[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]


 ========================================================================
 Proposed Rules
                                                 Federal Register
 ________________________________________________________________________
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 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.
---------------------------------------------------------------------------

    \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

[[Page 10992]]

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