Federal Register, Volume 77 Issue 37 (Friday, February 24, 2012)

[Federal Register Volume 77, Number 37 (Friday, February 24, 2012)]
[Proposed Rules]
[Pages 10981-10997]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-4181]

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Proposed Rules
Federal Register
________________________________________________________________________

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

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Federal Register / Vol. 77, No. 37 / Friday, February 24, 2012 /
Proposed Rules

[[Page 10981]]

DEPARTMENT OF AGRICULTURE

Food and Nutrition Service

7 CFR Parts 211 and 235

RIN 0584-AD96

Fresh Fruit and Vegetable Program

AGENCY: Food and Nutrition Service, USDA.

ACTION: Proposed rule.

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SUMMARY: This proposed rule would establish the basic requirements for
the operation of the Fresh Fruit and Vegetable Program (FFVP) in
conformance with the Richard B. Russell National School Lunch Act. It
would set forth administrative and operational requirements for FFVP
operators at the State and local levels. The intent of these provisions
is to ensure that the FFVP encourages the consumption of fresh fruits
and vegetables by elementary school children, thus improving their
dietary habits and long-term health.

DATES: To be assured of consideration, comments on this proposed rule
must be received by the Food and Nutrition Service on or before April
24, 2012.

ADDRESSES: The Food and Nutrition Service (FNS) invites interested
persons to submit comments on this proposed rule. Comments may be
submitted by any of the following methods:
Federal eRulemaking Portal: Go to http://www.regulations.gov. Follow the online instructions for submitting
comments.
Mail: Send comments to Julie Brewer, Chief, Policy and
Program Development Branch, Child Nutrition Division, Food and
Nutrition Service, USDA, 3101 Park Center Drive, Room 634, Alexandria,
Virginia 22302, (703) 703-305-2590.
All comments submitted in response to this proposed rule will be
included in the record and will be made available to the public. Please
be advised that the substance of the comments and the identities of the
individuals or entities submitting the comments will be subject to
public disclosure. All written submissions will be available for public
inspection at the address above during regular business hours (8:30
a.m. to 5 p.m.) Monday through Friday.

FOR FURTHER INFORMATION CONTACT: Jim Herbert, Chief, Policy and Program
Development Branch, Child Nutrition Division, Food and Nutrition
Service, USDA, 3101 Park Center Drive, Room 634, Alexandria, Virginia
22302; telephone: (703) 305-2572.

SUPPLEMENTARY INFORMATION:

Background

The FFVP began as a pilot program funded by the Farm Security and
Rural Investment Act of 2002 (Pub. L. 107-171) to determine the best
practices for increasing fruit (both fresh and dried) and fresh
vegetable consumption in schools. The pilot program limited
participation to a maximum of 25 schools per state. Selected primary
and secondary schools in Indiana, Ohio, Michigan, Iowa and the Zuni
Tribe of New Mexico participated in the pilot and were provided funds
to purchase and serve free fruits and vegetables during school year
2002-2003. An evaluation conducted after the first year of operation
disclosed that schools considered the pilot to be a success and wanted
to continue the Program beyond the pilot if funding were provided. The
pilot demonstrated student acceptance and interest in fresh fruit and
vegetable consumption.
The pilot's success led to expansion of the FFVP. Congress viewed
the continuation and expansion of the pilot as a positive step to
combat childhood overweight and obesity. The Child Nutrition and WIC
Reauthorization Act of 2004 (Pub. L. 108-265) added Pennsylvania, North
Carolina, Mississippi, and Washington, and two Indian Tribal
Organizations in South Dakota and Arizona starting in school year 2004-
2005. In addition, the Reauthorization Act of 2004 permanently
authorized the FFVP in those States by adding section 18(g), the Fresh
Fruit and Vegetable Program, to the Richard B. Russell National School
Lunch Act (NSLA). Section 18(g) required, to the maximum extent
practicable, the selection of low-income schools and established the
statutory requirements for FFVP operation.
In 2006, the Agriculture, Rural Development, Food and Drug
Administration, and Related Agencies Appropriations Act (Pub. L. 109-
97), provided one-time funding to further expand the FFVP to Utah,
Wisconsin, New Mexico, Texas, Connecticut and Idaho for one year.
Subsequently, the Consolidated Appropriations Act of 2008 (Pub. L. 110-
161) provided one time funding to expand the FFVP to add non-
participating States, allowed FNS to reallocate recovered FFVP funds
from previous years and for the first time provided funds for the
Federal administration of the FFVP.
The Food, Conservation and Energy Act of 2008 (Pub. L. 110-234),
also known as the Farm Bill, continued the Program and, most
significantly, permanently authorized the FFVP as a nationwide program.
In addition, other important changes were also made to the FFVP. It
eliminated references to the FFVP in section 18(g) of the NSLA and
transferred the program authorization and all operational procedures to
section 19 of the NSLA. It established selection criteria, requiring
State agencies to conduct outreach to schools serving low income
students and to select those schools with the highest number of
students certified for free or reduced-price meals for participation in
the FFVP. It also provided a significant funding increase, established
a funding formula, and, for the first time, provided funds for States
to administer the FFVP. The statute also made dried fruit ineligible to
be served in the Program. Prior to the 2008 Farm Bill, the FFVP was
available to secondary schools. The 2008 Farm Bill limited program
participation to elementary schools beginning in school year 2010-2011.
Additionally, the number of schools that a State agency can select to
participate in the FFVP is no longer limited to 25 schools per state as
was required in the pilot program and subsequent legislation. The
Program continues to operate on a reimbursement basis and many of the
responsibilities of the State agencies remain the same.
Based upon the record of continued support and expansion of the
FFVP, the Program is highly regarded by Members of Congress, nutrition
advocates, the health care community, parents and students. It is
perceived as an effective strategy to help school children develop
positive dietary habits during their

[[Page 10982]]

formative years. The Program is also of interest to farm to school
advocates because it provides opportunities to link schools with local
farms and increase children's access to fresh fruit and vegetables in
schools. Most children do not achieve the recommended intakes of fruits
and vegetables. Fruits and vegetables provide a variety of
micronutrients and fiber and, therefore, are one of the key food groups
emphasized by the 2010 Dietary Guidelines for Americans to maintain
overall health and reduce the risk of chronic diseases, overweight and
obesity.
The Farm Bill directed FNS to conduct an evaluation of the FFVP.
The principle objectives of this evaluation are to determine whether
children increase consumption of fruits and vegetables as a result of
their participation in the FFVP and experience other dietary changes,
such as a decrease in the consumption of less nutritious foods, as a
result of their FFVP participation. Additionally, the evaluation will
look at FFVP implementation and assess the role that additional
factors--such as characteristics of schools selected for the program,
method of fruit and vegetable distribution, level and role of nutrition
education, etc.--may have with regard to the FFVP's impact on the
dietary intake of participating children. An interim evaluation report
was delivered to Congress in September.\1\ That report finds that
students consume an additional \1/4\ cup of fruits and vegetables, on
average, on days when the program is operating. That is nearly 15
percent higher than average fruit and vegetable consumption of children
in non-FFVP schools. In addition, the report finds no statistically
significant increase in total calorie consumption by program
participants. That finding suggests that fruits and vegetables are
replacing other foods in the diets of participating children, rather
than adding excess calories. The report is available on the FNS Web
site at http://www.fns.usda.gov/ora/MENU/Published/CNP/cnp.htm.
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\1\ Lauren Olsho, Jacob Klerman, and Susan Bartlett, Food and
Nutrition Service Evaluation of the Fresh Fruit and Vegetable
Program (FFVP): Interim Evaluation Report. Abt Associates, September
2011. http://www.fns.usda.gov/ora/MENU/Published/CNP/cnp.htm.
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Major Provisions of the Proposed Rule

This proposed rule reflects the statutory requirements found in
section 19 of the NSLA and the policy memoranda issued by FNS to
implement the changes prompted by the 2008 Farm Bill. Although the
statutory requirements are already implemented, this proposed rule
would set forth the regulatory requirements which will be codified upon
adoption of a final rule. This preamble also discusses a few additional
parameters established by FNS to ensure that the FFVP is administered
similarly to the National School Lunch Program (NSLP) and School
Breakfast Program (SBP), when appropriate, and in accordance with
applicable Federal requirements.
This proposed rule would establish requirements for the
administration and operation of the FFVP consistent with section 19 of
the NSLA. FNS is seeking public comments that will help the agency
establish regulatory requirements that reflect the intent of the law
and are feasible for States and local program operators. Following the
public comment period, FNS will issue a final rule to codify the
program requirements in Title 7, Part 211 of the Code of Federal
Regulations. While the rulemaking process is underway, State and local
operators must continue to follow implementation memoranda and guidance
materials issued by FNS based on section 19 of the NSLA.

Program Administration

Addendum to the Federal/State Agreement

The FFVP is administered by FNS in collaboration with the State
agencies responsible for the NSLP. In cases in which the State agency
is not permitted by their State law to disburse funds paid to it under
the Richard B. Russell National School Lunch Act (42 U.S.C. 1759),
administration of the Program shall be in accordance with Sec. 210.3
of the NSLP regulations. Section 211.3(b) of this proposed rule would
require each State agency to amend its permanent Federal/State
agreement to include administration of the FFVP. State agencies may use
the prototype addendum in FNS memorandum SP 31-2008, which was issued
to the State agencies on July 11, 2008. The FFVP would be administered
by the State agencies as the NSLP and the SBP are administered. Unlike
the pilot, during which State agencies worked directly with
participating schools, this proposed rule requires that the State
agencies work with School Food Authorities (SFAs) that are charged with
administering the FFVP in the State. SFAs would be responsible for
administering the program in their participating schools, including
training such schools in the requirements of the Program as well as
approving, consolidating and submitting monthly reimbursement claims to
the State agency for all participating schools, as they do in the NSLP
and the SBP.

Funding

Program funding is available to all State agencies on a school year
basis to reimburse school food authorities for the service of fresh
fruit and vegetables in selected elementary schools. Section 19 of the
NSLA provides funding as follows: $101 million for school year 2010-
2011; and $150 million for school year 2011-2012. For the subsequent
school years, funding is based on the amount received in the preceding
year, adjusted to reflect changes in the Consumer Price Index for the
12-month period ending the preceding April 30. Funds for Federal
administration of the Program ($500,000) are deducted from the
available funding before allocating funds to each State agency.
The amount received by each State agency is based on the funding
formula established in section 19 of the NSLA, which provides a minimum
annual grant of 1 percent of the available funds to each State and the
District of Columbia. Remaining funds are allocated to each State, the
District of Columbia, Guam, Puerto Rico and the Virgin Islands based on
the percentage of their population in relation to the United States
total population. In States in which FNS administers the program in
some or all schools, FNS shall have available applicable funds to
administer and operate the program. In terms of administrative funds,
it is proposed that for FNS Regional Office Administered Programs
(ROAPs), funding for the FFVP would be determined by the proportion of
the number of schools participating in the FFVP administered by the
State agency compared to the number of schools participating in the
FFVP administered by the FNS Regional Office. The funding provisions
are in Sec. 211.4 of the proposed regulatory text.
Under the proposed rule, each State agency would determine how to
administer the FFVP within its existing personnel structure, workload,
and other factors. A State agency would be allowed to set aside a
portion of their total annual grant to cover the cost of State agency
administration of the Program. As stated in Sec. 211.6 of the proposed
regulatory text, such an amount would be the lesser of 5 percent of the
State agency's total FFVP funding for the school year or the amount
required to pay the cost of one full-time coordinator for the Program,
as included in the language of the Farm Bill. These options are
intended to assist the State agency in developing a reasonable estimate
for State agency costs of administering the FFVP. However, the

[[Page 10983]]

statute does not require that the State agency employ a full-time
program coordinator. The amount of funds required for State
administrative costs would have to be determined prior to selecting
schools or allocating FFVP funds for schools. A State agency would also
have the option of retaining no FFVP funds for State administrative
costs, or may retain less State administrative funding than the formula
allows, in order to increase the availability of Program funds for the
purchase of fresh fruits and vegetables by the schools. In addition,
this rule proposes to amend 7 CFR part 235, State Administrative
Expense Funds, to allow the use of SAE funds for the administration of
the FFVP. The FFVP is an eligible program, since it is authorized under
the NSLA. If such funds are used for the administration of the FFVP,
all necessary requirements for the use of such funds shall be followed
in accordance with 7 CFR part 235.
To enable State agencies to administer the Program on a fiscal year
basis, like other Child Nutrition Programs, FNS would provide Program
funds in two allocations on or around July 1st and October 1st of each
year. The July allocation would be a small portion of each State's
total allocation and would reflect what the State and schools
anticipate that they will expend or obligate for the first quarter of
the school year. The October allocation would consist of the remaining
balance of the State's grant. States would be required to expend or
obligate the July and October allocations by the following September
30. For example, funds allocated to the States on July 1, 2011 would
have to be obligated or expended by September 30, 2011 (the following
September 30). Subsequent funds allocated in October of 2011 shall be
obligated or expended by the following September 30, 2012. A state's
unobligated funds would be returned to the Program and reallocated at a
later date. . The provisions on funding allocation are found in Sec.
211.5 of the proposed regulatory text.
As provided by statute, each State agency will determine the
distribution of funds to each school and provide Program funding to
those schools through the SFAs. Each school selected to participate in
the FFVP would be allotted funds based on a per-student amount. As
required by the statute, funding for participating schools must equal
an amount of no less than $50 and not more than $75 per child per
school year. Schools would be required to submit expenditure data to
the SFA. SFAs would be required to consolidate school expenditure
information and submit their claims for reimbursement to the State
agency on a monthly basis.
As provided in Sec. 211.5(a)(1)(iii) and Sec. 211.5(a)(2)(ii),
respectively, participating SFAs must ensure that funds are allocated
to participating schools for the school year and any unobligated or
unspent funds will be recovered for reallocation in a future school
year.

Outreach to Schools Serving Low Income Children

Prior to selecting schools for participation in the Program,
section 19 of the NSLA requires that each State agency conduct outreach
to schools serving the highest percentage of children certified for
free and reduced price meals. Outreach would be conducted on a schedule
that would enable the school application and selection processes to be
completed in a timely manner to ensure that the selected schools are
able to offer the Program at the start of the school year.
It is recognized that available funding may not be sufficient to
institute the FFVP in each of the schools that have a student
population where at least 50 percent of the enrolled students are
certified eligible for free or reduced price school meals. Since the
statute requires that participation priority be given to schools
serving the highest percentage of free and reduced price certified
students, State agencies should rank their schools starting with those
at which 100 percent of the students are certified for free and
reduced-price meals down to those in which 50 percent of the students
are certified for free and reduced-price meals in order to actively
target the most needy schools. In States in which FNS operates Regional
Office Administered Programs (ROAPs), it is proposed that the State
agency coordinate the ranking of schools with FNS to determine the
number of ROAP schools that may be eligible for the FFVP in the State
and for which outreach activities shall be targeted. States may
actively target those elementary schools with the highest need to
encourage participation in the Program. States that have more low-
income elementary schools than could possibly be funded may choose to
contact only those schools with the highest documented need. Schools
with fewer than 50 percent of their students certified for free and
reduced-price meals that meet the other FFVP eligibility criteria would
only be considered for participation in the Program after all schools
with higher documented percentages of free and reduced price student
populations that applied for FFVP have been selected for participation
in the Program. Section 211.10(c)(2) proposes that such schools must be
ranked in order of the percentage of free and reduced price certified
students that they serve and be selected for participation in the FFVP
on that basis.
Targeting schools with the highest need is one of the key statutory
requirements in section 19 of the NSLA. Compliance with this
requirement is nondiscretionary. This statutory requirement cannot be
waived to give all schools in a State an equal chance to participate in
the Program or to avoid restricting the Program to a few areas.
Requiring outreach to schools that serve low income children is
feasible because State agencies have access to the free and reduced-
price data from all participating SFAs and should be able to easily
target the elementary schools with the highest need. The SFAs may
assist the State agencies with this outreach process. The outreach
provision is found in Sec. 211.10 of the proposed regulatory text.

School Selection

The intent of Congress to target Program participation to those
elementary schools that serve the highest percentage of low income
students precludes the use of a competitive process for selecting
schools for participation in the FFVP. State agencies would be required
to use the criteria specified in Sec. 211.10 to select schools for
participation in the Program. An inadequate or incomplete application
from a school with a high free and reduced price certified enrollment
may not be a reason to reject an application from such a school. As
part of the outreach effort, a State agency would be required to assist
eligible schools in meeting the application requirements for
participation. However, SFAs or schools that have been documented as
being deficient in managing FNS programs or there have been
administrative findings documenting violations of the requirements of
any FNS programs shall not be authorized to operate the FFVP.
Each State agency would be responsible for ensuring that the FFVP
reaches elementary schools with the highest percentage of students
certified as eligible for free and reduced-price meals. This is a key,
nondiscretionary selection criterion that ensures that Program benefits
are targeted in accordance with Congressional intent.
In order to determine the number of elementary schools that can be
funded each year, section 19 of the NSLA requires State agencies to
establish a per-student allocation. As required by

[[Page 10984]]

law, the per-student allocation shall not be less than $50 or more than
$75 per school year. The State agency would be allowed to set a
different per-student allocation for participating schools provided
that the amount allotted per student is within the $50-$75 range
established by law and the rationale for the differing allocations can
be provided. In States in which FNS administers the program, ROAP
schools in the State must be included when establishing such per-
student funding allocations.
In summary, a State agency would need to consider the following
criteria when selecting schools for participation in the Program:
Only elementary schools that offer the NSLP may
participate in the FFVP;
Eligible schools must have at least 50 percent or more of
their students certified as eligible for free and reduced-price school
meals, except for those situations provided for in Sec. 211.10(c)(2);
Priority must be given to elementary schools with the
highest need based upon the percentage of free and reduced-price
children;
Schools must submit an application for participation in
the FFVP; and
Schools must not have been documented as being deficient
in managing any FNS program or there are no outstanding administrative
findings documenting violations of the requirements of any FNS program.

Claims for Reimbursement

Prior to submission of a consolidated claim for reimbursement to
the State agency, the SFA would review the FFVP expenditure information
submitted to them by the participating schools to ensure that the FFVP
expenses submitted by the schools are allowable. SFAs are required to
maintain appropriate records to substantiate the claims submitted for
reimbursement. As stated in Sec. 211.9 of the proposed regulatory
text, upon review, the State agency would be able to disallow payment
for unallowable costs or disallow any claim that is otherwise
inconsistent with the Program requirements.

Program Assistance and Monitoring

Other State agency functions would involve standard procedures
found in all Child Nutrition Programs designed to ensure efficiency and
integrity. As stated in Sec. 211.14 of the proposed regulatory text,
the State agency would be required to provide training and technical
assistance to enable schools to operate the Program correctly. The
State agency would review a participating school in conjunction with
any administrative review or oversight activity they may conduct under
the NSLP or SBP. FNS intends to provide guidance to facilitate State
agency reviews of the FFVP.
Since the FFVP is a relatively simple program and FNS has already
provided ample technical assistance and guidance through memoranda,
conference calls, webinars and annual conferences, we expect minor need
for corrective action and anticipate that technical assistance will
suffice in most cases. However, this proposed rule would give the State
agency authority to withhold payment and to suspend or terminate a
school's participation in the FFVP due to repeated failure to meet
Program requirements. See Sec. 211.15 and Sec. 211.16 of the proposed
regulatory text.

Reporting and Recordkeeping

The State agency would be required to submit an annual report
disclosing the number of schools that applied and the number of schools
selected, the enrollment and percentage of free and reduced-price
participation for each selected school as well as the per student
allocation being made to each selected school. In addition, the State
agency must provide the number of schools that applied for
participation and were not selected and the percentage of certified
free and reduced price eligible students served by such schools. This
information would demonstrate that the Program is reaching schools with
the highest need. The State agency would also be required to submit a
quarterly financial status report (currently the SF-425) via the Food
Programs Reporting System (FPRS). The SF-425 has been designated in
FPRS for the FFVP. A final financial status report (SF-425) would also
be submitted for each fiscal year. State agency recordkeeping retention
requirements would be for the same period of time required in the NSLP,
i.e., a minimum of three years. The proposed reporting and
recordkeeping provisions are in Sec. 211.11 of the proposed regulatory
text.

Program Operation

Agreement With State Agency

An SFA is responsible for the operation of the FFVP in schools
within its jurisdiction. SFAs would enter into a written agreement, or
amend an existing written agreement, with the State agency to offer the
FFVP in the selected schools in conformance with the requirements
established by law, regulations and FNS guidance that reflects current
program operations. As part of the agreement, the SFA would commit to
using funds primarily for the purchase of fresh fruits and vegetables,
offering the Program separately from the NSLP and SBP at a minimum of
twice a week, but as frequently as possible during the school week and
integrating the Program with other wellness activities. These and other
responsibilities that would be included in the agreement are listed in
Sec. 211.10 of the proposed regulatory text. The State agency would
have authority to amend, suspend or terminate the agreement if an SFA
or a school repeatedly fails to operate the Program in accordance with
the provisions of the agreement and/or the requirements of this part.

School Application

Eligible schools that wish to participate in the Program would be
required to submit an application through the SFA. Such applications
shall be submitted by the SFA to the State agency for FFVP approval. At
a minimum, the application submitted to the State agency shall contain
the following information for each school applying for Program
participation:
The total number of students enrolled in the school and
the percentage of those students certified as eligible for free and
reduced-price meals;
A certificate of support for participation in the FFVP
signed by all of the following: (1) The school food manager, (2) the
school principal, and (3) the district superintendent (or equivalent
position); and
A program implementation plan that includes efforts to
integrate the FFVP with other efforts to promote children's health,
nutrition and physical activity, and to reduce overweight and obesity
in children.
In addition, as a part of the implementation plan, each school
would be encouraged to include a description of partnership activities
undertaken or planned to enhance the operation of the FFVP in the
school. FNS has developed an on-line FFVP Toolkit for States to submit
``Best Practices''. Both the toolkit and the FFVP Handbook may be found
at http://www.fns.usda.gov/cnd/FFVP/toolkit.htm and at http://www.fns.usda.gov/cnd/FFVP/handbook.pdf.
Schools are encouraged to develop partnerships with one or more
entities that can provide non-Federal resources to the FFVP operating
in the school. Such entities could include representatives of the fruit
and vegetable industries, grocery stores, local colleges and
universities and local health

[[Page 10985]]

promotion resources. The FFVP handbook specifically encourages schools
to use training materials and develop partnerships with all entities to
promote the goals of program.
SFAs submitting information on behalf of schools reapplying to the
Program based on their continued high need would be allowed, at the
discretion of the State agency, to simply update the information the
State agency has on file rather than submit a complete application
package. This would simplify the application process for the SFA, the
returning school and the State agency. However, SFAs wishing to add new
schools to the Program would be required to submit a complete
application for such schools that include all of the required elements
noted above.
Schools that demonstrate both compliance with the FFVP requirements
outlined in the regulations and continue to meet the Program
eligibility requirements may be reapproved to continue FFVP
participation. However, this does not eliminate the need for the State
agency to evaluate FFVP eligibility priority for schools on an annual
basis to ensure that schools serving the highest percentage of free and
reduced price certified students are provided the opportunity to
participate in the FFVP, in accordance with the eligibility criteria
established by statute.

Publicizing the FFVP in School

Once selected for participation, a school would be responsible for
announcing the availability of free fresh fruits and vegetables to
children within the school. If the school has a Head Start program, a
split-session kindergarten class, or a child care center, the school
would notify these groups as well. When publicizing the Program, it is
important that schools note that the FFVP is not intended to serve
teachers, parents or other adults who are in the school. The only
exception to this prohibition against serving FFVP components to adults
who are in the school concerns specific teachers. It is proposed that
it be acceptable for teachers who are in the classroom with the
children during the FFVP service to partake of the fruit or vegetable
being served to the children in order to reinforce the nutrition
education message of the FFVP. Anecdotal information acquired through
the operation of the FFVP indicates that teachers provide a positive
role model if they consume fruits and vegetables with their students.
However, no additional funding for the service of such components may
be claimed for reimbursement by the SFA or participating schools.

Program Operation

Each school selected to participate in the FFVP would have the
flexibility to operate the Program within the basic statutory and
regulatory requirements and FNS guidance. Each school would decide
when, where, and how to serve the fresh fruit and vegetables, what mix
of fresh fruits and vegetables to serve, how to involve teachers,
parents and community members, how to incorporate nutrition education,
how to publicize the availability of free fruits and vegetables, and
other Program logistics. The actual operation of the Program would have
to be consistent with the agreement between the SFA and the State
agency, as described in Sec. 211.10 of the regulatory text.
Although Congress funded the FFVP on a school year basis, we expect
that the actual service of fresh fruits and vegetables in schools will
begin when school begins for the students and end by June 30th. Schools
would be expected to offer the Program during the entire school year
(first to last day of school) to effect a positive change in the
dietary habits of participating students. Schools that operate year-
round may participate in the FFVP during their entire ``school year''.
However, schools are not allowed to offer the Program during scheduled
holidays, summer school sessions or when the Summer Food Service
Program or the Seamless Summer option of the NSLP is in operation at
the school.
Participating schools would be required to make the fresh fruits
and vegetables available during the school day, separate and distinct
from the NSLP and SBP meal service, at one or more locations in the
school. This rule also proposes that such a food service would occur in
each participating school at least twice a week. The Program would not
operate before or after school hours. The school would also need to
consider the time and place available to eat the fruits and vegetables
and other logistical issues. The FFVP tool kit (http://www.fns.usda.gov/cnd/FFVP/toolkit.htm) encourages the collection of
``Best Practices'' and the FFVP manual (http://www.fns.usda.gov/cnd/FFVP/handbook.pdf) provides a number of suggestions in this area.

Food Eligible To Be Served in the FFVP

The purpose of the Program is to encourage the increased
consumption of fresh fruits and fresh vegetables in elementary schools
serving low income students. Schools participating in the Program would
provide access to fresh fruits and fresh vegetables that are
appropriate for the grade levels of the enrolled children and that
represent a variety of whole or pre-cut fresh fruits and vegetables.
Frozen, canned, dried, certain types of vacuum packed and other types
of processed fruits and vegetables would be prohibited from being
served in the FFVP. In addition, schools would be required to limit the
service of cooked fresh vegetables to a maximum of one service per week
as part of a nutrition education lesson. Other ingredients of the
cooked fresh vegetable dish would not be reimbursable under the
Program. Low fat or non-fat dip for fresh vegetables is permitted in
the Program in order to encourage consumption and enhance
acceptability. Many vegetables may otherwise not be palatable to
students. However, fruit is acceptable on its own and does not need to
be enhanced for acceptability. Since fruit has naturally occurring
sugar, we determined that dips for fruit will increase not only sugar
but fat in children's diets and would be counterproductive to the goals
of the Program.
The definition of the term ``Fresh fruits and vegetables'' as
proposed in this rule has been based upon the definition of the term
``fresh'' included in Sec. 101.95(a) of Title 21 Part 101 of the Food
and Drug Administration Food Labeling regulations as well as an
adaptation of FNS' approach to defining ``unprocessed'' agricultural
products appropriate to the FFVP. We believe that this proposed
definition best represents the types of fresh fruits and vegetables
that Congress intended to be served to children enrolled in this
Program. The proposed definition is included in Sec. 211.2.
As required in Sec. 211.21 of this proposed rule, the requirements
found in Sec. 210.10(g) of the NSLP regulations regarding
accommodations for children with disabilities also exists in the FFVP.
Schools must consider how this accommodation requirement may be applied
in the operation of the FFVP. For example, in providing accommodations
for the FFVP, schools may have to provide texture modifications. In
doing so, it is recommended that schools consider starting with fresh
fruit or vegetable products and avoid pur[eacute]eing canned, frozen
and vacuum packed fruits and vegetables and those in jars, including
baby foods. In most instances, fresh fruits can be easily
pur[eacute]ed; however, we recognize that this is not the case for most
vegetables. Fresh vegetables may be used, but in most circumstances,
will need to be cooked, then pur[eacute]ed.

[[Page 10986]]

The pur[eacute]eing of fresh produce for these students must be
done within the constraints of their medical requirements as allowed by
their physician. However, schools should make sure that both the parent
and the child's doctor are aware of the program and its intent to
provide fresh produce in order to determine if the fresh items are
acceptable choice for texture modifications.

Geographic Preference

Section 4302 of Public Law 110-246, the Food, Conservation, and
Energy Act of 2008, amended section 9(j) of the Richard B. Russell
National School Lunch Act (42 U.S.C. 1758(j)) to require the Secretary
of Agriculture to encourage institutions operating all Child Nutrition
Programs to purchase unprocessed locally grown and locally raised
agricultural products. We initially implemented the provisions through
policy memoranda and explanatory question and answer communications
dated January 9, 2009, July 22, 2009 and October 9, 2009. Most
recently, a final rule entitled ``Geographic Preference Option for the
Procurement of Unprocessed Agricultural Products in Child Nutrition
Programs'', was published at 76 FR 22603 on April 22, 2011.
The geographic preference procurement option is applicable to
purchases made in the FFVP. However, this provision shall only be
applied within the context of the FFVP requirement that produce
utilized in the program be fresh. The definition of ``unprocessed
agricultural products'' in this proposal has been modified from the
definition used for the rest of the Child Nutrition Programs since the
geographic preference provisions of the Food, Conservation, and Energy
Act of 2008 do not change the basic regulatory and statutory
requirement that only fresh produce is allowed to be purchased in the
FFVP. This definition may be found in Sec. 211.13(b).
By utilizing the statutorily established geographic preference
option in Child Nutrition Programs, purchasing institutions, such as
States and SFAs, may specifically identify the geographic area within
which unprocessed locally raised and locally grown fresh fruits and
vegetables will originate. These procurements may be accomplished
through informal or formal procurement procedures, as required by the
FFVP regulations, which are consistent with the regulations of the
other Child Nutrition Programs.
Should SFA's choose to exercise the geographic preference option,
it basically allows schools operating the FFVP to specifically define
geographic areas from which they will seek to procure unprocessed local
fresh fruits and vegetables. It is up to each school or SFA to
determine how to define the geographic area from which such products
will be procured. As previously stated, utilizing a geographic
preference is an option that may or may not be utilized when procuring
fresh fruits and vegetables for the Program.

Other Requirements

To ensure that the fresh fruits and vegetables are safe for
consumption by the students, schools must follow the applicable
sanitation and health standards established under State and local law
and regulations, as well as the school's food safety program. Food
safety requirements for schools are already in place under Sec. 210.13
and Sec. 220.7, respectively, of this chapter for schools
participating in the school lunch and breakfast programs.
Section 19(d)(1)(E) of the statute encourages schools to submit a
plan for implementation that includes partnerships with one or more
entities that will provide non-Federal resources to the Program such as
promotional materials, speakers, etc. Schools would also be expected to
encourage the involvement of parents and the community in activities
that enhance the Program such as seeking program partners and speakers,
and other activities in support of the FFVP and nutrition education
efforts.

Use of Program Funds

Schools shall use the majority of the Program funds for the
purchase of fresh fruits and vegetables, including services for produce
to be pre-cut and for the production of ready-made produce trays. FNS
expects that the resources of the school foodservice operation would be
available for the FFVP. However, FNS acknowledges that participating
schools may have some additional expenses in connection with the
Program such as buying new equipment to maintain food safety. As stated
in Sec. 211.6 of the proposed regulatory text, schools would be
allowed to use no more than 15 percent of a school's total grant for
non-food costs necessary to operate the Program. Such non-food costs
would include, for example, the purchase of disposable supplies,
equipment leases and purchases, and salaries and fringe benefits for
employees that wash and cut produce, prepare food trays, distribute
produce to classrooms, set up kiosks, restock vending machines, and
clean up after the food service. Based on previous experience and
information on the FFVP operations, the 15 percent limitation on non-
food costs seems reasonable and appropriate. However, we invite
comments on this proposed limitation.
All FFVP expenditure information submitted to the SFA by a school
for reimbursement would be reviewed by the SFA to ensure that such
costs are allowable and reasonable given the number of children
benefiting from the Program. The SFA claim for reimbursement submitted
to the State agency must be signed by an SFA official and must be
supported by records maintained by the SFA.
Non-reimbursable costs would include any food items that do not
meet the definition of fresh fruits and vegetables included in Sec.
211.2, such as processed or preserved fruits and vegetables (i.e.,
canned, frozen, dried and certain types of vacuum packed products), dip
for fruit, fruit leather, jellied fruit, trail mix, nuts, fruit or
vegetable pizza, fruit smoothies, promotional items such as posters and
buttons, and nutrition education materials.
A variety of free nutrition education materials, both printed and
online, are available from State and federal partners identified in the
FFVP page of the Child Nutrition Programs public Web site, http://www.fns.usda.gov/cnd/FFVP/FFVPResources.htm as well as the FNS Team
Nutrition site. Local partners, such as food retailers, health
departments, and the USDA Extension Service, are also good sources for
nutrition education and promotional materials that may be used in the
Program.
The fruits and vegetables offered in the Program are intended to be
consumed by children enrolled in the participating school during the
school day at school, where there is the opportunity to monitor the
distribution of the food and talk about the link between nutrition and
health, as well as the importance of good hygiene before and during
meals. Schools are not allowed to give children fruits and vegetables
to take home.

Claims for Reimbursement

Each participating school would submit monthly expenditure
information to the SFA in order to enable the SFA to submit the monthly
claim for reimbursement to the State agency for the purchase of fresh
fruits and vegetables and for allowable non-food costs in conformance
with Sec. 211.9 of the proposed regulatory text. Schools would be
required to submit supporting documentation and would be required to
maintain such information for review

[[Page 10987]]

for a period of three years after the date of submission of the final
Financial Status Report. Purchase orders that commingle orders placed
for fresh fruit and vegetables used in the FFVP as well as in other
school meal programs would have to indicate which fresh produce is for
the use in the FFVP.
It is proposed that expenditure information submitted by each
participating school would be reviewed by the SFA to ensure that the
school expenditures are appropriate to be claimed and are correct. The
SFA would then consolidate the information submitted by the
participating schools into a single claim for reimbursement for
submission to the State agency. Such monthly claims for reimbursement
shall be submitted by the SFAs to the State agency not later than 60
days following the last day of the full month covered by the claim in
accordance with Sec. 211.9 of the proposed rule. The State agency
maintains responsibility to ensure the claims are accurate and
reasonable.

I. Procedural Matters

A. Executive Order 12866 and Executive Order 13563

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

B. Regulatory Impact Analysis

The following summarizes the conclusions of the regulatory impact
analysis.
Need for Action
This proposed rule seeks to establish the regulatory requirements
for the administration and operation of the FFVP, a new program which
began as a pilot in a small number of schools in the year 2002 and is
now available to over 4,640 selected schools nationwide. Given the
incremental funding process, FNS expects that the Program will continue
to grow. Currently, FFVP operators at the State and local levels follow
policy memoranda and practical guidance.
Benefits
The intent of the proposed rule is to encourage the consumption of
fresh fruits and vegetables by elementary school children. The 2010
Dietary Guidelines for Americans \2\ discusses the importance of fruits
and vegetables to a healthful diet. Most current consumption patterns
of children and adults do not achieve the recommended intakes of many
varieties of fruits and vegetables. The program is expected to be
successful in introducing school children to a variety of produce that
they otherwise might not have the opportunity to sample. By providing
increased access to fruits and vegetables, the FFVP will address a key
inconsistency between the diets of elementary school children and the
2010 Dietary Guidelines.
---------------------------------------------------------------------------

\2\ U.S. Department of Agriculture and U.S. Department of Health
and Human Services. Dietary Guidelines for Americans, 2010. 7th
Edition, Washington, DC: US Government Printing Office, December
2010.
---------------------------------------------------------------------------

The September 2011 interim evaluation of the FFVP finds that
students are consuming more fruits and vegetables, an additional \1/4\
cup of fruits and vegetables on average, on days when the program is
operating.\3\ That is nearly 15 percent higher than average fruit and
vegetable consumption of children in non-FFVP schools. The report also
finds no statistically significant increase in calorie consumption
among program participants. That important finding indicates that
fruits and vegetables are replacing other foods rather than adding
calories to the diets of participants and increasing the risk of weight
gain.
---------------------------------------------------------------------------

\3\ Lauren Olsho, Lauren, Jacob Klerman, and Susan Bartlett,
Food and Nutrition Service Evaluation of the Fresh Fruit and
Vegetable Program (FFVP): Interim Evaluation Report. Abt Associates,
September 2011. http://www.fns.usda.gov/ora/MENU/Published/CNP/cnp.htm.
---------------------------------------------------------------------------

This proposed rule would help FNS develop regulatory requirements
in consultation with stakeholders and the public. The rulemaking
process also provides the opportunity to consolidate all the FFVP
requirements into Title 7, part 211 of the Code of Federal Regulations.
Costs
Although this proposed rule has been designated significant, the
costs associated with implementing the proposed regulatory requirements
are not expected to significantly add to current program costs at the
State and local levels. The total cost of the proposed rule is
projected to be $778 million for FY2011-2015. One half million dollars
per fiscal year is retained by USDA for the administration of the
program. The rest of the funds are distributed to the States for the
purchase of fresh fruit and vegetables, served free to all children
enrolled in selected elementary schools, and administration of the
program at the State and local levels. This cost is estimated as $776
million for FY2011-2015. From this statutory grant, funds are made
available to offset the costs incurred by State agencies, SFAs and
schools for administration of the program, including required reporting
and recordkeeping, and for other allowable non-food costs.
The key responsibilities of the State agency would be: (1)
Disseminate information about the Program to low-income schools; (2)
solicit applications from eligible schools and select those with the
highest percentage of free and reduced-price participation; (3) provide
training and technical assistance to new schools and monitor program
operation: and (4) submit quarterly financial reports and an annual
report to FNS. These activities are not expected to be time consuming
because the FFVP is a relatively simple program. FNS anticipates that
many of these activities, including monitoring, would be conducted in
conjunction with activities required under the NSLP. In addition, FNS
has issued implementation memoranda and provided technical assistance
through conference calls, online webinars, regional and state
conferences, and workshops at the School Nutrition Association annual
conference. The total State agency administrative 5-year cost (FY2011-
2015) is estimated as $23 million.
At the local level, schools are reimbursed for the food and
allowable non-food costs. Schools would be required to submit
expenditure data to the SFA and keep supporting records for three
years. We expect that the staff, facilities and equipment used for the
lunch program will be available to the FFVP. Food preparation (e.g.,
washing, peeling and cutting fruits and vegetables) may occasionally be
necessary and could result in an added cost to the school. Other
possible costs would include purchases of additional equipment and
disposable supplies for the FFVP. For FY2011-2015, the total SFA and
school administrative cost and allowable non-food cost is estimated as
$113 million. The total State agency, SFA and school administrative
cost and allowable non-food 5-year cost is estimated as $136 million.

C. Regulatory Flexibility Act

This rule has been reviewed with regard to the requirements of the
Regulatory Flexibility Act (RFA) of 1980, (5 U.S.C. 601-612). Pursuant
to that review it has been certified that this rule would not have a
significant impact on a substantial number of small entities. The
administrative and operational requirements of the Program are simple.
The Federal government provides funds for the purchase of fresh fruit
and vegetables and general administration of the Program.

[[Page 10988]]

Therefore, FNS does not expect that the proposed rule will have a
significant economic impact on small entities.

D. 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, the
Department 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 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 the Department to identify
and consider a reasonable number of regulatory alternatives and adopt
the most cost effective or least burdensome alternative that achieves
the objectives of the rule.
This proposed rule does not contain Federal mandates (under the
regulatory provisions of Title II of the UMRA) that would result in
expenditures for State, local and tribal governments or the private
sector of $100 million or more in any one year. Thus, the rule is not
subject to the requirements of sections 202 and 205 of the UMRA.

E. Executive Order 12372

The FFVP is listed in the Catalog of Federal Domestic Assistance
Programs under 10.582. For the reasons set forth in the final rule in 7
CFR part 3015, subpart V, and related Notice (48 FR 29115, June 24,
1983), this program is included in the scope of Executive Order 12372
which requires intergovernmental consultation with State and local
officials. The Child Nutrition Programs are federally funded programs
administered at the State level. FNS headquarters and regional office
staff engage in ongoing formal and informal discussions with State and
local officials regarding program operational issues. This structure of
the Child Nutrition Programs allows State and local agencies to provide
feedback that forms the basis for any discretionary decisions made in
this and other rules.

F. Executive Order 13132

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 13121.
1. Prior Consultation With State Officials
FNS headquarters and regional offices have formal and informal
discussions with State agency officials on an ongoing basis regarding
the Child Nutrition Programs and policy issues. Prior to drafting this
proposed rule, FNS held several conference calls and meetings with the
State agencies to discuss the statutory requirements addressed in this
proposed rule. In response, FNS received a number of questions which
were summarized in practical guidance distributed to the State and
local program operators. FNS also discussed the FFVP statutory
requirements with program operators at national, regional and state
conferences and received input which has been considered in drafting
this proposed rule.
2. Nature of Concerns and the Need To Issue This Rule
State agencies requested clarification on school applications and
selection, allowable foods, and general program operation. These and
other requirements are based on section 19 of the National School Lunch
Act and FNS policy memoranda are discussed in the preamble.
3. Extent to Which the Department Meets Those Concerns
FNS has considered the impact of this proposed rule on State and
local operators. We have attempted to balance the goal of increasing
the opportunities for low-income children to consume fresh fruits and
vegetables against the need to establish basic regulatory requirements
for a new program. At the State agency level, seeking applications from
low-income schools could require persistence and assistance from the
school food authorities. For schools, adequate staff resources to wash,
cut, and serve the fresh fruits and vegetables could pose an occasional
challenge. FNS has provided and continues to provide guidance and
technical assistance to program operators, and expects that schools
will only have minor difficulties in meeting the proposed requirements.

G. Executive Order 12988

This proposed rule has been reviewed under Executive Order 12988,
Civil Justice Reform. This proposed rule is intended to have preemptive
effect with respect to any State or local laws, regulations or policies
which conflict with its provisions or which would otherwise impede its
full and timely implementation. This rule is not intended to have
retroactive effect unless so specified in the Effective Dates section
of the final rule. Prior to any judicial challenge to the provisions of
the final rule, appeal procedures in Sec. 210.18(q) and Sec.
235.11(f) of this chapter must be exhausted.

H. Executive Order 13175

E.O. 13175 requires Federal agencies to consult and coordinate with
tribes on a government-to-government basis on policies that have tribal
implications, including regulations, legislative comments or proposed
legislation, and other policy statements or actions that have
substantial direct effects on one or more Indian tribes, on the
relationship between the Federal Government and Indian tribes, or on
the distribution of power and responsibilities between the Federal
Government and Indian tribes. In late 2010 and early 2011, USDA engaged
in a series of consultative sessions to obtain input by Tribal
officials or their designees concerning the impact of this rule on the
tribe or Indian Tribal governments, or whether this rule may preempt
Tribal law. Reports from these consultations 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 officials or
their designees 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 commentors address any concerns
in this regard in their responses.

I. Civil Rights Impact Analysis

FNS has reviewed this proposed rule in accordance with the
Department Regulation 4300-4, ``Civil Rights Impact Analysis,'' to
identify any major civil rights impacts the rule might have on children
on the basis of age, race, color, national origin, sex, or disability.
A careful review of the rule's intent and provisions revealed that this
rule is not intended to reduce children's ability to participate in the
National School Lunch Program, School Breakfast Program, Fresh Fruit
and Vegetable Program, or Special Milk Program.

[[Page 10989]]

J. Paperwork Reduction Act

The Paperwork Reduction Act of 1995 (44 U.S.C. chapter 35; see 5
CFR part 1320) requires that 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
proposed rule contains information collections that are subject to
review and approval by OMB; therefore, FNS has submitted an information
collection under 0584-NEW, which contains the burden information in the
proposed rule for OMB's review and approval.
Comments on the information collection in this proposed rule must
be received by April 24, 2012. 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, Child Nutrition Division, Food and Nutrition
Service, U.S. Department of Agriculture, 3101 Park Center Drive, Room
636, Alexandria, Virginia 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)
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: Fresh Fruit and Vegetable Program (FFVP).
OMB Number: [Not Yet Assigned] 0584-XXXX.
Expiration Date: [Not Yet Determined].
Type of Request: New Collection.
Abstract: Section 120 of the Child Nutrition and WIC
Reauthorization Act of 2004 amended the Richard B. Russell National
School Lunch Act, 42 U.S.C. 1769(g) to authorize the Fresh Fruit and
Vegetable pilot as a permanent program effective July 1, 2004. The
Food, Conservation, and Energy Act of 2008 expanded the Program and
significantly increased funding.
The purpose of the Program is to encourage increased consumption of
fresh fruits and vegetables by children enrolled in elementary schools
that serve low-income students. Schools interested in participating in
the Program must submit an application annually. Participating schools
must submit monthly expenditure data to their school food authority
(SFA) for the purchase of fruits and vegetables. SFAs must review,
approve, and forward the consolidated claims to the State agency (SA)
for payment. Program violations identified in any review conducted by
the SA and/or SFA must be documented. As necessary, schools or SFAs
must document any required corrective action.
SAs must submit financial reports on FFVP expenditures to FNS five
times per year to include four quarterly reports and one final report.
In addition, SAs must submit an annual report to FNS disclosing program
data such as the number of schools that apply, the number that are
selected for participation, their total enrollment, the percentage of
students eligible for free and reduced-price meals to ensure that the
Program is reaching low-income schools with the highest need and the
per student allocation provided to each school.
The average burden per response and the annual burden hours are
explained below and summarized in the charts which follow.
Estimated Annual Burden for 0584-New, Fresh Fruit And Vegetable
Program, 7 CFR 211
Recordkeeping: Estimated Annual Burden for 0584-NEW, Fresh Fruit and
Vegetable Program, 7 CFR 211
Respondents for This Proposed Rule: State agencies, School Food
Authorities, Schools.
Estimated Number of Respondents for This Proposed Rule: 54 Stage
agencies; 4,983 School Food Authorities; 4,983 Schools.
Estimated Number of Responses per Respondent for This Proposed
Rule: 5.5.
Estimated Total Annual Responses: 55,515.
Estimated Total Annual Recordkeeping Burden on Respondents for This
Proposed Rule: 264,413 hours.

Recordkeeping
--------------------------------------------------------------------------------------------------------------------------------------------------------
Estimated Average Average
Section number of Frequency of annual burden per Annual burden
respondents response responses response hours
--------------------------------------------------------------------------------------------------------------------------------------------------------
SA must maintain records as necessary 7 CFR 211.8(b)................... 54 9.0 486 0.25 121.50
to support reimbursement to SFAs and
reports submitted to FNS.
SA maintains Claims for Reimbursement 7 CFR 211.9(g) and 211.11(b)..... 54 1.0 54 0.33 17.82
and records pertaining to financial
action/compliance.
SA maintains applications for 7 CFR 211.10(d).................. 54 1.0 54 2.66 143.64
participation.
SA maintains on file evidence of 7 CFR 211.14(b) and 211.14(d).... 54 1.0 54 0.25 13.50
investigations and actions.
SA maintains records pertaining to 7 CFR 211.19(c).................. 54 1.0 54 0.33 17.82
claims against schools.
SFA maintains monthly Claim for 7 CFR 211.9(a) and 211.11(b)..... 4,983 9.0 44,847 5 224,235.00
Reimbursement submitted by schools
and supporting documentation.

[[Page 10990]]

SFA maintains records to ensure 7 CFR 211.14(b).................. 4,983 1.0 4,983 3 14,949.00
school is conducting program
accordingly (review conducted in
conjunction with on-site review
required under Sec. 210.8).
Schools must maintain all records 7 CFR 211.10(e)(15).............. 4,983 1.0 4,983 5 24,915.00
pertaining to the Program for 3
years after the end of the fiscal
year..
------------------------------------------------------------------------------------------------------------------
Total Recordkeeping for Proposed ................................. 10,020 5.5 55,515 4.76 264,413.28
rule.
------------------------------------------------------------------------------------------------------------------
Total Existing Recordkeeping ................................. n/a n/a n/a n/a n/a
Burden for Part 211.
------------------------------------------------------------------------------------------------------------------
Total Recordkeeping Burden for ................................. 10,020 5.5 55,515 4.76 264,413.28
Part 211 with Proposed rule.
--------------------------------------------------------------------------------------------------------------------------------------------------------

Reporting: Estimated Annual Burden for 0584-NEW, Fresh Fruit and
Vegetable Program, 7 CFR 211
Respondents for this Proposed Rule: State agencies, School Food
Authorities, Schools.
Estimated Number of Respondents for This Proposed Rule: 54 State
agencies; 4,983 School Food Authorities; 4,983 Schools.
Estimated Number of Responses per Respondent for This Proposed
Rule: 9.96.
Estimated Total Annual Responses: 99,822.
Estimated Total Annual Reporting Burden on Respondents for This
Proposed Rule: 111,034 hours.

Reporting
--------------------------------------------------------------------------------------------------------------------------------------------------------
Estimated Average Average
Section number of Frequency of annual burden per Annual burden
respondents response responses response hours
--------------------------------------------------------------------------------------------------------------------------------------------------------
SA must submit first quarter 7 CFR 211.5...................... 54 1 54 0.25 13.50
estimates by each June 1 to FNSRO to
receive allocation of funds..
SA shall solicit applications for 7 CFR 211.10(d).................. 54 1 54 1.25 67.50
participation.
SA must submit an annual FFVP report 7 CFR 211.11(a)(1)............... 54 1 54 1.5 81.00
to FNS.
SFAs consolidate monthly claims from 7 CFR 211.9(a)................... 4,983 9 44,847 1.5 67,270.50
schools and submit claim forms to SA
for reimbursement..
SFA must submit to SA documented 7 CFR 211.14(b).................. 4,983 1 4,983 3 14,949.00
corrective action, no later than 30
days from the deadline for
completion, for program violations
identified on administrative
reviews..
Schools submit monthly claims for 7 CFR 211.9(a) and 211.10(e)(10). 4,983 9 44,847 0.5 22,423.50
reimbursement for both food and non-
food costs..
Any school interested in 7 CFR 211.10(d).................. 4,983 1 4,983 1.25 6,229.20
participating in the FFVP must
complete an application including
program implementation plan and
description of partnership
activities. All returning schools
must update information on file..
Total Reporting for Proposed ................................. 10,020 9.9623 99,822 1.11232 111,034.20
rule*.
Total Existing Reporting Burden ................................. n/a n/a n/a n/a n/a
for Part 211.

[[Page 10991]]

Total Reporting Burden for Part ................................. 10,020 9.9623 99,822 1.11232 111,034.20
211 with Proposed rule*.
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Burden for SF-425 is captured in OMB 0348-0061.
SF-425 quarterly & annual financial report (54 respondents * 5 frequency * 1.5 hrs per response = 405 hours).

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

------------------------------------------------------------------------
Summary of Burden (OMB 0584-NEW) 7 CFR 211
------------------------------------------------------------------------
Total No. Respondents................................... 10,020
Average No. Responses per Respondent.................... 15.5
Total Annual Responses.................................. 155,337
Average Hours per Response.............................. 2.417
Total Burden Hours for Part 211......................... 375,447.48
------------------------------------------------------------------------

K. E-Government Act Compliance

The Food and Nutrition Service is committed to complying with the
E-Government Act 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.

List of Subjects in 7 CFR Parts 211 and 235

Administrative practice and procedure, Food assistance programs,
Grant programs--education, Grant programs--health, Infants and
children, Reporting and recordkeeping requirements, School breakfast
and lunch programs.

For the reasons set forth in the preamble, 7 CFR part 211 is
proposed to be added as follows:

PART 211--FRESH FRUIT AND VEGETABLE PROGRAM

Sec.
211.1 General purpose and scope.
211.2 Definitions.
211.3 Administration.
211.4 Funding.
211.5 Funding availability.
211.6 Use of funds.
211.7 Payment process to States.
211.8 Reimbursement for school food authorities.
211.9 Claims for reimbursement.
211.10 Eligibility requirements.
211.11 Reporting and recordkeeping.
211.12 Special responsibilities for schools.
211.13 Procurement standards.
211.14 Program assistance and monitoring.
211.15 Withholding payments.
211.16 Suspension, termination and grant closeout procedures.
211.17 Penalties.
211.18 Management evaluations and audits.
211.19 Educational prohibitions.
211.20 Other State agency responsibilities.
211.21 Nondiscrimination.
211.22 Program information.

Authority: 42 U.S.C. 1769a.

Sec. 211.1 General purpose and scope.

The purpose of the Fresh Fruit and Vegetable Program is to increase
fresh fruit and vegetable consumption in elementary schools to improve
the diets and long-term health of the participating children and to
help children understand the relationship between proper eating and
good health. This Program makes free fresh fruits and vegetables
available to students in selected schools in order to introduce
children to fresh fruits and vegetables and to make these foods more
prevalent in their diet. This part prescribes the general requirements
for Program administration and participation as stated in section 19 of
the Richard B. Russell National School Lunch Act, as amended (42 U.S.C.
1769a).

Sec. 211.2 Definitions.

For the purpose of this part, the term:
Act means the Richard B. Russell National School Lunch Act, as
amended.
Department means the United States Department of Agriculture.
Elementary school means, under the Program, a nonprofit
institutional day or residential school, including a public elementary
charter school that provides elementary education, as determined under
State law.
Fiscal year means a period of 12 calendar months beginning October
1st of any year and ending with September 30th of the following year.
FNS means the Food and Nutrition Service, United States Department
of Agriculture.
FNSRO means the appropriate Regional Office of the Food and
Nutrition Service of the Department.
Free means provided to all children at no charge.
Free lunch means a lunch served under the National School Lunch
Program to a child from a household eligible for such benefits under 7
CFR part 245 of this chapter and for which neither the child nor any
member of the household pays or is required to work.
Fresh fruits and vegetables means produce in its raw state which
has not been frozen or subjected to any form of thermal processing or
any other form of preservation. The following processes do not preclude
the food from being considered to be fresh: The addition of waxes, the
post-harvest use of approved pesticides, the application of a mild
chlorine wash or mild acid wash on produce, or the treatment of raw
foods with ionizing radiation within the limits established by the Food
and Drug Administration. (21 CFR 101.95, Sept. 24, 2009.) In addition,
such produce may include products that have been cooled, refrigerated,
peeled, sliced, diced, cut, chopped, shucked, washed, treated with high
water pressure or ``cold pasteurized'', packaged (such as placing
produce in cartons or vacuum packaging, in which air is removed from a
package of food and the package is hermetically sealed to ensure that
the vacuum remains within the packaging) and bagged (such as placing
produce in bags).
Nonprofit means, when applied to schools or institutions eligible
for the Program, exempt from income tax under section 501(c)(3) of the
Internal Revenue Code of 1986.
NSLP means the National School Lunch Program, under which
participating schools operate a nonprofit lunch program in accordance
with this title (7 CFR part 210) and receive general and special cash
assistance and donated food from the Department.
OIG means the Office of the Inspector General of the Department.
Program means the Fresh Fruit and Vegetable Program.
Reimbursement means Federal cash assistance payable to
participating schools for serving fresh fruits and vegetables to
children at no charge in accordance with the requirements of this part.
Reduced price lunch means a lunch served under the NSLP:
(a) To a child from a household eligible for such benefits under 7
CFR part 245 of this chapter;
(b) For which the price is less than the school food authority
designated full price of the lunch and which does not exceed the
maximum allowable reduced

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price specified under 7 CFR part 245 of this chapter; and
(c) For which neither the child nor any member of the household is
required to work.
ROAP means FNSRO Administered Programs.
School means for purposes of the Fresh Fruit and Vegetable Program:
(a) An educational institution of elementary and preprimary grades
recognized as part of the educational system in the State and operating
under public or nonprofit private ownership in a single building or
complex of buildings which participates in the NSLP; or
(b) Any public or nonprofit private residential child care
institution, or distinct part of such institution, which participates
in the NSLP and serves elementary school and preprimary school children
as defined by the State.
School day means calendar days in which the school is open and
teaching, and encompasses the period between opening and dismissal.
School food authority means the governing body which is responsible
for the administration of one or more schools; and has the legal
authority to operate the Program therein or be otherwise approved by
FNS to operate the Program.
School week means the normal school week of five consecutive days.
School year means a period of 12 calendar months beginning July 1st
of any year and ending June 30th of the following year and, for
purposes of Program, includes the service of food from the first day of
class until the last day of class.
Secretary means the Secretary of Agriculture.
State means any of the 50 States, the District of Columbia, the
Commonwealth of Puerto Rico, the Virgin Islands, and Guam.
State agency means:
(a) The State educational agency;
(b) Any other agency of the State which has been designated by the
Governor or other appropriate executive or legislative authority of the
State and approved by the Department to administer the NSLP in schools,
as specified in Sec. 210.3(b) of this chapter; or
(c) The FNSRO, where the FNSRO administers the Program as specified
in Sec. 211.3(b).

Sec. 211.3 Administration.

(a) FNS. FNS will act on behalf of the Department in the
administration of the Program;
(b) State agencies. The responsibility for the administration of
the Program at the state level will be in the State educational agency
or other State agency approved to administer the National School Lunch
Program (NSLP). The FNSRO will administer the Program if it does so for
the NSLP or any part of the NSLP in accordance with Sec. 210.3(c) of
this chapter. Each State agency desiring to offer the Program must
amend the permanent Federal-State agreement to include administration
of the Program in accordance with the applicable requirements of this
part; 7 CFR parts 15, 15a, 15b, and 3016; and FNS instructions.
(c) School food authorities. The school food authority will be
responsible for the administration of the Program in schools selected
by the State agency for participation. State agencies must ensure that
school food authorities administer the Program in accordance with the
applicable requirements of this part; 7 CFR parts 15, 15a, 15b, and
3016 or 3019, as applicable; and FNS instructions. Each school food
authority with schools selected for the Program must enter into an
agreement with the State agency that addresses the administration of
the Program during a specific school year in accordance with the
provisions of this part, and, as applicable, 7 CFR parts 210, 235,
3016, and 3019, and with FNS Instructions.

Sec. 211.4 Funding.

(a) Federal funding. (1) Federal funds available to the Program
each school year beginning July 1st will be as specified in Section 19
of the Act for school year 2010-2011 and for school year 2011-2012. For
school year 2012-2013 and each school year thereafter, Program funds
will be based on the amount received in the preceding year, as adjusted
to reflect changes for the 12-month period ending the preceding April
30th in the Consumer Price Index for All Urban Consumers for items
other than food published by the Department of Labor's Bureau of Labor
Statistics. Unobligated funds from a preceding school year may be
available to FNS for operation of the Program in subsequent years.
(2) No more than $500,000 of the funds made available for the
Program annually may be set aside for Federal administrative costs.
(b) State funding. (1) The minimum grant to each of the 50 states
and the District of Columbia will equal 1 percent of the funds made
available to carry out the Program for a school year.
(2) Remaining funds will be allocated to each of the 50 states, the
District of Columbia, Guam, Puerto Rico, and the Virgin Islands based
on the proportion of the state population to the U.S. population. In
States in which FNS administers part of the Program, funding for
eligible ROAP schools shall be made available to the Regional Office
administering the Program in the eligible schools in those states.

Sec. 211.5 Funding availability.

(a) FNS will notify each State agency of its total grant for the
upcoming school year. Program funds will be provided to each State
agency through two allocation distributions on or around July 1st and
October 1st of each school year. The State agency will use the
allocated funds to reimburse school food authorities for the purchase
of fresh fruits and vegetables under the Program. The State agency must
promptly notify FNS if it does not expect to obligate all the allocated
funds by the dates specified in this section.
(1) July 1 allocation. (i) FNS will determine the July allocation
for each State agency based on each State agency's estimate of the
amount of funding needed to initiate and operate the Program during the
first quarter of the school year. The State agency must submit a first
quarter estimate to FNS by June 1st in order to receive the first
allocation of funds on or about July 1st. The first quarter estimate
shall include anticipated obligations for the purchase of fruits and
vegetables and other reasonable expenses needed to implement the
Program in the approved schools during the first quarter of the school
year. The first quarter estimate may also include an amount for State
administrative costs for the first quarter of the school year, as
specified in Sec. 211.6(a)(1).
(ii) All funds received and retained by the State agency for
Program administration through the July allocation shall be obligated
or expended by September 30th of that same school year.
(iii) Funds provided to school food authorities through the July
1st allocation shall be obligated or expended by September 30th of that
same school year.
(iv) Any unobligated or unexpended funds shall be recovered by FNS
and made available to the Program for reallocation at a later time.
(2) October 1 allocation. (i) The balance of the State agency's
total Program funding for the school year will be allocated on or about
October 1st of each school year. Any funds not expended or obligated by
the State agency by the following September 30th of that fiscal year
will be recovered by FNS and made available to the Program for
reallocation at a later time. State agencies may only reallocate funds
for Program costs incurred within the same

[[Page 10993]]

school year for which the funds were made available;
(ii) School food authorities must ensure that October 1st
allocation funds made available to participating schools are expended
or obligated during the period of performance for which the funds have
been made available, otherwise the funds will be recovered by FNS and
made available to the Program for reallocation at a later time.
(b) To stay within the assigned funds, each State agency must
review the Program claims submitted by school food authorities and
control Program reimbursement payments. The State agency may not
advance Program funds to the school food authorities or to the schools
selected to participate in the Program.

Sec. 211.6 Use of funds.

(a) General. Federal funds made available under the Program shall
be used primarily for the purchase of fresh fruits and vegetables
served free to all children enrolled in selected elementary schools.
(1) State administrative costs. Each State agency may retain a
portion of its total grant to support administration of the Program.
The amount that may be retained must be determined prior to determining
the school allocations and must be the lesser of 5 percent of the State
agency's total grant for the school year, or the amount required to pay
the costs of one full-time coordinator for the Program in the State, as
determined by the State agency based on the State personnel structure.
(2) Local-level costs. School food authorities and schools shall
use Program funds primarily for the purchase of fresh fruits and
vegetables. Program funds shall not be used for nutrition education or
Program promotion. Costs for planning; food delivery, preparation, and
service; equipment leases and purchases; and other non-food expenses in
connection with the operation of the Program shall not exceed 15
percent of a school's total grant for the school year.
(3) State agencies may assess Program operations during the school
year and may reallocate funds to school food authorities in the State.
However, any such reallocations of funds shall only be made during the
school year for which the funds became available and shall be expended
or obligated during that same school year.

Sec. 211.7 Payment process to States.

(a) Letter of credit. FNS will generally make payments available by
means of a letter of credit issued in favor of the State agency. The
State agency will receive funds for reimbursement to participating
school food authorities through procedures established by FNS in
accordance with 7 CFR part 3016. The State agency must minimize the
time that elapses between the drawing of funds from the letter of
credit and the disbursement of those funds to pay the Claims for
Reimbursement. FNS may, at its option, reimburse a State agency by
Treasury check. FNS will pay with funds available in settlement of a
valid claim.
(b) Recovery of funds. FNS will recover any Federal funds made
available to the State agency under this part which are in excess of
obligations reported at the end of each fiscal year in accordance with
7 CFR 3016.23, ``Period of Availability of Funds'', and 7 CFR 3016.50-
3016.52, ``After-the-Grant-Requirements''. Such recoveries must be
reflected by a related adjustment in the State agency's letter of
credit.

Sec. 211.8 Reimbursement for school food authorities.

(a) Reimbursement payments to nonprofit school food service
operations must be made only to school food authorities operating the
Program under a written agreement with the State agency. Such payments
may be made for the purchase of fresh fruits and vegetables and other
allowable costs in connection with the Program.
(b) Each State agency must maintain Program records as necessary to
support the reimbursement payments made to school food authorities and
the reports submitted to FNS under this part. Such records must be
retained for a period of 3 years.

Sec. 211.9 Claims for reimbursement.

(a) Schools must submit expenditure data to their school food
authority providing sufficient detail and documentation to justify the
monthly reimbursement claimed by the school food authority. Schools
shall certify that the information is true and correct. Such
expenditure data for each month must include the cost of fresh fruits
and vegetables purchased for the program that month and allowable non-
food costs for that month.
(b) In submitting a Claim for Reimbursement to the State agency,
each school food authority must certify that:
(1) The claim is true and correct;
(2) Records are available to support the claim;
(3) The claim is in accordance with the existing agreement, and
(4) Payment has not been received. If the first or last month of
Program operations for any year contains 10 operating days or less,
such a month may be added to the Claim for Reimbursement for the
appropriate adjacent month; however, Claims for Reimbursement may not
combine operations occurring in two fiscal years.
(c) A final Claim for Reimbursement shall be postmarked and/or
submitted to the State agency not later than 60 days following the last
day of the full month covered by the claim. State agencies may
establish shorter deadlines at their discretion. Claims not postmarked
and/or submitted within 60 days shall not be paid with Program funds
unless FNS determines that an exception should be granted.
(d) The State agency shall review all Claims for Reimbursement and
discuss any discrepancies in the claim with the school food authority.
The State agency may make adjustments on claims and may disallow
payment of any claim, in whole or in part, that is inconsistent with
the Program requirements or FNS implementation memoranda.
(e) If FNS does not concur with the State agency's action in paying
a claim, FNS shall assert a claim against the State agency for the
amount of such claim. In all such cases, the State agency shall have
full opportunity to submit to FNS evidence or information to justify
the action taken. If FNS determines the State agency's payment of a
claim was unwarranted, the State agency shall promptly pay to FNS the
amount of the claim.
(f) The Secretary has authority to settle and to adjust any claims
arising under the Program, and to compromise or deny such claim or any
part thereof. The Secretary also has the authority to waive such claims
if the Secretary determines that to do so would serve the purposes of
the Program. This provision shall not diminish the authority of the
Attorney General of the United States under section 516 of Title 28,
U.S. Code, to conduct litigation on behalf of the United States.
(g) The State agency shall maintain all records pertaining to
action taken under this section for a period of three years after the
date of submission of the final Financial Status Report (SF-425),
except that, if audit findings have not been resolved, such records
shall be retained beyond the three-year period for as long as required
for the resolution of the issues.

Sec. 211.10 Eligibility requirements.

(a) State agency outreach to eligible schools. (1) Each State
agency is required to conduct outreach to all elementary schools,
including Native American schools, that participate in

[[Page 10994]]

the NSLP and have the highest proportion of students certified eligible
for free and reduced price NSLP meals in the State. In cases in which
FNS administers part of the Program in a State, the State agency and
FNS shall coordinate outreach activities to ensure that all eligible
schools are contacted. As part of the State agency's outreach
requirement, such schools must be notified of:
(i) The eligibility of such schools for the Program;
(ii) That Program funding is available;
(iii) That priority is given to schools with the highest need; and
(iv) That the school would be likely to be selected to participate
in the Program. At a minimum, the State agency must provide information
to all elementary schools where at least 50 percent of the students are
certified for free and reduced-price lunches and actively target those
schools with the highest need and encourage them to participate in the
Program.
(2) In cases in which there are more schools eligible for the
Program than can be funded for participation, the State agency may
limit outreach to only those schools with the highest percentages of
free and reduced-price certified students.
(3) In situations in which a State agency does not have enough
elementary schools with high percentages of students certified for free
and reduced-price lunches in the NSLP, the State agency may extend
Program outreach to other schools including those in which the free and
reduced- price certified student population is below the 50 percent
level. When soliciting such schools, priority for participation in the
Program shall still be given to the schools that have the highest
proportion of free and reduced price certified students.
(4) The outreach process shall be conducted prior to selecting any
school for participation in the Program and may be conducted in
collaboration with the school food authorities.
(b) Per-student allocation. State agencies shall allocate from $50
to $75 per student to operate the Program each school year. The per-
student allocation for each school may vary by school within the
established allocation range.
(c) Selection criteria. (1) Elementary schools that meet the
following criteria may be selected for participation in the Program:
(i) Schools in which not less than 50 percent of the students are
certified eligible for free or reduced price school lunches, except as
noted in paragraph (c)(2) of this section, with priority for selection
given to those schools that serve the highest percentage of free and
reduced price certified students.
(ii) Schools that have submitted an application for participation
in accordance with paragraph (d) of this section; and
(iii) Schools that have not been documented as being deficient in
managing any FNS program or that have no outstanding administrative
findings documenting violations of the requirements of any FNS program.
(2) Applicant schools in which fewer than 50 percent of the
students are certified as eligible for free and reduced price meals
shall only be selected to participate in the program if all of the
eligible higher need schools in the State have been selected for
participation in the Program and the State agency has not reached its
statewide participation goal. When selecting such schools, priority
shall be given to schools in descending order beginning with those
schools that serve the highest percentage of free and reduced price
certified students.
(3) A State agency may only impose additional selection criteria
with the approval of FNS if the State agency has more schools at the
same need level than can be funded, and if such criteria are not
inconsistent with the provisions in paragraph (c) of this section.
(d) Application process. Each year, the State agency shall solicit
applications for participation from the elementary schools with the
highest number of children certified for free and reduced-price meals.
Each school must submit the application to operate the Program in the
following school year to the State agency through their school food
authority. At a minimum, the school application shall include:
(1) The total number of enrolled students and the percentage
certified eligible for free and reduced price meals;
(2) A certificate of support for participation in the Program
signed by the school food manager, school principal and district
superintendent or equivalent position, as determined by the school; and
(3) A program implementation plan that includes efforts to
integrate the Program with other initiatives to promote health and
nutrition, reduce overweight and obesity, or promote physical activity.
It is recommended that the plan also include a description of
partnership with one or more entities, such as produce, fruit and
vegetable industry groups and grocery stores, local colleges and
universities or other organizations that will provide non-Federal
resources to the school in support of the Program's goals.
(e) Agreement. Each school food authority must enter into a written
agreement with the State agency to offer the Program. Under such
agreement, the school food authority will be responsible for the
operation of the Program in schools within its jurisdiction. Such
agreement may be amended, suspended, or terminated as determined by the
State agency in consultation with FNS. The agreement between the State
agency and the school food authority will ensure that the school food
authority will require the selected schools to:
(1) Make free fresh fruit and vegetables available to all enrolled
children attending the participating school;
(2) Offer the Program during the regular school year, excluding
holidays and summer break;
(3) Serve fresh fruits and vegetables to students during the school
day, at least twice a week, and separately from the National School
Lunch Program and School Breakfast Program service times;
(4) Offer a variety of fresh fruits and vegetables as defined in
Sec. 211.2 to children. The types of fruits and vegetables and portion
sizes should reflect the ages and preferences of students. Frozen,
canned, dried and other types of processed fruits and vegetables are
not allowed;
(5) If dip for vegetables is provided, it must be fat-free or low-
fat and must be limited to a 2 ounce serving size. Dip for fruit is not
allowed;
(6) Limit the service of cooked fresh vegetables to no more than
once each week and only when included as part of a nutrition education
lesson. Other ingredients in the cooked fresh vegetable dish must be
fat-free or low-fat and are not reimbursable;
(7) Publicize the availability of free fresh fruit and vegetables
for children widely within the school through use of the public address
system, flyers and other usual means of communication and ensure that
the only adults allowed to receive FFVP components are teachers who are
in the classroom with the students during the FFVP food service;
(8) Integrate Program activities with other school efforts to
promote health, nutrition, healthy weight and physical activity;
(9) Participate in Program training offered by the school food
authority and/or State agency, as applicable;
(10) Use Program funds primarily for the purchase of fresh fruits
and vegetables;
(11) Maintain a financial management system as prescribed by the
State agency

[[Page 10995]]

and obligate funds on a timely manner as instructed in Sec. 211.5 of
this part;
(12) Limit allowable non-food costs to no more than 15 percent of
the school's total grant;
(13) Submit timely program expenditure information to the school
food authority to enable the school food authority to submit
consolidated reimbursement claims for the purchase of fresh fruits and
vegetables served to students and allowable non-food expenses only;
(14) Acknowledge that failure to submit accurate expenditure
information will result in the disallowance of payments and may result
in suspension or termination from the Program;
(15) Acknowledge that if failure to submit accurate expenditure
information or claims reflects embezzlement, willful misapplication of
funds, theft, or fraudulent activity, the penalties specified in Sec.
210.26 of this chapter will apply;
(16) Comply with the requirements of the Department's regulations
respecting nondiscrimination (7 CFR parts 15, 15a, and 15b);
(17) Comply with the applicable procurement requirements found at
Sec. 211.13;
(18) Follow hazard analysis and critical control point (HACCP)
principles, and sanitation and health standards established under State
and local law and regulations in conformance with Sec. 210.13 and
Sec. 220.7, respectively, of this chapter for schools participating in
the National School Lunch and School Breakfast Programs;
(19) Comply with all Program requirements specified in this part;
and
(20) When requested, make all records pertaining to the Program
available to the State agency and to FNS for audit and administrative
review, at any reasonable time and place. Such records must be retained
for a period of three years after the end of the fiscal year to which
they pertain, except that, if audit findings have not been resolved,
the records must be retained beyond the three-year period as long as
required for the resolution of the issues raised by the audit.

Sec. 211.11 Reporting and recordkeeping.

(a) Reporting responsibilities. Participating State agencies must
submit forms and reports to FNS to demonstrate compliance with Program
requirements. The reports include, but are not limited to the
following:
(1) Annual FFVP Report. Each State agency must submit an annual
report to FNS by November 1st of the current school year disclosing the
total number of schools in the state eligible to participate in the
program, the number of schools that applied for participation in the
Program, the schools selected for the Program, the total enrollment and
the percentages of students certified for free and reduced price meals
in the participating schools and the per student allocation provided
for each of the participating schools, the number of schools that
applied for participation and were not selected and the percentage of
free and reduced price certified students served by such schools.
(2) Quarterly report. Each State agency must submit to FNS a
quarterly Financial Status Report (SF-425) on the use of Program funds.
Such report must be postmarked and/or submitted no later than 30 days
after the end of each fiscal year quarter;
(3) End of year report. Each State agency must submit a final SF-
425 for each fiscal year. This final fiscal year closeout report must
be postmarked and/or submitted to FNS within 120 days after the end of
each fiscal year or part thereof that the State agency administered the
Program. Obligations must be reported only for the fiscal year during
which the obligations occur. FNS will not be responsible for
reimbursing Program obligations reported later than 120 days after the
close of the fiscal year in which they were incurred. Closeout
procedures are to be carried out in accordance with 7 CFR part 3016.
(b) Recordkeeping responsibilities. State agencies and
participating school food authorities are required to maintain records
to demonstrate compliance with Program requirements. School food
authorities must maintain on file each monthly Claim for Reimbursement
and all supporting documentation by school. Records shall be retained
as specified in Sec. 210.23(c) of this chapter. School food
authorities must make this information available to the Department and
the State agency upon request.

Sec. 211.12 Special responsibilities of schools.

(a) In addition to the requirements of Sec. 211.10(e), schools
selected to participate in the Program must comply with the following:
(1) Have an implementation plan to operate the Program as required
in the agreement between the school food authority and the State
agency;
(2) When possible, partner with entities that can provide non-
Federal resources to the Program; and
(3) Encourage the involvement of parents and the community in
activities that enhance the Program such as seeking program partners
and other support activities as determined by the school.
(b) A State agency may establish additional school responsibilities
with the approval of FNS if such responsibilities are consistent with
the provisions of this part and support the goals of the Program.

Sec. 211.13 Procurement standards.

(a) General. In the operation and administration of the Program,
State agencies and school food authorities shall comply with the
requirements of 7 CFR part 210 and 7 CFR parts 3015, 3016 and 3019, as
applicable, which implement the applicable Office of Management and
Budget (OMB) Circulars, concerning the procurement of all goods and
services with nonprofit school food service account funds.
(b) Geographic preference. (1) School food authorities
participating in the Program, as well as State agencies making
purchases on behalf of such school food authorities, may apply a
geographic preference when procuring unprocessed locally grown or
locally raised fresh fruits and vegetables. When utilizing the
geographic preference to procure such products, the school food
authority making the purchase or the State agency making purchases on
behalf of such school food authorities have the discretion to determine
the local area to which the geographic preference option will be
applied;
(2) For the purpose of applying the optional geographic preference
in paragraph (b)(1) of this section, ``unprocessed locally grown or
locally raised fresh fruits and vegetables'' means only those
agricultural products that retain their inherent character. For
purposes of the FFVP, the effects of the following processes shall not
be considered as changing fresh fruits and vegetables into a product of
a different kind or character: cooling; refrigerating; size adjustment
made by peeling, slicing, dicing, cutting, chopping, shucking: washing;
packaging (such as placing fruit in cartons) and bagging (such as
placing fruits or vegetables in bags or combining two or more types of
vegetables or fruits in a single package).

Sec. 211.14 Program assistance and monitoring.

(a) Program assistance. Each State agency must provide training and
technical assistance to the school food authorities to enable them to
operate the Program successfully in selected schools. The training for
new schools shall cover all Program requirements.
(b) Program monitoring. (1) A school food authority must review
each participating school within the first year

[[Page 10996]]

of operation to ensure that the school is conducting the Program in
accordance with the requirements of this part and FNS guidance. This
general review, conducted in conjunction with the on-site review
required under Sec. 210.8 of this chapter, will ensure that the
participating school has a financial system in place, including a
budget and a timeline for expending Program funds, and is using Program
funds as instructed by this part and FNS guidance.
(2) A State agency must review the Program performance for
compliance with the provisions of this part. This review, to be
conducted as specified by the Secretary in guidance, may take place in
conjunction with any administrative review or Federal oversight
activity required by this title.
(c) Corrective action. Corrective action is required for any
violation cited in a Program review authorized in this section.
Corrective actions may include technical assistance, training,
recalculation of data to ensure the correctness of any Claim for
Reimbursement that is being prepared at the time of the review, or
other actions established by the State agency.
(d) Investigations. Each State Agency must promptly investigate
complaints received or irregularities noted in connection with the
operation of the Program and must take appropriate action to correct
any irregularities. State Agencies must maintain on file evidence of
such investigations and actions. The Office of Inspector General (OIG)
of the Department must make investigations at the request of the State
Agency or if FNS or FNSRO determines investigations by OIG are
appropriate.

Sec. 211.15 Withholding payments.

In accordance with Departmental regulations at Sec. 3016.43 and
Sec. 3019.62 of this chapter, the State agency must withhold Program
payments, in whole or in part, to any school food authority that has
failed to comply with the provisions of this part. Program payments
must be withheld until the school food authority takes corrective
action satisfactory to the State agency, or gives evidence that such
corrective action will be taken, or until the State agency terminates
the grant in accordance with Sec. 211.16 of this part. Subsequent to
the State agency's acceptance of the corrective actions, payments will
be released for any claims in accordance with the provisions of this
part.

Sec. 211.16 Suspension, termination and grant closeout procedures.

Whenever it is determined that a State agency has materially failed
to comply with the provisions of this part, or with FNS guidelines, FNS
may suspend or terminate the Program or take any other action as may be
available and appropriate. FNS and the State agency must comply with
the provisions of 7 CFR part 3016 concerning grant suspension,
termination and closeout procedures. Furthermore, the State agency must
apply these provisions, or the parallel provisions of 7 CFR part 3019,
as applicable, to suspension or termination of the Program in school
food authorities due to repeated failure to meet Program requirements,
as documented by the State agency.

Sec. 211.17 Penalties.

Whoever embezzles, willfully misapplies, steals, or obtains by
fraud any funds, assets, or property provided under this part whether
received directly or indirectly from the Department, shall, if such
funds, assets, or property are of a value of $100 or more, be fined no
more than $25,000 or imprisoned not more than 5 years or both; or if
such funds, assets, or property are of a value of less than $100, be
fined not more than $1,000 or imprisoned not more than 1 year or both.
Whoever receives, conceals, or retains for personal use or gain, funds,
assets, or property provided under this part, whether received directly
or indirectly from the Department, knowing such funds, assets, or
property have been embezzled, willfully misapplied, stolen or obtained
by fraud, shall be subject to the same penalties.

Sec. 211.18 Management evaluations and audits.

(a) Unless otherwise exempt, audits at the State and school food
authority levels must be conducted in accordance with OMB Circular A-
133 and the Department's implementing regulations at 7 CFR part 3052.
For availability of the OMB Circular mentioned in this paragraph,
please refer to 5 CFR part 1310.3.
(b) Each State agency must provide FNS with full opportunity to
conduct management evaluations (including visits to schools) of any
operations of the State agency under the Program and provide OIG with
full opportunity to conduct audits (including visits to schools) of all
operations of the State agency under the Program. Each State agency
must make its records available, including records of the receipt and
expenditure of funds under the Program, when FNS or OIG reasonably
requests. OIG must also have the right to make audits of the records
and operations of any school.

Sec. 211.19 Educational prohibitions.

In carrying out the provisions of the Act, the Department shall not
impose any requirements with respect to teaching personnel, curriculum,
instructions, methods of instruction, or materials of instruction in
any school as a condition for participation in the Program.

Sec. 211.20 Other State agency responsibilities.

(a) State agencies, or FNSROs where applicable, shall disallow any
portion of a claim and recover any payment made to a school food
authority that was not properly payable under this part. State agencies
will use their own procedures to disallow claims and recover
overpayments already made.
(b) Each State agency shall maintain all records pertaining to
action taken under this section. Such records shall be retained for a
period of three years after the date of the submission of the final
Financial Status Report, except that, if audit findings have not been
resolved, the records shall be retained beyond the three-year period
for as long as required for the resolution of the issues raised by the
audit.
(c) If FNS does not concur with the State agency action in paying a
claim or a reclaim, or in failing to collect an overpayment FNS shall
assert a claim against the State agency for the amount of such claim,
reclaim or overpayment. In all such cases, the State agency shall have
full opportunity to submit to FNS evidence or information concerning
the action taken. If in the determination of FNS, the State agency's
action was unwarranted, the State agency shall promptly pay to FNS the
amount of the claim, reclaim, or overpayment.
(d) The amounts recovered by the State agency from schools may be
utilized to:
(1) Make reimbursement payments for fresh fruits and vegetables
served during the fiscal year for which the funds were initially
available and
(2) Repay any State funds expended in the reimbursement of claims
under the program and not otherwise repaid. Any amounts recovered which
are not so utilized shall be returned to FNS in accordance with the
requirements of 7 CFR part 210.

Sec. 211.21 Nondiscrimination.

(a) In the operation of the Program, no child shall be denied
benefits or be otherwise discriminated against because of race, color,
national origin, age, sex,

[[Page 10997]]

or disability. State agencies and school food authorities shall comply
with the requirements of Title VI of the Civil Rights Act of 1964;
title IX of the Education Amendments of 1972; section 504 of the
Rehabilitation Act of 1973; the Age Discrimination Act of 1975;
Department of Agriculture regulations on nondiscrimination (7 CFR parts
15, 15a and 15b); and FNS Instruction 113-6.
(b) When accommodating children due to medical or special dietary
needs, schools must follow the applicable provisions in Sec. 210.10(g)
of this chapter.

Sec. 211.22 Program information.

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 (www.fns.usda.gov/cnd).

PART 235--STATE ADMINISTRATIVE EXPENSE FUNDS

1. The authority citation for part 235 continues to read as
follows:

Authority: Secs. 7 and 10 of the Child Nutrition Act of 1966,
80 Stat. 888, 889, as amended (42. U.S.C. 1776, 1779).

2. Section 235.1 is amended by adding the phrase ``and the Fresh
Fruit and Vegetable Program (7 CFR part 211).'' to the end of the
second sentence.

Dated: February 10, 2012.
Kevin W. Concannon,
Under Secretary, Food, Nutrition, and Consumer Services.
[FR Doc. 2012-4181 Filed 2-23-12; 8:45 am]
BILLING CODE 3410-30-P