, reduced price, and paid lunch
served, as provided by Section 6 of the Richard B. Russell National
School Lunch Act (NSLA). Table 2 provides a breakdown of breakfast and
lunch reimbursements in SY 201-2011, including USDA Foods.
---------------------------------------------------------------------------

\12\ Reimbursement rates and annual inflation adjustments are
set by statute, not regulation. The proposed rule does not alter
current reimbursement rates. Reimbursement rates for school lunch
under current nutrition standards are specified in Sections 4(b)(2)
and 11(a)(2) of the NSLA (42 USC 1753(b)(2) and 42 USC 1759a(a)(2)).
Breakfast reimbursement rates are specified in Section 4(b)(1)(B) of
the Child Nutrition Act (42 USC 1773(b)(1)(B)). Both lunch and
breakfast reimbursement rates are subject to the annual inflation
adjustment prescribed by Section 11(a)(3) of the NSLA (42 USC
1759a(a)(3)).
\13\ School year 2010- NSLP and SBP reimbursement rates, and the
minimum value of donated foods, can be found in the July 19, 2010
Federal Register, Vol. 75, No. 137, pp. 41797 and 41798.
[GRAPHIC] [TIFF OMITTED] TP13JA11.006

Under Section 9(a)(4) and Section 9(f)(1) of the NSLA, schools that
participate in the NSLP or SBP must offer lunches and breakfasts that
are consistent with the goals of the most recent Dietary Guidelines for
Americans. School lunches must provide one-third of the Recommended
Dietary Allowances (RDA) for protein, calcium, iron, and vitamins A and
C, on average over the course of a week; school breakfasts must satisfy
one-fourth of the RDAs for the same nutrients. Current nutrition
requirements for school lunches and breakfasts are based on the 1995
Dietary Guidelines and the 1989 RDAs. (School lunches and breakfasts
were not updated when the 2000 Dietary Guidelines were issued because
those recommendations did not require significant changes to the school
meal patterns.) The 2005 Dietary Guidelines, provide more prescriptive
and specific nutrition guidance than earlier releases, and require
significant changes to school meal requirements.
The United States Department of Agriculture's Food and Nutrition
Service (FNS) contracted with the National Academies' Institute of
Medicine (IOM) in 2008 to examine current NSLP and SBP nutrition
requirements. IOM formed an expert committee tasked with comparing
current school meal requirements to the 2005 Dietary Guidelines and to
current Dietary Reference Intakes. The committee released its
recommendations in late 2009 (IOM 2009). For a summary discussion of
the scientific standards that guided the committee, and the development
of recommended targets for micro- and macronutrients, see the preamble
to the proposed rule.

II. Summary of Proposed Meal Requirements

The proposed rule adopts the IOM recommendations with only minor
modifications (see section IV). In general, IOM recommended new
requirements for menu planning that:
Increase the amount and variety of fruits, vegetables, and
whole grains;
Set a minimum and maximum level of calories; and
Increase the focus on reducing the amounts of saturated
fat and sodium provided in school meals.

[[Page 2516]]

[GRAPHIC] [TIFF OMITTED] TP13JA11.007

Tables 4 and 5 \15\ compare the meal pattern recommendations
proposed in this rule to current requirements for breakfast and lunch
respectively.\16\ Key differences include:
---------------------------------------------------------------------------

\14\ Information in this table is summarized from the preamble
to the proposed rule.
\15\ Tables 4 and 5 appear as Tables 8-1 and 8-2 in IOM's report
on the school meals programs, School Meals: Building Blocks for
Healthy Children (IOM 2009). The recommendations in these tables are
adopted by the proposed rule with one small exception: non-starchy
vegetables may be substituted for fruit at breakfast (see Table 3,
note c).
\16\ The food group recommendations presented in Tables 4 and 5
are based on a set of nutrient targets developed by IOM (see IOM
2009 for a detailed discussion of that process). Tables 7-2, O-2,
and O-3 of the IOM report compare IOM's nutrient targets to the RDA
targets that underlie the current meal patterns. Readers of the IOM
report may notice that differences in current rule and recommended
food group quantities (Tables 4 and 5) do not always track
differences between IOM's nutrient targets and current rule RDA
targets (IOM report tables 7-2, O-2, and O-3). For instance, IOM's
nutrient targets for protein are twice as great as the RDA protein
targets for elementary and high school students; IOM's protein
targets are close to three times as great as the RDA targets for
middle school students. By comparison, IOM's recommended number of
meat servings are little different than the number of servings under
current program rules. The reason for the discrepancy is that
student intakes of protein currently exceed RDA targets (see Tables
VI.2 and VII.2 in FNS 2007). IOM nutrient targets for protein are
fully satisfied by the meat and legume recommendations in Tables 4
and 5 (see the discussion on pages 164 and 165 of IOM 2009). Readers
of the IOM report should compare the IOM's nutrient targets to the
RDA values in report Tables 7-2, O-3, and O-4, rather than to the
RDA values in report table E-4. Table E-4 figures are based on the
1989 RDAs. RDA values in Tables 7-2, O-3, and O-4 are current. Pages
118-120 of the IOM report (IOM 2009) discuss how the IOM nutrient
targets compare to the minimum RDA standards for school meals
specified by Section 9(b)(1) of the NSLA (42 USC 1758(f)(1)).

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

[[Page 2517]]

The number of fruit and vegetable servings offered to
students over the course of a week would double at breakfast and would
rise substantially at lunch.
Schools would no longer be permitted to substitute between
fruits and vegetables; each has its own requirement, ensuring that
students are offered both fruits and vegetables every day.
A minimum number of vegetable servings would be required
from each of four vegetable subgroups.
Initially, half of grains offered to students would have
to be whole grain rich. Two years after implementation, all grain
products offered would have to be whole grain rich.
Schools would be required to substitute low fat and skim
milk for higher fat content milk.

[[Page 2518]]

[GRAPHIC] [TIFF OMITTED] TP13JA11.008

The proposed rule differs slightly from the IOM recommendations in
that it proposes a quicker transition to a whole grain requirement
consistent with the Dietary Guidelines. IOM recommended that the
proportion of whole grains to refined grains on school menus exceed 50
percent within ``approximately 3 years'' of implementation of revised
meal patterns.\17\
---------------------------------------------------------------------------

\17\ ``With regard to increasing whole grains and especially to
reducing the sodium content of meals, the committee acknowledges the
need for a gradual phase-in to accustom children to the changes in
school meals and also to give the market time to respond to changes
in demands (expressed as purchase specifications) from school food
service directors.'' (IOM 2009, pp. 172, 199)
---------------------------------------------------------------------------

In contrast, the proposed rule accelerates the transition to
Dietary Guidelines recommendations to the second year after
implementation of the rule. At that time, it requires that schools
offer only grain products that are whole grain rich, rather than permit
schools to offer half of all grains in the form of 100 percent whole
grain foods and the other half as refined grains (one of the options
suggested by IOM).
The proposed rule adopts with a slight modification IOM's
recommendation for ``offer vs. serve''

[[Page 2519]]

requirements as part of a reimbursable meal. Under this requirement, a
student may decline 1 food item from the meal pattern at breakfast but
must select 1 fruit or vegetable. For lunch, the student may decline 2
food items but must select 1 fruit or vegetable. Our estimates of the
impact of the proposed rule reflect this flexibility in estimating the
quantities of foods actually served to students.

III. Cost/Benefit Assessment

A. Summary

1. Costs
The proposed rule will more closely align school meal pattern
requirements with the science-based recommendations of the 2005 Dietary
Guidelines. These changes will increase the amount of fruits,
vegetables, and whole grains offered to participants in the NSLP and
SBP.\18\ The proposed meal patterns will also limit certain fats and
reduce calories and sodium in school meals. Because some foods that
meet these requirements are more expensive than foods served in the
school meal programs today, the food cost component of preparing and
serving school meals will increase.
---------------------------------------------------------------------------

\18\ The proposed rule would make no change to the meal
requirements for pre-kindergarten (pre-K) children. But, the rule
would require that schools serving meals to pre-K children adopt
food-based menu planning (FBMP) for consistency with the rule's FBMP
requirement for meals served to older children. Because the rule
proposes no substantive change to the pre-K meal requirements we
assume that the rule has no impact on the cost of serving meals to
these children. More than \2/3\ of elementary schools used
traditional or enhanced FBMP in SY 2004-2005 (USDA 2008, vol. 1, p.
36) and would need to make no changes at all to comply with the
rule's pre-K menu planning requirement. For elementary schools that
serve meals to pre-K children using a nutrient based menu planning
system, the rule would require a change to FBMP. But that change is
required for meals served to older children as well, and the
administrative cost of that change is incorporated into the labor
cost estimate of this analysis.
---------------------------------------------------------------------------

The biggest contributors to this increase are the costs of serving
more vegetables and more fruit, and replacing refined grains with whole
grains. We estimate that food costs may increase by 3.4 cents per lunch
served and 18.8 cents per breakfast served on initial implementation of
the proposed requirements. Two years after implementation, when all
grains served must be whole grain rich, the food costs may increase to
7.2 cents per lunch served and 25.3 cents per breakfast.\19\ In
aggregate, we estimate that the proposed rule may increase SFA food
costs by $3.4 billion from FY 2012 through FY 2016. The annual increase
in food costs, once the 100 percent whole grain requirement takes
effect, may be about $1 billion.
---------------------------------------------------------------------------

\19\ Some of the difference between the 3.4 cent and 7.2 cent
lunch figures and the 18.8 cent and 25.3 cent breakfast figures are
due to food inflation, not to the change in the whole grain
requirement. The lower numbers are estimates for the end of FY 2012
(the start of SY 2012-2013). The higher numbers are for FY 2015.
---------------------------------------------------------------------------

Compliance with this rule is also likely to increase labor costs.
Serving healthier school meals that are acceptable to students may
require more on-site preparation, and less reliance on prepared foods.
IOM did not estimate the overall required increase in labor costs to
implement its recommended changes in meal requirements, but noted an
analysis of data from some Minnesota school districts that showed that
``healthier'' meals had higher labor costs--principally because of
increased use of on-site preparation.\20\
---------------------------------------------------------------------------

\20\ IOM 2009, p. 148.
---------------------------------------------------------------------------

For purposes of this impact analysis, labor costs are assumed to
grow so as to maintain a constant ratio with food costs, consistent
with findings from a national study of school lunch and breakfast meal
costs (USDA 2008). In practice, this suggests that food and labor costs
may increase by nearly equal amounts relative to current costs.
Additional costs of compliance with the rule are discussed in
subsections III C and III D of this analysis.\21\
---------------------------------------------------------------------------

\21\ The SLBCS-II found that costs other than food and labor
accounted for 9.9 percent of reported SFA costs. These costs include
``supplies, contract services, capital expenditures, indirect
charges by the school district, etc.'' (USDA 2008, pp. 3-5)
---------------------------------------------------------------------------

The estimated overall costs of compliance are summarized in Table
6. For purposes of this analysis, the rule is assumed to take effect on
July 1, 2012, the start of school year (SY) 2012-2013. The additional
requirement to offer only whole grain rich grain products is assumed to
begin in SY 2014-2015.
The analysis estimates that total costs may increase by $6.8
billion through fiscal year (FY) 2016, or roughly 12 percent when fully
implemented in FY 2015. The estimated increases in food and labor costs
are equivalent to about 14 cents for each reimbursable school lunch and
about 50 cents for each reimbursable breakfast in FY 2015. These costs
would be incurred by the local and State agencies that control school
food service accounts.

Table 6--Projected Cost of Proposed Rule
[Dollars in millions]
----------------------------------------------------------------------------------------------------------------
Fiscal year
-----------------------------------------------------------------------------
2012 2013 2014 2015 2016 Total
----------------------------------------------------------------------------------------------------------------
Food Costs........................ $91.8 $626.5 $704.9 $968.9 $1,028.2 $3,420.4
Labor Costs....................... 89.6 611.4 687.9 945.6 1,003.4 3,337.9
State Agency Administrative Costs. 0.1 8.9 9.0 9.3 9.6 36.9
-----------------------------------------------------------------------------
Total......................... 181.5 1,246.8 1,401.9 1,923.8 2,041.3 6,795.2
-----------------------------------------------------------------------------
Percent Change Over 8.3 8.5 9.1 12.0 12.2 10.5
Baseline.................
----------------------------------------------------------------------------------------------------------------

2. Benefits
The primary benefit of this proposed rule is to align the
regulations with the requirements placed on schools under NSLA to
ensure that meals are consistent with the goals of the most recent
Dietary Guidelines and the Dietary Reference Intakes. In increasing
access to children for such meals it will address key inconsistencies
between the diets of school children and Dietary Guidelines by (1)
increasing servings of fruits and vegetables, (2) replacing refined-
grain foods with whole-grain rich foods, and (3) replacing higher-fat
dairy products with low-fat varieties. It also results in a number of
additional benefits, including alignment between Federal program
benefits and national nutrition policy, improved confidence by parents
and families in the nutritional quality of school meals, and the
contribution that improved school

[[Page 2520]]

meals can make to the overall school nutrition environment.

B. Food and Labor Costs

1. Baseline Cost Estimate
Food Costs: The analysis begins with an assessment of the cost of
purchasing food to meet the rule's food-based meal requirements. The
estimated increase in food cost is the difference between the cost of
serving the quantities and types of foods used to meet current
requirements and the cost of serving the quantities and types of foods
outlined in the proposed rule.
[GRAPHIC] [TIFF OMITTED] TP13JA11.009

The data sources that we use in this analysis, and their
contribution to our food cost estimate, are summarized in Table 7.

[[Page 2521]]

[GRAPHIC] [TIFF OMITTED] TP13JA11.010

[[Page 2522]]

[GRAPHIC] [TIFF OMITTED] TP13JA11.011

We first totaled the value of food served by food group, as
reported by schools in a national school nutrition assessment (SNDA-
III), separately for lunch and breakfast. SNDA-III provides an estimate
of the amount or quantity (in grams) of foods offered and served in the
school lunch and breakfast programs for SY 2004-2005, based on a
nationally representative sample of all participating public
schools.\22\ SNDA-III provides quantities of both minimally processed
single foods (such as whole fruit, fruit juice, milk, and vegetables)
and combination foods or entrees (such as beef stew, macaroni and
cheese, and breakfast burritos). We summed the quantities of foods
served to generate total gram weights for each single food and
combination food category. We then divided these sums by SNDA-III's
count of total meals served to generate average per-meal gram amounts
for the same broad food categories.
---------------------------------------------------------------------------

\22\ If patterns of student selection of foods is different in
private schools than it is in public schools, then the reliance on
public school data alone may bias our results. However, enrollment
in public schools accounts for 97 percent of total enrollment in
NSLP participating schools. Public schools account for more than 98
percent of total enrollment in SBP participating schools (USDA
program data). Because public schools account for such a large share
of total enrollment by participating schools, we expect that any
differences in selection patterns between public and private schools
would have little impact on our analysis.
---------------------------------------------------------------------------

We estimated the cost per gram within each food category using
detailed price and quantity information collected as part of another
nationally representative sample of public schools in SY 2005-2006
(SLBCS-II). SLBCS-II provides information on the number of servings,
the average gram weight per serving, total grams served, and the cost
per serving for a comprehensive list of single foods and combination
entrees. The SLBCS-II dataset provides sufficient information to
estimate weighted average prices for the same broad food categories
identified in SNDA-III.
We computed preliminary per-meal baseline costs for breakfast and
lunch as the product of the food quantities reported in SNDA-III and
the unit prices computed from the SLBCS-II. Because the food prices
available for this analysis are from SY 2005-2006, we inflated our
estimates by the actual and projected increase in prices since that
time. We computed a set of food group inflators weighted by SNDA-III's
relative mix of foods served by schools in SY 2004-2005. We used the
Consumer Price Index (CPI-U) for the specific food items in our
weighted group averages. Because the mix of foods served in school
breakfasts differs from the mix served at lunch (the grain group, for
example, is weighted more heavily with bread at lunch, and more heavily
with cereal at breakfast) we computed two sets of food group inflators.
For years through 2009, these inflators are constructed with actual CPI
values. For years after 2009, the food group inflators rely on historic
5-year averages. Food group inflation factors are summarized in Table
8.

[[Page 2523]]

[GRAPHIC] [TIFF OMITTED] TP13JA11.012

The value of USDA Foods and the value of cash in lieu of such food
donations enters into both our baseline and proposed rule cost
estimates; we treat them as food ``costs'' in both estimates. This is
the same approach used in the SLBCS-II to estimate the cost of
preparing and serving school meals.
---------------------------------------------------------------------------

\23\ Computed by USDA from CPI figures from the Bureau of Labor
Statistics. The figures for combination foods are based on the CPI
values for the Food at Home series.
---------------------------------------------------------------------------

We assume in the analysis that the types of commodities offered to
schools in future years may satisfy the food group requirements of the
proposed rule as effectively as they do now. USDA's annual commodity
purchase plan, developed by FNS in consultation with the Agricultural
Marketing Service, Farm Service Agency, and others, is driven by school
demand for particular products as well as by current prices, available
funds, and the variable nature of agricultural surpluses.
In large measure the variety of USDA Foods offered to schools are
already well positioned to support the proposed requirements. In recent
years USDA has purchased relatively more canned foods and meats with
reduced levels of fat, sodium, and sugar for school distribution. As
products such as butter and shortening have been removed from the USDA
Foods available to schools, new products such as whole grain pasta have
been added. The proposed rule is likely to move school demand towards a
greater emphasis on these new offerings as schools introduce new menus.
We assume that the contribution of USDA Foods to the cost of preparing
school meals will not change after implementation of the rule.
The final step in constructing the baseline cost estimate was to
multiply the per-meal cost estimates by the projected number of
breakfasts and lunches served through our 5-year forecast period.
Projected growth in the number of NSLP and SBP meals served in the
absence of the proposed rule is shown in Table 9.
---------------------------------------------------------------------------

\24\ The projected growth above in meals served through FY 2011
reflects the difference between FNS estimates for FY 2011 prepared
for the 2011 President's Budget and actual meals served in FY 2010.
The remaining percentages are FNS projections prepared for the FY
2011 President's Budget.

Table 9--Projected Baseline Growth in Reimbursable Meals Served \24\
----------------------------------------------------------------------------------------------------------------
Fiscal year
-----------------------------------------------------------------
2011 2012 2013 2014 2015 2016
----------------------------------------------------------------------------------------------------------------
Lunches.................. meals 5.4 5.5 5.5 5.6 5.6 5.7
(billions).
percent change. 2.9 1.2 1.0 0.9 0.8 0.8
Breakfasts................... meals 2.1 2.1 2.2 2.2 2.2 2.3
(billions).
percent change. 5.3 3.0 2.0 1.6 1.6 1.6
----------------------------------------------------------------------------------------------------------------

Appendix A contains a set of tables that detail the calculations
described above. The appendix tables present baseline and proposed rule
food prices, food quantities, and meals served for

[[Page 2524]]

each year from FY 2012 through FY 2016.
Note that our baseline per-meal cost estimates are averages. They
reflect the variety of meals served across all NSLP and SBP
participating schools. Some schools may be much closer than others to
serving meals that meet the requirements of the proposed rule, and the
costs of compliance with the proposed rule may therefore vary at the
school level. The use of an average baseline cost estimate is
appropriate, however, for estimating the aggregate cost of compliance
across all schools.
2. Proposed Rule Cost Estimate
Food Costs: Both our baseline and proposed rule food cost estimates
rely on quantity and price information reported by schools in SNDA-III
and SLBCS-II. These datasets contain detailed information on the
quantity, variety, and unit prices of foods offered and served to
students. Many of the records on these datasets describe single item
foods that are served alone or are used in school recipes. But other
records describe prepared or heat-and-serve entrees and other
``combination foods.'' As described above, we developed our baseline
cost estimate by multiplying the gram weight of food items served by
their cost per gram. For both single item foods and combination foods,
prices and quantities are given in SLBCS-II and SNDA-III; our baseline
cost estimate required limited processing of these datasets.
For the proposed rule we continue to rely on prices per gram from
SLBCS-II. But for quantities served we need to look to the requirements
of the rule rather than to SNDA-III. We use the midpoints of the rule's
food group requirements, expressed in servings rather than grams, to
estimate the quantities of food that schools must purchase.\25\ For
single foods, the number of program-creditable food group servings per
gram is a function of the foods themselves (density and fat content,
for example) and whether the foods (primarily vegetables) are served
raw or cooked. We relied on several sources for this information,
including the USDA Food Buying Guide and the National Nutrient Database
for Standard Reference. For combination foods we relied on the USDA's
child nutrition food labels and the USDA's recipe database; these
sources contain the result of analyses performed by food manufacturers
and USDA. Because the sources for program-creditable servings per gram
are different for single foods and combination foods, we need to
separate single foods from combination foods and estimate their costs
separately.
---------------------------------------------------------------------------

\25\ The rule's food group requirements are expressed in
servings per week. Because we are developing an average cost per
meal we divide these weekly figures by 5. Some of the rule's
requirements are given in ranges of servings, such as 10-12 meat or
meat alternate servings (for lunches) per high school child per week
(see Table 3). FNS's primary cost estimate targets the midpoints of
the rule's food group requirements where requirements are expressed
as ranges.
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BILLING CODE 3410-30-P

[[Page 2525]]

[GRAPHIC] [TIFF OMITTED] TP13JA11.013

BILLING CODE 3410-30-C
A basic assumption underlying the estimated cost of reimbursable
meals under the proposed rule is that schools will continue to serve
entrees that have proven popular with students on current school menus.
Some of these entrees may be modified to replace a portion of their
refined grains with whole grains, or starchy vegetables with other
vegetable varieties. But, because pizza, burritos, and salad bars are
successful items today, this impact analysis assumes that they will
remain on school menus under the proposed rule.
We separated combination foods from single food items in the SNDA-
III and SLBCS-II datasets.\26\ Using USDA food codes and the
descriptive food labels found on the records of both datasets, we
divided the combination foods into sub-categories such as chili, beef
dishes, lasagna, chicken sandwiches, macaroni and cheese, and peanut
butter and jelly. Recognizing that there is variation within these
groups, we selected a sample of the most commonly served varieties, and
retrieved paper food labels with matching USDA food codes from USDA's
Child Nutrition food label collection (CN labels).
---------------------------------------------------------------------------

\26\ As with the baseline estimate, we prepared separate
estimates of meals served under the proposed rule for breakfast and
lunch.
---------------------------------------------------------------------------

CN labels are affixed to many of the commercially prepared and
processed foods purchased by school food authorities. The labels
provide information on serving size and the

[[Page 2526]]

number of cup and ounce equivalents of meat, meat alternate (such as
cheese, eggs, legumes, or soy protein), grains, or vegetables that
schools may credit toward current reimbursable meal pattern
requirements.\27\ We averaged the crediting information for several
varieties within each combination food category to generate
representative food credits for the category.
---------------------------------------------------------------------------

\27\ Many large commercial food vendors prepare their own CN
labels to help market their foods to SFAs. Other labels are
developed by USDA.
---------------------------------------------------------------------------

CN labels are not available for some combination foods. However,
foods with similar descriptions are often found in USDA's recipe
database. The USDA recipe database provides the same type of food
crediting information found on CN labels. We used the crediting
information from the recipe database when CN labels were unavailable
for sampled combination foods. FNS averaged the crediting information
from labels and recipes when both sources returned data for particular
combination foods.
CN labels and USDA recipes do not indicate whether creditable grain
servings are refined or whole grains, nor do they specify what fraction
of creditable vegetable servings are satisfied by dark green, deep
yellow, starchy, or other varieties. But, USDA's MyPyramid database
breaks down total grain and vegetable content for given foods into
those subcategories or varieties. We matched USDA food codes for the
sample of combination foods against the MyPyramid database in order to
estimate relative shares of whole and refined grains, and vegetable
varieties for the combination foods served.\28\
---------------------------------------------------------------------------

\28\ Because CN crediting values and MyPyramid equivalents are
not the same, information from the MyPyramid database was used only
to determine relative shares of vegetable or grain subtypes. FNS
also used the MyPyramid database to determine if particular
combination foods contained any dark green vegetables, orange
vegetables, etc.
---------------------------------------------------------------------------

With these average food credits, and with unit prices from the
SLBCS-II, we estimated a price per creditable ounce or cup equivalent
of meat, grain, vegetable, and fruit for each combination food served.
We then computed a weighted average price per food credit for
combination foods as a whole, using the SLBCS-II's relative gram weight
of each item. Finally, we multiplied the average price and food credit
per gram by SNDA-III's total gram weight of combination foods served
per reimbursable meal at the elementary, middle, and high school
levels.
These steps generate a price, and a set of food group credits,
contributed by combination foods to the average elementary, middle, and
high school lunch and breakfast.
We subtracted the food credits accrued by combination foods from a
set of school-level food group targets that represent the requirements
of the proposed rule after adjustment for student selection. Under the
proposed rule, as under current program rules, students need not take
all of the food items offered to them in order for their lunch or
breakfast to qualify for Federal reimbursement. The difference between
what is offered to students and what they select is the ``take rate.''
We computed average take rates by school level for milk, meat/meat
alternate, fruit, vegetables, and grains from SNDA-III and applied
those rates, unchanged, to the proposed rule's food group requirements
from Tables 4 and 5.\29\ These adjusted requirements are estimates of
what elementary, middle, and high schools are likely to serve to
students after implementation of the proposed rule. The unadjusted
requirements are what schools must offer to their students to be in
compliance.
---------------------------------------------------------------------------

\29\ Our take rates are weighted averages computed from all
school level records on SNDA-III. We cap individual school take
rates for any food group at 100%. We assume that these take rates
remain unchanged after implementation of the proposed rule for two
primary reasons: lack of an evidence-based alternative, and to avoid
understating the costs of the rule. We discuss our assumption of
constant take rates, and examine the cost implications of altering
that assumption, in section III.B.5.
---------------------------------------------------------------------------

The take-rate adjusted requirements not satisfied by combination
foods must be met with single offerings of meat or meat alternates,
grains, fruit, vegetables, and milk. We computed weighted average
prices for these broad food groups, and for dark green, deep yellow and
other vegetable varieties, from the SLBCS-II dataset. We estimated the
cost of whole grains relative to all grain and bread products with
information contained in a food price database developed by USDA's
Center for Nutrition Policy and Promotion. The prices per unit of these
foods, multiplied by the balance of the proposed rule's requirements
that are not met by combination foods, give a total cost per meal for
single item foods.
Note that this analytic framework uses an identical set of
combination foods in the baseline and proposed rule cost estimates; we
do not attempt to construct a reformulated set of combination foods to
satisfy the proposed rule's requirements for whole grains or dark
green, yellow, and other vegetable varieties. The deficits in whole
grains and in dark green and other vegetable varieties are satisfied
entirely through increased offerings of single foods.\30\ As a result,
the cost per unit of combination foods served is unchanged in the
baseline and under the proposal, and the entire cost of meeting the new
rule's requirements is reflected in the cost of single foods.
---------------------------------------------------------------------------

\30\ The amount of refined grains in combination foods in excess
of proposed rule requirements are offset by subtracting the value of
an equivalent amount of single food refined grain products from the
proposed rule's per-meal cost.
---------------------------------------------------------------------------

In practice, we expect manufacturers may offer reformulated
versions of popular combination foods, and that schools may incorporate
more whole grains and vegetable varieties in their entree recipes, so
that students may not be expected to consume all of their whole grains
and healthier vegetables as single foods. Implicit in this modeling
approach is the assumption that the cost of serving more whole grains
and vegetable varieties is similar, whether those foods are part of
combination recipes or single items. The reasoning behind this
assumption is that the likely effect of these reformulations on the
cost of combination foods is uncertain. While some varieties of
combination foods may help schools meet the new requirements at lower
cost than single foods, others may be developed to provide greater
student acceptance or ease of preparation than single items. These
products could command higher prices. We thus assume that, on average,
these two propensities combine to result in no net difference in the
cost of whole grains and vegetable varieties as combination foods or as
single items.\31\
---------------------------------------------------------------------------

\31\ Note that we are only referring to the incremental cost of
foods above the quantities already purchased by schools (singly or
in combination items), not the overall cost of all foods in the
proposed meal patterns.
---------------------------------------------------------------------------

The proposed rule encourages schools to meet the fruit requirement
with whole fruit rather than juice ``whenever possible'' in order to
increase fiber consumption. Schools may therefore find it necessary to
offer more whole or cut-up fruit relative to fruit juice than they
offer today. For this reason, this cost estimate assumes that the
proposed rule's entire increase in the fruit group requirement may be
satisfied by schools through additional servings of whole or cut-up
fruit; the estimate assumes that schools may serve no more fruit juice
to students under the proposed rule than they serve today. As a result,
there is no added cost for fruit juice in Table 11.
The methodology outlined above generates a set of per-meal cost
estimates for breakfast and lunch under the requirements of the
proposed rule. Like our baseline estimates, these are multiplied by
weighted food group

[[Page 2527]]

inflation factors, then multiplied by the projected number of meals
served to generate projected aggregate costs through FY 2016.
Labor costs: Compliance with this rule is also likely to increase
labor costs because of the need for more on-site preparation, and less
reliance on prepared foods, than current requirements. The challenge
faced by schools in reducing the sodium content of school meals, one
element of both the IOM recommendations and the proposed rule,
illustrates the need for additional labor hours by school kitchen
staff.

[M]ore local food preparation and the use of a greater
proportion of fresh foods and frozen vegetables could result in
acceptable school meals with a lower sodium content. However, many
food production kitchens are designed to heat and hold food items
rather than to prepare them.\32\
---------------------------------------------------------------------------

\32\ IOM 2009, p. 110.
---------------------------------------------------------------------------

In addition to the implied need for new kitchen equipment, IOM
notes that ``switching from heat and hold to food production requires
the addition of staff. Those districts that estimate meals per labor
hour (MPLH) to monitor productivity may see an unfavorable decrease in
their numbers.'' \33\
---------------------------------------------------------------------------

\33\ Ibid.
---------------------------------------------------------------------------

If schools choose to prepare more meals on-site to meet new
requirements, IOM sees the need for ``greater managerial skill,'' and
``more skilled labor and/or training.'' \34\ At the same time, lesser
reliance on prepared foods offers some opportunity for offsetting
savings.
---------------------------------------------------------------------------

\34\ IOM 2009, p. 148.

An empirical analysis of data from 330 Minnesota school
districts found that ``healthier'' meals had higher labor costs (for
on-site preparation) but lower costs for processed foods (Wagner, et
al., 2007). The authors call for funds to be made available for
labor training and kitchen upgrades. They suggest that higher
Federal meal reimbursement rates may be unnecessary (under the
assumption that the meals do not cost more to produce because lower
food costs offset higher labor costs).\35\
---------------------------------------------------------------------------

\35\ Ibid.
---------------------------------------------------------------------------

The effect of the proposed rule's meal requirements on the mix of
food and labor costs is unclear. The proposed rule requires schools to
offer relatively more foods with higher unit costs than schools now
offer to their students. The rule requires, for example, that schools
replace many of their refined grain foods with whole grain substitutes.
Because prices for whole grain products tend to exceed the prices of
similar products made with refined grains, savings from eliminating a
particular refined grain product is more than offset by the cost of its
whole grain counterpart. Where pre-baked whole grain foods are simply
substituted for pre-baked refined grain products, or whole grain flour
is substituted for refined flour in existing recipes, the added cost of
serving these new foods is strictly a food cost; labor costs may not
increase at all.
But the rule includes other provisions that are likely to increase
both food and labor costs. One is the requirement that schools offer
more vegetables, from a variety of vegetable subgroups, than schools
tend to offer today. Some schools may choose to meet those targets by
offering vegetables in school salad bars. It is not difficult to
imagine that the cost of installing and maintaining a salad bar could
increase the overall cost of school meal production. Similarly, to meet
the proposed rule's calorie and fat requirements, schools may find it
necessary to rely less on pre-purchased entrees, and hire more central
kitchen or cafeteria workers to prepare healthier meals from scratch.
SLBCS-II data show that the cost of purchasing food accounted for
45.6 percent of SFA reported costs, on average. Labor accounted for an
additional 44.5 percent of reported SFA costs. The remaining 9.9
percent of reported costs are attributable to ``supplies, contract
services, capital expenditures, indirect charges by the school
district, etc.'' \36\ Labor costs are broadly defined in the SLBCS-II
to include the costs of foodservice administrative tasks such as
planning, budgeting, and management, and foodservice equipment
maintenance.\37\ Some of these tasks are detailed in section III.C.1.
These tasks include training food preparation staff, servers, and
cashiers. They also include the work of individuals who plan menus and
prepare recipes.
---------------------------------------------------------------------------

\36\ USDA 2008, p. 3-5.
\37\ USDA 2008, p. 3-9.
---------------------------------------------------------------------------

For purposes of this analysis, we assume that the relative
contributions of food and labor to the total cost of preparing
reimbursable school meals will remain fixed at the levels observed in
the SLBCS-II. As a result, we estimate that labor costs increase on a
nearly dollar for dollar basis with estimated food costs.\38\ We
estimate that the proposed rule may increase schools' food costs by
about 12 percent. Although labor costs relative to food costs have held
steady over many years,\39\ this approach may overstate labor costs. We
explore the potential effect of labor costs growing at a somewhat lower
rate in section III.B.5.
---------------------------------------------------------------------------

\38\ The estimates contained in this analysis assume labor costs
equal to food costs multiplied by (44.5/45.6), the ratio of reported
labor to food costs in the SLBCS-II.
\39\ Labor costs as a share of the total costs of preparing
school meals were found to be 43.8 percent in FNS's SY 1992-1993
School Lunch and Breakfast Cost Study I, and 44.5 percent in the SY
2005-2006 School Lunch and Breakfast Cost Study II (a statistically
insignificant difference). Food costs as a percent of total costs
grew slightly from 45.6 percent in SY 1992-1993 to 48.3 percent in
SY 2005-2006. But this change, too, is statistically insignificant.
USDA 2008, p. 9-2.
---------------------------------------------------------------------------

Food and Labor Cost Summary: Table 10 summarizes the estimated
increase in food and labor costs associated with the proposed rule
through FY 2016.\40\ (The final two rows of Table 10 also include the
estimated administrative costs to State agencies.) Overall, we estimate
that the proposed rule would increase the total cost of reimbursable
school meals by $6.8 billion over five years; the cost of food would
increase by $3.4 billion, and the cost of labor would increase by $3.3
billion. In the first year of full implementation (FY 2015),\41\ the
combined cost of food and labor is expected to be about 12 percent
higher under the proposed rule than under existing requirements. The
estimated additional cost of food for a reimbursable lunch increases
from about 3.4 cents in 2012 to 7.7 cents in 2016; the equivalent
increase in food costs for a reimbursable breakfast grows from 18.8
cents to 26.1 cents. These rates roughly double--to 15.1 cents and 51.6
cents--when the estimated cost of labor is included.
---------------------------------------------------------------------------

\40\ For purposes of this analysis, the new standards are
assumed to take effect at the start of SY 2012-2013. Because the
2012-2013 school year begins in July 2012, there is just a small
cost in Federal FY 2012. Note that these figures assume no effect on
student participation. We discuss the possible effects of the
proposed rule on student participation in section III.F. We examine
the effect of alternate participation assumptions in section
III.B.5.
\41\ Two years after implementation of the rule, all grains
servings offered to meet meal pattern requirements must be whole
grain rich. If the rule is implemented in SY 2012-2013, then the 100
percent whole grain requirement takes effect in SY 2014-2015 or FY
2015.
---------------------------------------------------------------------------

BILLING CODE 3410-30-P

[[Page 2528]]

[GRAPHIC] [TIFF OMITTED] TP13JA11.014

BILLING CODE 3410-30-C
3. Food Cost Drivers
Table 11 provides a breakdown in the estimated food costs of the
proposed rule by seven broad food categories. Consistent with the
Dietary Guidelines, the proposed rule will require schools to offer
more fruits, vegetables, and whole grains than they currently offer
today.
Changes in school demand also impact food producers. The figures in
Table 11 indicate that the economic costs and benefits of the proposed
rule may not be shared equally by producer groups.

Table 11--Estimated Food Costs by Food Category
[Dollars in millions]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Fiscal year
Food group -----------------------------------------------------------------------------------------------------
2012 2013 2014 2015 2016 Total
--------------------------------------------------------------------------------------------------------------------------------------------------------
Milk.............................................. -$4.4 -$29.0 -$29.8 -$30.5 -$31.3 -$125.1
Meat or Meat Alternate............................ 3.1 22.5 24.9 27.6 30.5 108.6
Fruit Juice....................................... 0.0 0.0 0.0 0.0 0.0 0.0
Fruit (non-juice)................................. 42.3 286.1 301.4 317.1 334.1 1,281.0
Vegetables........................................ 75.6 515.2 547.8 581.2 617.5 2,337.3
Refined Grains.................................... -116.0 -787.5 -964.7 -1,766.5 -1,869.1 -5,503.8
Whole Grains...................................... 91.2 619.3 825.3 1,840.0 1,946.5 5,322.3
-----------------------------------------------------------------------------------------------------

[[Page 2529]]

Total Cost of Proposal........................ 91.8 626.5 704.9 968.9 1,028.2 3,420.4
--------------------------------------------------------------------------------------------------------------------------------------------------------

Milk: This impact analysis estimates that the amount of milk served
to students may not change after implementation of the proposed
rule.\42\ However, the rule does require schools to serve only low-fat
or fat-free milk in the school meals programs. Because the per-unit
cost of low-fat and fat-free milk is less than the average per-unit
cost of the mix of milk products now served in schools, the cost of
serving milk under the proposed rule is reduced.
---------------------------------------------------------------------------

\42\ See section III.B.5. for an examination of the cost
implications of altering this assumption.
---------------------------------------------------------------------------

Fruit Juice: The estimate assumes that schools may satisfy the
rule's increased fruit requirement entirely through additional servings
of whole or cut-up fruit, not fruit juice. We expect that schools may
have to encourage consumption of additional whole or cut-up fruit in
order to satisfy this requirement. The cost estimate assumes that the
amount of fruit juice served to students may not increase above the
levels assumed in the baseline estimate. As a result, the relative
share of whole or cut-up fruit to fruit juice servings offered to (and
taken by) students may increase after implementation of the rule.
Grains: The proposed rule initially requires that half of grains
offered to students be whole grain rich. Beginning in SY 2014-2015, the
rule requires that all grains served be whole grain rich. This change
is reflected in the large changes in both the whole and refined grains
figures between FY 2014 and FY 2016.
Note that the total amount of grain products served under the
proposed rule may be less than the amount served in the baseline (the
per-meal amount taken in SNDA-III). The effect of this net reduction in
total grains served is reflected in figures for fiscal years 2012 to
2014, where the cost decrease for refined grains exceeds the cost
increase for whole grains. Throughout the estimation period, we assume
that the unit cost of whole grains exceeds the unit cost of comparable
refined grain products. Despite this, the net reduction in total grain
products served through FY 2014 more than offsets the increased unit
cost of whole grains. After FY 2014, when the rule's 100 percent whole
grain rich requirement takes effect, the higher relative cost of whole
grains to refined grains exceeds the savings from the net reduction in
grain products served.
4. Comparison of FNS and IOM Cost Estimates
IOM prepared its own food cost estimate for its recommended meal
pattern changes. The methodology behind that estimate is discussed in
School Meals: Building Blocks for Healthy Children (IOM 2009). While
IOM relies on SLBCS-II and SNDA-III, the same primary sources used by
FNS, to estimate unit costs and baseline quantities served, its
methodology differs from ours in several ways.
Perhaps the most significant difference is in the establishment of
baselines. We used all records on the SNDA-III dataset to estimate
baseline quantities of food served and student take rates. IOM limited
its analysis to a set of six representative baseline menus selected
from the SNDA-III dataset. IOM selected one 5-day lunch menu and one 5-
day breakfast menu for each of three age-grade groups (elementary,
middle, and high school) at random from a subset that excluded
practices identified as uncommon.\43\ The goal of both methodologies is
to estimate a baseline food cost representative of all schools that
participate in the Federal school meals programs. We have not attempted
to isolate and quantify the effect of this methodological difference on
our cost estimates.
---------------------------------------------------------------------------

\43\ IOM excluded menus that did not offer a reduced fat or fat
free unflavored milk, offered only one entree, offered 15 or more
entree options, offered juice drinks rather than 100% fruit juice,
or offered dessert every day. IOM 2009, p. 307
---------------------------------------------------------------------------

Another important difference between the IOM and FNS estimates is
our use of different student take rates in preparing food cost
estimates for the recommended meal patterns. We computed take rates
from SNDA-III and applied them, largely unchanged, to the food group
serving requirements of the proposed rule.\44\ We do not increase take
rates in anticipation of greater demand for better meals, nor reduce
take rates in anticipation of a decline in student acceptance of new
vegetable varieties, whole grains, or low fat milk relative to the
starchy vegetables, refined grains, and higher fat milk on current
school menus.\45\ IOM modified observed take rates from SNDA-III where
the expert judgment of committee members and school meal practitioners
deemed it appropriate.\46\ Additional differences in FNS and IOM take
rates can be attributed to IOM's use of six representative school menus
in its analysis; IOM computed its take rates from those schools alone.
FNS take rates are computed from all schools on the SNDA-III dataset.
---------------------------------------------------------------------------

\44\ FNS caps individual school take rates at the food group
category to 100 percent.
\45\ As discussed elsewhere in this impact analysis, our take
rate assumptions are intended to avoid understating the cost of the
proposed rule given the uncertain response of both students and
school foodservice workers to the new meal pattern requirements. We
test the cost implications of adopting different take rates in
section III.B.5.
\46\ IOM 2009, p. 136.
---------------------------------------------------------------------------

IOM estimated that food costs would increase by 4 to 9 percent for
lunch, depending on student take rates for fruits and vegetables. For
breakfast, IOM estimated an increase in food costs of 18 to 23 percent.
Both of these ranges are based on unadjusted SY 2005-2006 prices from
the SLBCS-II. In addition, both are for the requirements recommended
for the first year of implementation, not including the more stringent
whole grain requirement recommended for later introduction. The
comparable FNS figures are 3 percent for lunch and 26 percent for
breakfast.
5. Uncertainties
We made several simplifying assumptions in developing this cost
estimate, reflecting gaps in available data and evidence. The most
significant simplifications are discussed in Table 12. In most cases,
our primary estimate reflects conservative assumptions, to avoid
understating the costs of the proposal. In this section, we describe
the impact of several alternative assumptions on the estimate. The cost
impacts of these alternatives are presented in Table 14.

[[Page 2530]]

Table 12--Simplifying Assumptions
------------------------------------------------------------------------
Explanation and implications
Item of simplifying assumptions
------------------------------------------------------------------------
Take Rates................................ For each of several food
groups, we used SNDA-III
data to compute average
``take rates'' equal to the
percentage of food servings
taken by students for each
serving offered to them.
Take rates under current
program rules vary by
school, grade level, and
menu planning system. They
are, at best, a rough
predictor of student
behavior under the proposed
rule, which imposes a
single food-based meal
planning system across all
schools, and requires
schools to offer a mix of
foods somewhat different
than many students are
accustomed to. We apply
these take rates to
generate a primary cost
estimate. But, recognizing
the uncertainty of these
take rates, the cost
implications of different
take rate assumptions are
examined in the
uncertainties section of
the impact analysis.
Student Participation..................... The cost estimate assumes no
change in student
participation following
introduction of the rule's
new meal pattern
requirements. However, we
recognize that
participation may increase
due to better meals or
decrease when favorite
school foods are replaced
with unfamiliar or less
appealing options. We chose
not to estimate a
participation effect given
the uncertainty about how
schools may incorporate new
foods into their menus, and
what changes schools may
make to a la carte and
other non-NSLP/SBP
``competitive'' foods,
factors known to affect
NSLP/SBP participation.
Schools have a financial
interest in preserving the
revenue stream that comes
with serving Federally-
reimbursable school meals.
It is also unclear whether
participation effects, if
any, may prove temporary or
permanent. We estimate the
cost of the rule under an
assumption of increased and
reduced student
participation in the
uncertainties section.
USDA Foods................................ We include USDA Foods
(formerly USDA commodities)
in both the quantity and
value of food served in its
baseline and proposed cost
estimates. This treatment
of USDA Foods is consistent
with the SLBCS-II which
includes the value of USDA
Foods in its computation of
the cost of producing a
school meal. We assume that
USDA Foods will contribute
comparably to the overall
cost of preparing school
meals under current and
proposed program rules. We
believe it is reasonable to
ignore the value of USDA
Foods in computing the
estimated cost increase of
the proposal.
Whole Grains.............................. We apply a single take rate
to both whole grain rich
and refined grain products.
A less conservative
approach would have applied
a lower take rate to whole
grain foods, at least when
offered singly, rather than
as part of a combination
entree. Further, this take
rate is the same take rate
observed in SNDA-III where
the relative share of whole
grain rich products is
lower than the 50 percent
share that schools must
offer in the first two
years of implementation,
and much lower than the 100
percent share that must be
offered thereafter.
Testimony before the IOM
expert committee by
University of Minnesota
Professor Leonard Marquart
documented steps SFAs can
take to phase in whole
grains in a manner that
promotes high take rates.
Labor Rates............................... We assume that the relative
contributions of food and
labor to the total cost of
preparing reimbursable
school meals will remain
fixed at the levels
observed in the SLBCS-II
study. The study found that
the cost of purchasing food
accounted for 45.6 percent
of SFA reported costs on
average, while labor
accounted for 44.5 percent
of reported costs. We
therefore estimate that
labor costs may increase on
a nearly dollar for dollar
basis with estimated food
costs. Our assumption leads
to a substantial increase
in estimated labor costs,
one that assumes schools
may rely less on prepared
foods and more on on-site
preparation. We re-estimate
the cost of the proposed
rule assuming a smaller
increase in labor costs in
the uncertainties section.
Macronutrient Requirements and Calories... The cost estimate developed
in this impact analysis is
based entirely on the cost
of adding or deleting foods
from particular food
groups.
The cost estimate accounts
for current price
differences in whole grains
compared to refined grain
products, low fat milk
compared to 2 percent or
whole milk, whole fruit
compared to fruit juice,
and vegetables by
subcategory. But it does
not account directly for
differences in the costs of
comparable combination
entrees with different
levels of sodium, fat, or
calories. SNDA-III found
that school lunches offered
to students in SY 2004-2005
provided, on average, about
11 percent of calories from
saturated fat. The proposed
rule would limit this to 10
percent--a relatively
modest reduction.
Our cost estimate does take
into account the added cost
of more fruits and
vegetables. It also takes
into account the cost of
shifting away from starchy
vegetables, which reduces
the relative share of
french fries in the
proposed rule estimate.
Finally, the estimate
accounts for the
replacement of higher fat
content milk with low fat
and skim milk. All of these
steps implicitly
incorporate the cost of
offering lower calorie and
lower fat content meals
into our estimate. We make
an explicit assumption that
a reduction in sodium can
be achieved at minimal
cost, at least over the
short term, when proposed
sodium requirements are
only partially phased-in.
This is one of the very few
assumptions that, if wrong,
tend to understate the cost
of the proposed rule. But,
given the decision to err
on the side of overstating
costs when making most
other assumptions, we
believe that the upside
risk to an error on this
assumption is small.
------------------------------------------------------------------------

FNS and IOM Food Group Take Rates: For all food groups, we assume
that observed (baseline) take rates from SNDA-III will continue to
characterize student behavior after implementation of the proposed
rule's meal requirements.\47\ These take rates are weighted averages
across schools that operated under nutrient-based, traditional food-
based, and enhanced-food based systems in SY 2004-2005, calculated as
follows:
---------------------------------------------------------------------------

\47\ We cap individual food group take rates at 100 percent in
our proposed rule cost estimate.

Take rate = number of servings taken \1\/(Servings offered \2\/meal *
---------------------------------------------------------------------------
number of meals \3\)

\1\ Based on SNDA-III analysis of observed meals taken by
students.
\2\ Based on SNDA-III analysis of school menus/recipes.
\3\ Based on SNDA-III observations of daily meal counts.

Data are not available to assess how student behavior across all
schools may change in response to menus that simply offer more fruits,
vegetables, and whole grains. One approach to model that response would
be to apply take rates from schools that offered higher than average
amounts of these foods in SY 2004-2005, but this occurred in a
relatively small subset of schools sampled in SNDA-III; conclusions
drawn based on their behavior may be

[[Page 2531]]

misleading. In addition, upon implementation of the rule, schools may
attempt to influence student behavior by developing appealing new menu
items, or by taking other steps to encourage increased consumption of
the fruits, vegetables, low-fat milk products, and whole grains
emphasized by the rule. Because of these unknowns, FNS adopted a static
take-rate assumption in developing its primary cost estimate.
IOM departed from observed take rates in developing its assumptions
for its own cost estimate, drawing on expert opinion from school meal
practitioners about likely student behavior. IOM's assumed take rates,
``which are based on data from SNDA-III but are adjusted to consider
the recommended Meal Requirements, represent estimates that the
committee considers realistic.'' \48\
---------------------------------------------------------------------------

\48\ IOM 2009, p. 307
---------------------------------------------------------------------------

Tables 13a and 13b compare the take rates applied by IOM and by FNS
in developing their respective cost estimates.\49\
---------------------------------------------------------------------------

\49\ See IOM 2009, pp. 309-315, for all of IOM's food group take
rate assumptions. Note that some of IOM's assumed take rates are
presented as ranges. For the cost estimate in Table 12, FNS uses the
midpoint of these ranges.

Table 13a--IOM and FNS Breakfast Take Rates After Implementation of IOM Recommendations and FNS Proposed Rule
--------------------------------------------------------------------------------------------------------------------------------------------------------
IOM Breakfast take-up rates FNS Breakfast take rates
Food group ------------------------------------------------------------------------------------------------------------------------
Elementary Middle High Elementary Middle High
--------------------------------------------------------------------------------------------------------------------------------------------------------
Fluid Milk..................... 98%................... 92%.................. 96%.................. 90% 81% 81%
Meat/Meat Alternate............ 62% or more........... 68% or more.......... 62% or more.......... 85% 84% 82%
Fruit.......................... 70%................... 70%.................. 75%.................. 84% 82% 77%
Grain.......................... 100%.................. 100%................. 100%................. 89% 81% 83%
--------------------------------------------------------------------------------------------------------------------------------------------------------

Table 13b--IOM and FNS Lunch Take Rates After Implementation of IOM Recommendations and FNS Proposed Rule
--------------------------------------------------------------------------------------------------------------------------------------------------------
IOM Lunch take-up rates USDA Lunch take rates
Food group -----------------------------------------------------------------------------------------------------
Elementary Middle High Elementary Middle High
--------------------------------------------------------------------------------------------------------------------------------------------------------
Fluid Milk........................................ 98% 97% 88% 91% 81% 78%
Meat/Meat Alternate............................... 100% 100% 100% 91% 91% 90%
Fruit............................................. 80% 80% 60% 70% 58% 50%
Vegetables........................................ 55% 60% 65% 85% 83% 86%
Grain............................................. 65%-100% 65%-100% 70-100% 86% 86% 79%
--------------------------------------------------------------------------------------------------------------------------------------------------------

Subsections a through c, below, explain three alternative
applications of IOM take rate assumptions.
a. Fruit and Vegetable Take Rates--Use IOM Estimates
In Table 14, Section A, we substitute the fruit and vegetable take
rates used by IOM to model student behavior after implementation of new
meal patterns for the take rates used in FNS's primary cost estimate
under the proposed rule.\50\ IOM applied lower take rates than FNS for
vegetables, but applied higher take rates for fruit. The reduced cost
estimate presented in Table 14, Section A simply substitutes the post-
implementation fruit and vegetable take rates assumed by IOM for the
post-implementation take rates assumed by FNS. The net result of using
IOM's assumptions would reduce the estimated cost of implementing the
proposed rule by $3.5 billion.
---------------------------------------------------------------------------

\50\ IOM take rates appear in tables L-1 through L-6 of IOM's
School Meals report. IOM 2009, pp. 309-315.
---------------------------------------------------------------------------

b. IOM Fruit and Vegetable Take Rates with Labor Cost Adjustment
The effect of using IOM's vegetable take rates is to reduce the
change in food cost for lunch in implementing the proposed rule to
zero. Under our approach, labor costs are assumed to remain fixed,
relative to food costs, at the ratio estimated in the SLBCS-II. As a
result, the figures in Table 14, Section A assume no increase in the
labor costs of preparing lunches under the proposed rule. However, the
work required to prepare lunches (and breakfasts) that meet the new
food group, macronutrient, and calorie requirements could increase even
if the costs of purchasing food for those meals is about equal under
current and proposed rules.
Table 14, Section B reflects estimated food costs using IOM's
estimated fruit and vegetable take rates, and the labor costs estimated
by FNS for its primary estimate (from Table 6). This revised estimate
assumes that the relationship between food and labor costs diverges
from the relationship observed in SLBCS-II and the net effect of this
assumption would reduce the estimated cost of implementing the proposed
rule by $1.8 billion.
c. Using All IOM Take Rates
As described in section III.B.4, IOM and FNS took different
approaches to anticipating students' response to the proposed meal
pattern changes. IOM relied on observed take rates from SNDA-III as
well as the best judgment of school foodservice practitioners. While
some of IOM's take rates are higher than the ones used in our primary
estimate, others are lower. The net effect of substituting IOM post-
implementation take rates for FNS post-implementation take rates for
all food groups (milk, meat, meat alternate, fruit/fruit juice,
vegetables, and grain products) is displayed in Table 14, Section C.
The net effect is a cost estimate that differs from our primary
estimate by about 10 percent, a reduction in our primary cost estimate
of $676 million.\51\
---------------------------------------------------------------------------

\51\ It is worth recognizing that the differences between IOM's
estimate and our primary estimate also reflect differences in
baseline assumptions. We did not alter our baseline take rates for
this test.
---------------------------------------------------------------------------

d. Cost of Whole Grains--Reduction over Time
The proposed rule requires schools to replace refined grains with
whole grain rich foods. In the first two years of

[[Page 2532]]

implementation, whole grain rich products must make up half of all
grain products offered to students. By the third year, schools must
offer only whole grain rich products. At present, whole grain rich
products cost more than similar refined grain products. The primary
cost estimate developed above assumes that the relative price of whole
grain rich to refined grain products will remain constant at FY 2009
levels throughout the five year forecast period. Part of the price
difference, however, may be due to low supply of whole grain products
in the market--in turn influenced by current low demand by schools. As
IOM explains:
Of greater concern is the relative lack of available whole
grain-rich processed products on the market and acceptable in the
school meals program. Hence some cost increases would be expected
for the less available processed whole grain-rich products in the
market. Several new whole grain products are being introduced
through the USDA Foods program; over time, the availability of whole
grain-rich products is expected to expand.\52\
---------------------------------------------------------------------------

\52\ IOM 2009, p. 8-22

The difference in price between whole grain rich and refined grain
products may diminish over time. Table 14, Section D provides estimates
of the cost of the proposed rule under the assumption that the
difference in price between whole grain rich and refined grain products
will disappear entirely at a rate of one-third per year from FY 2013 to
FY 2015. The net result of this assumption would reduce the estimated
cost of implementing the proposed rule by $2.5 billion.
e. Change in Participation--2 Percent Increase
As discussed in Table 12 above, we assumed that student
participation would not change following the introduction of new meal
requirements. Table 14 Sections E and F model the effects of altering
that assumption.
Section E estimates the effect of a two percent increase in student
participation on the cost of the rule relative to our primary cost
estimate in Table 6. The dollar figures in Section E are the estimated
cost to schools of preparing all meals served under our baseline
assumption plus an additional 2 percent. Per meal costs for all of
these additional meals are taken from Table 10. The additional meals
are eligible for USDA reimbursement at the appropriate free, reduced
price, or paid rates. However, the figures shown in Section E are not
offset by these increased Federal reimbursements. The net cost to
schools, after accounting for Federal reimbursements, would be lower.
Because these costs reflect the provision of improved meals to
additional children, we would expect a commensurate increase in the
benefits resulting from addition of more fruits, vegetables, and whole
grains to the diets of participating children. This participation
assumption would result in a $1.4 billion increase over the cost of our
primary estimate.
f. Change in Participation--2 Percent Decrease
Table 14, Section F models the effect of a two percent decrease in
participation upon implementation of the new rule. A reduction in
participation reduces the cost of compliance with the rule, relative to
the primary cost estimate in Table 6.\53\ Again, because the cost
reduction reflects the provision of improved meals to fewer children,
we would expect a proportionate decrease in the rule's benefits for
participating children. The net effect of this assumption would be to
decrease the cost of implementing the final rule by $1.4 billion.
---------------------------------------------------------------------------

\53\ This reduction in cost comes at the expense of reduced
Federal meal reimbursements.
---------------------------------------------------------------------------

g. Lower Rate of Increase in Labor Costs Than Food Costs
Our primary cost estimate assumes that the ratio of labor to food
costs will remain fixed at the ratio observed in the SLBCS-II. Because
we estimate a substantial increase in school food costs, our fixed
labor to food cost assumption leads to a substantial increase in labor
costs.
Some increase in labor costs is likely. Schools may find it
necessary to prepare more meals on site to incorporate added vegetables
and whole grains, and to reduce levels of sodium and fat. In addition,
schools are likely to incur additional expense to train foodservice
workers on the new meal requirements. However, commercial suppliers can
be expected to develop and introduce healthier products for the school
market ahead of implementation of a final rule; other products may be
introduced after implementation. Schools may find that new training
replaces some training planned in existing budgets.
It is also uncertain that more expensive foods are proportionately
more expensive to prepare than less expensive foods. Long-term
stability in the relationship between food and labor costs is
unremarkable if the primary factor driving both is an increase in the
number of participants and meals served. Though the limited data
available shows that this ratio remained stable between SY 1992-1993
and SY 2005-2006--a period that included program changes under the
School Meals Initiative--there are reasons to suspect that this
relationship may not hold in response to a sudden increase in food
costs unrelated to the number meals served.
Table 14, Section G models an increase in labor costs that is 75
percent of the level in our primary estimate, to reflect a shift in the
balance between food and labor costs under the proposed rule. This
assumption would result in an $834 million decrease of our primary cost
estimate of implementing the proposed rule.
h. Extent of School Compliance With New Requirements
Results from SNDA-III indicate that most schools do not fully
comply with the current nutrition requirements for meals served and
reimbursed through the school lunch and breakfast programs. Although a
large majority of schools (more than 80 percent) served lunches in SY
2004-2005 that met requirements for protein, calcium, and iron, and
more than 70 percent served lunches that met requirements for vitamins
A and C, fewer than half met minimum calorie requirements, just 30
percent met the standard for saturated fat, and only 21 percent met the
standard for total fat. Overall, while most schools met most of the
requirements for a nutritious school meal, just 7 percent of schools
served reimbursable lunches that met every requirement.\54\
---------------------------------------------------------------------------

\54\ USDA 2007, vol. I, p169. For breakfast, schools tend to
perform better, though just 30 percent offered meals that met the
SMI standard for calories; see p. 204.
---------------------------------------------------------------------------

Despite the challenge of meeting these requirements, it is
relatively uncommon for schools to serve meals for Federal
reimbursement that lack required food group or meal components. FNS'
study of improper payments in the school meal programs found no point-
of-sale error in identifying reimbursable lunches at 45 percent of
schools in SY 2005-2006, and high error rates (more than 20 percent) in
just 2 percent of schools. These errors were somewhat more prevalent in
breakfast service, but still far below the level of noncompliance with
nutrient standards.\55\
---------------------------------------------------------------------------

\55\ USDA 2007b, vol. I, p. 116. The comparable rates for
breakfast were 48 percent with no error, and 11 percent with error
rates above 20 percent.
---------------------------------------------------------------------------

Taken together, these results indicate that schools make a
relatively successful effort to comply with food group and meal
component requirements, but serve too many high fat options in
satisfaction of those requirements.

[[Page 2533]]

The proposed rule is intended to facilitate meeting most micro- and
macronutrient targets by focusing on a set of food group requirements.
This plays to the strengths of the current system which tends to
produce meals that satisfy food item or meal component requirements,
but is less successful at monitoring the nutrient content of those
foods. The cost estimate we developed above is the cost of serving more
fruits and vegetables, substituting whole grains for refined grains,
and limiting the fat content of fluid milk, as required by the proposed
rule's food group requirements; the estimate assumes, we believe
reasonably, that schools may comply with those food level changes.
Although schools are expected to satisfy most nutrient requirements
through compliance with the rule's proposed food group standards, IOM
recognized the need to retain four separate nutrient targets for
saturated fat, trans fat, calories, and sodium. While schools may have
difficulty meeting those requirements, at least in the short term, they
may eventually meet them within the same food group requirements that
are effective on initial implementation of the rule. For this reason,
we believe that less than full compliance with these four nutrient
standards offers little cost savings to schools.
We estimate that a committed effort by schools to serve meals
consistent with the proposed rule's food-based requirements may
increase costs as summarized in Table 6. Nevertheless, it remains
possible that some schools may find it operationally difficult, or too
costly, to prepare and serve meals that satisfy the new food group and
subgroup requirements of the rule. If some schools fall short of the
proposed food group requirements in the initial years after
implementation by not serving enough of certain foods, the aggregate
cost of the rule may be lower than estimated.
The nature of noncompliance with the proposed rule, if observed, is
likely to resemble compliance with current standards as illustrated by
SNDA-III. That is, most schools can be expected to work toward and
achieve compliance with most provisions of the rule. We would expect
some variation across schools in the degree to which individual food
group requirements are met, given differences in current menus, what
students in different schools are accustomed to eating, and variations
in school policy on a la carte foods, other non-program choices,
implementation of offer versus serve, etc. But it is also possible that
some schools may be unable to make any changes to current menus, at
least initially. Those schools' compliance with the proposed rule may
depend on current differences in the content of school menus relative
to the new standards.
Table 14, Section H presents an estimate of the cost of the rule
under the alternate assumption that some schools fail to meet the
proposed rule's food group requirements. This alternate estimate looks
to SNDA-III's school-level compliance rates with current nutrient
standards to model compliance with proposed rule food group
requirements. Specifically, the estimate assumes:
1. Initial (FY 2012 and FY 2013) school-level compliance with the
proposed standard for the meat group is equal to the average of the
observed school-level rates of compliance with the SMI standards for
protein and iron,
2. Initial school-level compliance with the proposed fruit and
vegetable group standards matches the average of the observed school-
level rates of compliance with SMI standards for vitamins A and C,
3. Initial school-level compliance with the fluid milk standard
equals the average of the observed school-level rates of compliance
with the SMI standards for protein and vitamin A,
4. Initial school-level compliance with the grains standard equals
the average of the observed school-level rates of compliance with SMI
standards for iron, protein, and vitamin A.
In each case, school-level compliance means the percent of schools
that serve meals that meet the current or proposed requirements. For
schools that do not initially comply with a proposed food group
standard, we assume that they may serve the same amount from that food
group in fiscal years 2012 and 2013 that they did prior to
implementation of the rule. In that way, we assume a distribution of
food level compliance rates based on actual recent performance. This
recognizes that some schools are much closer to meeting particular food
group standards than other schools. The alternative estimate assumes
that these schools' average rate of compliance may rise to 100 percent,
in equal increments, over the FY 2014 through 2016 period.
This assumption of less than full compliance would reduce the five
year cost of the rule by $743 million.
i. Cost Attributable to Noncompliance With Existing Meal Requirements
In subsection h, we point to results from SNDA-III that show most
schools fall short on at least some SMI nutrient standards for lunch
and breakfast.
The cost estimate developed in this impact analysis measures the
difference in the cost of serving meals that comply with the proposed
rule's requirements, and the current cost of serving meals consistent
with the findings of SNDA-III. Note that in concept, some portion of
that cost difference could represent the cost for schools to reach
existing nutrition requirements. Arguably, any cost incurred to reach
existing standards should not be considered a cost of the proposed
rule.
We note, however, that an assessment of the cost to schools of
changing meals to achieve current nutrition requirements is sharply
limited by a lack of specific relevant data . Existing requirements for
school meals consist of a limited number of food item requirements and
a range of nutrient standards. Most schools that do not meet current
standards are missing one or more nutrient standards--most commonly,
those for total fat, saturated fat, and calories.
The proposed rule, as IOM recommended, moves more fully to a set of
food-based standards--requiring increases in particular kinds of foods
(such as fruits and vegetables), and replacement of other foods with
different types (whole-grain versus refined grain products, and low fat
versus full fat dairy). The proposed rule includes only four stand-
alone nutrient requirements (for sodium, saturated fat, calories and
trans fat).
The estimates presented in this analysis address the cost of
providing more fruits and vegetables and replacing some or all high
refined grains with whole grains--changes that could be modeled using
school food purchase and cost data. In contrast, many of the kinds of
changes needed to meet current standards, such as changing from frying
to baking, and replacing full-fat milk with lower-fat varieties, would
cost little. And for some nutrients, relatively small changes may be
sufficient to reach current standards. For example, while SNDA-III
shows that few schools met current requirements for total fat and
saturated fat at lunch, on average schools were relatively close to
meeting them. So, while just 21 percent of schools served lunches with
no more than 30 percent of calories from total fat, the mean percent of
energy from total fat across all schools was only 33.8 percent. For
saturated fat, just 30 percent of schools met the 10 percent of total
calories standard, but the mean percent of calories across all schools
was just 10.9 percent. If reductions in those measures can be achieved
with modest changes in menus and preparation methods, then the cost to
meet them

[[Page 2534]]

would represent a small part of the overall cost of moving to the
proposed rule's standards. At the same time, it is plausible to
envision changes to meet existing standards, for vitamins A and C for
example, that would cost nearly as much as the proposed rule's food
group standards for fruits and vegetables.
Second, the cost of compliance with existing rules relies as much
on assumptions about student acceptance of certain foods and menus as
it does on the cost per nutrient. This too can be illustrated with
SNDA-III data. School compliance with current SMI standards is far
lower in high schools than in elementary schools for almost all
nutrients. Because ``offer versus serve'' (OVS) is required in high
schools, meals served to high school students better reflect student
preferences than meals served to elementary school students, as roughly
one in five elementary schools do not use OVS.\56\ Given a choice, the
SNDA data indicates that students tend to select foods that do not
satisfy current nutrient standards. That does not mean that schools
cannot offer a mix of foods that students accept, but it may take a
more comprehensive and costly change in school menus to gain that
acceptance.
---------------------------------------------------------------------------

\56\ SNDA-III found that 78 percent of elementary schools and 93
percent of middle schools used OVS in SY 2004-2005. These
percentages are the same for lunch and breakfast. USDA 2007, vol. I,
Table II.11A, p. 52.
---------------------------------------------------------------------------

For these reasons, we do not know the likely order of magnitude of
the estimated cost to reach current standards.
Table 14 below assumes that State administrative costs are not
impacted by any of the alternate assumptions (a-h) listed above.
BILLING CODE 3410-30-P

[[Page 2535]]

[GRAPHIC] [TIFF OMITTED] TP13JA11.015

BILLING CODE 3410-30-C

C. Administrative Impact

1. School Food Authorities (SFA)
An initial increase in administrative staff time for training and
implementation is anticipated at the SFA level. Most of these impacts
will be limited to the transition to the rule's new requirements as a
result of:
Training staff on the required components of reimbursable
lunches and breakfasts;
Changes to menus and portion size may necessitate
revisions to menus and recipes currently used by SFAs;
Changes to food purchasing and commodity food use (for
example, increasing purchases for fresh fruit and vegetables, whole
grain products, and lower sodium products), as well as changes in the
methods of preparation of food, may be necessary for many schools;
Changes in SFA financial structure, as SFAs may need to
review finances in order to determine how to deal with any cost changes
associated with the proposed requirements;
Forging new relationships with local farmers to supply
fresh produce

[[Page 2536]]

appealing to the tastes of school children; and
Modifying a la carte foods and other foods at school to
maintain NSLP and SBP participation rates.
The proposed rule also increases the length of State reviews of
SFAs through the Coordinated Review Effort (CRE) by incorporating the
requirements of School Meals Initiative (SMI) reviews, and increases
their frequency to once every three years. SFAs that previously held
separate CREs and SMIs may experience a decrease in burden, because
they will undergo just one CRE every three years, rather than two
reviews (one CRE and one SMI) every five years.
The proposed rule incorporates the provision of training and
technical assistance by SAs to the SFAs. SFAs must, in turn, adjust
their current training agenda to include the new requirements, as no
funding has been provided in the proposed rule to accommodate new
training.
FNS expects these additional burdens on SFA staff time and budgets
may be offset by other benefits. For instance, new age/grade groupings
would require school districts to offer different portion sizes instead
of the same portions to all ages/grades. While this could be an
additional burden to some SFAs, it could also reduce plate waste with
use of more appropriate age/grade groupings. Moreover, it is expected
that, as food service workers gain experience and become comfortable
with the new requirements, administrative efforts associated with
implementation may decline. Therefore, although an initial
administrative impact is anticipated, FNS does not expect any
significant long-term increase in administrative burden.
2. State Agencies
State Child Nutrition Agencies (SAs) play a key role in the
implementation of school meal programs through their agreements and
partnership with local SFAs. FNS anticipates that SAs that administer
the school meals programs will work closely with SFAs to meet the
requirements of the proposed rules, and to remove barriers that may
hinder compliance.
Many changes associated with implementation of the proposed rule
may result in an increased burden and additional required level of
effort from States, such as:
Training and technical assistance: SAs may provide
training and technical assistance to SFAs on new calorie and meal
pattern requirements, age/grade groupings, and revised nutrient
requirements. Moving to a single, food-based menu planning system may
simplify the meal service for some schools and will likely streamline
the meal planning process, but may require initial training to
accomplish.
Although SAs may meet most of this demand by modifying current
training and technical assistance efforts, we recognize that SAs may
incur additional costs assisting SFAs with the transition to the
proposed requirements. Our cost estimate provides for an additional 80
hours per SA in each of fiscal years 2012 and 2013, for a total of $0.2
million.
Systems assistance: SAs may assist SFAs with any changes
in the meal planning process occurring as a result of this rule. This
is included in our $0.2 million estimate for training and technical
assistance.
Food procurement and preparation: More fruits, vegetables,
whole grains, and foods that are lower in sodium may be necessary to
align meals with the proposed meal patterns. SAs may also review SFA
contracts with food service management companies (FSMCs). We have not
estimated this cost, but expect that it may be small.
Monitoring and compliance: SAs may be required to conduct
CREs more frequently, once every 3 years for each SFA; nutrient
analysis will be required for all SFAs and will become an additional
component of each CRE (although separate SMIs will be eliminated);
nutrient-based menus will be eliminated and only food-based menu
planning will be permitted; menus will be reviewed from a two-week
period preceding the review date; and a breakfast meal will be reviewed
as part of each CRE.\57\
---------------------------------------------------------------------------

\57\ FNS estimated in 1994 that extending the SFA review cycle
from four to five years would decrease costs associated with this
effort by 20 percent. (June 10, 1994, Federal Register Vol. 59, No.
111, p. 30234) A similar, but opposite, effect might be expected
from shortening the cycle from five to three years.
---------------------------------------------------------------------------

SAs are currently required to conduct a CRE for each SFA once every
5 years; to conduct a nutrient analysis via SMI review for only those
SFAs with food-based menu planning systems (although approximately 30
percent of these SFAs elect to conduct the nutrient analysis
themselves); to review menus from a one-week period preceding the
review date; and to review a breakfast meal only in the case of a
follow-up CRE (which is only conducted in those cases in which problems
are noted in the initial CRE). Total costs for each SA to complete a
CRE include costs for staff labor, travel (including transportation,
accommodations, and meals/incidental expenses), and possible printing
costs for those SAs that provide CRE results to SFAs and FNS in hard
copy rather than electronically.
Limited discussion with a small number of SA and FNS Regional
Office officials suggest that a typical CRE or SMI review costs about
$2,000 in 2010, with about half of that cost used for staff travel.
Because travel is a largely fixed cost, SAs that previously conducted
separate CRE and SMI reviews should realize some savings once SMIs are
ended and the nutrient analysis is made part of the CRE. That may help
offset some of the cost of increased CRE frequency. A mid-sized State
that now conducts 100 CRE reviews might incur annual expenses of
$200,000. Under the proposed rule, that SA could expect to conduct \2/
3\ more CRE reviews, or roughly 167 per year. If we assume
conservatively that the SA realizes no savings from elimination of SMI
reviews, its review costs would increase by $134,000 per year--an
upper-bound estimate. If all SAs incurred this same expense, the total
cost would be roughly $8 million per year by FY 2013.
3. USDA/FNS
FNS will assist State Agencies by providing nutrition education,
training, guidance, and technical assistance to facilitate their work
with local school food professionals. This may include developing
training standards, materials, updated measures for nutrition analysis,
and revisions to the food buying guide.
While we expect a small increase in administrative burden for FNS
under the proposed rule because of the need to provide additional
training and technical assistance to SAs, and to support their role in
the CRE process, this may largely be met by adapting existing efforts
to the new requirements.

D. Food Service Equipment

Changes in meal pattern requirements as a result of the proposed
rule may cause some SFAs to require different, or additional, equipment
than that which they currently possess. For example, some SFAs may need
to replace fryers with ovens or steamers. In FY 2009, FNS solicited
requests from SFAs for food service equipment grants, awarding $100
million in 2009 American Recovery and Reinvestment Act (ARRA) Equipment
Grants and an additional $25 million in one-time funds included in the
FY 2010 Agriculture Appropriations Act. In response to its
solicitation, FNS received a total of approximately $600 million in
grant requests from SFAs. The strong response to these grant programs
indicates that schools could make productive use of an even greater

[[Page 2537]]

investment in kitchen equipment. However, much of that demand is
associated with the routine need to replace equipment that is nearing
the end of its useful life--a cost that is appropriately covered by
USDA meal reimbursements and other sources of food service revenue.
Although some schools may need additional upgrades to prepare meals
that meet the proposed rule's standards, we do not have the data
necessary to assess that need or to estimate the associated cost. The
$125 million in kitchen equipment grants distributed to schools through
ARRA funds and the FY 2010 appropriation should have addressed much of
the most pressing need. For these reasons, we do not include additional
incremental equipment costs as a result of the proposed rule in our
estimate.

E. Implementation of Proposed Rule--SFA Resources

We estimate that the proposed rule may raise the average cost of
producing and serving school lunches by almost 7 cents and school
breakfasts by 37 cents on initial implementation. By FY 2015, when the
100 percent whole grain rich requirement takes effect, the cost per
lunch may be 14 cents higher than our baseline estimate; the cost per
breakfast may be 50 cents higher than our baseline.
Not all schools will face the same cost changes. Schools with menus
that already emphasize fruits, non-starchy vegetables, and whole grains
may need to make fewer changes, and the costs of implementation in
those schools may be lower than average. Because the per-meal costs of
complying with the proposed requirements are much higher for breakfast
than for lunch, the overall costs of implementation in schools that
serve more school breakfasts relative to lunches may be higher than the
costs faced by schools that do not serve breakfast.
SFAs have a variety of funding sources used to cover the cost of
preparing and serving school meals. The SLBCS-II found that about half
of average SFA revenues are provided by Federal reimbursements (cash
and donated foods), about one-quarter by payments from participating
families, and the remainder from other sources (See Figure 3).
[GRAPHIC] [TIFF OMITTED] TP13JA11.016

Covering the increased costs estimated to implement the proposed
rule may be challenging for many schools. However, some schools are
already making substantial progress using available resources. USDA's
HealthierUS Schools Challenge (HUSSC) recognizes elementary schools
that meet voluntary school meal and physical activity standards. HUSSC
school meal standards exceed NSLP requirements on several levels,
including requirements for a variety of vegetables each week, including
dark green and orange vegetables and legumes; a variety of whole
fruits, and limits on fruit juice; and whole grain and low fat milk
requirements. USDA has certified more than 840 HUSSC schools since
2004. HUSSC schools have demonstrated an ability to operate cost-
effective school meals programs that emphasize many of the same foods
required by the proposed rule. These schools receive no financial
assistance from USDA beyond the meal reimbursements and USDA Foods
available to other schools that participate in the Federal school lunch
and breakfast programs.
---------------------------------------------------------------------------

\58\ USDA 2008, p. xii.
---------------------------------------------------------------------------

Most schools will have a number of options and flexibilities within
available revenue streams and operational approaches that can help to
balance costs and resources.
Federal Reimbursements: As noted above, about half of all SFA
revenues are from Federal reimbursements. These payments are adjusted
annually for changes in food and labor costs by statute.\59\ SLBCS-II
found that in 2005-

[[Page 2538]]

06, for most reimbursable lunches and in most SFAs, reported lunch
production costs were less than the Federal free lunch subsidy by a
small amount, with the difference greatest in SFAs that produce more
meals, resulting in a lower per-meal cost.
---------------------------------------------------------------------------

\59\ The Healthy, Hunger-Free Kids Act of 2010 increases the
Federal subsidy for reimbursable school lunches by 6 cents on
implementation of final regulations to update the school meal
patterns. All SFAs in compliance with the regulations would be
eligible for the increased reimbursement. Further guidance on how
SFAs may fulfill this legislative requirement will be forthcoming
and may be addressed in a subsequent rulemaking.
---------------------------------------------------------------------------

Student Payments: School districts have the discretion to set
student payments for ``paid meals'' and [agrave] la carte foods at
levels of their choosing, so long as the resulting revenues are paid
into the non-profit school food service account. Some currently set
prices for these meals and foods at levels that do not cover the full
cost of production, with Federal payments for free and reduced-price
meals covering the difference. Schools will likely face additional
incentives to adjust their pricing policies so that adequate revenue is
generated to cover the cost of production.\60\
---------------------------------------------------------------------------

\60\ The Healthy, Hunger-Free Kids Act of 2010, requires SFAs to
gradually raise non-Federal revenues for reimbursable paid lunches,
if necessary, until those revenues equaled the difference between
the Federal reimbursements for free and paid lunches, to address the
disparity in SFA revenue between paid and free lunches discussed
above. Raising paid meal prices represents one approach by which
schools may derive increased revenue, but is not a requirement of
the law. Further guidance on how SFAs may fulfill this legislative
requirement will be forthcoming and may be addressed in a subsequent
rulemaking.
---------------------------------------------------------------------------

State and Local Funds: A limited but nonetheless substantial
portion of meal production costs are paid from State and local
government sources. The contributions of these entities may need to
increase to cover costs.
Operational Changes: Like other service businesses, schools may
need to consider changes to their operations to increase efficiency and
meet the requirements of the proposed rule. As noted above, several
hundred HUSSC schools have demonstrated an ability to operate cost-
effective school meals programs that meet many of the proposed rule's
requirements. These schools may offer models for others as
implementation moves forward.

F. Impact on Participation

As noted in Table 12, the cost estimate in this analysis assumes no
net change in student participation following introduction of the
rule's new meal pattern requirements. This assumption reflects
uncertainties in a number of areas, including how schools will reflect
the new requirements in menus, the acceptance of those changes by
students, and potential changes in prices for reimbursable paid meals
to provide additional revenue. These factors are discussed below.
1. Acceptance of Meals
Any revision to the content of school meals or the method of
preparation may have an effect on the acceptance of school meals.
Concerns are often raised that students may react negatively to changes
designed to improve nutrition. USDA launched the School Meals
Initiative for Healthy Children (SMI) in 1995 to help schools improve
the nutritional quality of NSLP and SBP meals. The SMI offers an
opportunity to examine how students react to substantial changes in
school meal patterns.
As a result of the SMI many school food service directors reported
making changes in procurement and preparation practices (Abraham,
2002). For example, they reported increased purchases of low-fat/
reduced-fat foods (81 percent) and fresh fruits and vegetables (75
percent). The majority reported no change in food waste. However, to
the extent that there was change in the amount of food wasted, more
respondents reported a reduction rather than an increase in food waste
(with the exception of cooked vegetables). School food service
directors report that the SMI has generally had a neutral-to-positive
impact on program performance.
SNDA-III found that ``[c]haracteristics of NSLP lunches offered,
including percent of calories from fat, whether dessert or French fries
were frequently offered, and average number of fresh fruits and
vegetables offered per day, were generally not significantly associated
with NSLP participation.'' \61\ This suggests that changes in meal
patterns that enhance nutrition can be well received by students.
Furthermore, the increased emphasis on a healthy school nutrition
environment in recent years, and greater awareness of the importance of
healthy eating habits in schools, may help to support student
acceptance of changes in program meals.
---------------------------------------------------------------------------

\61\ For breakfast, the study estimated that projected
participation rates ``were higher in schools that offered a greater
percentage of calories from fat in the SBP breakfast; however, these
differences were not statistically significant at conventional
levels.'' USDA 2007, vol. II, pp. 113 and 127.
---------------------------------------------------------------------------

There is also a strong and growing school nutrition effort and
infrastructure already in place. For example, Team Nutrition is an FNS
initiative to support healthier meals through training and technical
assistance for food service, nutrition education for children and their
caregivers, and school and community support for healthy eating and
physical activity. Similarly, in 2004 Congress required school
districts to establish local wellness policies; through these policies,
schools have made changes to their school nutrition environments,
improved the quality of foods offered, and students are provided with
more nutritious, healthy choices. In the context of these initiatives,
implementation of the proposed rule will not be an isolated endeavor,
but rather may build upon a range of ongoing local, State and Federal
efforts to promote children's nutrition and health.
2. Impact of Price on Participation
FNS estimates that the average cost of preparing school meals may
increase by 12 percent. SFAs may raise student prices for reimbursable
paid meals to compensate for some of this increase in cost. All else
being equal, increased paid meal prices may reduce NSLP paid-meal
participation. Mathematica[supreg], Inc. modeled the effect of paid
meal prices on student participation as part of the SNDA-III study.\62\
All else equal, students who were not income-eligible for free or
reduced-price meals were less likely to participate in the program when
the full price of the meals was higher. For lunch, the model estimates
a 0.11 percent decrease in participation for each 1 cent increase in
paid lunch prices.\63\ For breakfast, the model estimates a 0.12
percent decrease in participation per 1 cent increase in price.
---------------------------------------------------------------------------

\62\ USDA 2007, vol. II, pp. 116-117, 123-124.
\63\ This relationship between price and participation applies
to prices in the range of $1.50 to $2.00 in SY 2004-2005 dollars. A
much bigger price increase might trigger a bigger reduction in
participation.
---------------------------------------------------------------------------

The model's predicted student participation rate was 54 percent in
schools that charged $2.00 for an NSLP lunch, compared to 59 percent in
schools that charged $1.50. The study also predicts lower breakfast
participation in schools that charged higher prices. Predicted
participation was 10.3 percent in schools that charged $0.70 for an SBP
breakfast versus 7.2 percent in schools that charged $1.00. Since meals
meeting the new requirements will be improved in nutritional content it
is not clear how this factor would balance against the effects of
higher meal prices. Although price changes may be a necessary option
for some SFAs, FNS expects that efforts designed to maintain
participation would be concurrently implemented.

G. Benefits

As noted in the preamble to this proposed rule, NSLA requires that

[[Page 2539]]

schools serving lunches and breakfasts under its program authority
ensure that those meals are consistent with the goals of the most
recent Dietary Guidelines for Americans and the Dietary Reference
Intakes. The proposed rule, by updating program regulations consistent
with Dietary Guidelines goals and aligning the regulations with the
requirements placed on schools under the statute, will ensure that
school meal nutrition requirements reflect current nutrition science,
increase the availability of key food groups, better meet the
nutritional needs of children, and foster healthy eating habits.
In so doing, it also provides a clear means of meeting the
statutory requirements through a food-based meal pattern designed with
the particular circumstances and challenges of school food service in
mind, to ensure that it is feasible for school foodservice operators
and does not jeopardize student and school participation in the meal
programs. A related benefit of the proposal is that it simplifies meal
requirements to create a single, food-based approach to meal planning.
This approach helps to simplify menu planning and monitoring, and
streamline training and technical assistance needs.
Once implemented by schools, USDA projects that this rule will
change the types and quantities of foods prepared, offered and served
through the school meals programs (the sources of the costs described
in this analysis). The proposed rule is expected to result in (1)
increased servings of fruits and vegetables, (2) replacement of
refined-grain foods with whole-grain rich foods, and (3) replacement of
higher-fat dairy products with low-fat varieties. As documented in the
IOM recommendations, each of these changes corresponds to an
inconsistency between the typical diets of school-aged children in the
United States and the Dietary Guidelines/MyPyramid recommendations. In
particular, the report cited an analysis of NHANES 1999-2002 data that
showed that:
Total vegetable intake was only about 40 percent of the
MyPyramid levels, with intake of dark green and orange vegetables less
than 20 percent of MyPyramid levels.
Total fruit intake was about 80 percent of the MyPyramid
levels for children ages 5-8, with far lower levels for older children.
Intake of whole grains was less than one-quarter of
MyPyramid levels, although total grain intake was at or above MyPyramid
levels.
Intake of dairy products varied by age, with the intakes
of the youngest children exceeding MyPyramid levels, while those of
older children were below those levels. However, most dairy consumed
contained 2 percent or more milk fat, while the Dietary Guidelines
recommend fat-free or low-fat dairy products.\64\
---------------------------------------------------------------------------

\64\ IOM 2009, pp. 49-53.
---------------------------------------------------------------------------

In addition, the rule would make significant changes to the level
of sodium in school meals over time. Research suggests that modest
population-wide reductions in dietary salt could substantially reduce
cardiovascular events and medical costs.\65\ More specifically, a
forthcoming study suggests that reducing dietary salt in adolescents
could yield substantial health benefits by decreasing the number of
teenagers with hypertension and the rates of cardiovascular disease and
death as these teenagers reach young and middle age adulthood.\66\
---------------------------------------------------------------------------

\65\ See, for example, Smith-Spangler, 2010; Bibbins-Domingo,
2010.
\66\ Bibbins-Domingo, 2010b.
---------------------------------------------------------------------------

The rule also makes substantial changes in the calorie targets for
meals that are designed to promote healthful energy balance for the
children served by these programs. For the first time, the rule sets
maximum as well as minimum calorie targets, and creates a finer
gradation of calorie levels by age. As a result, minimum calorie
requirements for some groups are reduced by as much as 225 calories per
lunch.\67\ Implemented consistent with other requirements that ensure
that lunches provide appropriate nutrient content, these changes in
calorie levels can help to reduce the energy imbalance that contributes
to obesity among the Nation's children, without compromising nutrition
to support healthy growth and development.
---------------------------------------------------------------------------

\67\ The minimum calorie level for a lunch served to Grade 7
students is 825 calories under current standards (Grades 7-12); this
would change to a range of 600 calories minimum, 700 calories
maximum under the new standards (Grades 6-8).
---------------------------------------------------------------------------

This approach is fully consistent with the recommendations of the
Dietary Guidelines for Americans. Recognizing that the Dietary
Guidelines apply to a total diet, rather than a specific meal or
portion of an individual's consumption, the intention of the proposed
rule is to make changes to school meals nutrition requirements to
promote diets more consistent with the Guidelines among program
participants. Such diets, in turn, are useful behavioral contributors
to health and well-being. As the report of the 2010 Dietary Guidelines
Advisory Committee notes, ``evidence is accumulating that selecting
diets that comply with the Guidelines reduces the risk of chronic
disease and promotes health.'' \68\ The report describes and
synthesizes the evidence linking diet and different chronic disease
risks, including cardiovascular disease and blood pressure, as well as
the effects of dietary patterns on total mortality. Children are a
subpopulation of particular focus for the Committee; the report
emphasizes the increasing common evidence of chronic disease risk
factors, such as glucose intolerance and hypertension, among children,
and explains that ``[e]vidence documents the importance of optimal
nutrition starting during the fetal period through childhood and
adolescence because this has a substantial influence on the risk of
chronic disease with age.'' \69\
---------------------------------------------------------------------------

\68\ Dietary Guidelines Advisory Committee, p. B1-2.
\69\ Dietary Guidelines Advisory Committee, pp. B1-2, B1-3.
---------------------------------------------------------------------------

In response, the report notes improvements in food at schools as a
critical strategy to prevent obesity, and related health risks, among
children. Indeed, the Committee recommends ``[i]mprov[ing] foods sold
and served in schools, including school breakfast, lunch, and after-
school meals and competitive foods so that they meet the
recommendations of the IOM report on school meals (IOM, 2009) and the
key findings of the 2010 DGAC. This includes all age groups of
children, from preschool through high school.'' \70\
---------------------------------------------------------------------------

\70\ Dietary Guidelines Advisory Committee, p. B3-6.
---------------------------------------------------------------------------

The linkage between poor diets and health problems such as
childhood obesity are also a matter of particular policy concern, given
their significant social costs. One in every three children (31.7
percent) ages 2-19 is overweight or obese.\71\ Along with the effects
on our children's health, childhood overweight and obesity imposes
substantial economic costs, and the epidemic is associated with an
estimated $3 billion in direct medical costs.\72\ Perhaps more
significantly, obese children and adolescents are more likely to become
obese as adults.\73\ In 2008, medical spending on adults that was
attributed to obesity increased to an estimated $147 billion.\74\
---------------------------------------------------------------------------

\71\ Ogden et al., 2010.
\72\ Trasande et al., 2009.
\73\ Whitaker et al., 1997; Serdula et al., May 1993.
\74\ Finkelstein et al., 2009.
---------------------------------------------------------------------------

Because of the complexity of factors that contribute both to
overall food consumption and to obesity, we are not able to define a
level of disease or cost reduction that is attributable to the changes
in meals expected to result from implementation of the rule. As the
rule is projected to make substantial improvements in meals served to
more

[[Page 2540]]

than half of all school-aged children on an average school day, we
judge that the likelihood is reasonable that the benefits of the rule
exceed the costs, and that the proposal thus represents a cost-
effective means of conforming NSLP and SBP regulations to the statutory
requirements for school meals.
There are other, corollary benefits to improvement in school meals
that are worthy of note. The changes could increase confidence by
parents and families in the nutritional quality of school meals, which
may encourage more families to opt for them as a reliable source of
nutritious food for their children. Improved school meals can reinforce
school-based nutrition education and promotion efforts and contribute
significantly to the overall effectiveness of the school nutrition
environment in promoting healthful food and physical activity choices.
Finally, the new requirements provide a clearer alignment between
Federal program benefits and national nutrition policy, which can help
to reinforce overall understanding of the linkages between diet and
health.

IV. Alternatives

In response to NSLA Section 9(a)(4) amended into law in 2004, USDA
contracted with IOM to assemble an expert panel to undertake a review
of the nutritional needs of children, the recommendations of the
Dietary Guidelines, and IOM's Dietary Reference Intakes. USDA asked IOM
to develop recommendations for updating NSLP and SBP meal patterns and
nutrition requirements based on that review of need and nutrition
science, with consideration given to operational feasibility and cost.
The USDA contract with IOM called for the creation of a panel with
representatives from the fields of public health, epidemiology,
pediatrics, child nutrition and child nutrition behavior, statistics,
and economics. The contract also called for representatives with
knowledge of cultural differences in food preference and eating habits,
experience in menu planning, and experience in managing and operating a
school lunch and breakfast program. IOM held workshops at which the
panel heard presentations from invited speakers, and solicited public
input. The panel also accepted public comment on its planned approach
to the project.
The process undertaken by IOM was designed to consider different
perspectives and competing priorities. The panel necessarily weighed
the merits of alternatives as it developed a preferred option. USDA's
commitment was to implement IOM's recommendations where feasible. This
commitment is driven by the statutory requirement that schools serve
meals that are consistent with the goals of the Dietary Guidelines.\75\
---------------------------------------------------------------------------

\75\ Section 9(a)(4) and 9(f)(1) of the NSLA (42 U.S.C.
1758(a)(4) and (f)(1)).
---------------------------------------------------------------------------

We did not consider alternatives that depart significantly from
IOM's recommendations and cannot satisfy USDA's statutory obligation.
Nevertheless, the proposed rule makes a few small changes to IOM's
recommendations. In addition, the rule contains a handful of provisions
that are not addressed by IOM. These proposed rule provisions are
summarized below.
The final alternative discussed in this section is to retain the
status quo.

a. Whole Grains

Proposed rule: Within two years of implementation of a final rule
all grains offered to students must be whole grain rich (a minimum
whole grain content of 51 percent).
IOM alternative: Within three years of implementation, the whole
grain content of grain products offered to students must average at
least 50 percent.
The proposed rule aligns the dates of the whole grain transition
with the first intermediate sodium target for ease of program
operation. The IOM alternative introduces additional administrative
disruption, and delays the benefits of the stronger whole grain
requirement by one year. That delay, however, also postpones the added
cost of the stronger requirement. The alternative would reduce the five
year cost of the proposed rule by an estimated $510 million.

b. Sodium Targets

Proposed rule: Reduce sodium content of school meals to the levels
specified by IOM within ten years of a final rule. Set three
intermediate sodium targets, 2 years, 4 years, and 10 years after
implementation of a final rule.
IOM alternative: Reach sodium targets by 2020. Set intermediate
targets every 2 years.
Given the time necessary to publish proposed and final rules,
reaching IOM's recommended sodium target by 2020 would leave relatively
little time for phased implementation. The proposed rule's 10-year
schedule is intended to win greater student acceptance. It also allows
industry and schools added time to reformulate their products and
school recipes between intermediate target dates. A rapid reduction in
the sodium content of school meals would likely reduce participation in
the lunch and breakfast programs, and thus undermine the goal of
improved student nutrition.\76\ Added time may also allow the market to
respond to increased demand for lower sodium foods, reducing upward
pressure on prices and the costs of compliance with the rule. We have
not quantified these risks to student participation or food prices.\77\
---------------------------------------------------------------------------

\76\ See the preamble to the proposed rule for a more thorough
discussion of this issue.
\77\ Section III.B.5 examines the effect of an arbitrary two
percent drop in student participation on the cost of preparing
school meals, and on Federal reimbursements to schools.
---------------------------------------------------------------------------

c. Offer Versus Serve at Breakfast

Proposed rule: Students may decline one item at breakfast, but they
must take at least one fruit or fruit juice or non-starchy vegetable.
IOM alternative: Students may decline one item at breakfast, but
they must take at least one fruit or fruit juice.
The proposed rule recognizes that some schools offer vegetables at
breakfast. The cost effects of this change are minimal.

d. Require Schools To Identify Reimbursable Meals

Proposed rule: Schools are required to identify the components of
the day's reimbursable meals at or near the start of the serving line.
Alternative: Schools are not required to identify the components of
the day's reimbursable meals.
This provision is intended to help students select a reimbursable
meal and avoid a la carte charges. The provision is also meant to
educate students on the content of a balanced, healthy meal. The school
revenue and cost effects of this provision are small.

e. Crediting of Specific Foods

Proposed rule: Schools may credit tomato paste based on volume
served. Schools may not credit snack-type fruit or vegetable products
(such as fruit leather), nor may they credit formulated grain-fruit
products.
Alternative: Schools can only credit tomato paste based on its
calculated whole tomato equivalent. Schools may credit snack-type fruit
and vegetable products and formulated grain-fruit products.
Allowing schools to credit tomato paste based on volume served is
consistent with the treatment of similar products. Disallowing the
crediting of snack-type fruit or vegetable products reinforces the
Dietary Guidelines emphasis on whole fruits and vegetables, and
supports nutrition education to the extent that these foods

[[Page 2541]]

are not recognized by children as fruits or vegetables. In addition,
the crediting of certain fruit snacks was based on an FDA standard of
identity for canned fruit nectar which has been removed from the Code
of Federal Regulations. The crediting of formulated grain-fruit
products is disallowed because those products typically contain high
levels of fortification, rather than naturally occurring nutrients, and
are high in sugar and fat. The effect of these changes on school costs
is minimal.

f. Low Fat Flavored Milk

Proposed rule: Low fat milk cannot be flavored. Only fat-free milk
can be flavored.
Alternative: Schools may allow flavored low fat milk.
The proposed rule is based on the IOM recommendation. FNS
considered allowing schools to offer flavored low fat milk if they
could stay within the proposed rule's calorie ranges. This was
potentially achievable since the calorie difference between plain low
fat milk and flavored low fat milk is modest (about 30 calories). We
ultimately rejected this alternative; allowing only fat-free milk to be
offered in flavored form is intended to reduce students' fat intakes.
The difference in cost between the proposed rule and the alternative is
very small (fat-free milk is less expensive than low fat milk).

g. Phase-In Implementation of IOM Recommendations

Proposed rule: All schools are expected to implement the proposed
rule beginning with school year 2012-2013, with final whole grain
requirements implemented by the school year 2014-2015.
Alternative: Phase-in implementation of the rule based on LEA size.
LEAs with:
More than 25,000 students would implement by SY 2012-2013;
10,000 to 25,000 students would implement by SY 2013-2014;
and
Less than 10,000 schools would implement by SY 2014-2015.
Final whole grain requirements in effect two years after
implementation in each cohort of LEAs.
Schools vary in the extent to which they meet current nutrition
requirements for reimbursable meals. Though most are reasonably
successful in meeting the food group requirements under current rules,
some schools may find it operationally difficult, or too costly, to
prepare, serve, and gain acceptance for meals that satisfy the new food
group and subgroup requirements of the proposed rule. There is
potential concern that the magnitude of the changes required could make
it difficult for some schools to meet the requirements of the proposed
rule by SY 2012-2013.
As an alternative, USDA could consider an approach that would
phase-in the requirements of the rule so that schools that can comply
most readily do so early, and those for which compliance may be more
difficult would have additional time. Though we are not aware of any
evidentiary basis to distinguish groups of schools that may find it
more difficult to meet the proposed requirements than others, we offer
as an alternative scenario the phase-in schedule adopted by Congress
for the requirement to conduct direct certification under Section 104
of the Child Nutrition and WIC Reauthorization Act of 2004 (Public Law
108-265). This gave smaller LEAs more time to meet the requirements
than larger ones. The cost of implementing the rule under this
alternative scenario is shown in Table 15, below:

Table 15--Cost (in Millions) of Proposed Rule With Implementation Phase-In Based on LEA Size
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total 2012-
2012 2013 2014 2015 2016 2016
--------------------------------------------------------------------------------------------------------------------------------------------------------
Food Costs.............................................. $31.4 $243.3 $443.2 $805.1 $918.4 $2,441.4
Labor Costs............................................. 30.6 237.4 432.5 785.6 896.3 2,382.5
State Admin............................................. 0.1 8.9 9.0 9.3 9.6 36.9

Total............................................... 62.1 489.6 884.8 1,600.0 1,824.4 4,860.9
--------------------------------------------------------------------------------------------------------------------------------------------------------

A phase-in of the new meal standards would reduce estimated
benefits as well as costs for those schools not yet phased-in.
Participation in the school meals program is highest among elementary
school students; participation decreases as students move to middle and
high school (see Figure 4). One of the goals of USDA-sponsored IOM
recommendations for updated meal requirements was to ``foster healthy
eating habits'' through exposure to the school meals program.\78\ But,
because of the decrease in participation among older students, the
school meals program has only a limited opportunity to influence the
eating habits of some students. Students who are not introduced to the
proposed meal requirements while still in elementary school may not
benefit at all from the potential positive impact of these changes on
their diets.
---------------------------------------------------------------------------

\78\ IOM 2009, p. 2.
---------------------------------------------------------------------------

h. Do Not Implement IOM Recommendations

Proposed rule: With few minor exceptions, discussed above, the
proposed rule adopts IOM's recommendations.
Alternative: Do not adopt the recommendations, or postpone their
implementation.
By statute, schools are required to serve NSLP and SBP meals that
are consistent with the goals of the Dietary Guidelines.\79\ Given this
mandate, USDA contracted with IOM to review current meal pattern and
nutrition requirements and recommend changes. IOM assembled a panel of
child nutrition experts and school foodservice practitioners. That
panel accepted input from industry, interest groups, and
representatives of the school foodservice community. The panel was
charged with recommending program changes that reflect Dietary
Guidelines goals but are also operationally practical and cost-
efficient, to the extent possible. Although a different review might
have generated a different set of recommendations, any proposal
consistent with Dietary Guidelines goals would be obligated to
recommend increases in the amounts and varieties of vegetables and
fruits offered to students, the substitution of whole grains for
refined grains, and limits on the fat content of milk. These changes
are the principal cost drivers of the IOM recommendations (see Table
11). Alternate proposals to align program requirements with the goals
of the Dietary Guidelines would necessarily confront these same costs,
and thus

[[Page 2542]]

would be unlikely to cost significantly less than the proposed rule.
---------------------------------------------------------------------------

\79\ Section 9(a)(4) and 9(f)(1) of the NSLA (42 U.S.C.
1758(a)(4) and (f)(1)).
---------------------------------------------------------------------------

We did not consider alternatives that would move significantly away
from the objective to align school meal patterns with the goals of the
Dietary Guidelines. Such alternatives include making no change to
program rules, or delaying implementation of the proposed rule. Both of
these would reduce costs relative to the proposed rule.
Taking no action would, of course, forfeit all of the benefits
discussed in section III.G. Delaying implementation would have lesser,
but still significant negative consequences. As noted under alternative
g, students who are not introduced to the proposed meal requirements
while still in elementary school may not benefit at all from delayed
implementation of the rule.
---------------------------------------------------------------------------

\80\ USDA 2007, Vol. II, pp. 39-40.
[GRAPHIC] [TIFF OMITTED] TP13JA11.017

V. References

Abraham, S., M. Chattopadhyay, M. Montgomery, D. M. Steiger, L.
Daft, B. Wilbraham. (Abraham, 2002) The School Meals Initiative
Implementation Study-Third Year Report. U.S. Department of
Agriculture, Food and Nutrition Service.
Bibbins-Domingo K et al. (Bibbins-Domingo, 2010) Projected effect of
dietary salt reductions on future cardiovascular disease. New
England Journal of Medicine, 2010 Feb 18;362(7):590-9. Epub 2010 Jan
20.
Bibbins-Domingo K. (Bibbins-Domingo, 2010b) Abstract 18899:
Cardiovascular Benefits of Dietary Salt Reduction for US
Adolescents. Presented at: American Heart Association Scientific
Sessions 2010; Nov. 13-17; Chicago.
Dietary Guidelines Advisory Committee. Report of the Dietary
Guidelines Advisory Committee on the Dietary Guidelines for
Americans, 2010 (http://www.cnpp.usda.gov/DGAs2010-DGACReport.htm).
Finkelstein, E., Trogdon, J., Cohen J., Dietz, W. (2009). Annual
Medical Spending Attributable to Obesity: Payer- And Service-
Specific Estimates. Health Affairs, 28(5).
Institute of Medicine (IOM 2009). School Meals: Building Blocks for
Healthy Children. Washington, D.C: The National Academies Press.
http://www.fns.usda.gov/ora/MENU/Published/CNP/FILES/SchoolMealsIOM.pdf.
Institute of Medicine (IOM 2009). Nutrition Standards for Foods in
Schools: Leading the Way toward Healthier Youth. Washington, D.C:
The National Academies Press. http://books.nap.edu/openbook.php?record_id=11899.
Maurer, K. The National Evaluation of School Nutrition Programs:
Program Impact on Family Food Expenditures. The American Journal of
Clinical Nutrition 40: August 1984, pp 448-453.
Ogden, C.L., Carroll, M., Curtin, L., Lamb, M., Flegal, K. (2010).
Prevalence of High Body Mass Index in US Children and Adolescents
2007-2008. Journal of American Medical Association, 303(3), 242-249.
Smith-Spangler CM et al. (2010) Population strategies to decrease
sodium intake and the burden of cardiovascular disease: A cost-
effectiveness analysis. Annals of Internal Medicine, 2010 Apr
20;152(8):481-7, W170-3. Epub 2010 Mar 1.
Serdula MK, Ivery D, Coates RJ, Freedman DS. Mayiamson DF. Byers T.
Do obese children become obese adults? A review of the literature.
Prev Med 1993;22:167-177.
Trasande, L., Chatterjee, S. (2009). Corrigendum: The Impact of
Obesity on Health Service Utilization and Costs in Childhood.
Obesity, 17(9).
Whitaker RC, Wright JA, Pepe MS, Seidel KD, Dietz WH. Predicting
obesity in young adulthood from childhood and parental obesity. N
Engl J Med 1997; 37(13):869-873.
U.S. Department of Agriculture, Food and Nutrition Service (USDA
2008). School Lunch and Breakfast Cost Study-II, Final Report, by
Susan Bartlett, et al. http://www.fns.usda.gov/ora/MENU/Published/CNP/FILES/MealCostStudy.pdf.
U.S. Department of Agriculture, Food and Nutrition Service (USDA
2007). School Nutrition Dietary Assessment Study-III by Anne Gordon,
et al. http://www.fns.usda.gov/ora/MENU/Published/CNP/FILES/SNDAIII-SummaryofFindings.pdf.
U.S. Department of Agriculture, Food and Nutrition Service (USDA
2007a). White Paper: USDA Commodities in the National School Lunch
Program.
U.S. Department of Agriculture, Food and Nutrition Service (USDA
2007b). NSLP/SBP Access, Participation, Eligibility, and
Certification Study--Erroneous Payments in the NSLP and SBP, by
Michael Ponza, et al. http://www.fns.usda.gov/ora/MENU/Published/CNP/FILES/apecvol1.pdf.
U.S. Department of Agriculture, Dietary Guidelines Advisory
Committee (USDA

[[Page 2543]]

2004). Report of the Dietary Guidelines Advisory Committee on the
Dietary Guidelines for Americans, 2005 http://www.health.gov/dietaryguidelines/dga2005/report/.
U.S. Department of Agriculture, Food and Nutrition Service (USDA
2001). School Nutrition Dietary Assessment Study-II by Mary Kay Fox,
et al. http://www.fns.usda.gov/ora/MENU/Published/CNP/FILES/SNDAIIfind.pdf.
U.S. Department of Agriculture, Food and Nutrition Service. The
Impact of the School Nutrition Programs on Household Food
Expenditures. Prepared by Mathematica Policy Research, Inc., October
30, 1987.
U.S. Department of Health and Human Services (HHS 2010). The Surgeon
General's Vision for a Healthy and Fit Nation. http://www.surgeongeneral.gov/library/obesityvision/obesityvision2010.pdf.
U.S. Department of Health and Human Services and U.S. Department of
Agriculture (HHS/USDA 2005). Dietary Guidelines for Americans, 6th
Edition. http://www.cnpp.usda.gov/Publications/DietaryGuidelines/2005/2005DGPolicyDocument.pdf.
Wagner, B., B. Senauer, and F.C. Runge. (Wagner, 2007). An Empirical
Analysis of and Policy Recommendations to Improve the Nutritional
Quality of School Meals. Review of Agricultural Economics 29(4):672-
688.

VI. Appendix A

The following tables detail the major steps in the computation
of food cost estimates described in the main body of the impact
analysis. The tables develop both a baseline food cost estimate and
an estimate under the proposed rule.
Note that the dollar values of our baseline food cost estimates
are lower than the figures reported in the SLBCS-II. The primary
reason that our figures differ is that we use SNDA-III rather than
SLBCS-II for baseline totals of food served; we only use the SLBCS-
II for unit prices.\81\ We chose SNDA-III as our source for food
quantities because of its information on student take rates. In
order to estimate the cost of the proposed rule, we need to take the
rule's food group requirements, which are expressed in terms of
quantities that schools must offer to students, and estimate the
quantity of food actually served. The take rates from SNDA-III allow
us to do that; \82\ the SLBCS-II is not designed to estimate take
rates. Because of the relationship between take rates and quantities
served, it would be inappropriate to mix SNDA-III take rates and
SLBCS-II quantities. Because we use SNDA-III take rates to estimate
the cost of serving meals under the proposed rule, we use SNDA-III
quantities to estimate our baseline.
---------------------------------------------------------------------------

\81\ Another small part of the difference in cost is our
omission of items such as snack chips, drinks other than milk and
fruit juice, condiments, and salad dressing; these items are served
in addition to the foods that help satisfy the NSLP and SBP meal
requirements. We exclude them from both the baseline and the
proposed rule estimates under the assumption that they will
contribute similarly to each estimate and will have no effect on the
difference in cost.
\82\ The SNDA-III dataset was designed to allow the computation
of take rates by food item in order to support a nutrient analysis
of school meals.
---------------------------------------------------------------------------

The lower scale of our baseline food cost estimate compared to
the SLBCS-II should not impact our cost estimate of the proposed
rule. As long as the take rates are computed from the same source
for both our baseline and proposed rule estimates, the estimated
cost of an incremental change in quantities offered should not be
biased.
Table A-1 contains total food and labor cost estimates for the
baseline and under the proposed rule. The difference is summarized
in the shaded panel at the bottom of the table. That difference is
the estimated cost of the rule, as presented in Table 6 in section
III.A.1.
Table A-2 shows each of the major inputs into our baseline cost
estimate. The first two columns are the estimated volumes of food
served per meal, expressed in grams, and weighted average prices per
gram. We estimate the cost per meal of prepared and processed foods
without breaking them into food group ingredients. Quantities of
food served per meal are from SNDA-III; unit prices are from SLBCS-
II. The product of these figures give the estimated food cost per
school meal served. We inflate each of the meal components by
historic and projected changes in food group specific prices to
estimate per meal costs through FY 2016. Inflation factors, not
shown in Table A-2, are weighted averages, computed from CPI-U data
from the Bureau of Labor Statistics. The next set of columns
contains projections of meals served through FY 2016. Total baseline
costs, in the five rightmost columns of Table A-2, are the product
of the estimated costs per meal and FNS projections of the number of
meals served.
Our estimate of total cost under the proposed rule is developed
in Tables A-3 and A-4. Table A-3 summarizes the steps that we took
to estimate a per-meal food cost in FY 2012, the year in which the
rule is expected to take effect. Table A-4 takes that FY 2012 figure
and projects total costs through FY 2016.
Table A-3 begins with a set of food group quantities per meal
consistent with proposed rule meal pattern requirements. There is a
considerable amount of work behind these numbers that cannot be
summarized in a simple table. The first three columns of numbers in
Table A-3 represent the quantities of food that may be served to
students, by grade level, on a per-meal basis. These figures include
estimated quantities by food group and for prepared and processed
foods. The process that we used to develop these figures is
described in detail in section III.B.2. The key steps in that
process (not shown in Table A-3) are summarized as follows:
Begin with the food group specific quantities that must
be offered to students under the proposed rule.
Multiply quantities that must be offered by anticipated
student take rates to generate estimated ``target'' amounts that may
be served.
Assume that schools will offer the same amount of
prepared and processed (``combination'') foods as they reported
serving in SY 2004-2005 (from SNDA-III). Estimate the amount of
creditable servings of vegetables, refined grains, whole grains, and
meat or meat alternate satisfied by these combination foods and
subtract those creditable amounts from our food group targets.
The differences between targeted servings and amounts
satisfied by combination foods must be satisfied with non-
combination single-item servings of those foods.
Some of the food group targets satisfied by single-item servings
are negative; see the refined grain figures for all grade groups,
and the meat or meat alternate figure for middle schools in Table A-
3. This means that the combination foods more than satisfy the
serving targets for those foods. We use the negative numbers to
compute the value of that excess and subtract it from our proposed
rule cost estimate.
Table A-3's fourth column of numbers is weighted average prices
per unit of food served for FY 2012. Note that the prices by food
group are different for lunch and breakfast; we estimate different
weighted average prices based on the different mix of foods served
at breakfast and lunch. Our price figures use data from the SLBCS-
II, and are inflated with FNS-computed factors constructed with CPI-
U data (not shown in Table A-3). The product of our food group
serving targets and estimated unit prices give estimated food group
component costs per meal (the three columns under the ``Weighted
Average Price--Dollar Cost per Meal'' header). To this point, all of
the figures are specific to elementary, middle, and high schools.
The last column in Table A-3 uses the percent distribution of meals
served by grade level to estimate an overall weighted average cost
per meal by food group.
Table A-4 resembles Table A-2. It takes the weighted average
prices per meal for combination foods and single-item foods for FY
2012, projects them through FY 2016 using food group specific
inflation factors, then multiplies those inflated per meal figures
by FNS projections of meals served. The final estimated cost of
meals served under the proposed rule is displayed in the last five
columns of the table.
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Initial Regulatory Flexibility Analysis

Proposed Rule: Nutrition Standards in the National School Lunch and
School Breakfast Programs

[RIN 0584-AD59]

Agency: Food and Nutrition Service, USDA.
Background: The Regulatory Flexibility Act (RFA) requires agencies
to consider the impact of their rules on small entities and to evaluate
alternatives that would accomplish the objectives of the rules without
unduly burdening small entities when the rules impose a significant
economic impact on a substantial number of small entities. Inherent in
the RFA is Congress' desire to remove barriers to competition and
encourage agencies to consider ways of tailoring regulations to the
size of the regulated entities.
The RFA does not require that agencies necessarily minimize a
rule's impact on small entities if there are significant legal, policy,
factual, or other reasons for the rule's having such an impact. The RFA
requires only that agencies determine, to the extent feasible, the
rule's economic impact on small entities, explore regulatory
alternatives for reducing any significant economic impact on a
substantial number of such entities, and explain the reasons for their
regulatory choices.

Reasons That Action Is Being Considered

Section 103 of the Child Nutrition and WIC Reauthorization Act of
2004 inserted Section 9(a)(4) into the National School Lunch Act
requiring the Secretary to promulgate rules revising nutrition
requirements, based on the most recent Dietary Guidelines for
Americans, that reflect specific recommendations for increased
consumption of foods and food ingredients offered in school meal
programs. This proposed rule amends Sections 210 and 220 of the
regulations that govern the National School Lunch Program (NSLP) and
the School Breakfast Program (SBP). The proposed rule implements
recommendations of the National Academies' Institute of Medicine (IOM).
Under contract to the United States Department of Agriculture (USDA),
IOM proposed changes to NSLP and SBP meal pattern requirements
consistent with the 2005 Dietary Guidelines and IOM's Dietary Reference
Intakes. The proposed rule advances the mission of the Food and
Nutrition Service (FNS) to provide children access to food, a healthful
diet, and nutrition education in a manner that inspires public
confidence.

Objectives of, and Legal Basis for, the Proposed Rule

Under Section 9(a)(4) and Section 9(f)(1) of the NSLA, schools that
participate in the NSLP or SBP must offer lunches and breakfasts that
are consistent with the goals of the most recent Dietary Guidelines for
Americans. Current nutrition requirements for school lunches and
breakfasts are based on the 1995 Dietary Guidelines and the 1989 RDAs.
(School lunches and breakfasts were not updated when the 2000 Dietary
Guidelines were issued because those recommendations did not require
significant changes to the school meal patterns.) The 2005 Dietary
Guidelines provide more prescriptive and specific nutrition guidance
than earlier releases and require significant changes to school meal
requirements.

Number of Small Entities to Which the Proposed Rule Will Apply

This rule directly regulates the 55 State education agencies and 2
State Departments of Agriculture (SAs) that operate the NSLP and SBP
pursuant to agreements with USDA's Food and Nutrition Service (FNS); in
turn, its provisions apply to entities that prepare and provide NSLP
and SBP meals to students. While SAs are not small entities under the
RFA as State populations exceed the 50,000 threshold for a small
government jurisdiction, many of the service-providing institutions
that work with them to implement the program do meet definitions of
small entities:
There are currently about 19,000 School Food Authorities
(SFAs) participating in NSLP and SBP. More than 99 percent of these
have fewer than 50,000 students.\83\ About 26 percent of SFAs with
fewer than 50,000 students are private. However, private school SFAs
account for only 3 percent of all students in SFAs with enrollments
under 50,000.\84\
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\83\ FNS 742 School Food Verification Survey, School Year 2009-
2010. This number is approximate, not all SFAs are required to
submit the 742 form.
\84\ Ibid. RCCIs include but are not limited to juvenile
detention centers, orphanages, and medical institutions. We do not
have information on the number of children enrolled in these
institutions.
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Nearly 102,000 schools and residential child care
institutions participate in the NSLP. These include more than 90,000
public schools, 6,000 private schools, and about 5,000 residential
child care institutions (RCCIs).\85\ We focus on the impact at the SFA
level in this document, rather than the school level, because SFAs are
responsible for the administration of the NSLP and the SBP.
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\85\ FNS program data for FY 2010.
---------------------------------------------------------------------------

Food service management companies (FSMCs) that prepare
school meals or menus under contract to SFAs are affected indirectly by
the proposed rule. Thirteen percent of public school SFAs contracted
with FSMCs in school year (SY) 2004-2005.\86\ Of the 2,460 firms
categorized as ``food service contractors'' under NAICS code 72231, 96
percent employ fewer than 500 workers.\87\
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\86\ U.S. Department of Agriculture, Food and Nutrition Service,
Office of Research, Nutrition and Analysis, School Nutrition Dietary
Assessment Study-III, Vol. I, 2007, p. 34 http://www.fns.usda.gov/ora/MENU/Published/CNP/FILES/SNDAIII-Vol1.pdf
\87\ Ibid.
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Projected Reporting, Recordkeeping and Other Compliance Requirements

The analysis below covers only those organizations impacted by the
proposed rule that were determined to be small entities.

School Food Authorities (SFA)/Schools

Increased Cost To Produce School Meals

It is estimated that the proposed rule will raise the average cost
of producing and serving school lunches by almost 7 cents and school
breakfasts by 37 cents on initial implementation. By FY 2015, when the
100 percent whole grain rich requirement takes effect, the cost per
lunch will be 14 cents higher than our baseline estimate; the cost per
breakfast will be 50 cents higher. Across all SFAs we estimate that the
total cost of compliance will be $6.8 billion over five years. Although
about 99 percent of SFAs enroll fewer than 50,000 students, they enroll
only about 80 percent of all students. If they serve about 80 percent
of all meals (we do not have data on meals served by SFA size) then
these small entities would incur roughly 80 percent of estimated costs.
Increased costs of producing school meals as a result of the
proposed rule are not expected to fall disproportionally on smaller
SFAs. We estimate the cost of the proposed rule on a per meal basis.
Schools that face average labor and food costs, and have menus typical
of the average school will incur costs directly proportional to their
size. We estimate that those costs will equal our estimated cost per
meal multiplied by the number of meals served.
The most important factors that will separate schools with higher
than

[[Page 2550]]

average per-meal costs from those with lower than average costs are not
necessarily associated with the size of the SFA. For instance, schools
with menus that already emphasize fruits, non-starchy vegetables, and
whole grains will need to make fewer changes, and the costs of
implementation in those schools may be lower than average. Also,
because the per-meal cost of complying with the proposed requirements
is much higher for breakfast than for lunch, the overall costs of
implementation in schools that serve the most school breakfasts
relative to lunches will be higher than the costs faced by schools that
do not serve breakfast.

Increased Cost of Administering School Meals Programs

An initial increase in administrative staff time for training and
implementation is anticipated at the SFA level. The proposed rule
increases the length of State reviews of SFAs through the Coordinated
Review Effort (CRE) by incorporating the requirements of School Meals
Initiative (SMI) reviews, and increases their frequency to once every
three years. SFAs that previously had separate CREs and SMIs may
experience a decrease in burden, because they will undergo just one CRE
every three years, rather than two reviews (one CRE and one SMI) every
five years.
The proposed rule incorporates the provision of training and
technical assistance by SAs to the SFAs. SFAs must, in turn, adjust
their current training agenda to include the new requirements, as no
funding has been provided in the proposed rule to accommodate new
training.
In total, these administrative changes, in the form of
recordkeeping and reporting burden arising from the proposed rule, are
estimated to result in a net change of 8.2 hours for each of about
7,000 SFAs per year. The additional 8.2 hours of record keeping and
reporting burden to SFAs per year would not rise to the level of a
significant impact for RFA purposes.\88\
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\88\ SBA's ``A Guide for Government Agencies'' identifies
several examples of significant impact: A rule that provides a
strong disincentive to seek capital; 175 staff hours per year for
recordkeeping; impacts greater than the $500 fine (in 1980 dollars)
imposed for noncompliance; new capital requirements beyond the reach
of the entity; and any impact less cost-efficient than another
reasonable regulatory alternative.
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Increased Equipment Costs

SFAs may need to purchase new equipment to prepare and serve meals
that comply with the proposed standards. For example, some SFAs may
need to replace fryers with ovens or steamers. In FY 2009, FNS
solicited requests from SFAs for food service equipment grants,
awarding $100 million in 2009 American Recovery and Reinvestment Act
(ARRA) Equipment Grants and an additional $25 million in one-time funds
included in the FY 2010 Appropriations Act. In response to their
solicitations for these funds, State agencies received a total of
approximately $600 million in grant requests from SFAs. The strong
response to these grant programs indicates a substantial demand for
investment in kitchen equipment.
We do not have the data necessary to measure the remaining unmet
demand in smaller SFAs or in SFAs that did not receive grants. However,
much of that demand is driven by the routine need to replace equipment
that is nearing the end of its useful life--a cost that is
appropriately covered by USDA meal reimbursements and other sources of
food service revenue. For recipient SFAs, the grants temporarily freed
some of those revenue sources for other priorities. In the absence of
additional Congressional action, SFAs must again turn to those sources
to meet their ongoing equipment needs.

Options for Addressing Increased Costs

Most schools will have a number of options and flexibilities within
available revenue streams and operational approaches that can help to
balance costs and resources. The primary resources available to SFAs
are listed here.
1. Federal Reimbursements: About half of all SFA revenues are from
Federal reimbursements. These payments are adjusted annually for
changes in food and labor costs by statute. SLBCS-II found that in
2005-06, for most reimbursable lunches and in most SFAs, reported lunch
production costs were less than the Federal free lunch subsidy by a
small amount, with the difference greatest in SFAs that produce more
meals, resulting in a lower per-meal cost.
2. Student Payments: School districts have the discretion to set
student payments for ``paid meals'' and [agrave] la carte foods at
levels of their choosing, so long as the resulting revenues are paid
into the non-profit school food service account. Some currently set
prices for these meals and foods at levels that do not cover the full
cost of production, with Federal payments for free and reduced-price
meals covering the difference. Schools will likely face additional
incentives to adjust their pricing policies so that adequate revenue is
generated to cover the cost of production.
3. State and Local Funds: A limited but nonetheless substantial
portion of meal production costs are paid from State and local
government sources. The contributions of these entities may need to
increase to cover costs.
4. Operational Changes: Like other service businesses, schools may
need to consider changes to their operations to increase efficiency and
meet the requirements of the proposed rule. Several hundred schools
recognized as part of the HealthierUS School Challenge (HUSSC) have
demonstrated an ability to operate cost-effective school meals programs
that meet many of the proposed rule's requirements. These schools may
offer models for others as implementation moves forward.
We recognize that small SFAs, like others, will face substantial
costs and potential challenges in implementing the proposed rule. These
costs are not significantly greater for small SFAs than for larger
ones, as implementation costs are driven primarily by factors other
than SFA size. Nevertheless, we do not discount the special challenges
that may face some smaller SFAs. As a group, small SFAs may have less
flexibility to adjust resources in response to immediate budgetary
needs. The time between publication of the proposed and final rules
offers these SFAs some opportunity, however, for advance planning.

Food Service Management Companies

FSMCs are potentially indirectly affected by the proposed rule.
FSMCs that provide school meals under contract to SFAs will need to
alter those products to conform to the proposed changes in meal
requirements. In addition, FSMCs may find new opportunities to work
with SFAs that currently do not contract for food service assistance, a
``beneficial impact'' of the regulation. Consistent with SBA guidance,
which notes that ``[t]he courts have held that the RFA requires an
agency to perform a regulatory flexibility analysis of small entity
impacts only when a rule directly regulates them'',\89\ we do not
attempt to quantify the economic effect of the proposed rule on FSMCs.
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\89\ SBA, ``A Guide for Government Agencies'', p. 20.
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Federal Rules That May Duplicate, Overlap or Conflict With the Proposed
Rule

FNS is unaware of any such Federal rules or laws.

[[Page 2551]]

Significant Alternatives

The proposed rule establishes a single effective date that applies
to all local educational agencies (LEAs), regardless of size. Schools
vary in the extent to which they meet current nutrition requirements
for reimbursable meals. Though most are reasonably successful in
meeting the food group requirements under current rules, some schools
may find it operationally difficult, or too costly, to prepare and
serve meals that satisfy the new requirements of the proposed rule by
SY 2012-2013.
Though we are not aware of any evidentiary basis to distinguish
groups of schools that may find it more difficult to meet the proposed
requirements than others, the regulatory impact analysis considers as
an alternative the phase-in adopted by Congress for the requirement to
conduct direct certification under Section 104 of the Child Nutrition
and WIC Reauthorization Act of 2004 (Public Law 108-265). LEAs with
more than 25,000 students could be required to implement by SY 2012-
2013, those with 10,000 to 25,000 students by SY 2013-2014, and those
with less than 10,000 students by SY 2014-2015. Final whole grain
requirements would become effective two years after implementation in
each cohort of LEAs. Such an approach would give smaller LEAs more time
to meet the requirements than larger ones and reduce the cost and
impact of the rule during the first five years of implementation.
It would also, however, reduce the potential benefits of providing
more nutritious meals to the children in those schools. Participation
in the school meals program is highest among elementary school
students; participation decreases as students move to middle and high
school. One of the stated goals of IOM was to ``foster healthy eating
habits'' through exposure to the school meals program. Because of the
decrease in participation among older students, the school meals
program has only a limited opportunity to influence the eating habits
of some students. Students in smaller SFAs who are not introduced to
the proposed meal requirements while still in elementary school may not
benefit at all from delayed implementation of the rule. Because a
phased implementation would deny some students the benefits of
healthier school meals, this alternative schedule was not proposed.

List of Subjects

7 CFR Part 210

Grant programs--education, Grant programs--health, Infants and
children, Nutrition, Penalties, Reporting and record keeping
requirements, School breakfast and lunch programs, Surplus agricultural
commodities.

7 CFR Part 220

Grant programs--education, Grant programs--health, Infants and
children, Nutrition, Reporting and record keeping requirements, School
breakfast and lunch programs.

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 continues to read as
follows:

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

2. In Sec. 210.2:
a. Revise the definition of Food component;
b. Revise the definition of Food item;
c. Amend the definition of Lunch by removing the words ``applicable
nutrition standards and portion sizes'' and adding in their place the
words ``meal requirements'';
d. Remove the definition of Menu item;
e. Remove the definition of Nutrient Standard Menu Planning/
Assisted Nutrient Standard Menu Planning;
f. Revise the definition of School week; and
g. Add the definition of Whole grains.
The revisions and additions read as follows:

Sec. 210.2 Definitions.

* * * * *
Food component means one of the five food groups which comprise
reimbursable meals. The five food components are: Meats/meat
alternates, grains, vegetables, fruits, and fluid milk.
* * * * *
Food item means a specific food offered within the five food
components: Meats/meat alternates, grains, vegetables, fruits, and
fluid milk.
* * * * *
School week means the period of time used to determine compliance
with the meal requirements in Sec. 210.10. The period shall be a
normal school week of five consecutive days; however, to accommodate
shortened weeks resulting from holidays and other scheduling needs, the
period shall be a minimum of three consecutive days and a maximum of
seven consecutive days. Weeks in which school lunches are offered less
than three times shall be combined with either the previous or the
coming week.
* * * * *
Whole grains means grains that consist of the intact, ground,
cracked, or flaked grain seed whose principal anatomical components--
the starchy endosperm, germ and bran--are present in the same relative
proportions as they exist in the intact grain seed. Whole grain-rich
products must conform to FNS guidance to count toward the grains
component.
* * * * *
3. Revise Sec. 210.10 to read as follows:

Sec. 210.10 Meal requirements for lunches and requirements for
afterschool snacks.

(a) General requirements. (1) General nutrition requirements.
Schools must offer nutritious, well-balanced, and age-appropriate meals
to all the children they serve to improve their diets and safeguard
their health.
(i) Requirements for lunch. School lunches offered to children age
5 or older must meet, at a minimum, the meal requirements in paragraph
(b) of this section. Schools must follow a food-based menu planning
approach and produce enough food to offer each child the quantities
specified in the meal pattern established in paragraph (c) of this
section for each age/grade group served in the school. In addition,
school lunches must meet the dietary specifications in paragraph (f) of
this section. Schools offering lunches to children ages 1 to 4 and
infants must meet the meal pattern requirements in paragraph (p) of
this section.
(ii) Requirements for afterschool snacks. Schools offering
afterschool snacks in afterschool care programs must meet the meal
pattern requirements in paragraph (o) of this section. Schools must
plan and produce enough food to offer each child the minimum quantities
under the meal pattern in paragraph (o) of this section. The component
requirements for meal supplements served under the Child and Adult Care
Food Program authorized under part 226 of this chapter also apply to
afterschool snacks served in accordance with paragraph (o) of this
section.
(2) Unit pricing. Schools must price each meal as a unit. Schools
need to consider participation trends in an effort to provide one
reimbursable lunch and, if applicable, one reimbursable afterschool
snack for each child every school day. If there are leftover meals,
schools may offer them to the students but cannot get reimbursement for
them. Schools must identify, near or at the beginning of the serving
line(s), the food items that constitute the unit-priced reimbursable
school meal(s).
(3) Production and menu records. Schools or school food
authorities, as

[[Page 2552]]

applicable, must keep production and menu records for the meals they
produce. These records must show how the meals offered contribute to
the required food components and food quantities for each age/grade
group every day. Labels or manufacturer specifications for food
products and ingredients used to prepare school meals must indicate
zero grams of trans fat per serving (less than 0.5 grams). Schools or
school food authorities must maintain records of the latest nutritional
analysis of the school menus conducted by the State agency. Production
and menu records must be maintained in accordance with FNS guidance.
(b) Meal requirements for school lunches. School lunches for
children ages 5 and older must reflect food and nutrition requirements
specified by the Secretary. Compliance with these requirements is
measured as follows:
(1) On a daily basis: (i) Meals offered to each age/grade group
must include the food components and food quantities specified in the
meal pattern in paragraph (c) of this section;
(ii) Food products or ingredients used to prepare meals must
contain zero grams of trans fat per serving or a minimal amount of
naturally-occurring trans fat; and
(iii) Meals selected by each student must have the number of food
components required for a reimbursable meal and include at least one
fruit or vegetable.
(2) Over a 5-day school week: (i) Average calorie content of meals
offered to each age/grade group must be within the minimum and maximum
calorie levels specified in paragraph (f) of this section;
(ii) Average saturated fat content of the meals offered to each
age/grade group must be less than 10 percent of total calories; and
(iii) Average sodium content of the meals offered to each age/grade
group must not exceed the maximum level specified in paragraph (f) of
this section.
(c) Meal pattern for school lunches. Schools must offer the food
components and quantities required in the lunch meal pattern
established in the following table:

[[Page 2553]]

[GRAPHIC] [TIFF OMITTED] TP13JA11.023

(1) Age/grade groups. Schools must plan menus for students using
the following age/grade groups: grades K-5 (ages 5-10), grades 6-8
(ages 11-13), and grades 9-12 (ages 14-18). If an unusual grade
configuration in a school prevents the use of these established age/
grade groups, students in grades K-5 and grades 6-8 may be offered the
same food quantities at lunch provided that the calorie and sodium
standards for each age/grade group are met. No customization of the
established age/grade groups is allowed.
(2) Food components. Schools must offer students in each age/grade
group the food components specified in paragraph (c) of this section.
(i) Meats/meat alternates component. Schools must offer meats/meat
alternates daily as part of the lunch meal pattern. The quantity of
meats/meat alternates must be the edible portion as served. This
component must be served in a main dish or in a main dish and only one
other food item. Schools without daily choices in this component should
not serve any one meat alternate or form of meat (for example, ground,
diced, pieces) more than three times in the same week. If a portion
size of this component does not meet the daily requirement for a
particular age/grade group, schools may supplement it with another
meats/meat alternates to meet the full requirement. Schools may adjust
the daily quantities of this component provided that a minimum of one
ounce is offered daily and the total weekly requirement is met over a
five-day period.
(A) Enriched macaroni. Enriched macaroni with fortified protein as
defined in Appendix A to this part may be used to meet part of the
meats/meat alternates requirement when used as specified in Appendix A
to this part. An enriched macaroni product with fortified protein as
defined in Appendix A to this part may be used to meet part

[[Page 2554]]

of the meats/meat alternates component or the grains component but not
as both food components in the same lunch.
(B) Nuts and seeds. Nuts and seeds and their butters are allowed as
meat alternates in accordance with program guidance. Acorns, chestnuts,
and coconuts may not be used because of their low protein and iron
content. Nut and seed meals or flours may be used only if they meet the
requirements for Alternate Protein Products established in Appendix A
to this part. Nuts or seeds may be used to meet no more than one-half
(50 percent) of the meats/meat alternates component with another meats/
meat alternates to meet the full requirement.
(C) Yogurt. Yogurt may be used to meet all or part of the meats/
meat alternates component. Yogurt may be plain or flavored, unsweetened
or sweetened. Noncommercial and/or non-standardized yogurt products,
such as frozen yogurt, drinkable yogurt products, homemade yogurt,
yogurt flavored products, yogurt bars, yogurt covered fruits and/or
nuts or similar products are not creditable. Four ounces (weight) or
\1/2\ cup (volume) of yogurt equals one ounce of the meats/meat
alternates requirement.
(ii) Fruits component. Schools must offer fruits daily as part of
the lunch menu. Fruits that are fresh; frozen without sugar; canned in
light syrup, water or fruit juice; or dried may be offered to meet the
requirements of this paragraph. All fruits are credited based on their
volume as served, except that \1/4\ cup of dried fruit counts as \1/2\
cup of fruit. Only pasteurized, full-strength fruit juice may be used,
and may be credited to meet no more than one-half of the fruits
component.
(iii) Vegetables component. Schools must offer vegetables daily as
part of the lunch menu. Fresh, frozen, or canned vegetables and dried
legumes may be offered to meet this requirement. All vegetables are
credited based on their volume as served, except that 1 cup of leafy
greens counts as \1/2\ cup of vegetables. Pasteurized, full-strength
vegetable juice may be used to meet no more than one-half of the
vegetable requirement. Cooked dry beans or peas may be counted as
either a vegetable or as a meat alternate but not as both in the same
meal. Vegetable offerings at lunch must include the following vegetable
subgroups in the quantities specified in the meal pattern in paragraph
(c) of this section:
(A) Dark green vegetables. This subgroup includes bok choy,
broccoli, collard greens, dark green leafy lettuce, kale, mustard
greens, romaine lettuce, spinach, turnip greens, and watercress;
(B) Orange vegetables. This subgroup includes acorn squash,
butternut squash, carrots, pumpkin, and sweet potato;
(C) Legumes (dry beans). This subgroup includes black beans, black-
eyed peas, garbanzo beans, green peas, kidney beans, lentils, lima
beans, soy beans, split peas, and white beans;
(D) Starchy vegetables. This subgroup includes corn, green peas,
lima beans, and white potatoes. Green peas and fresh, frozen, or canned
(not dried) lima beans are considered part of this subgroup and part of
the legumes subgroup, but must be counted in one subgroup only in the
same meal; and
(E) Other vegetables. This subgroup includes all other fresh,
frozen, and canned vegetables, cooked or raw, including tomatoes,
tomato juice, iceberg lettuce, green beans, and onions.
(iv) Grains component. (A) Enriched or whole grains. All grains
must be enriched or whole grain-rich, or made with enriched or whole
grain meal or flour, in accordance with the most recent grains guidance
from FNS.
(B) Daily and weekly servings. The grains requirement is based on
minimum daily servings plus total servings over a five-day school week.
Half of the grains offered during the school week must meet the whole
grain-rich criteria specified in FNS guidance. Two years post
implementation of the final rule all grains offered during the school
week must meet the whole grain-rich criteria specified in FNS guidance.
The whole grain-rich criteria may be updated to reflect additional
information provided voluntarily by industry on the food label or a
whole grains definition by the Food and Drug Administration. Schools
serving lunch 6 or 7 days per week must increase the weekly grains
quantity by approximately 20 percent (1/5th) for each additional day.
When schools operate less than 5 days per week, they may decrease the
weekly quantity by approximately 20 percent (1/5th) for each day less
than five. The servings for biscuits, rolls, muffins, pastas, cereals,
and other grains varieties are specified in program guidance.
(C) Desserts. Schools may count up to one grain-based dessert per
day towards meeting the grains requirement as specified in the Grains/
Bread Instruction issued by FNS.
(v) Fluid milk component. Fluid milk must be offered daily in
accordance with paragraph (d) of this section.
(3) Food components in outlying areas. Schools in American Samoa,
Puerto Rico and the Virgin Islands may serve vegetables such as yams,
plantains, or sweet potatoes to meet the grains component.
(4) Adjustments to the school menus. Schools must adjust future
menu cycles to reflect production and how often the food items are
offered. Schools may need to change the foods offered given the
students' selections and may need to modify the recipes and other
specifications to make sure that the meal requirements are met.
(5) Standardized recipes. All schools must develop and follow
standardized recipes. A standardized recipe is a recipe that was tested
to provide an established yield and quantity using the same ingredients
for both measurement and preparation methods. Standardized recipes
developed by USDA/FNS are in the Child Nutrition Database. If a school
has its own recipes, they may seek assistance from the State agency or
school food authority to standardize the recipes. Schools must add any
local recipes to their local database as outlined in FNS guidance.
(6) Processed foods. The Child Nutrition Database includes a number
of processed foods. Schools may use purchased processed foods that are
not in the Child Nutrition Database. Schools or the State agency must
add any locally purchased processed foods to their local database as
outlined in FNS guidance. The State agencies must obtain the levels of
calories, saturated fat, and sodium in the processed foods.
(7) Menu substitutions. Schools should always try to substitute
nutritionally similar foods.
(d) Fluid milk requirement. (1) Types of fluid milk. (i) Schools
must offer students a variety of fluid milk. Milk must be fat-free or
low-fat. Milk with higher fat content is not allowed. Fat-free fluid
milk may be flavored or unflavored, and low-fat fluid milk must be
unflavored. Lactose-free fluid milk may also be offered.
(ii) All fluid milk served in the Program must be pasteurized fluid
milk which meets State and local standards for such milk. All fluid
milk must have vitamins A and D at levels specified by the Food and
Drug Administration and must be consistent with State and local
standards for such milk.
(2) Inadequate fluid milk supply. If a school cannot get a supply
of fluid milk, it can still participate in the Program under the
following conditions:
(i) If emergency conditions temporarily prevent a school that
normally has a supply of fluid milk from obtaining delivery of such
milk, the State agency may allow the school to serve meals during the
emergency period with an alternate form of fluid milk or without fluid
milk.

[[Page 2555]]

(ii) If a school is unable to obtain a supply of any type of fluid
milk on a continuing basis, the State agency may approve the service of
meals without fluid milk if the school uses an equivalent amount of
canned milk or dry milk in the preparation of the meals. In Alaska,
Hawaii, American Samoa, Guam, Puerto Rico, and the Virgin Islands, if a
sufficient supply of fluid milk cannot be obtained, ``fluid milk''
includes reconstituted or recombined fluid milk, or as otherwise
allowed by FNS through a written exception.
(3) Fluid milk substitutes. If a school chooses to offer one or
more substitutes for fluid milk for non-disabled students with medical
or special dietary needs, the nondairy beverage(s) must provide the
nutrients listed in the following table. Fluid milk substitutes must be
fortified in accordance with fortification guidelines issued by the
Food and Drug Administration. A school need only offer the nondairy
beverage(s) that it has identified as allowable fluid milk substitutes
according to the following chart.

------------------------------------------------------------------------
Per cup (8
Nutrient fl oz)
------------------------------------------------------------------------
Calcium.................................................... 276 mg.
Protein.................................................... 8 g.
Vitamin A.................................................. 500 IU.
Vitamin D.................................................. 100 IU.
Magnesium.................................................. 24 mg.
Phosphorus................................................. 222 mg.
Potassium.................................................. 349 mg.
Riboflavin................................................. 0.44 mg.
Vitamin B-12............................................... 1.1 mcg.
------------------------------------------------------------------------

(4) Restrictions on the sale of fluid milk. A school participating
in the Program, or a person approved by a school participating in the
Program, must not directly or indirectly restrict the sale or marketing
of fluid milk (as identified in paragraph (d)(1) of this section) at
any time or in any place on school premises or at any school-sponsored
event.
(e) Offer versus serve. School lunches must offer daily the five
food components specified in the meal pattern in paragraph (c) of this
section. Under offer versus serve, students in senior high (as defined
by the State educational agency) must be allowed to decline two items
at lunch but must select at least one fruit or vegetable. Students
below the senior high level may participate in offer versus serve at
the discretion of the school food authority. The price of a
reimbursable lunch does not change if the student does not take a food
item or requests smaller portions. Schools may not require a student to
take the entr[eacute]e, which is a combination of foods or a single
food item that is offered as the main course.
(f) Dietary specifications. (1) Calories. School lunches offered to
each age/grade group must meet, on average over the school week, the
minimum and maximum calorie levels specified in the following table:

----------------------------------------------------------------------------------------------------------------
Calorie ranges for lunch
--------------------------------------------------------
Grades K-5 Grades 6-8 Grades 9-12
----------------------------------------------------------------------------------------------------------------
Min-max calories (kcal) a b............................ 550-650 600-700 750-850
----------------------------------------------------------------------------------------------------------------
\a\ The average daily amount for a 5-day school week must fall within the minimum and maximum levels.
\b\ Discretionary sources of calories (solid fats and added sugars) may be added to the meal pattern if within
the specifications for calories, saturated fat, trans fat, and sodium.

(2) Saturated fat. School lunches offered to all age/grade groups
must, on average over the school week, provide less than 10 percent of
total calories from saturated fat.
(3) Sodium. School lunches offered to each age/grade group must
meet, on average over the school week, the levels of sodium specified
in the following table:
[GRAPHIC] [TIFF OMITTED] TP13JA11.024

[[Page 2556]]

(4) Trans fat. Food products and ingredients used to prepare school
meals must contain zero grams of trans fat (less than 0.5 grams) per
serving. Schools must add the trans fat specification and request the
required documentation (nutrition label or manufacturer specifications)
in their procurement contracts. Documentation for food products and
food ingredients must indicate zero grams of trans fat per serving.
Meats that contain a minimal amount of naturally-occurring trans fats
are allowed in the school meal programs.
(g) Compliance assistance. The State agency and school food
authority must provide technical assistance and training to assist
schools in planning lunches that meet the meal pattern in paragraph (c)
of this section and the calorie, saturated fat, sodium, and trans fat
specifications established in paragraph (f) of this section. Compliance
assistance may be offered during annual training, onsite visits, and/or
administrative reviews.
(h) State Agency responsibilities for monitoring dietary
specifications. (1) Calories, saturated fat and sodium. As part of the
administrative review authorized under Sec. 210.18 of this chapter,
State agencies must conduct a nutrient analysis for the school(s)
selected for review to evaluate the average levels of calories,
saturated fat, and sodium of the lunches offered to students in grades
K and above during the review period. The nutrient analysis must be
conducted in accordance with the procedures established in paragraph
(i)(3) of this section. If the results of the nutrient analysis
indicate that the school lunches are not meeting the standards for
calories, saturated fat, and sodium specified in paragraph (f) of this
section, the State agency or school food authority must provide
technical assistance and require the reviewed school to take corrective
action to meet the established standards.
(2) Trans fat. During the administrative review, State agencies
must verify that the food products or ingredients used by the reviewed
school(s) contain zero grams of trans fat (less than 0.5 grams) per
serving.
(i) State agency's responsibilities for nutrient analyses. (1)
Conducting the nutrient analyses. State agencies must conduct a
nutrient analysis of the reimbursable meals offered to children in
grades K and above by a school selected for administrative review under
Sec. 210.18 of this chapter. The nutrient analysis must be conducted
in accordance with the procedures established in paragraph (i)(3) of
this section. The purpose of the nutrient analysis is to determine the
average levels of calories, saturated fat, and sodium in the meals
offered over a school week. Unless offered as part of a reimbursable
meal, foods of minimal nutritional value (see appendix B to part 210)
are not included in the nutrient analysis.
(2) Software elements. (i) The Child Nutrition Database. The
nutrient analysis is based on the USDA Child Nutrition Database. This
database is part of the software used to do a nutrient analysis.
Software companies or others developing systems for schools may contact
FNS for more information about the database.
(ii) Software evaluation. FNS or an FNS designee evaluates any
nutrient analysis software before it may be used in schools. FNS or its
designee determines if the software, as submitted, meets the minimum
requirements. The approval of software does not mean that FNS or USDA
endorses it. The software must be able to perform a weighted average
analysis after the basic data is entered. The combined analysis of the
lunch and breakfast programs is not allowed.
(3) Nutrient analysis procedures. (i) Weighted averages. State
agencies must include all foods offered in the reimbursable meals in
the nutrient analysis. Foods items are included based on the portion
sizes and projected serving amounts. They are also weighted based on
their proportionate contribution to the meals offered. This means that
food items offered more frequently are weighted more heavily than those
not offered as frequently. State agencies calculate weighting as
indicated by FNS guidance and by the guidance provided by the software.
(ii) Analyzed nutrients. The analysis determines the average levels
of calories, saturated fat, and sodium in the meals offered over a
school week. It includes all food items offered by the reviewed school
over a two-week period.
(4) Comparing the results of the nutrient analysis. Once the
procedures in paragraph (i)(3) of this section are completed, State
agencies must compare the results of the analysis to the calorie,
saturated fat, and sodium levels established in Sec. 210.10 or Sec.
220.8, as appropriate, for each age/grade group to evaluate the
school's compliance with the meal requirements.
(j) State agency's responsibilities for compliance monitoring.
Compliance with the meal requirements in paragraph (b) of this section,
including dietary specifications for calories, saturated fat and
sodium, will be monitored by the State agency through administrative
reviews authorized in Sec. 210.18 of this chapter.
(k) Menu choices at lunch. (1) Availability of choices. Schools may
offer children a selection of nutritious foods within a reimbursable
lunch to encourage the consumption of a variety of foods. Children who
are eligible for free or reduced price lunches must be allowed to take
any reimbursable lunch or any choices offered as part of a reimbursable
lunch. Schools may establish different unit prices for each
reimbursable lunch offered provided that the benefits made available to
children eligible for free or reduced price lunches are not affected.
(2) Opportunity to select. Schools that choose to offer a variety
of reimbursable lunches, or provide multiple serving lines, must make
all required food components available to all students, on every lunch
line, in at least the minimum required amounts.
(l) Requirements for lunch periods. (1) Timing. Schools must offer
lunches meeting the requirements of this section during the period the
school has designated as the lunch period. Schools must offer lunches
between 10 a.m. and 2 p.m. Schools may request an exemption from these
times from the State agency.
(2) Adequate lunch periods. FNS encourages schools to provide
sufficient lunch periods that are long enough to give all students
adequate time to be served and to eat their lunches.
(m) Exceptions and variations allowed in reimbursable meals. (1)
Exceptions for disability reasons. Schools must make substitutions in
lunches and afterschool snacks for students who are considered to have
a disability under 7 CFR 15b.3 and whose disability restricts their
diet. Substitutions must be made on a case by case basis only when
supported by a written statement of the need for substitution(s) that
includes recommended alternate foods, unless otherwise exempted by FNS.
Such statement must be signed by a licensed physician.
(2) Exceptions for non-disability reasons. Schools may make
substitutions for students without disabilities who cannot consume the
regular lunch or afterschool snack because of medical or other special
dietary needs. Substitutions must be made on a case by case basis only
when supported by a written statement of the need for substitutions
that includes recommended alternate foods, unless otherwise exempted by
FNS. Except with respect to substitutions for fluid milk, such a
statement must be signed by a recognized medical authority.

[[Page 2557]]

(i) Fluid milk substitutions for non-disability reasons. Schools
may make substitutions for fluid milk for non-disabled students who
cannot consume fluid milk due to medical or special dietary needs. A
school that selects this option may offer the nondairy beverage(s) of
its choice, provided the beverage(s) meets the nutritional standards
established under paragraph (d) of this section. Expenses incurred when
providing substitutions for fluid milk that exceed program
reimbursements must be paid by the school food authority.
(ii) Requisites for fluid milk substitutions. (A) A school food
authority must inform the State agency if any of its schools choose to
offer fluid milk substitutes other than for students with disabilities;
and
(B) A medical authority or the student's parent or legal guardian
must submit a written request for a fluid milk substitute identifying
the medical or other special dietary need that restricts the student's
diet.
(iii) Substitution approval. The approval for fluid milk
substitution must remain in effect until the medical authority or the
student's parent or legal guardian revokes such request in writing, or
until such time as the school changes its substitution policy for
nondisabled students.
(3) Variations for ethnic, religious, or economic reasons. Schools
should consider ethnic and religious preferences when planning and
preparing meals. Variations on an experimental or continuing basis in
the food components for the meal pattern in paragraph (c) of this
section may be allowed by FNS. Any variations must be consistent with
the food and nutrition requirements specified under this section and
needed to meet ethnic, religious, or economic needs.
(4) Exceptions for natural disasters. If there is a natural
disaster or other catastrophe, FNS may temporarily allow schools to
serve meals for reimbursement that do not meet the requirements in this
section.
(n) Nutrition disclosure. To the extent that school food
authorities identify foods in a menu, or on the serving line or through
other communications with program participants, school food authorities
must identify products or dishes containing more than 30 parts fully
hydrated alternate protein products (as specified in appendix A of this
part) to less than 70 parts beef, pork, poultry or seafood on an
uncooked basis, in a manner which does not characterize the product or
dish solely as beef, pork, poultry or seafood. Additionally, FNS
encourages schools to inform the students, parents, and the public
about efforts they are making to meet the meal requirements for school
lunches.
(o) Afterschool snacks. Eligible schools operating afterschool care
programs may be reimbursed for one afterschool snack served to a child
(as defined in Sec. 210.2) per day.
(1) Eligible schools mean schools that:
(i) Operate school lunch programs under the Richard B. Russell
National School Lunch Act; and
(ii) Sponsor afterschool care programs as defined in Sec. 210.2.
(2) Afterschool snacks shall contain two different components from
the following four:
(i) A serving of fluid milk as a beverage, or on cereal, or used in
part for each purpose;
(ii) A serving of meat or meat alternate. Nuts and seeds and their
butters listed in program guidance are nutritionally comparable to meat
or other meat alternates based on available nutritional data. Acorns,
chestnuts, and coconuts are excluded and shall not be used as meat
alternates due to their low protein content. Nut or seed meals or
flours shall not be used as a meat alternate except as allowed under
appendix A of this part;
(iii) A serving of vegetable(s) or fruit(s) or full-strength
vegetable or fruit juice, or an equivalent quantity of any combination
of these foods. All fruits and vegetables are credited based on their
volume as served. Juice may not be served when fluid milk is served as
the only other component;
(iv) A serving of whole-grain or enriched bread; or an equivalent
serving of a bread product, such as cornbread, biscuits, rolls, or
muffins made with whole-grain or enriched meal or flour; or a serving
of cooked whole-grain or enriched pasta or noodle products such as
macaroni, or cereal grains such as enriched rice, bulgur, or enriched
corn grits; or an equivalent quantity of any combination of these
foods.
(3) Afterschool snacks served to infants ages birth through 11
months must meet the requirements in paragraph (o)(3)(iv) of this
section. Foods offered as meal supplements must be of a texture and a
consistency that are appropriate for the age of the infant being
served. The foods must be served during a span of time consistent with
the infant's eating habits. For those infants whose dietary needs are
more individualized, exceptions to the meal pattern must be made in
accordance with the requirements found in paragraph (m) of this
section.
(i) Breastmilk and iron-fortified formula. Either breastmilk or
iron-fortified infant formula, or portions of both, must be served for
the entire first year. Snacks containing breastmilk and snacks
containing iron-fortified infant formula supplied by the school are
eligible for reimbursement. However, infant formula provided by a
parent (or guardian) and breastmilk fed directly by the infant's
mother, during a visit to the school, contribute to a reimbursable
snack only when the school supplies at least one component of the
infant's snack.
(ii) Fruit juice. Juice should not be offered to infants until they
are 6 months of age and ready to drink from a cup. Fruit juice served
as part of the meal pattern for infants 8 through 11 months must be
full-strength and pasteurized.
(iii) Solid foods. Solid foods of an appropriate texture and
consistency are required only when the infant is developmentally ready
to accept them. The school should consult with the infant's parent (or
guardian) in making the decision to introduce solid foods. Solid foods
should be introduced one at a time, on a gradual basis, with the intent
of ensuring the infant's health and nutritional well-being.
(iv) Infant meal pattern. Meal supplements for infants must
include, at a minimum, breastmilk or iron-fortified infant formula, or
portions of both, in the appropriate amount indicated for the infant's
age. For some breastfed infants who regularly consume less than the
minimum amount of breastmilk per feeding, a serving of less than the
minimum amount of breastmilk may be offered. In these situations,
additional breastmilk must be offered if the infant is still hungry.
Some infants may be developmentally ready to accept an additional food
component. Meal supplements are reimbursable when schools provide all
of the components in the Supplements for Infants table that the infant
is developmentally ready to accept.
(4) The minimum amounts of food components to be served as meal
supplements follow. Select two different components from the four
listed in the Supplements for Infants table (Juice may not be served
when fluid milk is served as the only other component). A serving of
bread/bread alternate must be made from whole-grain or enriched meal or
flour. It is required only when the infant is developmentally ready to
accept it.

[[Page 2558]]

Supplements for Infants
----------------------------------------------------------------------------------------------------------------
Birth through 3 months 4 through 7 months 8 through 11 months
----------------------------------------------------------------------------------------------------------------
Supplement (snack)................... 4-6 fl. oz. breastmilk 4-6 fl. oz. breastmilk 2-4 fl. oz. breastmilk
1,2 or formula \3\. 1,2 or formula \3\. 1,2, formula \3\, or
fruit juice \4\; 0-\1/
2\ bread \5\ or 0-2
crackers \5\
----------------------------------------------------------------------------------------------------------------
\1\ It is recommended that breastmilk be served in place of formula from birth through 11 months.
\2\ For some breastfed infants who regularly consume less than the minimum amount of breastmilk per feeding, a
serving of less than the minimum amount of breastmilk may be offered with additional breastmilk offered if the
infant is still hungry.
\3\ Infant formula must be iron-fortified.
\4\ Fruit juice must be full-strength and pasteurized.
\5\ Bread and bread alternates must be made from whole grain or enriched meal or flour. A serving of this
component must be optional.

(p) Lunches for preschoolers and infants. (1) Requirements for
preschooler's lunch pattern. (i) General. Until otherwise instructed by
the Secretary, lunches for children ages 1 to 4 must meet the nutrition
standards in paragraph (p)(2) of this section, the nutrient and calorie
levels in paragraph (p)(3) of this section, and meal pattern in
paragraph (p)(4) of this section.
(ii) Unit pricing. Schools must price each meal as a unit. Schools
need to consider participation trends in an effort to provide one
reimbursable lunch for each child every day. If there are leftover
meals, schools may offer them to the students but cannot receive
reimbursement for them.
(iii) Production and menu records. Schools must keep production and
menu records for the meals they produce. These records must show how
the meals contribute to the required food components and quantities
every day. In addition, these records must show how the lunches
contribute to the nutrition standards in paragraph (p)(2) of this
section and the appropriate calorie and nutrient requirements for the
children served. Schools or school food authorities must maintain
records of the latest nutritional analysis of the school menus
conducted by the State agency.
(2) Nutrition standards for preschoolers' lunches. Children ages 1
to 4 must be offered lunches that meet the following nutrition
standards for their age group:
(i) Provision of one-third of the Recommended Dietary Allowances
(RDAs) for protein, calcium, iron, vitamin A and vitamin C in the
appropriate levels for the ages/grades (see paragraph (p)(3) of this
section).
(ii) Provision of the lunchtime energy allowances (calories) in the
appropriate levels (see paragraph (p)(3) of this section);
(iii) The following dietary recommendations:
(A) Eat a variety of foods;
(B) Limit total fat to 30 percent of total calories;
(C) Limit saturated fat to less than 10 percent of total calories;
(D) Choose a diet low in cholesterol;
(E) Choose a diet with plenty of grain products, vegetables, and
fruits; and
(F) Choose a diet moderate in salt and sodium.
(iv) The following measures of compliance:
(A) Limit the percent of calories from total fat to 30 percent of
the actual number of calories offered;
(B) Limit the percent of calories from saturated fat to less than
10 percent of the actual number of calories offered;
(C) Reduce sodium and cholesterol levels; and
(D) Increase the level of dietary fiber.
(v) Compliance with the nutrition standards and the appropriate
nutrient and calorie levels is determined by the State agency in
accordance with the procedures in paragraph (p)(10) of this section.
(3) Nutrient and calorie levels. The minimum levels of nutrients
and calories that lunches for preschoolers must offer are specified in
the following table:

[[Page 2559]]

[GRAPHIC] [TIFF OMITTED] TP13JA11.025

(4) Meal pattern for preschoolers' lunches. Schools must follow the
traditional food-based menu planning approach to plan lunches for
children ages 1-2 and ages 3-4.
(i) Food components and quantities. Lunches must offer the food
components and quantities specified in the following meal pattern:
BILLING CODE 3410-30-P

[[Page 2560]]

[GRAPHIC] [TIFF OMITTED] TP13JA11.026

BILLING CODE 3410-30-C
(ii) Meat/meat alternate component. The quantity of the meat/meat
alternate component must be the edible portion as served. If the
portion size of a food item for this component is excessive, the school
must reduce that portion and supplement it with another meat/meat
alternate to meet the full requirement. This component must be served
in a main dish or in a main dish and only one other food item. Schools
without daily choices in this component should not serve any one meat
alternate or form of meat (for example, ground, diced, pieces) more
than three times in the same week. Schools may adjust the daily
quantities of this component provided that a minimum of one ounce is
offered daily and the total weekly requirement is met over a five-day
period.
(A) Enriched macaroni. Enriched macaroni with fortified protein as
defined in appendix A to this part may be used to meet part of the
meat/meat alternate requirement when used as specified in appendix A to
this part. An enriched macaroni product with fortified protein as
defined in appendix A to this part may be used to meet part of the
meat/meat alternate component or the grains/breads component but not as
both food components in the same lunch.
(B) Nuts and seeds. Nuts and seeds and their butters are allowed as
meat alternates in accordance with program guidance. Acorns, chestnuts,
and coconuts must not be used because of their low protein and iron
content. Nut and seed meals or flours may be used only as allowed under
appendix A to this part. Nuts or seeds may be used to meet no more than
one-half of the meat/

[[Page 2561]]

meat alternate component with another meat/meat alternate to meet the
full requirement.
(C) Yogurt. Yogurt may be used to meet all or part of the meat/meat
alternate requirement. Yogurt may be plain or flavored, and unsweetened
or sweetened. Noncommercial and/or non-standardized yogurt products,
such as frozen yogurt, homemade yogurt, yogurt flavored products,
yogurt bars, yogurt covered fruit and/or nuts or similar products are
not creditable. Four ounces (weight) or \1/2\ cup (volume) of yogurt
equals one ounce of the meat/meat alternate requirement.
(iii) Vegetable/fruit component. Full strength vegetable or fruit
juice may be used to meet no more than one-half of the vegetable/fruit
requirement. Cooked dry beans or peas may be counted as either a
vegetable or as a meat alternate but not as both in the same meal.
(iv) Grains/breads component. (A) Enriched or whole grains. All
grains/breads must be enriched or whole grain or made with enriched or
whole grain meal or flour.
(B) Daily and weekly servings. The requirement for the grain/bread
component is based on minimum daily servings plus total servings over a
five day period. Schools serving lunch 6 or 7 days per week should
increase the weekly quantity by approximately 20 percent (\1/5\th) for
each additional day. When schools operate less than 5 days per week,
they may decrease the weekly quantity by approximately 20 percent (\1/
5\th) for each day less than five. The servings for biscuits, rolls,
muffins, and other grain/bread varieties are specified in the Food
Buying Guide for Child Nutrition Programs (PA 1331), an FNS
publication.
(C) Minimums under the traditional food-based menu planning
approach. Schools must offer daily at least one-half serving of the
grain/bread component to children in Group I and at least one serving
to children in Group II. Schools which serve lunch at least 5 days a
week shall serve a total of at least five servings of grains/breads to
children in Group I and eight servings per week to children in Group
II.
(D) Offer versus serve. Schools must offer all five required food
items. At the school food authority's option, students in preschool may
decline one or two of the five food items. The price of a reimbursable
lunch does not change if the student does not take a food item or
requests smaller portions.
(E) Meal pattern exceptions for outlying areas. Schools in American
Samoa, Puerto Rico and the Virgin Islands may serve a starchy vegetable
such as yams, plantains, or sweet potatoes to meet the grain/bread
requirement.
(5) Fluid milk requirement. Schools must offer students in age
group 1-2 years and age group 3-4 years fluid milk in a variety of fat
contents. Schools may offer flavored or unflavored fluid milk and
lactose-free fluid milk. All fluid milk served must be pasteurized
fluid milk which meets State and local standards for such milk. All
fluid milk must have vitamins A and D at levels specified by the Food
and Drug Administration and must be consistent with State and local
standards for such milk. Schools must also comply with other applicable
milk requirements in Sec. 210.10(d)(2), Sec. 210.10(d)(3), and Sec.
210.10(d)(4) of this part.
(6) Menu choices. FNS encourages schools to offer children a
selection of foods at lunch. Choices provide variety and encourage
consumption. Schools may offer choices of reimbursable lunches or foods
within a reimbursable lunch. Children who are eligible for free or
reduced price lunches must be allowed to take any reimbursable lunch or
any choices offered as part of a reimbursable lunch. Schools may
establish different unit prices for each lunch offered provided that
the benefits made available to children eligible for free or reduced
price lunches are not affected.
(7) Requirements for lunch periods. (i) Timing. Schools must offer
lunches meeting the requirements of this section during the period the
school has designated as the lunch period. Schools must offer lunches
between 10 a.m. and 2 p.m. Schools may request an exemption from these
times only from FNS.
(ii) Lunch periods for young children. With State agency approval,
schools are encouraged to serve children ages 1 through 4 over two
service periods. Schools may divide the quantities and/or the menu
items, foods, or food items offered each time any way they wish.
(iii) Adequate lunch periods. FNS encourages schools to provide
sufficient lunch periods that are long enough to give all students
enough time to be served and to eat their lunches.
(8) Exceptions and variations allowed in reimbursable meals.
Schools must comply with the requirements in Sec. 210.10(m) of this
part.
(9) Nutrition disclosure. If applicable, schools must follow the
provisions on disclosure of Alternate Protein Products in Sec.
210.10(n) of this part.
(10) State agency's responsibilities for monitoring lunches. As
part of the administrative review authorized under Sec. 210.18(g)(2)
of this chapter, State agencies must evaluate compliance with the meal
pattern requirements (food components and quantities) in paragraph (d)
of this section. If the meals for preschoolers do not meet the
requirements of this section, the State agency or school food authority
must provide technical assistance and require the reviewed school to
take corrective action. In addition, the State agency may take fiscal
action as authorized in Sec. 210.18(m) and Sec. 210.19(c) of this
part.
(11) Requirements for the infant lunch pattern. (i) Definitions.
(A) Infant cereal means any iron-fortified dry cereal, specially
formulated and generally recognized as cereal for infants, that is
routinely mixed with breastmilk or iron-fortified infant formula prior
to consumption.
(B) Infant formula means any iron-fortified formula intended for
dietary use solely as a food for normal, healthy infants. Formulas
specifically formulated for infants with inborn errors of metabolism or
digestive or absorptive problems are not included in this definition.
Infant formula, when served, must be in liquid state at recommended
dilution.
(ii) Feeding lunches to infants. Lunches served to infants ages
birth through 11 months must meet the requirements in paragraph (k)(5)
of this section. Foods included in the lunch must be of a texture and a
consistency that are appropriate for the age of the infant being
served. The foods must be served during a span of time consistent with
the infant's eating habits. For those infants whose dietary needs are
more individualized, exceptions to the meal pattern must be made in
accordance with the requirements found in Sec. 210.10(m) of this part.
(iii) Breastmilk and iron-fortified formula. Either breastmilk or
iron-fortified infant formula, or portions of both, must be served for
the entire first year. Meals containing breastmilk and meals containing
iron-fortified infant formula supplied by the school are eligible for
reimbursement. However, infant formula provided by a parent (or
guardian) and breastmilk fed directly by the infant's mother, during a
visit to the school, contribute to a reimbursable lunch only when the
school supplies at least one component of the infant's meal.
(iv) Solid foods. For infants ages 4 through 7 months, solid foods
of an appropriate texture and consistency are required only when the
infant is developmentally ready to accept them. The school should
consult with the infant's parent (or guardian) in making the decision
to introduce solid foods. Solid foods should be introduced one at a
time, on a gradual basis, with the

[[Page 2562]]

intent of ensuring the infant's health and nutritional well-being.
(v) Infant meal pattern. Infant lunches must include, at a minimum,
each of the food components indicated in Lunch Pattern for Infants
table in the amount that is appropriate for the infant's age. For some
breastfed infants who regularly consume less than the minimum amount of
breastmilk per feeding, a serving of less than the minimum amount of
breastmilk may be offered. In these situations, additional breastmilk
must be offered if the infant is still hungry. Lunches may include
portions of breastmilk and iron-fortified infant formula as long as the
total number of ounces meets, or exceeds, the minimum amount required
of this food component. Similarly, to meet the component requirements
for vegetables and fruits, portions of both may be served. Infant
lunches are reimbursable when schools provide all of the components in
the Lunch Pattern for Infants table that the infant is developmentally
ready to accept.
[GRAPHIC] [TIFF OMITTED] TP13JA11.027

5. In Sec. 210.18:
a. Revise paragraphs (a), (b)(2)(ii), (c), (g)(2), (i)(3)(ii), and
(m); and
b. Remove paragraph (h)(2) and redesignate paragraph (h)(3),
(h)(4), (h)(5), and (h)(6) as paragraphs (h)(2), (h)(3), (h)(4), and
(h)(5).
The revisions read as follows:

Sec. 210.18 Administrative reviews.

(a) General. Each State agency must follow the requirements of this
section to conduct administrative reviews of school food authorities
serving meals under parts 210 and 220 of this chapter.
(b) * * *
(2) * * *
(i) * * *
(ii) Performance Standard 2--Meal Requirements. Reimbursable
lunches meet the meal requirements in Sec. 210.10 of this chapter, as
applicable to the age/grade group reviewed. Reimbursable breakfasts
meet the meal requirements in Sec. 220.8 of this chapter, as
applicable to the age/grade group reviewed.
* * * * *
(c) Timing of reviews. State agencies must conduct administrative
reviews of all school food authorities participating in the NSLP and/or
SBP at least once during a 3-year review cycle. For each State agency,
the first 3-year review cycle will start the school year that begins on
July 1, 2012 and ends on June 30, 2013. Administrative reviews and
follow-up reviews must be conducted as follows:
(1) Administrative reviews. At a minimum, State agencies must
conduct administrative reviews of all school food authorities at least
once during each 3-year review cycle, provided that each school food
authority is reviewed at least once every 4 years. The on-site portion
of the administrative review must be completed during the school year
in which the review was begun.
(2) Exceptions. FNS may, on an individual school food authority
basis, approve written requests for 1-year extensions to the 3-year
review cycle specified in paragraph (c)(1) of this section if FNS
determines this 3-year cycle requirement conflicts with efficient State
agency management of the Programs.
(3) Follow-up reviews. The State agency is encouraged to conduct
first follow-up reviews in the same school year as the administrative
review. The first follow-up review must be conducted no later than
December 31 of the school year following the administrative review.
Subsequent follow-up reviews must be scheduled in accordance with
paragraph (i)(5) of this section.
* * * * *

[[Page 2563]]

(g) * * *
(2) Performance Standard 2 (Reimbursable lunches meet the meal
requirements in Sec. 210.10 of this chapter, as applicable to the age/
grade group reviewed. Reimbursable breakfasts meet the meal
requirements in Sec. 220.8 of this chapter, as applicable to the age/
grade group reviewed). When reviewing meals, the State agency must:
(i) For the day of the review, observe the serving line(s) to
determine whether all food components and food quantities required
under Sec. 210.10, as applicable, and Sec. 220.8, as applicable, are
offered.
(ii) For the day of the review, observe a significant number of the
Program meals counted at the point of service for each type of serving
line to determine whether the meals selected by the students contain
the food components and food quantities required for a reimbursable
meal under Sec. 210.10, as applicable, and Sec. 220.8, as applicable.
If visual observation suggests that quantities offered are insufficient
or excessive, the State agency must require the reviewed school(s) to
provide documentation demonstrating that the required amounts of each
food component were available for service for each day of the review
period.
(iii) Review menu and production records for a minimum of ten
operating days (specified by the State agency); such review must
determine whether all food components and food quantities required
under Sec. 210.10, as applicable, and Sec. 220.8, as applicable, of
this chapter have been offered.
(iv) Conduct a nutrient analysis of the meals for students in age/
grade groups K and above to determine whether the meals offered meet
the calorie, sodium, and saturated fat requirements in Sec. 210.10 and
Sec. 220.8 of this chapter, as applicable. The State agency must
conduct the nutrient analysis in accordance with the procedures
established in Sec. 210.10(i) of this part. Until instructed by the
Secretary, a nutrient analysis for the meals offered to preschoolers is
not required. The State agency must also review nutrition labeling or
manufacturer specifications for products or ingredients used to prepare
school meals to verify they contain zero grams (less than 0.5 grams) of
trans fat per serving.
* * * * *
(i) * * *
(3) * * *
(ii) For Performance Standard 2--10 percent or more of the total
number of Program lunches or Program breakfasts observed in a school
food authority are missing one or more of the food components required
under parts 210 and 220.
* * * * *
(m) Fiscal action. Fiscal action for violations identified during
an administrative review or any follow-up reviews must be taken in
accordance with the provisions in Sec. 210.19(c) of this part.
(1) Performance Standard I violations. A State agency is required
to take fiscal action for all violations of the critical areas of
Performance Standard 1. The State agency may limit fiscal action from
the point corrective action occurs back through the beginning of the
review period for errors identified under paragraphs (g)(1)(i)(A),
(g)(1)(i)(B) and (g)(1)(i)(C) of this section, provided corrective
action occurs.
(2) Performance Standard 2 violations. A State agency is required
to take fiscal action for violations of the critical areas of
Performance Standard 2 as follows:
(i) For food component violations cited under paragraph (g)(2) of
this section, the State agency must take fiscal action and require the
school food authority and/or school reviewed to take corrective action
for the missing component. If a corrective action plan is in place, the
State agency may limit fiscal action from the point corrective action
occurs back through the beginning of the review period for errors
identified under paragraph (g)(2) of this section.
(ii) For repeated violations involving vegetable subgroups and milk
type cited under paragraph (g)(2) of this section, the State agency
must take fiscal action provided that:
(A) Technical assistance has been given by the State agency;
(B) Corrective action has been previously required and monitored by
the State agency; and
(C) The school food authority remains in noncompliance with the
meal requirements established in parts 210 and 220 of this chapter.
(iii) For violations involving food quantities and whole grains
cited under paragraph (g)(2) of this section and for violations of
calorie, saturated fat, sodium, and trans fat requirements cited under
paragraph (g)(2)(iv) of this section, the State agency has discretion
to apply fiscal action provided that:
(A) Technical assistance has been given by the State agency;
(B) Corrective action has been previously required and monitored by
the State agency; and
(C) The school food authority remains in noncompliance with the
meal requirements established in parts 210 and 220 of this chapter.
* * * * *
6. In Sec. 210.19:
a. Remove paragraph (a)(1) and redesignate paragraphs (a)(2),
(a)(3), (a)(4), (a)(5), and (a)(6) as paragraph (a)(1), (a)(2), (a)(3),
(a)(4), (a)(5); and
b. Revise paragraphs (c) introductory text, (c)(1) and (c)(6) to
read as follows:

Sec. 210.19 Additional responsibilities.

* * * * *
(c) Fiscal action. State agencies are responsible for ensuring
Program integrity at the school food authority level. State agencies
must take fiscal action against school food authorities for Claims for
Reimbursement that are not properly payable, including, if warranted,
the disallowance of funds for failure to take corrective action to
comply with the meal requirements in parts 210 and 220 of this chapter.
In taking fiscal action, State agencies must use their own procedures
within the constraints of this Part and must maintain all records
pertaining to action taken under this section. The State agency may
refer to FNS for assistance in making a claim determination under this
part.
(1) Definition. Fiscal action includes, but is not limited to, the
recovery of overpayment through direct assessment or offset of future
claims, disallowance of overclaims as reflected in unpaid Claims for
Reimbursement, submission of a revised Claim for Reimbursement, and
correction of records to ensure that unfiled Claims for Reimbursement
are corrected when filed. Fiscal action also includes disallowance of
funds for failure to take corrective action to meet the meal
requirements in Parts 210 and 220 of this chapter.
* * * * *
(6) Exceptions. The State agency need not disallow payment or
collect an overpayment when any review or audit reveals that a school
food authority is approving applications which indicate that the
households' incomes are within the Income Eligibility Guidelines issued
by the Department or the applications contain Supplemental Nutrition
Assistance Program or TANF case numbers or FDPIR case numbers or other
FDPIR identifiers but the applications are missing the information
specified in paragraph (1)(ii) of the definition of Documentation in
Sec. 245.2 of this chapter.
* * * * *

Sec. 210.21 [Amended]

7. In Sec. 210.21, amend paragraph (e) by removing the phrase
``paragraph

[[Page 2564]]

(m)(1)(ii) of this section'' and adding in its place the phrase ``Sec.
210.10(d)(4)) of this chapter.''
8. Revise Sec. 210.30 to read as follows:

Sec. 210.30 State agency and Regional office addresses.

School food authorities and schools desiring information about the
Program should contact their State educational agency or the
appropriate FNS Regional Office at the address or telephone number
listed on the FNS Web site (http://www.fns.usda.gov/cnd).
9. In Appendix B to part 210:
a. Amend paragraph (b)(1) by removing from the fourth sentence the
words ``, and the public by notice in the Federal Register as indicated
below under paragraph (b)(3) of this section;''
b. Amend paragraph (b)(2) by removing the words ``as indicated
under paragraph (b)(3) of this section'' from the last sentence.
c. Remove paragraph (b)(3) and redesignate paragraph (b)(4) as
paragraph (b)(3); and
d. Revise the first sentence of newly redesignated paragraph (b)(3)
to read as follows:
* * * * *

Appendix B to Part 210--Categories of Foods of Minimal Nutritional
Value.

(b) * * *
(3) Written petitions should be sent to the Chief, Nutrition
Promotion and Training Branch, Child Nutrition Division, FNS, USDA,
3101 Park Center Drive, Room 632, Alexandria, Virginia 22302.* * *
* * * * *

PART 220--SCHOOL BREAKFAST PROGRAM

10. The authority citation for 7 CFR part 220 continues to read as
follows:

Authority: 42 U.S.C. 1773, 1779.

11. In Sec. 220.2:
a. Amend the definition of Breakfast by removing the word
``nutritional'' and adding in its place the word ``meal'',
b. Remove the definition of Menu item and the definition of
Nutrient Standard Menu Planning/Assisted Nutrient Standard Menu
Planning;
c. Revise the definition of School week; and
d. Add the definition of Whole grains and placing the definition in
alphabetical order.
The revisions and additions read as follows:

Sec. 220.2 Definitions.

* * * * *
School week means the period of time used to determine compliance
with the meal requirements in Sec. 220.8. The period must be a normal
school week of five consecutive days; however, to accommodate shortened
weeks resulting from holidays and other scheduling needs, the period
must be a minimum of three consecutive days and a maximum of seven
consecutive days. Weeks in which school breakfasts are offered less
than three times must be combined with either the previous or the
coming week.
* * * * *
Whole grains means grains that consist of the intact, ground,
cracked, or flaked grain seed whose principal anatomical components--
the starchy endosperm, germ and bran--are present in the same relative
proportions as they exist in the intact grain seed. Whole grain-rich
products must conform to FNS guidance to count toward the grains
component.
* * * * *
12. Revise Sec. 220.8 to read as follows:

Sec. 220.8 Meal requirements for breakfasts.

(a) General. School food authorities must ensure that participating
schools provide nutritious, well-balanced, and age-appropriate
breakfasts to all the children they serve to improve their diet and
safeguard their health. School breakfasts offered to children age 5 and
older must meet, at a minimum, the meal requirements in paragraph (b)
of this section. Schools must follow a food-based menu planning
approach and produce enough food to offer each child the quantities
specified in the meal pattern established in paragraph (c) of this
section for each age/grade group served in the school. In addition,
school breakfasts must meet the dietary specifications in paragraph (f)
of this section. Schools offering breakfasts to children ages 1 to 4
and infants must meet the meal pattern requirements in paragraph (n) of
this section.
(b) Meal requirements for school breakfasts. School breakfasts for
children ages 5 and older must reflect food and nutrition requirements
specified by the Secretary. Compliance with these requirements is
measured as follows:
(1) On a daily basis:
(i) Meals offered to each age/grade group must include the food
components and food quantities specified in the meal pattern in
paragraph (c) of this section;
(ii) Food products or ingredients used to prepare meals must
contain zero grams of trans fat per serving or a minimal amount of
naturally-occurring trans fat; and
(iii) Meals selected by each student must have the number of food
components required for a reimbursable meal and include at least one
fruit or vegetable.
(2) Over a 5-day school week:
(i) Average calorie content of the meals offered to each age/grade
group must be within the minimum and maximum calorie levels specified
in paragraph (f) of this section;
(ii) Average saturated fat content of the meals offered to each
age/grade group must be less than 10 percent of total calories;
(iii) Average sodium content of the meals offered to each age/grade
group must not exceed the maximum level specified in paragraph (f) of
this section.
(c) Meal pattern for school breakfasts. A school must offer the
food components and quantities required in the breakfast meal pattern
established in the following table:

[[Page 2565]]

[GRAPHIC] [TIFF OMITTED] TP13JA11.028

(1) Age/grade groups. Schools must plan menus for students using
the following age/grade groups: Grades K-5 (ages 5-10), grades 6-8
(ages 11-13), and grades 9-12 (ages 14-18). If an unusual grade
configuration in a school prevents the use of the established age/grade
groups, students in grades K-5 and grades 6-8 may be offered the same
food quantities at breakfast provided that the calorie and sodium
standards for each age/grade group are met. No customization of the
established age/grade groups is allowed.
(2) Food components. Schools must offer students in each age/grade
group the food components specified in meal pattern in paragraph (c).
Food component descriptions in Sec. 210.10 of this chapter apply to
this Program. A serving of non-starchy vegetables may be offered in
place of fruits at breakfast. Only pasteurized full-strength fruit and
vegetable juice may be used, and may be credited to meet no more than
one-half of the fruits component.
(3) Food components in outlying areas. Schools in American Samoa,
Puerto Rico and the Virgin Islands may serve a vegetable such as yams,
plantains, or sweet potatoes to meet the grains component.
(4) Production and menu records. Schools or school food
authorities, as applicable, must keep production and menu records for
the meals they produce. These records must show how the meals offered
contribute to the required food components and food quantities for each
age/grade group every day. Labels or manufacturer specifications for
food products and ingredients used to prepare school meals must
indicate zero grams of trans fat per serving (less than 0.5 grams).
Schools or school food authorities must maintain records of the latest
nutritional analysis of the school menus conducted by the State agency.
Production and menu records must be maintained in accordance with FNS
guidance.
(d) Fluid milk requirement. A serving of fluid milk as a beverage
or on cereal or used in part for each purpose must be offered for
breakfasts. Schools must offer students a variety of fluid milk. Milk
must be fat-free or low-fat. Milk with higher fat content is not
allowed. Fat-free fluid milk may be flavored or unflavored, and low-fat
fluid milk must be unflavored. Lactose-free fluid milk may also be
offered. Schools must also comply with other applicable fluid milk

[[Page 2566]]

requirements in Sec. 210.10(d)(1), Sec. 210.10(d)(2), Sec.
210.10(d)(3), and Sec. 210.10(d)(4) of this chapter.
(e) Offer versus serve. School breakfasts must offer daily the four
food components specified in the meal pattern in paragraph (c) of this
section. At the option of the school food authority, each school may
allow students to decline food items they do not intend to consume.
Under offer versus serve, the student may decline one item at breakfast
but must select at least one fruit serving, or one vegetable serving
(if a vegetable is offered in place of fruit). The price of a
reimbursable breakfast does not change if a student does not take a
food item or requests smaller portions.
(f) Dietary specifications. (1) Calories. School breakfasts offered
to each age/grade group must meet, on average over the school week, the
minimum and maximum calorie levels specified in the following table:

Calorie Ranges for Breakfast
----------------------------------------------------------------------------------------------------------------
Grades K-5 Grades 6-8 Grades 9-12
----------------------------------------------------------------------------------------------------------------
Minimum-maximum calories (kcal)a b..................... 350-500 400-550 450-600
----------------------------------------------------------------------------------------------------------------
\a\ The average daily amount for a 5-day school must fall within the minimum and maximum levels.
\b\ Discretionary sources of calories (solid fats and added sugars) may be added to the meal pattern if within
the specifications for calories, saturated fat, trans fat, and sodium.

(2) Saturated fat. School breakfasts offered to all age/grade
groups must, on average over the school week, provide less than 10
percent of total calories from saturated fat.
(3) Sodium. School breakfasts offered to each age/grade group must
meet, on average over the school week, the levels of sodium specified
in the following table:
[GRAPHIC] [TIFF OMITTED] TP13JA11.029

[[Page 2567]]

(2) Trans fat. During an administrative review, State agencies must
verify that the food products or ingredients used by the reviewed
school(s) contain zero grams of trans fat (less than 0.5 grams) per
serving.
(i) State agency responsibilities for nutrient analysis. State
agencies must conduct a nutrient analysis of all foods offered in a
reimbursable breakfast by a school selected for administrative review
to determine the average levels of calories, saturated fat, and sodium
in the meals offered over a school week. The analysis must be conducted
in accordance with the procedures established in Sec. 210.10(i) of
this chapter.
(j) State agency's responsibilities for compliance monitoring.
Compliance with the meal requirements in paragraph (b) will be
monitored by the State agency through administrative reviews authorized
in Sec. 210.18 of this chapter.
(k) Menu choices at breakfast. The requirements in Sec. 210.10(k)
of this chapter apply to this Program.
(l) Exceptions and variations allowed in reimbursable meals. The
requirements in Sec. 210.10(m) of this chapter apply to this Program.
(m) Nutrition disclosure. The requirements in Sec. 210.10(n) of
this chapter apply to this Program.
(n) Breakfasts for preschoolers and infants. (1) Nutrition
standards for breakfasts for children age 1 to 4. Until otherwise
instructed by the Secretary, breakfasts for preschoolers, when averaged
over a school week, must meet the nutrition standards and the
appropriate nutrient and calorie levels in this section. The nutrition
standards are:
(i) Provision of one-fourth of the Recommended Dietary Allowances
(RDA) for protein, calcium, iron, vitamin A and vitamin C in the
appropriate levels (see paragraph (n)(2) of this section);
(ii) Provision of the breakfast energy allowances (calories) for
children in the appropriate levels (see paragraph (n)(2) of this
section);
(iii) The following dietary recommendations:
(A) Eat a variety of foods;
(B) Limit total fat to 30 percent of total calories;
(C) Limit saturated fat to less than 10 percent of total calories;
(D) Choose a diet low in cholesterol;
(E) Choose a diet with plenty of grain products, vegetables, and
fruits; and
(F) Choose a diet moderate in salt and sodium.
(iv) The following measures of compliance:
(A) Limit the percent of calories from total fat to 30 percent of
the actual number of calories offered;
(B) Limit the percent of calories from saturated fat to less than
10 percent of the actual number of calories offered;
(C) Reduce sodium and cholesterol levels; and
(D) Increase the level of dietary fiber.
(v) School food authorities must follow the traditional food-based
menu planning approach to plan breakfasts for preschoolers and provide
daily the food components and quantities specified in paragraph (n)(3)
of this section.
(vi) Schools must keep production and menu records for the
breakfasts they produce. These records must show how the breakfasts
contribute to the required food components and food quantities every
school day. In addition, these records must show how the breakfasts
contribute to the nutrition standards in paragraph (n)(1) of this
section and the appropriate calorie and nutrient levels in paragraph
(n)(2) of this section over the school week. Schools or school food
authorities must maintain records of the latest nutritional analysis of
the school menus conducted by the State agency.
(2) Nutrient and calorie levels for breakfasts for preschoolers.
Under the traditional food-based menu planning approach, the required
levels are:
[GRAPHIC] [TIFF OMITTED] TP13JA11.030

(3) Meal pattern for preschoolers. (i) Food items. Schools must
offer these food items in at least the portions required for each age
group:
(A) A serving of fluid milk as a beverage or on cereal or used
partly for both;
(B) A serving of fruit or vegetable or both, or full-strength fruit
or vegetable juice; and
(C) Two servings from one of the following components or one
serving from each component:
(1) Grains/breads; and/or
(2) Meat/meat alternate.

[[Page 2568]]

(ii) Quantities for the traditional food-based menu planning
approach. At a minimum, schools must offer the food items in the
quantities specified for the appropriate age/grade group in the
following table:
[GRAPHIC] [TIFF OMITTED] TP13JA11.031

(iii) Offer versus serve. Schools must offer all four required food
items. At the school food authority's option, students in preschool may
decline one of the four food items. The price of a reimbursable
breakfast does not change if the student does not take a menu item or
requests smaller portions.
(iv) Exceptions and variations allowed in reimbursable breakfasts.
Schools must follow the requirements in Sec. 210.10(m) of this
chapter.
(4) Fluid milk requirement. A serving of fluid milk as a beverage
or on cereal or used in part for each purpose must be offered for
breakfasts. Schools must offer students in age group 1-2 and age group
3-4 fluid milk in a variety of fat contents. Schools may offer flavored
or unflavored fluid milk and lactose-free fluid milk. All milk served
in the Program must be pasteurized fluid milk which meets State and
local standards for such milk. All fluid milk must have vitamins A and
D at levels specified by the Food and Drug Administration and must be
consistent with State and local standards for such milk. Schools must
also comply with other applicable milk requirements in Sec.
210.10(d)(2), Sec. 210.10(d)(3), and Sec. 210.10(d)(4) of this
chapter.
(5) Additional foods. Schools may offer additional foods with
breakfasts to children over one year of age.
(6) Menu choices at breakfast. Schools must follow the requirements
in Sec. 210.10(l) of this chapter.
(7) Exceptions and variations allowed in reimbursable meals.
Schools must follow the requirements in Sec. 210.10(m) of this
chapter.
(8) Nutrition disclosure. Schools must follow the requirements in
Sec. 210.10(n) of this chapter.
(9) State agency's responsibilities for monitoring breakfasts. As
part of the administrative review authorized under Sec. 210.18(g)(2)of
this chapter, State agencies must evaluate compliance with the meal
pattern requirements (food components and quantities) in paragraph
(n)(3) of this section. If the meals do not meet the requirements of
this section, the State agency or school food authority must provide
technical assistance and require the reviewed

[[Page 2569]]

school to take corrective action. In addition, the State agency must
take fiscal action as authorized in Sec. 210.18(m) and 210.19(c) of
this chapter.
(10) Requirements for the infant breakfast pattern. (i) Feeding
breakfasts to infants. Breakfasts served to infants ages birth through
11 months must meet the requirements described in paragraph (n)(11)(iv)
of this section. Foods included in the breakfast must be of a texture
and a consistency that are appropriate for the age of the infant being
served. The foods must be served during a span of time consistent with
the infant's eating habits. For those infants whose dietary needs are
more individualized, exceptions to the meal pattern must be made in
accordance with the requirements found in Sec. 210.10(m) of this
chapter.
(ii) Breastmilk and iron-fortified formula. Either breastmilk or
iron-fortified infant formula, or portions of both, must be served for
the entire first year. Meals containing breastmilk and meals containing
iron-fortified infant formula supplied by the school are eligible for
reimbursement. However, infant formula provided by a parent (or
guardian) and breastmilk fed directly by the infant's mother, during a
visit to the school, contribute to a reimbursable breakfast only when
the school supplies at least one component of the infant's meal.
(iii) Solid foods. For infants ages 4 through 7 months, solid foods
of an appropriate texture and consistency are required only when the
infant is developmentally ready to accept them. The school should
consult with the infant's parent (or guardian) in making the decision
to introduce solid foods. Solid foods should be introduced one at a
time, on a gradual basis, with the intent of ensuring the infant's
health and nutritional well-being.
(iv) Infant meal pattern. Infant breakfasts must have, at a
minimum, each of the food components indicated, in the amount that is
appropriate for the infant's age. For some breastfed infants who
regularly consume less than the minimum amount of breastmilk per
feeding, a serving of less than the minimum amount of breastmilk may be
offered. In these situations, additional breastmilk must be offered if
the infant is still hungry. Breakfasts may include portions of
breastmilk and iron-fortified infant formula as long as the total
number of ounces meets, or exceeds, the minimum amount required of this
food component. Similarly, to meet the component requirement for
vegetables and fruit, portions of both may be served.
(A) Birth through 3 months. 4 to 6 fluid ounces of breastmilk or
iron-fortified infant formula--only breastmilk or iron-fortified
formula is required to meet the infant's nutritional needs.
(B) 4 through 7 months. Breastmilk or iron-fortified formula is
required. Some infants may be developmentally ready for solid foods of
an appropriate texture and consistency. Breakfasts are reimbursable
when schools provide all of the components in the meal pattern that the
infant is developmentally ready to accept.
(1) 4 to 8 fluid ounces of breastmilk or iron-fortified infant
formula; and
(2) 0 to 3 tablespoons of iron-fortified dry infant cereal.
(C) 8 through 11 months. Breastmilk or iron-fortified formula and
solid foods of an appropriate texture and consistency are required.
(1) 6 to 8 fluid ounces of breastmilk or iron-fortified infant
formula; and
(2) 2 to 4 tablespoons of iron-fortified dry infant cereal; and
(3) 1 to 4 tablespoons of fruit or vegetable.
(v) Infant meal pattern table. The minimum amounts of food
components to serve to infants, as described in paragraph (n)(11)(iv)
of this section, are:
[GRAPHIC] [TIFF OMITTED] TP13JA11.032

14. Paragraph 220.13 is amended as follows:
a. Amend paragraph (f)(2) by removing the words ``Sec. 210.30''
wherever it appears and adding in its place the words ``Sec. 210.29'';
and
b. Revise paragraph (f)(3) to read as follows:

Sec. 220.13 Special responsibilities of State agencies.

* * * * *
(f) * * *

[[Page 2570]]

(3) For the purposes of compliance with the meal requirements in
Sec. 220.8, the State agency must follow the provisions specified in
Sec. 210.18(g)(2) of this chapter, as applicable.
* * * * *

Appendix A to Part 220 [Amended]

15. Amend Appendix A to part 220 by removing section I. Formulated
Grain-Fruit Products in its entirety, and by removing the Roman numeral
``II.'' from the words ``II. Alternate Protein Products''.

Dated: January 3, 2011.
Kevin Concannon,
Under Secretary, Food, Nutrition, and Consumer Services.
[FR Doc. 2011-485 Filed 1-12-11; 8:45 am]
BILLING CODE 3410-30-P