[Federal Register Volume 85, Number 15 (Thursday, January 23, 2020)]
[Proposed Rules]
[Pages 4064-4092]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-00919]



[[Page 4063]]

Vol. 85

Thursday,

No. 15

January 23, 2020

Part II





Department of Agriculture





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Food and Nutrition Service





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7 CFR Parts 210, 215, 220, et al.





Streamlining Program Requirements and Improving Integrity in the Summer 
Food Service Program (SFSP); Proposed Rule

  Federal Register / Vol. 85 , No. 15 / Thursday, January 23, 2020 / 
Proposed Rules  

[[Page 4064]]


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DEPARTMENT OF AGRICULTURE

Food and Nutrition Service

7 CFR Parts 210, 215, 220, 225, and 226

[FNS-2019-0034]
RIN 0584-AE72


Streamlining Program Requirements and Improving Integrity in the 
Summer Food Service Program (SFSP)

AGENCY: Food and Nutrition Service (FNS), USDA.

ACTION: Proposed rule.

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SUMMARY: This rulemaking proposes to amend the Summer Food Service 
Program (SFSP) regulations to strengthen program integrity by codifying 
in regulations changes that have been tested through policy guidance 
and by streamlining requirements among Child Nutrition Programs. These 
changes update important definitions, simplify the application process, 
enhance monitoring requirements, and provide more discretion at the 
State agency level to manage program operations. The intended effect of 
this rulemaking is to clarify, simplify, and streamline program 
administration in order to facilitate compliance with program 
requirements.

DATES: Written comments must be received on or before March 23, 2020 to 
be assured of consideration.

ADDRESSES: The Food and Nutrition Service, USDA, invites interested 
persons to submit written comments on this proposed rule. Comments may 
be submitted in writing by one of the following methods:
     Federal eRulemaking Portal: Go to http://www.regulations.gov. Follow the online instructions for submitting 
comments.
     Mail: Send comments to Andrea Farmer, Chief, Community 
Meals Branch, Policy and Program Development Division, USDA Food and 
Nutrition Service, 1320 Braddock Place, Alexandria, VA 22314.
     All written 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 identity of the individuals or entities submitting the comments 
will be subject to public disclosure. USDA will make the written 
comments publicly available on the internet via http://www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: Andrea Farmer, Chief, Community Meals 
Branch, Policy and Program Development Division, USDA Food and 
Nutrition Service, 3101 Park Center Drive, Alexandria, VA 22302, 703-
305-2590.

SUPPLEMENTARY INFORMATION: 

I. Background

    The Summer Food Service Program (SFSP) is authorized under section 
13 of the Richard B. Russell National School Lunch Act (NSLA), 42 
U.S.C. 1761. Its primary purpose is to provide free, nutritious meals 
to children from low-income areas during periods when schools are not 
in session.
    Throughout the history of the SFSP, the United States Department of 
Agriculture (USDA) has striven to provide good customer service to 
children in need during the summer months while maintaining 
accountability and integrity in program operations. The SFSP is one of 
the USDA programs that collectively are known as the Child Nutrition 
Programs. For the purposes of this proposed rule, Child Nutrition 
Programs also include the National School Lunch Program (NSLP), School 
Breakfast Program (SBP), Special Milk Program (SMP), and Child and 
Adult Care Food Program (CACFP). Among Child Nutrition Programs, the 
SFSP is unique in many ways, including the seasonal nature of its 
operations, the diversity of organizations that participate in the 
program, and the range of sites at which meals are offered. State 
agencies, sponsors, and community organizations need flexibility to 
operate the SFSP in a manner that is responsive to local conditions. 
Such flexibility allows the SFSP to serve a diversity of communities 
efficiently and effectively. To that end, USDA is continually exploring 
options to increase administrative flexibility and reduce burden for 
SFSP sponsors and State agencies to facilitate compliance with program 
requirements.
    To explore program options, USDA is dedicated to working 
collaboratively with State agencies, local level organizations, program 
operators, and the advocacy community to learn from their experiences 
administering and operating the SFSP. USDA has a strong history of 
soliciting feedback from stakeholders and participants in the SFSP 
through:
     Participation at multiple national conferences;
     Nationwide workgroups including stakeholders from State 
agencies, program operators, and advocacy groups to collect strategies 
to improve the delivery of nutrition assistance to low-income children 
in the summer months, boost participation, and reduce unnecessary 
barriers to participation;
     Listening sessions and webinars;
     Partnerships with other government agencies, national 
nonprofit organizations, and faith-based communities; and
     A 2004 notice in the Federal Register (69 FR 3874 Page 
3874) soliciting public comments on how to improve the program.
    In response to the feedback received, USDA issued nationwide 
flexibilities and nationwide waivers of program regulations to 
facilitate sponsor and site participation and decrease paperwork 
burdens on both State agencies and sponsors--see following table 
entitled FNS Policy Memoranda Addressed in This Rule. While nationwide 
waivers of program regulations have largely supported improved program 
operations, the USDA Office of the Inspector General (OIG) audit 
entitled ``FNS Controls Over the Summer Food Service Program'' (27601-
0004-41) prompted USDA to assess whether nationwide waivers issued 
through policy memoranda complied with section 12(l) of the NSLA, which 
provides the Secretary with the authority to waive certain statutory 
and regulatory provisions. Through this assessment, USDA determined 
that the issuance of certain nationwide waivers through policy 
memoranda was not fully consistent with all requirements to waive 
program regulations as outlined in section 12(l). As a result, USDA 
rescinded several nationwide waivers through two memoranda:
     SFSP 06-2018, Summer Food Service Program Memoranda 
Rescission: SFSP 01-2007 and SFSP 06-2015, May 24, 2018; \1\ and
---------------------------------------------------------------------------

    \1\ https://www.fns.usda.gov/sfsp/summer-food-service-program-memoranda-rescission-sfsp-01-2007-and-sfsp-06-2015.
---------------------------------------------------------------------------

     SFSP 01-2019, Summer Food Service Program Memoranda 
Rescission, October 11, 2018.\2\
---------------------------------------------------------------------------

    \2\ https://www.fns.usda.gov/sfsp/summer-food-service-program-memoranda-rescission.
---------------------------------------------------------------------------

    For summer 2019, State agencies or eligible service providers were 
able to submit individual requests for waivers that they believed were 
in the best interest of the program in their State, following the 
requirements outlined in section 12(l) of the NSLA and policy 
memorandum SP 15-2018, CACFP 12-2018, SFSP 05-2018: Child Nutrition 
Program Waiver Request Guidance and Protocol--Revised, published May 
24, 2018.\3\
---------------------------------------------------------------------------

    \3\ https://www.fns.usda.gov/child-nutrition-program-waiver-request-guidance-and-protocol-revised.

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[[Page 4065]]

    The aforementioned nationwide waivers were developed based on 
consistent input from stakeholders and have effectively supported 
improved program operations. The process of approving individual waiver 
requests for program year 2019 reaffirmed the continued value of these 
flexibilities. State agencies justified their 2019 waiver requests with 
goals of improved efficiency, reduced administrative cost, and 
commitment to program integrity--specifically, the ability of both 
program sponsors and State agencies to provide adequate and effective 
program oversight with limited resources. As such, USDA is proposing to 
codify many of the policies that were previously available as 
nationwide waivers, as well as a number of flexibilities that are 
currently available through policy guidance. In addition, USDA is 
seeking comments on several proposals for removing barriers to 
efficient program administration. Taken as a whole, the changes 
proposed in this rule would maintain program integrity. They would 
streamline SFSP requirements for sponsors that participate in other 
Child Nutrition Programs; facilitate compliance with program monitoring 
requirements; provide customer-friendly meal service; and clarify 
program requirements. The following table details FNS policy memoranda 
that are discussed in this rule, the specific provision(s) from each 
memorandum that is discussed, the status of the waiver or flexibility, 
and the section of the rule in which it is addressed.

                                   FNS Policy Memoranda Addressed in This Rule
----------------------------------------------------------------------------------------------------------------
                                       Provision addressed in
          Policy memorandum                     rule              Provision status          Section of rule
----------------------------------------------------------------------------------------------------------------
Summer Food Service Program (SFSP)    Determining Eligibility  Rescinded in SFSP 01-   VII. B
 Waiver for Closed Enrolled Sites,     for Closed Enrolled      2019.
 November 17, 2002 1.                  Sites.
Field Trips in the Summer Food        Reimbursement Claims     Active................  VI. A
 Service Program (SFSP) February 3,    for Meals Served Away
 2003 2 & FNS Instruction 788-13:      from Approved
 Sub-Sites in the Summer Food          Locations.
 Service Program.
SFSP 12-2011, Waiver of Site          First Monitoring Site    Rescinded in SFSP 01-   IV. A
 Monitoring Requirements in the        Visits for Returning     2019.
 Summer Food Service Program, April    Sites.
 5, 2011 3.
SFSP 05-2012, Simplifying             Application Procedures   Active................  III. A
 Application Procedures in the         for New CACFP Sponsors.
 Summer Food Service Program,
 October 31, 2011 4.
                                      Demonstration of         Active................  III. B
                                       Financial and
                                       Administrative
                                       Capability for CACFP
                                       Institutions.
SFSP 04-2013, Summer Feeding Options  Application Procedures   Active................  III. A
 for School Food Authorities,          for New SFA Sponsors.
 November 23, 2012 5.
                                      Demonstration of         Active................  III. B
                                       Financial and
                                       Administrative
                                       Capability for SFAs.
                                      First Monitoring Site    Rescinded in SFSP 01-   IV. A
                                       Visits for SFA           2019.
                                       Sponsors.
SFSP 06-2014, Available               First Monitoring Site    Rescinded in SFSP 01-   IV. A
 Flexibilities for CACFP At-Risk       Visits for CACFP or      2019.
 Sponsors and Centers Transitioning    SFA sponsors.
 to SFSP, November 12, 2013 6.
SFSP 07-2014, Expanding Awareness     Requirements for Media   Active................  VI. C
 and Access to Summer Meals,           Release.
 November 12, 2013 7.
SFSP 16-2015, Site Caps in the        Establishing the         Active................  IV. B
 Summer Food Service Program--         Initial Maximum
 Revised, April 21, 2015 8.            Approved Level of
                                       Meals for Vended
                                       Sponsors.
SFSP 04-2017, Automatic Revocation    Annual Verification of   Active................  VI. D
 of Tax-Exempt Status--Revised,        Tax-Exempt Status.
 December 1, 2016 9.
SFSP 06-2017, Meal Service            Meal Service Times.....  Rescinded in SFSP 01-   V. A
 Requirements in the Summer Meal      .......................   2019.                  .........................
 Programs, with Questions and         Off-site Consumption of  Active................  V. B
 Answers--Revised, December 05, 2016   Food Items.
 10.
                                      Offer versus Serve.....  Rescinded in SFSP 01-   V. C
                                                                2019.
SFSP 05-2018, Child Nutrition         Overview of Statutory    Active................  VIII. A
 Program Waiver Request Guidance and   Waiver Authority
 Protocol--Revised, May 24, 2018 11.   Request Process.
----------------------------------------------------------------------------------------------------------------
Endnotes:
\1\ No longer available.
\2\ https://www.fns.usda.gov/sfsp-020303.
\3\ No longer available.
\4\ https://www.fns.usda.gov/simplifying-application-procedures-summer-food-service-program.
\5\ https://www.fns.usda.gov/summer-feeding-options-school-food-authorities.
\6\ https://www.fns.usda.gov/available-flexibilities-cacfp-risk-sponsors-and-centers-transitioning-summer-food-service-program.
\7\ https://www.fns.usda.gov/expanding-awareness-and-access-summer-meals.
\8\ https://www.fns.usda.gov/site-caps-summer-food-service-program-revised.
\9\ https://www.fns.usda.gov/sfsp/automatic-revocation-tax-exempt-status%E2%80%93revised.
\10\ https://www.fns.usda.gov/meal-service-requirements-summer-meal-programs-questions-and-answers-%E2%80%93-revised revised.
\11\ https://www.fns.usda.gov/child-nutrition-program-waiver-request-guidance-and-protocol-revised.

II. Reorganization of Sec.  225.6

    As stated in the summary and background, the purpose of this 
proposed rule is to streamline and clarify program requirements. In 
order to meet that goal, this rule proposes to reorganize and 
streamline Sec.  225.6 to more clearly present existing State agency 
requirements.
    The proposed changes reorganize requirements in Sec.  225.6(c), 
Content of sponsor application, to more clearly outline the 
requirements for complete applications. Provisions found in Sec.  
225.6(c)(2) related to site information sheets would move to a new 
paragraph (g); provisions in Sec.  225.6(c)(4) related to

[[Page 4066]]

the free meal policy statement would move to a new paragraph (f).
    The proposed changes would also reorder current Sec.  225.6(d) 
through (i). This reorganization is necessary in order to add new 
paragraphs related to performance standards for determining financial 
and administrative capability (new paragraph (d)), and sponsor 
submission of a management plan (new paragraph (e)), both of which are 
described in more detail in the next section of this preamble. The 
table below provides an outline of the proposed revisions:

------------------------------------------------------------------------
            Current outline                      Proposed outline
------------------------------------------------------------------------
a. General Responsibilities............  a. General responsibilities.
b. Approval of sponsor applications....  b. Approval of sponsor
                                          applications.
c. Content of sponsor application......  c. Content of sponsor
                                          application.
    1. Application forms...............    1. Application form.
    2. Requirements for new sponsors,      2. Application requirements
     new sites, and, as determined by    for new sponsors and sponsors
     the State agency, sponsors and      that have experienced
     sites which have experienced        significant operational
     significant operational problems    problems in the prior year.
     in the prior year.                  3. Application requirements for
                                          experienced sponsors.
    3. Requirements for experienced        4. Application requirements
     sponsors and experienced sites..    for School Food Authorities and
                                         Child and Adult Care Food
                                         Program Institutions.
                                         d. Performance standards
                                           1. Performance standard 1.
                                         2. Performance standard 2.
                                         3. Performance standard 3.
                                         e. Management plan.
    4. Free meal policy statement......  f. Free meal policy statement.
    5. Hearing procedures statement....    1. Nondiscrimination
                                         statement.
                                         2. Hearing procedures
                                          statement.
                                         g. Site information sheets
                                         1. New sites.
                                         2. Experienced sites.
d. Approval of sites...................  h. Approval of sites.
e. State-sponsor agreement.............  i. State-sponsor agreement.
f. Special account.....................  j. Special account.
g. FSMC registration...................  k. Food Service Management
                                          Company registration.
h. Monitoring of FSMC procurements.....  l. Monitoring of Food Service
                                          Management Company
                                          procurements.
i. Meal pattern exceptions.............  m. Meal pattern exceptions.
------------------------------------------------------------------------

III. Streamlining Program Requirements

    USDA is committed to decreasing paperwork burden across Child 
Nutrition Programs. In conjunction with decreasing paperwork, USDA has 
also found that supporting SFSP program operators that successfully 
operate other Child Nutrition Programs ensures that taxpayer money is 
used most efficiently. Therefore, through policy guidance, USDA has 
identified several ways to streamline the application process for SFSP 
sponsors also participating in the NSLP and/or the CACFP that reduce 
administrative burden when applying to participate in the SFSP.

A. Application Procedures for New Sponsors

    Current regulations in Sec.  225.6(c) outline specific requirements 
for sponsors and sites applying to participate in the SFSP. The 
regulations in Sec.  225.6(c)(2) require certain procedures for new 
sponsors, and sponsors that have experienced significant operational 
problems in the previous year, as determined by the State agency. For 
both new sponsors and those with operational problems, detailed 
information is required regarding site information, arrangements for 
meeting health and safety standards, and budgets, among other things. 
This information is necessary for State agencies to determine if new 
sponsors and sites, or those with previous operational problems, are 
capable of running the SFSP efficiently and effectively, and complying 
with all program requirements, thus maintaining program integrity.
    For experienced sponsors that have already operated the SFSP 
without significant operational problems, applications must include 
condensed information that is more likely to change from year to year, 
as currently outlined in Sec.  225.6(c)(3). Experienced sponsors are 
not required to submit the same level of detail with regard to 
organizational and operational information required of new sponsors and 
those with previous operational problems.
    In an effort to recruit eligible organizations that have already 
proven capable of successfully running other Child Nutrition Programs, 
USDA outlined flexibilities in several policy memoranda for NSLP and 
CACFP sponsors in good standing (SFSP 05-2012, Simplifying Application 
Procedures in the Summer Food Service Program, October 31, 2011 and 
SFSP 04-2013, Summer Feeding Options for School Food Authorities, 
November 23, 2012). Through policy guidance, a sponsor is considered to 
be in ``good standing'' if it has been reviewed by the State agency in 
the last 12 months and had no major findings or program violations, or 
completed and implemented all corrective actions from the last 
compliance review. In addition, a sponsor may be considered in good 
standing if it has not been found to be seriously deficient by the 
State agency in the past two years and has never been terminated from 
another Child Nutrition Program.
    The published guidance outlines flexibilities for school food 
authorities (SFAs) administering the NSLP or SBP and CACFP institutions 
in good standing that are applying to serve SFSP meals at the same 
sites where they provide meal services through the NSLP, SBP, or CACFP 
during the school year. Under this guidance, these institutions are 
permitted to follow the application requirements for experienced SFSP 
sponsors currently found in Sec.  225.6(c)(3) instead of the 
application requirements for new sponsors and sites currently found in 
Sec.  225.6(c)(2). While the guidance streamlines the requirements 
among programs, it also requires that NSLP or SBP SFAs and CACFP 
institutions using the experienced sponsor application procedures 
provide the following information:

[[Page 4067]]

     Whether the site is rural or non-rural;
     Whether the site's food service will be self-preparation 
or vended; and
     If a site will primarily serve the children of migrant 
families, certification from a migrant organization that the site 
serves children of migrant worker families and that it primarily serves 
migrant children if it also serves non-migrant children.
    This additional site information is necessary for the State agency 
to make a determination about the approval of sites for experienced 
sponsors. Further, this rule proposes to provide State agencies the 
discretion to allow NSLP and SBP SFAs and CACFP institutions applying 
for participation in the SFSP for the first time to use this 
flexibility.
    Accordingly, this rule proposes to codify under Sec.  225.6(c)(4) 
the flexibilities extended through policy guidance for NSLP and SBP 
SFAs and CACFP institutions to use procedures for experienced sponsors.

B. Demonstration of Financial and Administrative Capability

    Currently, SFSP regulations require sponsors applying to 
participate in the Program to demonstrate financial and administrative 
capability for program operations and accept financial responsibility 
for total program operations at all sites at which they propose to 
conduct a food service (Sec.  225.14(c)(1)). These two operational 
aspects underpin program integrity and promote effective use of 
taxpayer money. Demonstration of financial and administrative 
capability can include, but is not limited to, submission of budgets, 
financial records, documentation of organizational structure, and menu 
planning.
    In order to streamline Child Nutrition Program requirements and 
encourage participation, USDA issued policy guidance that provided that 
NSLP and SBP SFAs and CACFP institutions in good standing applying to 
participate in the SFSP are not required to submit further evidence of 
financial and administrative capability, as required in Sec.  
225.14(c)(1) (SFSP 05-2012, Simplifying Application Procedures in the 
Summer Food Service Program, October 31, 2011 and SFSP 04-2013, Summer 
Feeding Options for School Food Authorities, November 23, 2012). NSLP 
and SBP SFAs and CACFP institutions already undergo a rigorous 
application process in order to participate in NSLP, SBP, and CACFP and 
have demonstrated that they have the financial and organizational 
viability, capability, and accountability necessary to operate a Child 
Nutrition Program; therefore, they have the capacity to operate the 
SFSP as well.
    While the flexibility to not submit further evidence of financial 
and administrative capability is intended to decrease burden on both 
State agencies and sponsors applying for the program, State agencies 
must still be aware of the ways in which NSLP and SBP SFAs and, 
particularly, CACFP institutions have demonstrated their financial and 
administrative capabilities in the past. If the State agency has a 
reasonable belief that the operation of the SFSP would pose significant 
challenges for an NSLP or SBP SFA or CACFP sponsor applicant, the State 
agency may request additional evidence of financial and administrative 
capacity sufficient to ensure that the sponsor has the ability and 
resources to expand. For example, if an NSLP or SBP SFA or CACFP 
institution had a finding during a local review, the State agency may 
request additional evidence of financial and administrative capacity to 
demonstrate ability to administer the SFSP. Additionally, in certain 
instances, different State agencies are responsible for the 
administration of the SFSP and school meals or CACFP. In these 
instances, to protect the integrity of the SFSP and ensure that 
financially and administratively capable sponsors are approved to 
operate the program, State agencies must share relevant sponsor 
information, including, but not limited to:
     Demonstration of fiscal resources and financial history;
     Budget documents;
     Demonstration of appropriate and effective management 
practices; and
     Demonstration of adequate internal controls and other 
management systems in effect to ensure fiscal accountability.
    As this proposed rule would require State agencies to develop a 
process for sharing information across agencies if the agency that 
administers the SFSP is not the same as the one administering school 
meals or the CACFP, USDA is specifically seeking comment on the 
challenges and benefits of this requirement. Specifically, USDA is 
interested in the following questions:
     Would the sharing of information help improve the 
integrity of the program?
     Would developing an information sharing process create 
undue burden on State agencies?
     What are the potential costs of developing an information 
sharing process?
    Accordingly, this rule proposes to amend regulations found at Sec.  
225.14(c)(1) to include the flexibility outlined in previous guidance 
that SFAs and CACFP institutions in good standing applying to operate 
the SFSP do not have to provide further evidence of financial and 
administrative capabilities. In addition, this rule proposes to add a 
requirement that State agencies develop an information sharing process 
if programs are administered by separate agencies within the State.

C. Clarifying Performance Standards for Evaluating Sponsor Viability, 
Capability, and Accountability

    Organizations applying to participate as sponsors in the SFSP must 
demonstrate ``financial and administrative capability for program 
operations'' (Sec.  225.14(c)(1)). It is critical for State agencies to 
determine if an applicant has the potential to be viable, capable, and 
accountable for operating the SFSP with program integrity, and will 
accept financial and administrative responsibility at all sites it 
intends to operate. While USDA has provided technical assistance for 
how State agencies should determine if a sponsor is financially and 
administratively capable, the regulations do not include specific 
metrics for assessing an applicant's capability for successful program 
participation. As a result, USDA has received requests from State 
agencies to provide additional clarity on the application requirements 
in Sec.  225.14(c)(1).
    In response to State agency requests regarding application 
requirements, and in an effort to streamline requirements across 
programs, this rule proposes to add performance standards for 
organizations applying to participate as SFSP sponsors that correspond 
to standards currently in place at Sec.  226.6 for organizations 
applying to participate as CACFP sponsors. These detailed performance 
standards under Sec.  226.6 assist State agencies in assessing an 
applicant's financial viability and financial management, 
administrative capability, and accountability. In addition, the rule 
clarifies that sponsors must demonstrate compliance with these 
performance standards as part of their management plan. USDA recognizes 
that program operations, requirements, and monitoring responsibilities 
differ between the CACFP and the SFSP. However, the proposed standards 
would ensure that an organization meets basic requirements for 
operating any Child Nutrition Program. These standards would apply 
equally to the CACFP and the SFSP, and would provide more clarity to 
State agencies responsible for evaluating sponsor applications in SFSP.

[[Page 4068]]

    USDA recognizes that including these detailed performance standards 
in the management plan may require some State agencies and sponsors to 
modify current practices. Although USDA prioritizes flexibility for 
stakeholders to the greatest extent possible, these changes would 
bolster program integrity by supporting the ability of State agencies 
to more efficiently and consistently evaluate an applicant sponsor's 
financial and administrative capability. The proposed performance 
standards and management plan align with current regulations requiring 
sponsors to demonstrate financial and administrative capability for 
program operations.
    The proposed standards are composed of three main performance 
elements. Performance standard 1 addresses financial viability and 
financial management, performance standard 2 addresses administrative 
capability, and performance standard 3 addresses internal controls and 
management systems that ensure program accountability. The proposed 
regulations include additional criteria for assessing each performance 
standard. It is important to note that these standards would not 
require anything new of SFSP operators. These standards are intended to 
clarify existing SFSP requirements and provide support and guidance to 
State agencies when evaluating sponsor applications.
    Accordingly, this proposed rule would add performance standards for 
determining sponsor financial viability, administrative capability, and 
program accountability in a new Sec.  225.6(d) against which State 
agencies must evaluate an applicant sponsor's financial and 
administrative capabilities. This rule also proposes to require in 
Sec.  225.6(c)(2)(i) and new Sec.  225.6(e) the submission of a 
management plan demonstrating compliance with the performance standards 
in the new Sec.  225.6(d). Finally, this rule would amend Sec. Sec.  
225.14(a), 225.14(c)(1), and 225.14(c)(4) to reference application 
requirements, performance standards, and the management plan, 
respectively, in the reorganized Sec.  225.6.

IV. Facilitating Compliance With Program Monitoring Requirements

A. First Week Site Visits

    Section 225.15(d)(2) of the current regulations requires sponsors 
to visit each of their sites at least once during the first week of 
operation in the program. The purpose of conducting monitoring visits 
during the first week of site operation is for the sponsor to provide 
technical assistance to improve service delivery and to take action to 
promptly correct any deficiencies in program operations at the site 
level.
    USDA has received consistent feedback from State agencies and 
sponsors, through a national stakeholder workgroup and other means, 
that some sponsors lack sufficient resources to conduct monitoring 
visits during the first week of operation at all site locations. 
Minimal staff to conduct visits, large distances between sites, 
particularly in rural areas, and insufficient funding were all cited as 
barriers to fulfilling this requirement. In order to provide sponsors 
the option to target their technical assistance and monitoring 
resources towards activities that will have the greatest impact on 
program integrity, USDA issued policy guidance that waived the 
requirement that sponsors visit sites during the first week of 
operation for the following:
     Sponsors in good standing in the NSLP or CACFP (SFSP 04-
2013, Summer Feeding Options for School Food Authorities, November 23, 
2012 and SFSP 06-2014, Available Flexibilities for CACFP At-Risk 
Sponsors and Centers Transitioning to SFSP, November 12, 2013, 
respectively); and
     Sites that had operated successfully the previous summer 
(or other most recent period of operation) and had no serious 
deficiency findings (SFSP 12-2011, Waiver of Site Monitoring 
Requirements in the Summer Food Service Program, April 5, 2011).
    The waivers noted above were rescinded in 2018, as discussed in the 
background section of this proposed rule. Through implementation of 
these waivers for a number of years, USDA learned that waiving the 
first week site visit requirement eased burden for the sponsors and 
sites that met the requirements of the waiver. However, USDA also 
determined that site visits during the first weeks of operation are a 
crucial part of program monitoring and benefit sponsors and sites of 
all types. Early site visits facilitate good sponsor management at 
every site and ensure that site supervisors and staff are receiving the 
technical assistance needed to operate the SFSP in compliance with all 
program requirements, thereby maintaining program integrity.
    As such, USDA is proposing to amend this site visit requirement in 
Sec.  225.15(d)(2) to provide flexibility in the timeframe during which 
first monitoring visits must take place. This proposed rule would 
create a tiered framework, under which sponsors responsible for the 
management of 10 or fewer sites would be required to conduct the first 
site monitoring visit within the first week (seven calendar days) after 
the site begins program operations. Sponsors responsible for the 
management of more than 10 sites would be required to conduct the first 
site monitoring visits within the first two weeks (14 calendar days) 
after the site begins program operations. In cases where a site 
operates for one week or less, the site visit must be conducted during 
the period of operation. Based on currently available data from studies 
conducted by USDA and collected from State agencies, over 80 percent of 
sponsors participating in the program operate 10 sites or fewer. While 
this change would not impact the majority of sponsors, this flexibility 
would help alleviate logistical burdens for larger sponsors while 
strengthening monitoring practices.
    In addition, the proposed rule includes changes to the current 
regulatory requirement that sponsors must conduct a review of the food 
service at each site during the first four weeks of program operations 
(Sec.  225.15(d)(3)). The proposed rule would allow these food service 
reviews to occur at the same time as the first monitoring visit. This 
would provide all sponsors with the opportunity to manage their 
resources in a way that best suits their program operations.
    The intent of these changes is to allow sponsors of different sizes 
to adequately distribute their resources as necessary. USDA recognizes 
that through the waiver process conducted for summer 2019, many State 
agencies expressed the need for significant flexibilities related to 
first week site visits. USDA seeks to balance program integrity and 
administrative flexibilities and will consider all comments in drafting 
the final rule. To understand the full impact of these proposed 
changes, USDA is seeking specific comments on the:
     Number of sites that sponsors manage;
     Number of staff available to conduct site visits;
     Logistics of conducting site visits;
     Time and resources necessary, as well as any other 
factors, that impact the ability of sponsors to fulfill this 
requirement;
     Proposed tiers and whether this provides sufficient 
flexibilities for sponsors; and
     Benefits of requiring first monitoring visits at all sites 
versus those sites that are new to the program or experienced 
operational or administrative difficulties in the past.
    While the data shows that the vast majority of sponsors are 
responsible for program operations at 10 sites or fewer,

[[Page 4069]]

USDA is interested in learning more about how the tiers, as proposed, 
would affect sponsors of different sizes and that operate under varying 
conditions.
    Accordingly, this rule proposes to amend Sec.  225.15(d)(2) of the 
regulations to create a tiered framework for first monitoring visits. 
This rule also proposes to amend Sec.  225.15(d)(3) to allow sponsors 
to conduct a first monitoring visit and a food service review at the 
same time.

B. Establishing the Initial Maximum Approved Level of Meals for Sites 
of Vended Sponsors

    Program regulations found at Sec.  225.6(d) require that, when 
approving the application of a site, State agencies must establish for 
each meal service an approved level for the maximum number of 
children's meals which may be served under the program. This limit on 
the number of meals that may be served is commonly known as a ``site 
cap.'' For sites that prepare the meals that will be served and do not 
contract with a food service management company, this cap on the number 
of meals served may be no more than the number of children for which 
the facilities are adequate (Sec.  225.6(d)(1)(iii)). For sites that 
purchase meals from a food service management company, the regulations 
require that the initial maximum approved level be based on historical 
attendance, or by another procedure developed by the State agency if no 
accurate record from prior years is available. Once established, site 
caps may be increased or decreased based on information collected 
during site reviews or other documentation provided to the State agency 
by the sponsor demonstrating the need for an adjustment (Sec.  
225.6(d)(2)). The regulations further require that State agencies 
disallow payment on any meals served over the site cap at vended sites 
(Sec.  225.11(e)(3)).
    The purpose of a site cap is to encourage sponsors and State 
agencies to work closely together to develop reasonable estimates of 
anticipated site attendance. This ensures that a site does not purchase 
or produce meals outside of the capacity of the site and the needs of 
the community. Site caps are also an important tool for State agencies 
to monitor program management and determine if there is need for 
technical assistance or corrective action to ensure program integrity. 
As such, State agencies should work with sponsors to establish 
reasonable site caps that reflect the true capacity and capability of 
sites. However, USDA understands that State agencies and sponsors may 
have difficulty accurately assessing the capability of a site or the 
full needs of a community before operations begin. Circumstances may 
arise in which a site attracts more children than originally 
anticipated, such as an increase in the number of children coming for 
programs or activities offered at the same location. In other cases, a 
lack of historical data makes it difficult for State agencies and 
sponsors to accurately forecast participation levels.
    In order to allow sponsors of vended sites to make timely 
adjustments to program operations, USDA issued policy guidance 
clarifying that sponsors may request an increase to existing site caps 
at any time prior to the submission of the meal claim forms for 
reimbursement that includes meals served in excess of the site cap 
(SFSP 16-2015, Site Caps in the Summer Food Service Program--Revised, 
April 21, 2015). As with any change to program operations, this 
guidance clarified that State agencies have the discretion to approve 
the request. Providing sponsors of vended sites the flexibility to 
adjust site caps prior to submitting a claim for reimbursement gives 
them the freedom to right-size their program operations in real time, 
be responsive to local conditions, and provide better customer service 
to their communities. For sites with no accurate historical 
information, USDA recommends the State agency consider participation at 
other similar sites located in the same area, documentation of 
programming taking place at the site, or statistics on the number of 
children residing in the area when determining initial site caps.
    Accordingly, this rule proposes to amend Sec.  225.6(h)(2)(iii) of 
the regulations, as re-designated through this rule, to clarify that 
sponsors of vended sites may request an adjustment to the maximum 
approved level of meal service at any time prior to submitting a claim 
for reimbursement. This rule would also amend Sec.  225.6(h)(2)(i), as 
redesignated through this rule, to include further guidance for 
determining the maximum approved level of meal service for sites 
lacking accurate records from prior years.

C. Statistical Monitoring Procedures, Site Selection, and Meal Claim 
Validation for Site Reviews

    State agencies are responsible for reviewing sponsors and sites to 
ensure compliance with program regulations. Current regulations in 
Sec.  225.7(d)(2) discuss the frequency and number of required reviews, 
including the requirement in Sec.  225.7(d)(2)(ii)(E) that a State 
agency conducting a sponsor review must review at least 10 percent of 
the sponsor's sites, or one site, whichever number is greater. USDA 
guidance also instructs State agencies to validate 100 percent of all 
meal claims from all sites under a sponsor that is being reviewed.
    To provide flexibility to State agencies conducting sponsor and 
site reviews, Sec.  225.7(d)(8) affords State agencies the option to 
use statistical monitoring procedures in lieu of the site monitoring 
requirements found in Sec.  225.7(d)(2). However, USDA regulations and 
guidance do not provide clear instructions for how to develop and 
implement statistical monitoring procedures. In addition, USDA is not 
aware of any States that currently use statistical monitoring 
procedures. USDA reviewed feedback from State agencies, analyzed 
current State practices for selecting sites, and considered related 
sampling models that could be adapted as guidelines for statistical 
monitoring of sites in the SFSP. Through this process, USDA determined 
that it is not possible to create standard statistical monitoring 
procedures that will meet the needs of the program. As a result, USDA 
is proposing to remove the provision in Sec.  225.7(d)(8) which 
currently allows the use of statistical monitoring for site reviews.
    This rule will not change the current requirement that State 
agencies conduct reviews of at least 10 percent of each sponsor's 
sites, or one site, whichever number is greater. The rule proposes to 
increase the effectiveness of site reviews by providing guidance to 
assist State agencies and sponsors in selecting a sample of sites that 
is generally reflective of the variety of all a sponsor's sites. 
Through this guidance, site characteristics that will be reflected in a 
sponsor's sample include:
     The maximum number of meals approved to serve under 
Sec. Sec.  225.6(h)(1)(iii) and 225.6(h)(2), as redesignated through 
this rule;
     Method of obtaining meals (i.e., self-preparation, vended 
meal service);
     Time since last review by the State agency;
     Site type (i.e., open, closed enrolled, camp);
     Type of physical location (e.g., school, outdoor area, 
community center);
     Rural designation (i.e., rural, as defined in Sec.  225.2, 
non-rural); and
     Affiliation with the sponsor, as defined in Sec.  225.2.
    The State agency may use additional criteria to select sites 
including, but not limited to: Recommendations from the sponsoring 
organization, findings of other audits or reviews, or any indicators of 
potential error in daily meal counts (e.g., identical or very

[[Page 4070]]

similar claiming patterns, or large changes in meal counts).
    Additionally, this rule proposes a new method for conducting meal 
claim validations as a part of the sponsor review. USDA recognizes that 
conducting 100 percent meal claim validations for all sites under the 
sponsor being reviewed, instead of just the sampled sites, may be 
burdensome for some State agencies. In the case of large sponsors with 
many sites, this requirement often uses significant State agency 
resources and, based on feedback from State agencies, does not 
necessarily help improve the integrity of the program. For sponsors 
that run effective programs in compliance with program requirements, 
only a small portion of meal claims may need to be validated in order 
to confirm compliance. In recognition of this, the proposed changes 
would include a multi-step approach to site-based meal claim 
validation. State agencies would initially validate a small sample of 
claims and would only be required to validate additional claims if 
sufficient error is detected. The proposed method is shown in the table 
below.

                      Meal Claim Validation Process
------------------------------------------------------------------------
             Step                    Outcome               Result
------------------------------------------------------------------------
Step 1: Validate 100 percent    An average          The review
 of meal claims only for the     percent error of   of meal claims for
 sites being reviewed to         less than 5        this sponsor is
 satisfy the requirement that    percent is found.  complete.
 State agencies must review 10  An average          If
 percent of sites, or one        percent error of   necessary, the State
 site, whichever is greater,     5 percent or       agency must take
 operated by the sponsor being   more is found..    fiscal action per
 reviewed.                                          the disregard
                                                    threshold
                                                    established for
                                                    SFSP.
                                                    The State
                                                    agency must move to
                                                    Step 2.
Step 2: Expand validation of    An average          The review
 meal claims to all meals for    percent error of   of meal claims for
 the review period for 25        less than 5        this sponsor is
 percent of the sponsor's        percent is found   complete.
 total sites.                    in the             If
                                 additional sites   necessary, the State
                                 validated.         agency must take
                                An average          fiscal action per
                                 percent error of   the disregard
                                 5 percent or       threshold
                                 more is found in   established for
                                 the additional     SFSP.
                                 sites validated..  The State
                                                    agency must move to
                                                    Step 3.
Step 3: Expand validation of    An average          The review
 meal claims to all meals for    percent error of   of meal claims for
 the review period for 50        less than 5        this sponsor is
 percent of the sponsor's        percent is found   complete.
 sites.                          in the             If
                                 additional sites   necessary, the State
                                 validated.         agency must take
                                An average          fiscal action per
                                 percent error of   the disregard
                                 5 percent or       threshold
                                 more is found..    established for
                                                    SFSP.
                                                    The State
                                                    agency must move to
                                                    Step 4.
Step 4: Expand validation of    An average          The review
 meal claims to all meals for    percent error of   of meal claims for
 the review period for 100       less than 5        this sponsor is
 percent of the sponsor's        percent is found   complete.
 total sites.                    in the             If
                                 additional sites   necessary, the State
                                 validated.         agency must take
                                An average          fiscal action per
                                 percent error of   the disregard
                                 5 percent or       threshold
                                 more is found..    established for
                                                    SFSP.
                                                    The review
                                                    of meal claims for
                                                    this sponsor is
                                                    complete.
                                                    The State
                                                    agency must take
                                                    fiscal action, per
                                                    the disregard
                                                    threshold
                                                    established for
                                                    SFSP.
------------------------------------------------------------------------
* Fractions must be rounded up (>=0.5) or down (<0.5) to the nearest
  whole number.

    To calculate the percent error, subtract the total meals validated 
by the State agency for the reviewed sites from the total meals claimed 
by the sponsor for the reviewed sites, then divide by the total meals 
claimed by the sponsor for the reviewed sites and multiply by 100. By 
taking the absolute value, the percent error will be expressed as a 
positive number. An overclaim or an underclaim above the error 
threshold signals the need to expand the meal claim validation. Refer 
to the equations below for clarification.
[GRAPHIC] [TIFF OMITTED] TP23JA20.000

Where:

MR = total meals claimed by sponsor for reviewed sites
MVR = total meals validated by State agency for reviewed 
sites

    This incremental approach is intended to use State agency resources 
more efficiently and provide State agencies with a more targeted method 
for review. USDA is requesting specific comments on this process, 
including the anticipated impact on State agencies and burden, the 
accuracy of claim validations under this process, and the stepped 
increases and the percentage expanded at each step.
    Accordingly, Sec.  225.7(e)(5), as redesignated in this rule, 
includes site selection criteria. Section 225.7(e)(6), as redesignated 
in this rule, proposes a method for conducting meal claim validations. 
The proposed rule also removes the option for statistical monitoring 
currently found in Sec.  225.6(d)(8). Finally the rule proposes to 
renumber and rephrase portions of Sec.  225.7 to make the regulations 
easier to understand.

V. Providing a Customer-Service Friendly Meal Service

A. Meal Service Times

    Section 225.16(c) of the current regulations sets forth 
restrictions on when meals can be served in the SFSP. Three hours are 
required to elapse between the beginning of one meal service, including 
snacks, and the beginning of another, with the exception that four 
hours must elapse between the service of a lunch and supper when no 
snack is served between lunch and supper. Further, the regulations 
state that the service of supper cannot begin later than 7 p.m., unless 
the State agency has granted a waiver of this requirement due to 
extenuating circumstances; however, in no case may the service of 
supper extend beyond 8 p.m. The duration of the meal service is limited 
to two hours for lunch or supper and one hour for all other meals. 
These restrictions do not apply to residential camps.
    These strict requirements did not provide sufficient control at the 
State agency and sponsor level to allow for planned meal services that 
meet the needs of the community. Dating as far back as 1998, USDA has 
issued guidance that waives these requirements at certain sites where 
the requirements proved to create significant barriers to

[[Page 4071]]

efficient program operations and good customer service for the 
communities served. USDA heard consistent feedback from stakeholders 
that the restrictions presented challenges to aligning meal services 
with access to public transportation and community services. The waiver 
of meal time restrictions helped decrease administrative burden and 
provided more local level control to sponsors to plan the most 
effective meal services, thereby improving program operations. 
Therefore, in 2011, USDA published guidance that waived the meal 
service time restrictions for all SFSP sites while still requiring 
sponsors to submit meal service times to the State agency for approval 
(originating guidance has since been superseded and incorporated into 
SFSP 06-2017, Meal Service Requirements in the Summer Meal Programs, 
with Questions and Answers--Revised, December 05, 2016). These waivers 
were rescinded in 2018, as discussed in the background section of this 
proposed rule. In 2019, 42 State agencies requested a waiver of meal 
time restrictions to allow them to continue implementation of what had 
previously been in effect through guidance. Of those 42 State agencies, 
39 asserted that the waiver would result in improved program operations 
and, therefore, efficient use of resources.
    USDA supports flexibilities that provide the best possible customer 
service without compromising program integrity. Through implementation 
of this waiver for many years, USDA learned that allowing sponsors and 
State agencies more latitude to schedule meal service times gives 
sponsors the ability to best meet the needs of their community. 
However, removing meal service time restrictions also allowed for meal 
services to be scheduled one right after another, without any time 
elapsing between the end of one meal service and the beginning of 
another. This is not in keeping with the intent of the SFSP to maintain 
service of distinct meals, and poses a potential risk to program 
integrity by making it more difficult for sites to keep accurate 
records of meals served and to monitor the meal service itself. 
Therefore, this rulemaking proposes to remove all existing meal service 
time restrictions, and would add a requirement that, at all sites 
except residential camps, a minimum of one hour must elapse between the 
end of one meal service and the beginning of another. While this rule 
is proposing to remove meal time restrictions, USDA encourages State 
agencies to work with sponsors to establish distinct meal times that 
not only meet the needs of the community, but also allow the State 
agency to conduct all necessary monitoring requirements. State agencies 
should only approve extended meal service times if they have the 
capability to properly monitor the sites.
    Sponsors have also expressed the need for flexibilities to conduct 
meal services in the event of an unforeseen circumstance, such as a 
delayed delivery. Therefore, USDA also proposes to allow a State agency 
to approve for reimbursement meals served outside of the approved meal 
service time if an unanticipated event, outside of the sponsor's 
control, occurs. The State agency may request documentation to support 
approval of meals claimed when unanticipated events occur.
    In recent years, it has come to USDA's attention that some sponsors 
have served a meal, which meets the meal pattern requirements for 
breakfast, in the afternoon after a lunch service was provided and 
claimed this meal as a reimbursable ``breakfast.'' The SFSP is 
statutorily designed to support ``programs providing food service 
similar to food service made available to children during the school 
year'' under the NSLP and SBP (42 U.S.C. 1761(a)(1)(D)). Currently, 
regulations governing the SBP define breakfast as a meal which is 
served to children in the morning hours and must be served ``at or 
close to the beginning of the child's day at school'' (7 CFR 220.2). As 
such, the service of a reimbursable, three component meal, or 
``breakfast'', in the afternoon following the service of lunch is not 
supported by the statute. Therefore, a meal otherwise meeting the 
requirements for a breakfast meal is not eligible for reimbursement as 
a breakfast if it is served after any lunch or supper has been served 
and claimed for reimbursement.
    This rule also proposes to amend Sec.  225.16(c) to make it easier 
for users to locate and understand key information. Section 
225.16(c)(1) will consolidate meal service time requirements currently 
referenced in other sections of part 225. This would specify that meal 
service times must be established by the sponsor for each site, be 
included in the sponsor's application, and be approved by the State 
agency. Current Sec.  225.16(c)(6), which specifies that a sponsor may 
claim for reimbursement only the type(s) of meals for which it is 
approved to serve, would move to Sec.  225.16(b). In addition, a 
reference to approved meal service times would be added to the State-
sponsor agreement information in redesignated Sec.  225.6(i)(7)(iv).
    Accordingly, this proposed rule would amend Sec.  225.16(c) to:
     Remove meal service time restrictions;
     Add a requirement that a minimum of one hour elapse 
between the end of one meal service and the beginning of another;
     Allow a State agency to approve for reimbursement meals 
served outside of the approved meal service time if an unanticipated 
event occurs;
     Clarify that meals claimed as a breakfast must be served 
at or close to the beginning of a child's day, and prohibit a three 
component meal from being claimed for reimbursement as a breakfast if 
it is served after a lunch or supper is served; and
     Reorganize Sec.  225.16(c) to improve the clarity of the 
text.
    This proposed rule would also amend Sec. Sec.  225.16(b) and 
225.6(i)(7)(iv) to improve the clarity of the regulations.

B. Off-Site Consumption of Food Items

    Serving children in a supervised, safe, and congregate setting is a 
strength of the SFSP. Feeding children in a group setting has many 
benefits such as providing an opportunity for children to socialize, 
creating time for sites to offer activities, and allowing adults to 
monitor food safety and encourage healthy eating practices. The 
statutory requirement that children consume program meals onsite is 
found in the NSLA, which states that meal service in the SFSP is to be 
``similar to food service made available to children during the school 
year'' under the NSLP and SBP (42 U.S.C. 1761). Current regulations 
provide that sponsors must agree to ``maintain children on site while 
meals are consumed'' (Sec.  225.6(e)(15)). USDA has heard from 
stakeholders that, in some cases, the congregate feeding requirement 
poses a barrier to participation and compliance with program 
requirements. Program operators have expressed that some children, 
particularly those who are younger, are unable to eat all of the meal 
components in one sitting and have suggested that they be allowed to 
take certain components off-site for later consumption. Further, 
sponsors and site supervisors have raised concerns about plate waste 
and the need to provide as much nutritious food as possible to children 
who receive a meal but may not be able to consume a complete meal in 
one sitting. As the SFSP operates in a wide variety of settings, 
including sites that do not offer activities or programming separate 
from the meal service, some sponsors report that keeping children on 
site for the entire consumption of the meal offered is challenging.

[[Page 4072]]

    USDA initially issued guidance in 1998 that provided flexibilities 
for a fruit or vegetable item of the meal to be taken off-site for 
later consumption, with State agency approval, for sponsors with 
adequate staffing to administer this option (originating guidance has 
since been superseded and incorporated into SFSP 06-2017--Meal Service 
Requirements in the Summer Meal Programs, with Questions and Answers--
Revised, December 5, 2016 \4\). USDA subsequently amended this 
flexibility in response to stakeholder feedback that it could be 
implemented in a way that maintained health and safety requirements. In 
2013, USDA issued guidance that extended this option to all sponsors 
without the requirement for State agency approval, and expanded the 
eligible food items to include grains, allowing for a single item of 
fruit, vegetable, or grain to be taken off-site for later consumption 
(originating guidance has since been superseded and incorporated into 
SFSP 06-2017). However, the guidance maintained the State agencies' 
discretion to prohibit individual sponsors on a case-by-case basis from 
using the option if the State agency had concerns about adequate site 
monitoring, and provided that the State agency's decision to prohibit a 
sponsor from utilizing this option is not an appealable action. This 
flexibility is still in effect and is found in guidance issued in SFSP 
06-2017.
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    In order to provide flexibilities that are responsive to 
stakeholder needs, USDA is seeking specific comments on State agencies' 
ability to monitor the effective implementation of this option. 
Additionally, USDA is interested in learning whether State agencies 
would use the discretion to prohibit certain sponsors from utilizing 
this option on a case-by-case basis.
    Accordingly, this rule proposes to codify the flexibility for 
sponsors to allow children to take certain food items (i.e., fruit, 
vegetable, or grain items) off-site for later consumption by amending 
Sec.  225.6(i)(15), as redesignated through this rule, and adding a new 
Sec.  225.16(h).

C. Offer Versus Serve

    Current regulations in Sec.  225.16(f)(1)(ii) allow SFAs that are 
program sponsors to ``permit a child to refuse one or more items that 
the child does not intend to eat.'' This concept is known as ``offer 
versus serve'' (OVS). The regulations also require that an SFA using 
the OVS option must follow the requirements for the NSLP set out in 
Sec.  210.10. Finally, the regulations state that the sponsor's 
reimbursement must not be reduced if children do not take all required 
food components of the meal that is offered.
    OVS is a useful tool that applies to menu planning and meal 
service, which allows children to decline some of the food offered in a 
reimbursable breakfast, lunch, or supper, excluding snacks. The goals 
of OVS are to simplify program administration and reduce food waste and 
costs while maintaining the nutritional integrity of the SFSP meal that 
is served. As the SFSP operates on a short timeframe, efficiently 
managing costs is a significant concern for sponsors. USDA has explored 
many options to help sponsors maintain effective practices that reduce 
costs while maintaining high quality meal service. The use of OVS was 
first extended to SFSP operations through the Personal Responsibility 
and Work Opportunity Act of 1996 (Pub. L. 104-193) which permitted SFAs 
sponsoring the SFSP to use OVS on school grounds. This change was made 
on the basis that since the option is regularly implemented during the 
school year, these sponsors could successfully implement the option 
during the summer. Recognizing that OVS was a useful tool to reduce 
food waste and food costs, the William F. Goodling Child Nutrition 
Reauthorization Act of 1998 (Pub. L. 105-336) extended the use of OVS 
to all SFSP sites sponsored by SFAs.
    OVS has proved to be a popular method among both sponsors and 
participants.
    After observing SFA sponsors successfully utilizing the option for 
many years and receiving significant feedback from stakeholders, 
including Congressional testimony about the positive effects of OVS on 
reducing food waste and containing program costs, USDA extended the 
option to use OVS to non-SFA sponsors (SFSP 11-2011, Waiver of Meal 
Time Restrictions and Unitized Meal Requirements in the Summer Food 
Service Program, October 31, 2011). USDA continued to clarify policies 
surrounding OVS, including guidelines for required meal service 
components under the SFSP meal pattern (SFSP 08-2014, Meal Service 
Requirements, November 12, 2013) and extending the use of the SFSP OVS 
meal pattern guidelines to SFA sponsors that had previously been 
required to follow the OVS requirements for the NSLP (SFSP 05-2015 
(v.2), Summer Meal Programs Meal Service Requirements Q&As--Revised, 
January 12, 2015). This guidance took into account the distinguishing 
nature of the SFSP and NSLP, including variations in settings and 
resources, and adjusted the OVS requirements for use in the SFSP 
accordingly.
    As mentioned in the background of this proposed rule, these waivers 
and extensions of statutory and regulatory requirements pertaining to 
OVS were rescinded in 2018. In 2019, 37 State agencies requested a 
waiver of programs requirements to allow them to continue utilizing OVS 
as had previously been permitted through guidance. State agencies that 
submitted OVS waiver requests for program year 2019 cited simplifying 
program administration, reductions in food waste, and efficient uses of 
program funds to maintain program integrity, to illustrate the 
importance of this waiver.
    While USDA appreciates the positive benefits of the OVS option, the 
Department has some concerns about the effective implementation of OVS 
by non-SFA sponsors. Through on-site reviews, USDA has found meal 
pattern violations tied to the improper use of the OVS guidelines, 
specifically at sites sponsored by non-SFAs. The purpose of OVS is to 
decrease administrative burden and food costs while maintaining the 
nutritional integrity of meals served to children. In light of these 
findings, this rule proposes to retain the requirement that only SFA 
sponsors may utilize the OVS option; however, this rule also proposes 
to allow SFA sponsors electing to use the SFSP meal pattern to use SFSP 
OVS guidelines.
    USDA is dedicated to providing effective flexibilities for sponsors 
to operate the program efficiently, which maintains program integrity 
without impacting the nutritional quality and service of meals provided 
to children. Understanding that OVS can be beneficial to sponsor 
operations if used properly, USDA is interested in learning more about 
the implementation of OVS by non-SFA sponsors, when allowed under a 
waiver. Specifically:
     What level of training do non-SFA sponsors receive in 
order to be able to properly implement OVS?
     Do non-SFA sponsors have the resources needed to properly 
implement OVS?
     What level of technical assistance do non-SFA sponsors 
receive?
     How would non-SFA sponsors be impacted if OVS were no 
longer an available option?
     What are the specific benefits to sponsors that use OVS?
    Accordingly, this rule proposes to amend Sec.  225.16(f)(1) of the 
regulations to clarify meal service requirements for

[[Page 4073]]

SFA sponsors electing to use OVS under the SFSP meal pattern.

VI. Clarification of Program Requirements

A. Reimbursement Claims for Meals Served Away From Approved Locations

    As defined in Sec.  225.2, a site is ``a physical location at which 
a sponsor provides a food service for children and at which children 
consume meals in a supervised setting.'' Meals are reimbursable only 
when served at sites that have been approved by the State agency. Site 
approval applies only to the specific location that was approved, not 
to meals removed from that site for service at another location that 
has not been approved. The State agency must approve any changes in 
site service time or location after the initial site approval. However, 
USDA granted State agencies the flexibility to approve exceptions to 
this requirement for the operation of field trips under FNS Instruction 
788-13: Sub-Sites in the Summer Food Service Program and policy 
guidance, Field Trips in the Summer Food Service Program (SFSP), 
February 3, 2003.\5\
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    USDA is proposing to amend Sec.  225.6(i), as redesignated through 
this rule, and add a new Sec.  225.16(g) to allow sponsors the option 
to receive reimbursement for meals served away from the approved site. 
In accordance with current guidance, sponsors would be required to 
notify the State agency in advance that meals will be served away from 
the site, but formal approval of the alternative meal service is not a 
requirement. Under these proposed changes, State agencies have the 
discretion to set time limits for how far in advance of the field trip 
sponsors would send notification to the administering agency. This 
procedure is similar to the notification requirements of field trips in 
the CACFP, where providers must notify either their sponsoring 
organization or the State agency in advance of a planned field trip. If 
the State agency is not notified prior to the SFSP field trip, meals 
served may be considered ``consumed off-site'' and the State agency has 
the discretion to not reimburse those meals. In addition, in order to 
operate field trips in the SFSP, the sponsor would have to be capable 
of meeting all Program requirements on field trip days, including 
applicable State and local health, safety, and sanitation standards, as 
determined by the State agency. When considering if sponsors are 
eligible to receive reimbursement for meals served away from approved 
sites, State agencies should determine that all program requirements, 
including all applicable State and local health, safety, and sanitation 
standards will be met while traveling and at the field trip meal 
service location.
    The proposed rule would also require sponsors of open sites to 
continue operating at the approved open site location while the field 
trip occurs. If this is not possible (for example, if there is limited 
staff coverage), the sponsor must notify the community of the change in 
meal service and provide information about alternative open sites where 
community children can receive free summer meals. Accordingly, the 
proposed rule addresses meals served away from the approved site 
location during a field trip at redesignated Sec.  225.6(i)(7)(v) and 
in a new Sec.  225.16(g).

B. Timeline for Reimbursements to Sponsors

    Current regulations in Sec.  225.9(d)(4) require that State 
agencies must forward reimbursements to sponsors within 45 calendar 
days of receiving a valid claim. The regulations also require that if a 
sponsor submits a claim for reimbursement that is incomplete or 
invalid, the State agency must return the claim to the sponsor within 
30 calendar days with an explanation of the reason for disapproval. If 
the sponsor submits a complete revised claim, the State agency must 
take final action within 45 calendar days of receipt. These 
requirements are necessary to ensure that sponsors receive 
reimbursement for meals served in a timely manner.
    However, certain circumstances may arise that would require State 
agencies to conduct an extended review of a sponsor's claim for 
reimbursement to determine if it is incomplete or invalid, and if the 
claim should be denied. In recent years, USDA has received numerous 
inquiries and waiver requests to extend the timeline for taking final 
action on a claim for reimbursement within 45 calendar days of 
receiving a revised claim, as required in Sec.  225.9(d)(4), due to 
concerns that the sponsor may have engaged in unlawful acts such as 
fraud. State agencies have stated that the 45 calendar day timeline to 
complete a final action is not sufficient to conduct a thorough review 
of all the sponsor's records and make a determination that the claim is 
valid.
    After notifying the sponsor of disapproval of the claim within 30 
calendar days of receipt, the State agency can expand the review and 
meal claims validations in order to prevent the potential payment of a 
suspected unlawful claim. While Sec.  225.9(d)(10) of the regulations 
provides State agencies with the ability to use evidence found in 
audits, reviews, or investigations as the basis for nonpayment of a 
claim for reimbursement, the State agency may not be able to make this 
determination within the given timeframe. Therefore, this rule proposes 
to clarify that even if a State agency determines, in accordance with 
Sec.  225.9(d)(10), that there is reason to believe the sponsor has 
engaged in unlawful acts, the State agency must still return the claim 
to the sponsor within 30 calendar days with an explanation of the 
reason for disapproval. Additionally, this rule proposes to exempt the 
State agency from requirements in Sec.  225.9(d)(4) to take final 
action on a claim within 45 calendar days of receipt of a revised claim 
if the State agency has reason to believe that the sponsor has engaged 
in unlawful acts that would necessitate an expanded review. However, 
the State agency must still communicate its findings to the sponsor and 
allow the sponsor to submit a revised claim as allowed by Sec.  
225.9(d)(4). The State agency must complete final action on the revised 
claim once the review has concluded. Once final action is taken, the 
State agency must advise the sponsor of its rights to appeal consistent 
with the due process provided by the regulations in Sec.  225.13(a).
    Accordingly, this rule proposes to amend regulations found in Sec.  
225.9(d)(4) to include the clarification that if the claim is 
determined to be potentially unlawful based on Sec.  225.9(d)(10), the 
State agency must still disapprove the claim within 30 calendar days 
with an explanation of the reason for disapproval. This rule also 
proposes to amend regulations in Sec.  225.9(d)(10) to clarify that 
State agencies may be exempt from the 45 calendar day timeframe for 
final action in Sec.  225.9(d)(4) if more time is needed to complete a 
thorough examination of the sponsor's claim.

C. Requirements for Media Release

    An essential component to the successful operation of the SFSP is 
outreach and notification to the community about the availability of 
meals. Current regulations at Sec.  225.15(e) require all sponsors 
operating the SFSP, including sponsors of open sites, camps, and closed 
enrolled sites, to annually announce the availability of free meals in 
the media serving the area from which the sponsor draws its attendance. 
The regulations specify that media releases issued by sponsors of camps 
or closed enrolled sites must include income eligibility standards, a 
statement about automatic eligibility to receive free meal benefits at 
eligible program

[[Page 4074]]

sites, and a civil rights statement. However, the requirements of each 
type of sponsor are not clearly presented, leaving some State agencies 
and sponsors to make inadvertent errors in fulfilling requirements. 
Additionally, USDA has received questions from State agencies and has 
analyzed data from management evaluations that show that the current 
requirements are difficult to understand and implement correctly. To 
assist sponsors, USDA has issued guidance and resources encouraging 
State agencies to complete this requirement on behalf of all sponsors 
of open sites in their State through an all-inclusive Statewide media 
release (SFSP 07-2014, Expanding Awareness and Access to Summer Meals, 
November 12, 2013).
    In order to make it easier for SFSP sponsors to satisfy community 
notification requirements, USDA is proposing to codify current guidance 
allowing State agencies the discretion to issue a media release on 
behalf of all sponsors operating SFSP sites, including camps, in the 
State. This rule would require State agencies using this option to 
ensure that all notification requirements for camps and other sites not 
eligible under Sec.  225.2, paragraphs (a) through (c), in the 
definition of ``areas in which poor economic conditions exist'' are 
met. The proposed changes also clarify that, in the absence of a 
Statewide notification, sponsors of camps and other sites not eligible 
under Sec.  225.2, paragraphs (a) through (c), in the definition of 
``areas in which poor economic conditions exist'' are only required to 
notify participants or enrolled children of the availability of free 
meals, and do not need to issue a media release to the public at large. 
This would limit the sponsor's responsibility to notify only those who 
could potentially receive meals at the site. However, sponsors could 
still opt to issue public notification of their meal program if they 
determine it is appropriate. Finally, the section would be renamed 
``Notification to the Community'' to more accurately describe the types 
of activities required of sponsors, including sponsors of camps and 
closed enrolled sites that will no longer be required to issue a media 
release.
    Accordingly, this rule proposes to amend Sec.  225.15(e) by 
renaming the subsection ``Notification to the Community,'' specifying 
that State agencies may issue a media release on behalf of all sponsors 
operating open SFSP sites in the State, and clarifying that sponsors of 
camps and other sites not eligible under the definition of ``areas in 
which poor economic conditions exist'' must only notify participants or 
enrolled children of the availability of free meals.

D. Annual Verification of Tax-Exempt Status

    In order to be eligible to participate in the SFSP, sponsors must 
maintain their nonprofit status (Sec. Sec.  225.2 and 225.14(b)(5)). In 
2011, the Internal Revenue Service changed its filing requirements for 
some tax-exempt organizations. Failure to comply with these 
requirements could result in the automatic revocation of an 
organization's tax-exempt status. Due to this change, USDA released 
guidance for confirming sponsors' tax-exempt status, which requires 
that State agencies annually review a sponsor's tax-exempt status (SFSP 
04-2017, Automatic Revocation of Tax-Exempt Status--Revised, December 
1, 2016). Accordingly, this rule proposes to codify the requirement for 
annual confirmation of tax-exempt status at the time of application by 
amending Sec.  225.14(b)(5).

VII. Important Definitions in the SFSP

A. Self-Preparation Versus Vended Sites

    Current regulations in Sec.  225.2 define the terms ``self-
preparation sponsor'' and ``vended sponsor.'' These definitions are 
critical to the proper administration of the SFSP because reimbursement 
rates are determined, in part, based on the sponsor's classification as 
either self-preparation or vended. Per statutory requirements, 
reimbursement rates are calculated using operating and administrative 
costs (42 U.S.C. 1761(b)(1) and 42 U.S.C. 1761(b)(3)) to determine a 
reimbursement rate for each meal served. Rates are higher for sponsors 
of sites located in rural areas and for ``self-preparation'' sponsors 
that prepare their own meals at sites or at a central facility instead 
of purchasing from vendors. This is due to the higher administrative 
costs associated with program operation in rural areas and preparing 
meals rather than contracting with a food service management company. 
Therefore, correct classification of self-preparation or vended 
sponsors is necessary for proper program management and maintaining the 
fiscal integrity of the program.
    In recent years, advances in technology have allowed State agencies 
and sponsors to develop increasingly sophisticated reporting systems 
that are capable of collecting detailed information on the number and 
type of meals being served. Some State agencies have systems that allow 
sponsors to report the number and type of meals served at each site, 
rather than aggregating and reporting this information at the sponsor 
level, which is the current requirement. Accordingly, some State 
agencies have developed the ability to classify individual sites as 
self-preparation or vended sites, rather than classifying a sponsor and 
all of its sites as one type or the other. USDA is aware that some 
State agencies that have these capabilities also provide reimbursements 
based on the classification of the individual sites. For example, if a 
sponsor operates some sites as self-preparation and some sites as 
vended, the State agency provides a mix of reimbursements. This is 
significant because individual sponsors may support a range of sites, 
including sites self-preparing meals, sites utilizing a vendor contract 
to receive meals, or sites that use both methods of obtaining meals 
(e.g., offering a self-prepared breakfast and a vended lunch). 
Providing reimbursements to sponsors that operate a mix of sites based 
on the individual site classification is more accurate and helps 
protect the integrity of the SFSP.
    In recognition of the advances being made at the State agency and 
local level, this rule proposes to add definitions for ``self-
preparation site'' and ``vended site,'' and to require that sponsors 
and sites include in their application to participate in the SFSP 
information about how meals will be obtained for each site. While 
adding these definitions is an important first step, USDA is interested 
in learning more about current data collection practices. At this time, 
USDA does not have information on how many State agencies are capable 
of collecting meal claim information at the site level, how many State 
agencies currently collect information at the site level, how many 
State agencies provide reimbursement based on the individual site 
classification, and the potential impact of this practice on claiming 
and monitoring. To better understand the current state of claiming 
systems nationwide and the implications for policy development, 
including potential changes to regulatory requirements, USDA is 
gathering more information by soliciting specific feedback on this 
issue. Therefore, this proposed rule is requesting comments on the 
following questions:
     How many State agencies have systems that are capable of 
receiving claims at the site level? Are any State agencies currently 
receiving claims at the site level and providing reimbursement based on 
the individual site classification?

[[Page 4075]]

     What are the costs and benefits of implementing systems 
that can receive claims at the site level?
     How common or uncommon is it for a site to use two 
different methods of obtaining meals (e.g., offering a self-prepared 
breakfast and a vended lunch)?
     Do any State agencies have systems that are able to 
account for different methods of obtaining meals within the same site?
     What would be the impact on claiming and monitoring of 
collecting and paying claims at the site level?
    Accordingly, this rule proposes to add definitions to Sec.  225.2 
for ``self-preparation site'' (i.e., a site which prepares the majority 
of meals that will be served at its site and does not contract with a 
food service management company for unitized meals, with or without 
milk, or for management services) and ``vended site'' (i.e., a site 
which serves unitized meals, with or without milk, from a food service 
management company). In addition, this rule proposes to amend 
Sec. Sec.  225.6(c)(2)(viii) and 225.6(c)(3)(v) to require a summary of 
how meals will be obtained at each site as part of the sponsor 
application.

B. Eligibility for Closed Enrolled Sites

    The current definition of closed enrolled sites included in Sec.  
225.2 requires that at least 50 percent of the enrolled children at the 
site are eligible for free or reduced-price meals under the NSLP and 
the SBP, as determined by approval of applications in accordance with 
Sec.  225.15(f). This section outlines the requirement to use income 
eligibility forms to ``determine the eligibility of children attending 
camps and the eligibility of sites that are not open sites as defined 
in paragraph (a) of the definition of `areas in which poor economic 
conditions exist' in Sec.  225.2''. To reduce administrative burden on 
sponsors, USDA published guidance in 2002 that permitted closed 
enrolled sites to establish eligibility based on data of children 
eligible for free and reduced priced meals in the area where the site 
was located (Summer Food Service Program (SFSP) Waiver for Closed 
Enrolled Sites, November 17, 2002 \6\). After over 15 years of 
implementing this waiver, this flexibility has been shown to reduce 
administrative burden on sponsors of closed enrolled sites and 
eliminate barriers to participation for children and families enrolled 
at these sites. State agency waiver requests for Program year 2019 
confirm that these remain the principal benefits of permitting closed 
enrolled cites to rely on area eligibility rather than applications. 
Requests from 36 out of 40 State agencies noted that the reduction in 
administrative costs can be more productively invested in technical 
assistance and oversight to improve the quality of services provided to 
participants and strengthen program integrity. Further, the Healthy, 
Hunger-Free Kids Act of 2010, Public Law 111-296, amended the 
definition of ``areas in which poor economic conditions exist'' in the 
NSLA. This revised definition allows for enrolled sites to demonstrate 
eligibility through ``other means approved by the Secretary.''
---------------------------------------------------------------------------

    \6\ No longer available.
---------------------------------------------------------------------------

    Accordingly, this proposed rule would amend the definitions of 
``areas in which poor economic conditions exist'' and ``closed enrolled 
site'' in Sec.  225.2 to clarify eligibility requirements and include 
eligibility determination based on area data of children eligible for 
free and reduced-price meals. This proposed rule would also update 
redesignated Sec. Sec.  225.6(g)(1)(ix) and 225.6(g)(2)(iii) to 
establish the frequency at which the site must re-establish 
eligibility, if based on area data. This rule would make a technical 
correction to Sec.  225.15(f) to reflect changes made to the definition 
of ``areas in which poor economic conditions exist.''

C. Roles and Responsibilities of Site Supervisors

    Currently, SFSP regulations do not have a singular definition 
outlining the roles and responsibilities of site supervisors. USDA does 
publish guidance specifically for site supervisors as a tool to 
facilitate program operations that are consistent with regulations. The 
role of the site supervisor is critically important to proper 
management of the SFSP. USDA has determined that clearly defining the 
role of the site supervisor, including requiring that the site 
supervisor must be on site during the meal service, would help sponsors 
comply with program requirements and improve program integrity.
    Accordingly, this rule proposes to add the following definition in 
Sec.  225.2 for ``site supervisor:'' the individual on site for the 
duration of the meal service, who has been trained by the sponsor, and 
is responsible for all administrative and management activities at a 
site including but not limited to: ordering meals, maintaining 
documentation of meal deliveries, ensuring that all meals served are 
safe, and maintaining accurate point of service meal counts.

D. Unaffiliated Sites

    In the SFSP, many sponsors operate sites with which they have a 
legal affiliation. However, there are instances when a sponsor will 
provide meals to a site with which it has no legal affiliation other 
than an agreement to conduct a meal service. Section IV. C of this rule 
proposes to include this type of situation as a characteristic that 
should be taken into consideration when determining which sites a State 
agency should choose to review during a sponsor review in order to 
fulfill requirements set forth in Sec.  225.7(e)(4)(v). The current 
regulations under Sec.  225.2 do not include a definition for 
``unaffiliated site.'' Therefore, this rule would add a definition for 
``unaffiliated site'' to help State agencies determine which sites 
should be selected for review when conducting a sponsor review. 
Accordingly, this rule proposes to add the following definition in 
Sec.  225.2 for ``unaffiliated site:'' a site that is legally distinct 
from the sponsor.

E. Unanticipated School Closure

    The NSLA allows service institutions to provide meal services to 
children who are not in school for a period during the months of 
October through April due to a natural disaster, building repair, court 
order, or similar cause. The statute further requires that the meal 
service must take place at non-school sites. The service of meals 
during these unanticipated school closures makes the SFSP a critical 
piece of the food safety net, especially in disaster situations. While 
the regulations currently provide requirements for approving sponsors 
to serve during unanticipated school closures, there is not a specific 
regulatory definition of unanticipated school closure. This rule 
proposes to add a definition of ``unanticipated school closure'' that 
aligns with statutory requirements outlined in section 13(c)(1) of the 
NSLA, 42 U.S.C. 1761(c)(1), and existing regulatory provisions related 
to unanticipated school closures. Including this definition would also 
allow regulatory text to be streamlined and remove duplicative and 
repetitive references throughout the regulations. Accordingly, this 
rule proposes to add a definition in Sec.  225.2 for ``unanticipated 
school closure'' and revise all references to unanticipated school 
closures.

F. Nonprofit Food Service, Nonprofit Food Service Account, Net Cash 
Resources

    Financial management in the SFSP is critical to the success of the 
Program, especially considering the short duration during which most 
summer programs operate. As such, it is

[[Page 4076]]

important that key terms related to financial management are clearly 
defined. To create consistency across Child Nutrition Programs, this 
rule proposes to include definitions of ``nonprofit food service,'' 
``nonprofit food service account,'' and ``net cash resources'' that 
would align with the terms already defined under the NSLP in 7 CFR 
210.2. Accordingly, this rule proposes to add definitions in Sec.  
225.2 for ``nonprofit food service,'' ``nonprofit food service 
account,'' and ``net cash resources.''

VIII. Miscellaneous

    This rule proposes four other miscellaneous provisions that will 
help clarify program requirements.

A. Authority To Waive Statute and Regulations

    Section 12(l) of the NSLA, 42 U.S.C 1760(l), provides the Secretary 
with the authority to waive statutory requirements under the NSLA or 
the Child Nutrition Act of 1966 (42 U.S.C. 1771 et seq.) and any 
regulations issued under either Act for State agencies and eligible 
service providers if certain conditions are met. The Secretary may only 
approve requests that facilitate the ability of the State agency or 
eligible service provider to carry out the purpose of the program and 
that do not increase the overall cost of the Federal Government 
program. The Secretary does not have the authority to waive certain 
requirements including, but not limited to, the nutritional content of 
the meals served, Federal reimbursement rates, or the enforcement of 
any statutory right of any individual. USDA has issued guidance on the 
process for requesting a waiver and data reporting requirements for 
approved waivers (SFSP 05-2018, Child Nutrition Program Waiver Request 
Guidance and Protocol--Revised, May 24, 2018).
    USDA routinely works with State agencies to determine when and how 
waiver authority can best be applied to improve program operations. In 
1996, USDA issued technical assistance that outlined the 
responsibilities of State agencies, especially when submitting a waiver 
request on behalf of eligible service providers. The State agency 
should act as both a facilitator and a collaborator, and as such, is 
expected to provide technical assistance to eligible service providers 
requesting a waiver. As State agencies have the ability to best assess 
sponsor operations and capability, State agencies should review waiver 
requests from eligible service providers and determine whether the 
requesting sponsor has the capacity to implement the waiver. This 
includes the eligible service provider's ability to maintain a high 
level of program integrity and to capture data on the impacts of the 
waiver. State input on the capabilities of the eligible service 
provider are critical to helping USDA make a determination about 
whether an approval of the waiver would benefit the program. USDA is 
not in a position to evaluate a sponsor's capability to implement a 
waiver while maintaining program integrity, and relies upon a State 
agency's assessment of the sponsor's ability to do so. This rule 
proposes to address this responsibility in regulatory text.
    Further, State agencies are responsible for monitoring sponsor 
activities, including the implementation of waivers. State agencies and 
sponsors must work together in partnership to ensure that all 
monitoring requirements are met. The approval of a waiver of certain 
statutory or regulatory requirements does not alleviate the State 
agency or the eligible service provider of the responsibility to 
properly monitor program operations. If a State agency sends forward a 
waiver request, whether Statewide or for individual service providers, 
the State agency is agreeing that it can and will fulfill all other 
regulatory requirements, including monitoring and oversight. 
Additionally, by submitting a request, the State agency attests that 
the request meets all requirements for waiver requests outlined in 
section 12(l) of the NSLA.
    Under the proposed changes in this rule, the State agency would 
also have the discretion to deny a waiver submitted by an eligible 
service provider. There are many reasons why a State agency may choose 
to deny a request from an eligible service provider. For example, if 
the request does not meet the criteria for approvable requests outlined 
in section 12(l) of the NSLA, the State agency should deny the request 
or work with the eligible service provider to ensure that all statutory 
requirements are met. Additionally, as mentioned previously in this 
section, the State agency plays an important role in evaluating and 
monitoring sponsor operations. The State agency could deny the request 
of a sponsor if the State agency does not have confidence that the 
sponsor has the capability to implement the waiver while maintaining a 
high level of program integrity. Further, if the State agency or the 
sponsor does not have the resources to properly implement, monitor, and 
evaluate the impacts of the waiver, the State agency could deny the 
request.
    To ensure the waiver process is efficient and upholds a high level 
of program integrity, USDA is seeking comments on the process of 
requesting a waiver, monitoring implementation of the waiver, and 
reporting data on waivers issued through this authority.
    Although regulations are not needed to continue implementing 
regulatory waivers, this rule proposes to clarify that USDA has the 
authority to issue waivers of statutory and regulatory requirements for 
all Child Nutrition Programs. Accordingly, this rule proposes to add 
the following new paragraphs to codify USDA's authority to waive 
statutory and regulatory requirements for all Child Nutrition Programs:
     Sec.  210.3(d);
     Sec.  215.3(e);
     Sec.  220.3(d);
     Sec.  225.3(d); and
     Sec.  226.3(e).

B. Duration of Eligibility

    Statutory requirements found in the NSLA at 42 U.S.C. 
1761(a)(1)(A)(i)(I-II) authorize the use of school data and census data 
to establish area eligibility in the SFSP. The NSLA also establishes 
that area eligibility determinations made using school or census data 
must be redetermined every five years. This rule proposes to amend the 
duration of eligibility for open sites and restricted open sites based 
on school and census data from three years to five years, in accordance 
with the NSLA. Accordingly, this rule proposes to change the 
regulations in redesignated Sec. Sec.  225.6(g)(1)(ix) and 
225.6(g)(2)(iii) to require submission of eligibility documentation 
every five years.

C. Methods of Providing Training

    As technology has advanced, sponsors and State agencies have the 
capability to provide mandatory trainings via the internet. Having a 
variety of training opportunities and formats can accommodate varying 
sponsor needs, while at the same time minimizing the time and expense 
incurred by the State agency. Accordingly, this rule proposes to amend 
regulations in Sec.  225.7(a) to include the option for training to be 
conducted via the internet.

D. Meal Quality Facility Reviews

    Current regulations require that part of any review of a vended 
sponsor must include a food service management company facility visit. 
Through management evaluations and technical assistance, USDA has 
learned that this requirement is unclear and places undue burden on 
State agencies. The purpose of the food service management company 
facility visit is to verify that meals being served are prepared, 
stored, and transported in such a manner that

[[Page 4077]]

complies with local health and safety standards. In order to clarify 
review requirements, this rule proposes to rename the section title 
from ``Food Service Management Company Visits'' in current Sec.  
225.7(d)(6) to ``Meal Quality Facility Review,'' to clarify that each 
facility should be reviewed at least one time during the program year, 
and redesignate as Sec.  225.7(i).

Procedural Matters

Executive Order 12866 and 13563

    Executive Orders 12866 and 13563 direct agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). Executive 
Order 13563 emphasizes the importance of quantifying both costs and 
benefits, of reducing costs, of harmonizing rules, and of promoting 
flexibility. 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.

Regulatory Impact Analysis

Economic Summary for ``Strengthening Integrity in the Summer Food 
Service Program'' Proposed Rule
    As described in the preamble to the proposed rule, changes made by 
the proposed rule ``update important definitions, simplify the 
application process, enhance monitoring requirements, and provide more 
discretion at the State agency level to manage program operations.''
    The proposed rule codifies in regulation a number of waivers and 
policy guidance currently in place to ``streamlin[e] and clarify 
program requirements.''
    Although not currently in regulation, a majority of the proposed 
changes have already been implemented in the operation of the SFSP 
through policy guidance and remain in effect. Other proposed changes 
were previously implemented through policy guidance, but were rescinded 
in October 2018. These rescinded policies are currently in effect 
through approved individual State waivers. The proposed changes that 
have already been implemented in the operation of the SFSP through 
policy guidance or waivers are as follows:

1. Streamlining Program Requirements
    a. Application Procedures for New Sponsors \7\
---------------------------------------------------------------------------

    \7\ Although this flexibility is currently implemented in policy 
guidance (and therefore we do not estimate a separate savings for 
this provision), we note that this provision provides most of the 
burden hour savings as detailed in the ICR table on p. 76-77.
---------------------------------------------------------------------------

    b. Demonstration of Financial and Administrative Capability
2. Facilitating Compliance with Program Monitoring Requirements
    a. Establishing the Initial Maximum Approved Level of Meals for 
Sites of Vended Sponsors
3. Providing a Customer-Service Friendly Meal Service
    a. Meal Service Times
    b. Off-site Consumption of Food Items
    c. Offer versus Serve \8\
---------------------------------------------------------------------------

    \8\ As mentioned in the background of the proposed rule, the 
waivers and guidance that allowed non-SFA sponsors to implement 
offer versus serve were rescinded in 2018, effective for the 2019 
summer meals program. The proposed rule keeps the requirement that 
only SFA providers may use offer versus serve; therefore, we 
estimate no change in costs or burden due to this provision, since 
it reflects existing requirements.
---------------------------------------------------------------------------

4. Clarification of Program Requirements
    a. Annual Verification of Tax-Exempt Status
5. Important Definitions in the SFSP
    a. Eligibility for Closed Enrolled Sites
    b. Unanticipated School Closure
6. Miscellaneous
    a. Authority to Waive Statute and Regulations

    Since the above changes are currently in effect in program 
operations through policy guidance or State waivers, we estimate no 
change in participation, meal costs, or costs to State agencies, 
sponsors, or sites, beyond the savings generated by the decreased 
burden needed to fulfill program requirements under the proposed 
changes.
    A table with all of the burden changes as outlined in the ICR is 
available in this document.
    The proposed changes that are not currently implemented in program 
operations through policy guidance are as follows (each proposed change 
includes a description of the expected impact to the program, and an 
explanation for why we do not estimate additional costs associated with 
the proposed changes):
1. Streamlining Program Requirements
a. Clarifying Performance Standards for Evaluating Sponsor Viability, 
Capability, and Accountability
    i. Program Impact: This rule proposes to add performance standards 
for organizations applying to participate as SFSP sponsors that 
correspond to standards currently in place at Sec.  226.6 for 
organizations applying to participate as CACFP sponsoring 
organizations, in response to State agency requests regarding 
application requirements, and in an effort to streamline requirements 
across programs. These detailed performance standards under Sec.  226.6 
assist State agencies in assessing an applicant's financial viability 
and financial management, administrative capability, and 
accountability.
    ii. Cost Impact: USDA recognizes that including these detailed 
performance standards in the management plan may require some State 
agencies and sponsors to modify current practices. Although USDA 
prioritizes flexibility for stakeholders to the greatest extent 
possible, these changes would bolster program integrity by supporting 
the ability of State agencies to more efficiently and consistently 
evaluate an applicant sponsor's financial and administrative 
capability. However, we do not estimate any cost or participation 
effects. It is possible that adopting these performance standards could 
generate program efficiencies and potential savings in the long-term, 
as applicants to sponsor the Program must demonstrate their ability to 
meet the performance standards for financial viability, administrative 
capability, and Program accountability to be able to operate the 
program. Cost impacts would be difficult to quantify because any 
savings directly tied to the performance standards would be challenging 
to isolate.
2. Clarification of Program Requirements
a. Reimbursement Claims for Meals Served Away From Approved Locations
    i. Program Impact: SFSP meals are reimbursable only at approved 
sites. Via policy guidance, USDA granted State agencies the flexibility 
to approve exceptions to this requirement for the operation of field 
trips. This rule proposes to clarify the regulatory requirements that 
if an SFSP sponsor wishes to serve a meal away from the approved site 
location, they are required to notify the State agency, but formal 
approval of the alternative meal service is not a requirement.
    ii. Cost Impact: This provision may reduce the burden on both State 
agencies and sponsors, if State agencies had interpreted previous 
guidance to mean that State agencies had to formally approve field 
trips, instead of simply receiving notification of the field trip. 
According to an internal USDA analysis, 76 percent of sponsors and 63 
percent of sites reported serving program meals during off-site field 
trips at some point

[[Page 4078]]

in time during the summer.\9\ However, estimating any potential burden 
reduction is difficult because prior policy guidance on State approval 
for serving meals at an alternate location may have been inconsistently 
applied. As a result, this provision would provide a minimal reduction 
in burden for some States (i.e., States that currently allow for 
service of field trip meals with just a notice to the State agency) and 
a larger impact for States that use a formal approval process. This 
provision is providing clarity on the requirement currently provided 
through policy guidance.
---------------------------------------------------------------------------

    \9\ 2015 USDA internal SFSP study. (In 2015, USDA collected 
information about SFSP operations, sponsors, and sites through a 
nationally representative survey administered to State agencies, 
SFSP sponsors, and SFSP sites.)
---------------------------------------------------------------------------

b. Timeline for Reimbursements to Sponsors
    i. Program Impact: This provision clarifies a point of confusion 
for State agencies not addressed in current regulation. The proposed 
rule would state that if a sponsor's claim is determined to be 
potentially unlawful based on Sec.  225.9(d)(10), the State agency must 
still disapprove the claim within 30 calendar days with an explanation 
of the reason for disapproval. This rule also proposes to amend 
regulations in Sec.  225.9(d)(10) to clarify that State agencies may be 
exempt from the 45 calendar day timeframe for final action in Sec.  
225.9(d)(4) if more time is needed to complete a thorough examination 
of the sponsor's claim.
    ii. Cost Impact: We estimate no change in cost associated with this 
provision.
c. Requirements for Media Release
    i. Program Impact: Current regulations at Sec.  225.15(e) outline 
the requirement for each sponsor operating the SFSP to annually 
announce the availability of free meals in the media serving the area 
from which it draws its attendance, but the current requirements are 
not clear about what is required to be included in the release and, 
therefore, cause significant confusion. The changes clarify that 
sponsors of camps and other sites not eligible under the definition of 
``areas in which poor economic conditions exist'' must only notify 
participants or enrolled children of the availability of free meals. 
This rule also proposes to include a flexibility that provides State 
agencies the discretion to issue a media release for all sponsors 
operating SFSP sites in the State, as long as the notification meets 
the requirements outlined in the provision.
    ii. Cost Impact: We estimate no change in cost associated with this 
provision. It should be noted that this requirement will likely result 
in a burden reduction, especially for sponsors of closed sites, such as 
camps, and potentially on all sponsors in a State, if the State agency 
issues a compliant statewide notification.
3. Facilitating Compliance With Program Monitoring Requirements
a. First Week Site Visits
    i. Program Impact: Existing regulatory requirements state that 
sponsors are required to visit each of their sites at least once during 
the first week of operation under the program and must promptly take 
such actions as are necessary to correct any deficiencies. Although 
USDA had previously waived some of these requirements, these waivers 
were rescinded in 2018. This proposed rule would create a tiered 
framework, under which sponsors responsible for the management of 10 or 
fewer sites would be required to conduct the first site monitoring 
visit within the first week (seven calendar days) after the site begins 
program operations. Sponsors responsible for the management of more 
than 10 sites would be required to conduct the first site monitoring 
visits within the first two weeks (14 calendar days) after the site 
begins program operations. In cases where a site operates for one week 
or less, the site visit must be conducted during the period of 
operation. Based on currently available data from studies conducted by 
USDA and collected from State agencies, over 80 percent of sponsors 
participating in the program operate 10 sites or fewer. While this 
change would not impact the majority of sponsors, this flexibility in 
the timeline during which the first monitoring visit must take place 
would help alleviate logistical burdens for larger sponsors while 
maintaining strong monitoring practices.
    ii. Cost Impact: We estimate minimal change in costs due to this 
provision. This provision will not affect the regulatory and statutory 
requirements for most providers, and it provides additional flexibility 
to the sponsors it does affect. Therefore, this provision may create 
cost savings for some sponsors with more than 10 sites (in 2015, 18.4 
percent of sponsors had more than 10 sites),\10\ though we are not able 
to estimate any possible savings.
---------------------------------------------------------------------------

    \10\ 2015 USDA internal SFSP study.
---------------------------------------------------------------------------

b. Statistical Monitoring Procedures, Site Selection, and Meal Claim 
Validation for Site Reviews
    i. Program Impact: In order to provide flexibility to State 
agencies conducting sponsor and site reviews, current regulations at 
Sec.  225.7(d)(8) provide State agencies with the flexibility to use 
statistical monitoring procedures in lieu of the site monitoring 
requirements found in Sec.  225.7(d)(2). However, USDA regulations and 
guidance do not provide clear instructions for how to develop 
statistical monitoring procedures. After significant research and 
feedback from State agencies obtained through various workgroups, USDA 
has determined that any measure or formula that would be statistically 
significant and thus provide adequate monitoring of site meal claim 
forms is not feasible. Accordingly, USDA is proposing to remove the 
provision at Sec.  225.7(d)(8) allowing the use of statistical 
monitoring during site reviews and validation of meal claims. 
Additionally, this rule proposes to codify a method for conducting meal 
claim validations. The Department recognizes that the guidance for 
conducting 100 percent meal claim validations may be burdensome for 
some State agencies. Therefore, this rule proposes a stepped increase 
for meal claim validations (e.g., if the State agency reviews 10 
percent of a sponsor's sites and finds a 5 percent or greater error 
rate, the State agency must take fiscal action and expand the meal 
validation review to 25 percent of the sponsor's sites; if a 5 percent 
or greater error rate is found, the State agency must then review 50 
percent of the sponsor's sites; and if a 5 percent or greater rate 
continues to be found, then the State agency must review 100 percent of 
a sponsor's sites). This incremental approach will use State agency 
resources more efficiently and provide State agencies a more targeted 
method for review.
    ii. Cost Impact: These changes remove an unused option for site 
monitoring (statistical monitoring procedures) and increase State 
flexibility in how to conduct meal validation reviews. Although it is 
likely these flexibilities will generate some savings for State 
agencies, the impacts are not included as potential savings in our 
savings estimates for this rule because USDA lacks sufficient 
information to develop sound estimates. This provision impacts sponsors 
with more than one site (in 2015, 57 percent of sponsors had one site, 
while 43 percent of sponsors had more than one site).\11\ The impact of 
the

[[Page 4079]]

proposed meal claim validation process would depend on the average 
error rate, which determines how many claims the State will ultimately 
review. USDA does not know the distribution of meal claim error rates 
in SFSP and cannot estimate how many fewer claims would be reviewed 
under this proposed rule.
---------------------------------------------------------------------------

    \11\ 2015 USDA internal SFSP study.
---------------------------------------------------------------------------

4. Important Definitions in the SFSP
a. Self-Preparation Versus Vended Sites
    i. Program Impact: As sponsor sophistication and technology have 
developed, the operation of SFSP has shifted. State agencies have 
systems that allow for site based claiming, which provides more 
granular information about the number and types of meals being served 
at individual sites, rather than aggregating this information at the 
sponsor level. Additionally, as sponsors have grown, many used a mixed 
model of sponsorship, with some sites self-preparing meals and others 
utilizing a vendor contract to receive meals. In light of these 
changes, State agencies have the ability to classify sites as self-
preparation or vended sites, rather than sponsors. As such, the 
regulations require updates that reflect the current nature of program 
operations. Accordingly, this rule proposes to add definitions to Sec.  
225.2 for ``self-preparation site'' and ``vended site''. Additionally, 
this rule proposes to clarify requirements at Sec.  225.6(c)(2) to 
require a summary of how meals will be obtained at each site as part of 
the sponsor application.
    ii. Cost Impact: We estimate no change in cost associated with this 
provision. This proposed change merely updates program definitions to 
align with the current nature of program operations.
b. Roles and Responsibilities of Site Supervisors
    i. Program Impact: Currently, SFSP regulations do not have a 
singular definition outlining the roles and responsibilities of site 
supervisors. USDA does publish guidance specifically for site 
supervisors as a tool to facilitate program operations that are in 
compliance with regulations. The role of the site supervisor is 
critically important to proper management of the SFSP. Using a variety 
of methods (including nationwide studies conducted by the department), 
USDA has received the feedback that clearly defining the role of the 
site supervisor, including requiring that the site supervisor must be 
on site during the meal service, would greatly facilitate sponsors' 
ability to comply with requirements and improve program integrity. 
Accordingly, this rule proposes to add a definition at Sec.  225.2 for 
site supervisor, which outlines the role and responsibilities required 
of a site supervisor.
    ii. Cost Impact: We estimate no change in cost associated with this 
provision. This proposed change merely updates program definitions to 
align with the current nature of program operations.
c. Unaffiliated Sites
    i. Program Impact: In the SFSP, many sponsors operate sites with 
which they have a legal affiliation. However, there are instances when 
a sponsor will provide meals to a site with which it has no legal 
affiliation other than an agreement to conduct a meal service. Section 
IV. C of this rule proposes to include this type of situation as a 
characteristic that should be taken into consideration when determining 
which sites a State agency should choose to review during a sponsor 
review in order to fulfill requirements set forth in Sec.  
225.7(e)(4)(v). The current regulations under Sec.  225.2 do not 
include a definition for unaffiliated site. Therefore, this rule would 
add a definition for unaffiliated site to help State agencies determine 
which sites should be selected for review when conducting a sponsor 
review.
    ii. Cost Impact: We estimate no change in cost associated with this 
provision. This proposed change merely updates program definitions to 
align with the current nature of program operations.
d. Nonprofit Food Service, Nonprofit Food Service Account, Net Cash 
Resources
    i. Program Impact: Financial management in the SFSP is critical to 
the success of the program, especially considering the short duration 
during which most summer programs operate. As such, it is important 
that key terms related to financial management are clearly defined. To 
create consistency across Child Nutrition Programs, this rule proposes 
to include definitions of nonprofit food service, nonprofit food 
service account, and net cash resources that would align with the terms 
already defined under the National School Lunch Program in part 210.
    ii. Cost Impact: We estimate no change in cost associated with this 
provision. This would just ensure consistency across the SFSP and NSLP.
5. Miscellaneous
a. Duration of Eligibility: Decreases Burden for Sites and Sponsors 
Using Area Eligibility and Aligns SFSP Regulations With NSLP 
Regulations
    i. Program Impact: Statutory requirements found in the NSLA at 42 
U.S.C. 1761(a)(1)(A)(i)(I-II) authorize the use of school data and 
census data to establish area eligibility in the SFSP. The NSLA also 
establishes that area eligibility determinations made using school or 
census data must be redetermined every five years. This rule proposes 
to amend the duration of eligibility for open sites and restricted open 
sites for school and census data from three years to five years, in 
accordance with the NSLA. Accordingly, this rule proposes to change the 
regulations in redesignated Sec. Sec.  225.6(g)(1)(ix) and 
225.6(g)(2)(iii) to require submission of eligibility documentation 
every five years.
    ii. Cost Impact: We estimate no change in cost associated with this 
provision. The proposed change will decrease the burden on sponsors 
using school or census data for area eligibility determinations of 
sites. We are not able to estimate any potential participation effects, 
but we note that there is very little annual variation in the census 
data, so any participation or eligibility effects are likely to be 
minimal.
b. Methods of Providing Training
    i. Program Impact: As technology has advanced, sponsors and State 
agencies have the capability to provide mandatory trainings via the 
internet. Accordingly, this rule proposes to update regulations at 
Sec.  225.7(a) to include the option for training to be conducted via 
the internet.
    ii. Cost Impact: The proposed change may decrease training costs 
for State agencies and sponsors who switch from in-person trainings to 
online trainings, though we are not able to estimate this potential 
savings.
c. Food Service Management Company Facility Visits
    i. Program Impact: Current regulations require that part of any 
review of a vended sponsor must include a food service management 
company facility visit. In order to clarify review requirements, this 
rule proposes to rename the section titled `Food Service Management 
Company Visits' in current Sec.  225.7(d)(6) to `Meal Quality Facility 
Review.' This rule would also reorganize the requirements in a more 
logical manner and amend to clarify that each facility should be 
reviewed at least

[[Page 4080]]

one time during the program year, and redesignate as Sec.  225.7(i).
    ii. Cost Impact: We estimate no change in cost associated with this 
provision. The proposed change clarifies current requirements; it makes 
no changes to current requirements.
    We estimate that these new changes will not impact participation, 
meal costs, or costs to State agencies, sponsors, or sites, beyond 
accounting for the decreased burden needed to fulfill program 
requirements under the proposed changes, as the proposed changes 
streamline and/or decrease administrative requirements, increase 
flexibilities for State agencies and/or sponsors, and/or provide 
clarity where current program requirements are currently unclear.
    More generally, this action streamlines SFSP operations for both 
State agencies and program operators. It codifies policies that have 
proven effective in improving efficiencies in the operation of the 
SFSP. These flexibilities have provided significant relief from some 
program administrative burdens and have reduced paperwork for those 
sponsors experienced in other Child Nutrition Programs that wish to 
become SFSP operators. These waivers and flexibilities have also proven 
to improve compliance with program regulations. We estimate that there 
are no increased costs to State agencies or SFSP operators and no 
Federal costs associated with implementation of this rule.
    There may be some savings associated with this rule due to the 
reduction in burden associated with streamlining operations and 
reducing SFSP paperwork for experienced sponsors. Depending on the 
position of the staff person submitting the paperwork, this action is 
estimated to save approximately $0.13 million annually if performed by 
an administrative-level position, or about $0.23 million annually if 
performed by a director-level position. This would result in 
approximately $0.7 million to $1.2 million in savings over five years, 
depending on the position level of the person submitting the 
paperwork.\12\
---------------------------------------------------------------------------

    \12\ These ranges were calculated by taking the hourly total 
compensation from BLS for FY2017 (for all State and Local workers 
for the director-level position estimate, and for a private 
administrative assistant for the administrative-level estimate) and 
inflating that hourly total compensation figure according to the ECI 
wage increase in OMB's economic assumptions for the President's 
Budget for years FY2018-FY2022. That hourly compensation figure was 
then multiplied by the decrease in burden hours as estimated in the 
ICR to generate the yearly and 5-year savings estimate.
---------------------------------------------------------------------------

Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601-612) requires Agencies 
to analyze the impact of rulemaking on small entities and consider 
alternatives that would minimize any significant impacts on a 
substantial number of small entities. Pursuant to that review, the 
Secretary certifies that this rule would not have a significant impact 
on a substantial number of small entities. The totality of the proposed 
changes aim to decrease overall burden on the affected parties, which 
include the small entities covered by the proposed rule (i.e., small 
sponsors and sites). However, the majority of the proposed provisions 
are currently in effect via policy guidance or State waivers. In 
addition, changes that would affect burden primarily impact State 
agencies and larger sponsors, such as the requirement that State 
agencies share information, the flexibility on first monitoring visits 
for sponsors with more than ten sites, and the multi-step approach for 
States conducting claim validations.

Executive Order 13771

    Executive Order 13771 directs agencies to reduce regulation and 
control regulatory costs and provides that the cost of planned 
regulations be prudently managed and controlled through a budgeting 
process. If finalized as proposed, this rule would be an Executive 
Order 13771 deregulatory action. This rule codifies flexibilities that 
were previously extended via policy guidance. We estimate that this 
rule, if finalized as proposed, will save the affected parties at least 
$0.13-$0.23 million annually, or at least $0.7-$1.2 million over the 
next five years.

Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public 
Law 104-4, establishes requirements for Federal agencies to assess the 
effects of their regulatory actions on State, local and tribal 
governments and the private sector. Under section 202 of the UMRA, USDA 
generally must prepare a written statement, including a cost benefit 
analysis, for proposed and final rules with ``Federal mandates'' that 
may result in expenditures by State, local or tribal governments, in 
the aggregate, or the private sector, of $146 million or more (when 
adjusted for inflation; GDP deflator source: Table 1.1.9 at http://www.bea.gov/iTable) in any one year. When such a statement is needed 
for a rule, section 205 of the UMRA generally requires USDA to identify 
and consider a reasonable number of regulatory alternatives and adopt 
the 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) for 
State, local and tribal governments or the private sector of $146 
million or more in any one year. Thus, the rule is not subject to the 
requirements of sections 202 and 205 of the UMRA.

Executive Order 12372

    SFSP is listed in the Assistance Listings under the Catalog of 
Federal Domestic Assistance Number 10.559 and is subject to Executive 
Order 12372, which requires intergovernmental consultation with State 
and local officials (see 2 CFR chapter IV).

Federalism Summary Impact Statement

    Executive Order 13132 requires Federal agencies to consider the 
impact of their regulatory actions on State and local governments. 
Where such actions have federalism implications and either impose 
substantial direct compliance costs on State and local governments or 
preempt State law, agencies are directed to provide a statement for 
inclusion in the preamble to the regulations describing the agency's 
considerations in terms of the three categories called for under 
section (6)(b)(2)(B) of Executive Order 13132. USDA has determined that 
this rule does not have Federalism implications. This rule does not 
have substantial direct effects on the States, on the relationship 
between the national government and the States, or on the distribution 
of power and responsibilities among the various levels of government, 
nor does it impose substantial or direct compliance costs on State and 
local governments. Therefore, under section 6(b) of the Executive 
Order, a Federalism summary impact statement is not required.

Executive Order 12988, Civil Justice Reform

    This proposed rule has been reviewed under Executive Order 12988, 
Civil Justice Reform. This rule is not 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.

Civil Rights Impact Analysis

    FNS has reviewed this proposed rule in accordance with USDA 
Regulation 4300-4, ``Civil Rights Impact Analysis,'' to identify any 
major civil rights impacts the rule might have on program participants 
on the basis of age, race,

[[Page 4081]]

color, national origin, sex or disability. After a careful review of 
the rule's intent and provisions, FNS has determined that this rule is 
not expected to affect the participation of protected individuals in 
the SFSP.

Executive Order 13175

    Executive Order 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. Additionally, other policy 
statements or actions that have substantial direct effects on one or 
more Indian Tribes, the relationship between the Federal Government and 
Indian Tribes, or on the distribution of power and responsibilities 
between the Federal Government and Indian Tribes also require 
consultation. This regulation has possible Tribal implications, so 
consultation is required. FNS will seek consultation on this rule prior 
to implementing a final rule. If further consultation is requested, the 
Office of Tribal Relations (OTR) will work with FNS to ensure quality 
consultation is provided.

Paperwork Reduction Act

    The Paperwork Reduction Act of 1995 (44 U.S.C. Chap. 35; 5 CFR 
1320) requires that the OMB approve all collections of information by a 
Federal agency 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.
    In accordance with the Paperwork Reduction Act of 1995, this 
proposed rule is revising existing information collection requirements 
which are subject to review and approval by OMB. These existing 
requirements are currently approved under OMB Control Number 0584-0280 
7 CFR part 225, SFSP. The proposals outlined in this rule are expected 
to reduce the burden for some of the information requirements approved 
in that collection.
    Comments on this proposed rule and changes in the information 
collection burden must be received by March 23, 2020.
    Send comments to the Office of Information and Regulatory Affairs, 
OMB, Attention: Desk Officer for FNS, Washington, DC 20503. Comments 
are invited on: (a) Whether the proposed collection of information is 
necessary for the proper performance of the functions of the agency, 
including whether the information shall have practical utility; (b) the 
accuracy of the agency's estimate of the burden of the proposed 
collection of information, including the validity of the methodology 
and assumptions used; (c) ways to enhance the quality, utility, and 
clarity of the information to be collected; and (d) 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 notice will be 
summarized and included in the request for OMB approval. All comments 
will also become a matter of public record.
    Title: 7 CFR part 225, Streamlining Program Requirements and 
Improving Integrity in the Summer Food Service Program.
    OMB Control Number: 0584-0280.
    Expiration Date: 12/31/2022.
    Type of Request: Revision.
    Abstract: This is a revision of requirements in the information 
collection under OMB Control Number 0584-0280 that are being impacted 
by this rulemaking. USDA proposes to modify regulatory requirements for 
sponsors and State agencies in the SFSP to streamline program 
requirements for participation. This proposed rule impacts information 
reporting at the sponsor level, monitoring requirements for State 
agencies, and public disclosure.
    Under this rule, USDA is proposing to codify current guidance 
allowing State agencies the discretion to issue a media release on 
behalf of all sponsors operating SFSP sites, including camps, in the 
State. This burden is reflected in OMB Control Number 0584-0280. USDA 
does not expect that the proposals outlined in this rule will have any 
impact on either the requirements or the burden related to the media 
releases; therefore, they will not be included as part of the 
rulemaking submission.
    Additionally, USDA is proposing a change in the meal claim 
validation process that State agencies must follow during sponsor 
monitoring reviews. Currently, meal claims have to be validated for 100 
percent of a sponsor's sites. This rule proposes to reduce the initial 
validation requirement to 10 percent of a sponsor's sites, then 
establishes a stepped meal claim validation process for sponsors that 
exceed a 5 percent error rate. The burden for validating meal claims of 
100 percent of a sponsor's sites for 53 State agencies is estimated at 
2,055 hours annually. The proposed claim validation process is expected 
to result in an overall reduction of burden, from an estimated 2,055 
hours annually to an estimated 287.58 hours annually (a decrease of 
1,767.42 hours). This stepped validation process is included as a line 
item in the ICR associated with this rulemaking.
    For experienced sponsors and sites that have already operated the 
SFSP without significant operational problems, applications must 
include condensed information that is more likely to change from year 
to year, as currently outlined in Sec.  225.6(c)(3). Experienced 
sponsors are not required to submit the same level of detail with 
regard to the organizational and operational information that is 
required of new sponsors.
    This rule proposes to permit sponsors in good standing in other 
Child Nutrition Programs (NSLP, CACFP, etc.) to follow the application 
requirements for experienced sponsors and sites when applying to SFSP, 
instead of the application requirements for new sponsors and sites 
found at Sec.  225.6(c)(2). Through policy guidance, a sponsor is 
considered to be in ``good standing'' if it has been reviewed by the 
State agency in the last 12 months and had no major findings or program 
violations, or has completed and implemented all corrective actions 
from the last compliance review. In addition, a sponsor may be 
considered in good standing if it has not been found to be seriously 
deficient by the State agency in the past two years and has never been 
terminated from another Child Nutrition Program.
    This proposed rule change would eliminate duplicative documentation 
and paperwork, which saves time for SFSP's 5,524 sponsors (3,314 local/
tribal government sponsors and 2,210 businesses). The amount of time 
needed for a sponsor to complete a SFSP application would decrease from 
39.5 hours to 38.74 hours. FNS currently estimates a total of 218,198 
burden hours for completing these applications. As a result of this 
change, FNS estimates a total of 213,999.76 hours for these 
applications. Additionally, these proposals will decrease the time 
needed for sponsors to submit site information from 1 hour to 0.89 
hours. FNS currently estimates a total of 5,524 hours to submit site 
information (for 640 new and 2,675 experienced local/tribal government 
sponsors, and 426 new and 1,783 experienced business sponsors). As a 
result of this proposed rule, FNS estimates a total of 4916.36 burden 
hours for submitting this site information.
    Currently, SFSP regulations require sponsors applying to 
participate in the

[[Page 4082]]

Program to demonstrate financial and administrative capability for 
program operations and accept financial responsibility for total 
program operations at all sites at which they propose to conduct a food 
service (Sec.  225.14(c)(1)). SFAs and CACFP institutions already 
undergo a rigorous application process in order to participate in NSLP 
and CACFP and have demonstrated that they have the financial and 
organizational viability, capability, and accountability necessary to 
operate a Child Nutrition Program, and therefore have the potential to 
operate the SFSP as well.
    In order to streamline requirements between Child Nutrition 
Programs and encourage participation, this rule proposes to modify the 
requirement for SFAs and CACFP institutions applying to participate in 
the SFSP to submit further evidence of financial and administrative 
capability, as detailed in Sec.  225.14(c)(1). Roughly 10 percent (553) 
of sponsors (332 local/tribal government and 221 business sponsors) are 
asked to produce this information annually. It currently takes SFAs and 
CACFP institutions 7.2 minutes (0.12 hours) to supply the required 
information, for an estimated total of 67.836 burden hours. As a result 
of these proposals, FNS estimates that it will take 5.6 minutes (.093 
hours) to provide the required information, for an estimated total of 
51.429 burden hours.
    The current approved burden for OMB Control #0584-0280 is 338,411 
hours. This rule is expected to reduce the total burden by 6,590 hours, 
resulting in a revised burden of 331,821 hours.
    Respondents: SFSP Sponsors.
Sec. Sec.  225.6(c)(1) and (4), 225.14(a)
    Estimated Number of Respondents: 5,524.
    Estimated Number of Responses per Respondent: 1.
    Estimated Total Annual Responses: 5,524.
    Estimated Time per Response: 38.74.
    Estimated Burden Hours: 213,999.76.
Sec.  225.6(c)(2) and (3)
    Estimated Number of Respondents: 5,524.
    Estimated Number of Responses per Respondent: 1.
    Estimated Total Annual Responses: 5,524.
    Estimated Time per Response: 0.89.
    Estimated Burden Hours: 4,916.
Sec. Sec.  225.6(e), 225.14(c)(7)
    Estimated Number of Respondents: 553.
    Estimated Number of Responses per Respondent: 1.
    Estimated Total Annual Responses: 553.
    Estimated Time per Response: 0.093.
    Estimated Burden Hours: 51.
    Respondents: State Agencies.
Sec.  225.7(e)(6)
    Estimated Number of Respondents: 53.
    Estimated Number of Responses per Respondent: 65.38.
    Estimated Total Annual Responses: 3,465.
    Estimated Time per Response: 0.083.
    Estimated Burden Hours: 287.58.
    Estimated Total Annual Responses: 15,066.
    Estimated Total Annual Burden on Respondents: 219,255.

                                                                                            Reporting
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                         Difference
                                                                                        Estimated     Total     Estimated                  Current OMB     due to      Differences      Total
            CFR citation                    Description         Estimated number of   frequency of   annual    avg. number    Estimated     approved       program       due to      difference
                                                                    respondents         responses    records  of hours per   total hours  burden hours   changes in    adjustments  in 0584-0280
                                                                                                                response                  in 0584-0280    0584-0280
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                       State Agency Level
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
225.7(e)(6).........................  State agencies utilize  53....................         65.38     3,465          .083        287.58         2,055     -1,767.42             0     -1,767.42
                                       a multi-step process
                                       for meal claim
                                       validation based on
                                       amount of error
                                       detected.
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
    State Agency Level Total Change...............................................................................................................................................     -1,767.42
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------


 
                                                                                                                Estimated                  Current OMB   Difference
                                         Affected public/       Estimated number of     Estimated     Total    avg. number    Estimated     approved       due to      Differences      Total
            CFR citation                    description             respondents       frequency of   annual   of hours per   total hours  burden hours     program       due to      difference
                                                                                        responses    records    response                  in 0584-0280     changes     adjustments
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                          Sponsor Level
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
225.6(c)(1) and (4), 225.14(a)......  Sponsors submit         3,314 local or tribal              1     3,314         38.74    128,384.36    130,903.00     -2,518.64             0     -2,518.64
                                       written application     government.
                                       to SAs for
                                       participation in SFSP.
225.6(c)(1) and (4), 225.14(a)......  Sponsors submit         2,210 business                     1     2,210         38.74     85,615.40     87,295.00   -1,679.6000  ............   -1,679.6000
                                       written application     sponsors.
                                       to SAs for
                                       participation in SFSP.
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
    Total for sponsor applications..........................  5,524.................             1     5,524         38.74    213,999.76       218,198     -4,198.24             0     -4,198.24
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
225.6(c)(2) and (3).................  Sponsors submit site    640 new local or                   1       640          0.89        569.60           640        -70.40             0        -70.40
                                       information for each    tribal government
                                       site where a food       sponsors.
                                       service operation is
                                       proposed.
225.6(c)(2) and (3).................  Sponsors submit site    2,675 experienced                  1     2,675          0.89      2,380.75         2,675       -294.25             0       -294.25
                                       information for each    local or tribal
                                       site where a food       government sponsors.
                                       service operation is
                                       proposed.
225.6(c)(2) and (3).................  Sponsors submit site    426 new business                   1       426          0.89           379           426      -46.8600             0      -46.8600
                                       information for each    sponsors.
                                       site where a food
                                       service operation is
                                       proposed.
225.6(c)(2) and (3).................  Sponsors submit site    1,783 experienced                  1     1,783          0.89         1,587         1,783     -196.1300             0     -196.1300
                                       information for each    business sponsors.
                                       site where a food
                                       service operation is
                                       proposed.
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
    Total for sponsors' site information....................  5,524.................             1     5,524          0.89         4,916         5,524          -608             0          -608
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

[[Page 4083]]

 
225.6(e), 225.14(c)(7)..............  Sponsors approved for   332 local/tribal                   1       332         0.093         30.88         40.84         -9.96             0         -9.96
                                       participation in SFSP   government sponsors.
                                       enter into written
                                       agreements with SAs
                                       to operate program in
                                       accordance with
                                       regulatory
                                       requirements.
225.6(e), 225.14(c)(7)..............  Sponsors approved for   221 business sponsors.             1       221         0.093            21            27       -6.4470             0       -6.4470
                                       participation in SFSP
                                       enter into written
                                       agreements with SAs
                                       to operate program in
                                       accordance with
                                       regulatory
                                       requirements.
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
    Total for sponsor written agreements....................  553...................             1       553          0.09            51            68           -16             0           -16
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
    Sponsor Level Total Change..............................  5,524.................           2.1    11,601        18.874   218,967.549   223,789.836      -4,822.3  ............      -4,822.3
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
* Numbers presented based on the percentage of sites reviewed under the multi-tiered process.
** Totals may differ due to rounding.


--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                          Estimated avg.                      Current
                                             Estimated       Number of     Total annual      number of       Estimated       approved     Difference due
                                              number       responses per     responses       hours per      total hours      burden in      to program
                                            respondents     respondent     (col. B x C)      response      (col. D x E)     #0584-0280        changes
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                        Reporting
--------------------------------------------------------------------------------------------------------------------------------------------------------
State Agency Level......................              53           65.38           3,465            0.08          287.61           2,055       -1,767.42
Sponsor Level...........................           5,524             2.1          11,601          18.875         218,968         223,790        -4,822.3
                                         ---------------------------------------------------------------------------------------------------------------
    Total Reporting.....................           5,577             2.7          15,066          14.552         219,255         225,845          -6,590
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Some totals may not add due to rounding.

E-Government Act Compliance

    USDA 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

7 CFR Part 210

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

7 CFR Part 215

    Food assistance programs, Grant programs--education, Grant 
program--health, Infants and children, Milk, Reporting and 
recordkeeping requirements.

7 CFR Part 220

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

7 CFR Part 225

    Food assistance programs, Grant programs--health, Infants and 
children, Labeling, Reporting and recordkeeping requirements.

7 CFR Part 226

    Accounting, Aged, Day care, Food assistance programs, Grant 
programs, Grant programs--health, American Indians, Individuals with 
disabilities, Infants and children, Intergovernmental relations, Loan 
programs, Reporting and recordkeeping requirements, Surplus 
agricultural commodities.

    Accordingly, 7 CFR parts 210, 220, 215, 225, and 226 are proposed 
to be amended as follows:

PART 210--NATIONAL SCHOOL LUNCH PROGRAM

0
1. The authority citation for part 210 continues to read as follows:

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

0
2. In Sec.  210.3, add paragraph (e) to read as follows:


Sec.  210.3   Administration.

* * * * *
    (e) Authority to waive statute and regulations. (1) If authorized 
under the National School Lunch Act or the Child Nutrition Act of 1966, 
as amended, FNS may waive provisions of such acts and the provisions of 
this part with respect to a State agency or eligible service provider.
    (2) A State agency may submit a request for a waiver under 
paragraph (e)(1) of this section in accordance with the provisions of 
this part and any informational instructions issued by FNS under this 
part. A State agency may also submit a request to waive specific 
statutory or regulatory requirements on behalf of eligible service 
providers that operate in the State. Any waiver must be submitted to 
the appropriate FNS Regional office.
    (3)(i) An eligible service provider may submit a request for a 
waiver under paragraph (e)(1) of this section in accordance with: The 
provisions of this part and any informational instructions issued by 
FNS under this part and in accordance with any applicable instructions 
issued by a State agency. Any waiver submitted by an eligible service 
provider must be sent to the State agency for review. A State agency 
may deny requests from eligible service providers or it may concur with 
the request.
    (ii) If the State agency concurs with the request, within 15 
calendar days of receipt of the request, the State agency must forward 
to the FNS Regional office the request and a rationale supporting the 
request. By forwarding the request to the FNS Regional office, the 
State agency affirms:
    (A) The request meets all requirements for waiver submissions; and
    (B) The State agency will conduct all monitoring requirements 
related to normal program operations and the implementation of the 
waiver.
    (iii) If the State agency denies the request, it must notify the 
requesting eligible service provider in writing within 30 calendar days 
of receipt of the

[[Page 4084]]

request. The State agency response is final and may not be appealed to 
FNS.

PART 215--SPECIAL MILK PROGRAM FOR CHILDREN

0
3. The authority citation for part 215 continues to read as follows:

    Authority: 42 U.S.C. 1772 and 1779.

0
4. In Sec.  215.3, add paragraph (e) to read as follows:


Sec.  215.3   Administration.

* * * * *
    (e) Authority to waive statute and regulations. (1) If authorized 
under the National School Lunch Act or the Child Nutrition Act of 1966, 
as amended, FNS may waive provisions of such acts and the provisions of 
this part with respect to a State agency or eligible service provider.
    (2) A State agency may submit a request for a waiver under 
paragraph (e)(1) of this section in accordance with the provisions of 
this part and any informational instructions issued by FNS under this 
part. A State agency may also submit a request to waive specific 
statutory or regulatory requirements on behalf of eligible service 
providers that operate in the State. Any waiver must be submitted to 
the appropriate FNS Regional office.
    (3)(i) An eligible service provider may submit a request for a 
waiver under paragraph (e)(1) of this section in accordance with the 
provisions of this part and any informational instructions issued by 
FNS under this part and in accordance with any applicable instructions 
issued by a State agency. Any waiver submitted by an eligible service 
provider must be sent to the State agency for review. A State agency 
may deny requests from eligible service providers or it may concur with 
the request.
    (ii) If the State agency concurs with the request, within 15 
calendar days of receipt of the request, the State agency must forward 
to the FNS Regional office the request and a rationale supporting the 
request. By forwarding the request to the FNS Regional office, the 
State agency affirms:
    (A) The request meets all requirements for waiver submissions; and
    (B) The State agency will conduct all monitoring requirements 
related to normal program operations and the implementation of the 
waiver.
    (iii) If the State agency denies the request, it must notify the 
requesting eligible service provider in writing within 30 calendar days 
of receipt of the request. The State agency response is final and may 
not be appealed to FNS.

PART 220--SCHOOL BREAKFAST PROGRAM

0
5. The authority citation for part 220 continues to read as follows:

    Authority: 42 U.S.C. 1773, 1779, unless otherwise noted.

0
6. In Sec.  220.3, add paragraph (f) to read as follows:


Sec.  203.3  Administration.

* * * * *
    (f) Authority to waive statute and regulations. (1) If authorized 
under the National School Lunch Act or the Child Nutrition Act of 1966, 
as amended, FNS may waive provisions of such acts and the provisions of 
this part with respect to a State agency or eligible service provider.
    (2) A State agency may submit a request for a waiver under 
paragraph (f)(1) of this section in accordance with the provisions of 
this part and any informational instructions issued by FNS under this 
part. A State agency may also submit a request to waive specific 
statutory or regulatory requirements on behalf of eligible service 
providers that operate in the State. Any waiver must be submitted to 
the appropriate FNS Regional office.
    (3)(i) An eligible service provider may submit a request for a 
waiver under paragraph (f)(1) of this section in accordance with the 
provisions of this part and any informational instructions issued by 
FNS under this part and in accordance with any applicable instructions 
issued by a State agency. Any waiver submitted by an eligible service 
provider must be sent to the State agency for review. A State agency 
may deny requests from eligible service providers or it may concur with 
the request.
    (ii) If the State agency concurs with the request, within 15 
calendar days of receipt of the request, the State agency must forward 
to the FNS Regional office the request and a rationale supporting the 
request. By forwarding the request to the FNS Regional office, the 
State agency affirms:
    (A) The request meets all requirements for waiver submissions; and
    (B) The State agency will conduct all monitoring requirements 
related to normal program operations and the implementation of the 
waiver.
    (iii) If the State agency denies the request, it must notify the 
requesting eligible service provider in writing within 30 calendar days 
of receipt of the request. The State agency response is final and may 
not be appealed to FNS.

PART 225--SUMMER FOOD SERVICE PROGRAM

0
7. The authority citation for 7 CFR part 225 continues to read as 
follows:

    Authority: Secs. 9, 13 and 14, Richard B. Russell National 
School Lunch Act, as amended (42 U.S.C. 1758, 1761 and 1762a).

0
8. In Sec.  225.2:
0
a. Revise the definitions of ``Areas in which poor economic conditions 
exist'' and ``Closed enrolled site'';
0
b. In the definition of ``Documentation'', redesignate paragraphs 
(a)(1) through (4) as paragraphs (1)(i) through (iv), respectively and 
redesignate paragraphs (b)(1) and (2) as paragraphs (2)(i) and (ii), 
respectively;
0
c. In the definition of ``Private nonprofit'', redesignate paragraphs 
(a) through (e) as paragraph (1) through (5), respectively;
0
d. Add in alphabetical order definitions for ``Net cash resources'', 
``Nonprofit food service'', and ``Nonprofit food service account'',;
0
e. In the definition of ``Rural'', redesignate paragraphs (a) and (b) 
as paragraph (1) and (2), respectively; and
0
f. Add in alphabetical order definitions for ``Self-preparation site'', 
``Site supervisor'', ``Unaffiliated site'' and ``Vended site''.
    The revisions and additions read as follows:


Sec.  225.2   Definitions.

* * * * *
    Areas in which poor economic conditions exist means:
    (1) The attendance area of a school in which at least 50 percent of 
the enrolled children have been determined eligible for free or 
reduced-price school meals under the National School Lunch Program and 
the School Breakfast Program;
    (2) A geographic area where, based on the most recent census data 
available or information provided from a department of welfare or 
zoning commission, at least 50 percent of the children residing in that 
area are eligible for free or reduced-price school meals under the 
National School Lunch Program and the School Breakfast Program;
    (3) A geographic area where a site demonstrates, based on other 
approved sources, that at least 50 percent of the children enrolled at 
the site are eligible for free or reduced-price school meals under the 
National School Lunch Program and the School Breakfast Program; or
    (4) A closed enrolled site in which at least 50 percent of the 
enrolled children at the site are eligible for free or reduced-price 
school meals under the

[[Page 4085]]

National School Lunch Program and the School Breakfast Program, as 
determined by approval of applications in accordance with Sec.  
225.15(f).
* * * * *
    Closed enrolled site means a site which is open only to enrolled 
children, as opposed to the community at large, and in which at least 
50 percent of the enrolled children at the site are eligible for free 
or reduced-price school meals under the National School Lunch Program 
and the School Breakfast Program, as determined by approval of 
applications in accordance with Sec.  225.15(f), or on the basis of 
documentation that the site meets sub-sections (1) through (3) of the 
definition of ``areas in which poor economic conditions exist'' as 
provided in this section.
* * * * *
    Net cash resources means all monies, as determined in accordance 
with the State agency's established accounting system that are 
available to or have accrued to a sponsor's nonprofit food service at 
any given time, less cash payable. Such monies may include, but are not 
limited to, cash on hand, cash receivable, earnings on investments, 
cash on deposit and the value of stocks, bonds or other negotiable 
securities.
* * * * *
    Nonprofit food service means all food service operations conducted 
by the sponsor principally for the benefit of schoolchildren, all of 
the revenue from which is used solely for the operation or improvement 
of such food services.
    Nonprofit food service account means the restricted account in 
which all of the revenue from all food service operations conducted by 
the sponsor principally for the benefit of children is retained and 
used only for the operation or improvement of the nonprofit food 
service. This account shall include, as appropriate, non-Federal funds 
used to support program operations, and proceeds from non-program 
foods.
* * * * *
    Self-preparation site means a site that prepares the majority of 
meals that will be served at its site and does not contract with a food 
service management company for unitized meals, with or without milk, or 
for management services.
* * * * *
    Site supervisor means the individual on site for the duration of 
the meal service, who has been trained by the sponsor, and is 
responsible for all administrative and management activities at a site 
including, but not limited to: Ordering meals, maintaining 
documentation of meal deliveries, ensuring that all meals served are 
safe, and maintaining accurate point of service meal counts.
* * * * *
    Unaffiliated site means a site that is legally distinct from the 
sponsor.
* * * * *
    Unanticipated school closure means any period from October through 
April (or any time of the year in an area with a continuous school 
calendar) during which children who are not in school due to a natural 
disaster, building repair, court order, labor-management disputes, or, 
when approved by the State agency, similar cause, may be served meals 
at non-school sites through the Summer Food Service Program.
* * * * *
    Vended site means a site that serves unitized meals, with or 
without milk, from a food service management company.
* * * * *
0
9. In Sec.  225.3, add paragraph (d) to read as follows:


Sec.  225.3   Administration.

* * * * *
    (d) Authority to waive statute and regulations. (1) If authorized 
under the National School Lunch Act or the Child Nutrition Act of 1966, 
as amended, FNS may waive provisions of such Acts and the provisions of 
this part with respect to a State agency or eligible service provider.
    (2) A State agency may submit a request for a waiver under 
paragraph (d)(1) of this section in accordance with the provisions of 
this part and any informational instructions issued by FNS under this 
part. A State agency may also submit a request to waive specific 
statutory or regulatory requirements on behalf of eligible service 
providers that operate in the State. Any waiver must be submitted to 
the appropriate FNS Regional office.
    (3)(i) An eligible service provider may submit a request for a 
waiver under paragraph (d)(1) of this section in accordance with the 
provisions of this part and any informational instructions issued by 
FNS under this part and in accordance with any applicable instructions 
issued by a State agency. Any waiver submitted by an eligible service 
provider must be sent to the State agency for review. A State agency 
may deny requests from eligible service providers or it may concur with 
the request.
    (ii) If the State agency concurs with the request, within 15 
calendar days of receipt of the request, the State agency must forward 
to the FNS Regional office the request and a rationale supporting the 
request. By forwarding the request to the FNS Regional office, the 
State agency affirms:
    (A) The request meets all requirements for waiver submissions; and
    (B) The State agency will conduct all monitoring requirements 
related to normal program operations and the implementation of the 
waiver.
    (iii) If the State agency denies the request, it must notify the 
requesting eligible service provider in writing within 30 calendar days 
of receipt of the request. The State agency response is final and may 
not be appealed to FNS.


Sec.  225.4  [Amended]

0
10. In Sec.  225.4, amend paragraph (d)(7) by removing ``Sec.  
225.6(h)'' and adding ``Sec.  225.6(l)'' in its place.
0
11. In Sec.  225.6:
0
a. In the last sentence of paragraph (b)(1), remove ``during the period 
from October through April (or at any time of the year in an area with 
a continuous school calendar)'';
0
b. In the second sentence of paragraph (b)(4), remove ``during the 
period from October through April (or at any time of the year in an 
area with a continuous school calendar)'';
0
c. Revise paragraph (c);
0
d. Redesignate paragraphs (d) through (i) as paragraphs (h) through 
(m), respectively, and add new paragraphs (d) through (g);
0
e. Add a sentence to the end of newly redesignated paragraphs (h)(2)(i) 
and (iii);
0
f. Revise newly redesignated paragraphs (i)(7) and (15);
0
g. In newly designated paragraph (l)(2)(i), remove ``(h)(3)'' add 
``(l)(3)'' in its place;
0
h. In newly designated paragraph (l)(2)(iii), remove ``Sec.  
225.6(d)(2)'' and add ``Sec.  225.6(h)(2)'' in its place; and
0
i. In newly designated paragraph (l)(2)(xiv), remove ``Sec.  225.6(f)'' 
and add ``Sec.  225.6(j)'' in its place.
    The additions and revisions read as follows:


Sec.  225.6   State agency responsibilities.

* * * * *
    (c) Content of sponsor application--(1) Application form. (i) The 
sponsor must submit a written application to the State agency for 
participation in the Program. The State agency may use the application 
form developed by FNS, or develop its own application form. Application 
to sponsor the Program must be made on a timely basis within the 
deadlines established under Sec.  225.6(b)(1).
    (ii) At the discretion of the State agency, sponsors proposing to 
serve an

[[Page 4086]]

area affected by an unanticipated school closure may be exempt from 
submitting a new application if they have participated in the Program 
at any time during the current year or in either of the prior two 
calendar years.
    (iii) Requirements for new sponsors and sponsors that have 
experienced significant operational problems in the prior year, as 
determined by the State agency, are found under paragraph (c)(2) of 
this section.
    (iv) Requirements for experienced sponsors are found under 
paragraph (c)(3) of this section.
    (2) Application requirements for new sponsors and sponsors that 
have experienced significant operational problems in the prior year. 
New sponsors and sponsors that have experienced significant operational 
problems in the prior year, as determined by the State agency, must 
include the following information in their applications:
    (i) A complete management plan, as described in paragraph (e) of 
this section;
    (ii) A free meal policy statement, as described in paragraph (f) of 
this section;
    (iii) A site information sheet for each site where a food service 
operation is proposed, as described in paragraph (g)(1) of this 
section;
    (iv) Information in sufficient detail to enable the State agency to 
determine that the sponsor meets the criteria for participation in the 
Program, as described in Sec.  225.14;
    (v) Information on the extent of Program payments needed, including 
a request for advance payments and start-up payments, if applicable;
    (vi) A staffing and monitoring plan;
    (vii) A complete administrative budget for State agency review and 
approval, which includes:
    (A) The projected administrative expenses that the sponsor expects 
to incur during the operation of the Program; and
    (B) Information in sufficient detail to enable the State agency to 
assess the sponsor's ability to operate the Program within its 
estimated reimbursement.
    (viii) A summary of how meals will be obtained at each site (e.g., 
self-prepared at each site, self-prepared and distributed from a 
central kitchen, purchased from a school food authority, competitively 
procured from a food service management company);
    (ix) If an invitation for bid is required under Sec.  225.15(m), a 
schedule for bid dates and a copy of the invitation for bid; and
    (x) For each sponsor which seeks approval as a unit of local, 
municipal, county or State government under Sec.  225.14(b)(3) or as a 
private nonprofit organization under Sec.  225.14(b)(5), certification 
that the sponsor has administrative oversight, as required under Sec.  
225.14(d)(3).
    (3) Application requirements for experienced sponsors. The 
following information must be included in the applications of 
experienced sponsors:
    (i) A site information sheet for each site where a food service 
operation is proposed, as described under paragraph (g)(2) of this 
section;
    (ii) Information on the extent of Program payments needed, 
including a request for advance payments and start-up payments, if it 
is applicable;
    (iii) A staffing and monitoring plan;
    (iv) A complete administrative budget for State agency review and 
approval, which includes:
    (A) The projected administrative expenses which a sponsor expects 
to incur during the operation of the Program; and
    (B) Information in sufficient detail to enable the State agency to 
assess the sponsor's ability to operate the Program within its 
estimated reimbursement.
    (v) If the method of obtaining meals is changed, a summary of how 
meals will be obtained at each site (e.g., self-prepared at each site, 
self-prepared and distributed from a central kitchen, purchased from a 
school food authority, competitively procured from a food service 
management company); and
    (vi) If an invitation for bid is required under Sec.  225.15(m), a 
schedule for bid dates, and a copy of the invitation for bid, if it is 
changed from the previous year.
    (4) Applications for school food authorities and Child and Adult 
Care Food Program institutions. At the discretion of the State agency, 
school food authorities in good standing in the National School Lunch 
Program or School Breakfast Program, as applicable, and institutions in 
good standing in the Child and Adult Care Food Program may apply to 
operate the Program at the same sites where they provide meals through 
the aforementioned Programs by following the procedures for experienced 
sponsors outlined in paragraph (c)(3) of this section.
    (d) Performance Standards. The State agency may only approve the 
applications of those sponsors that meet the three performance 
standards outlined in this section: Financial viability, administrative 
capability, and Program accountability. The State agency must deny 
applications that do not meet all of these standards. The State agency 
must consider past performance in the SFSP or another Child Nutrition 
Program, and any other factors it deems relevant when determining 
whether the sponsor's application meets the following standards:
    (1) Performance Standard 1. The sponsor must be financially viable. 
The sponsor must expend and account for Program funds, consistent with 
this part; FNS Instruction 796-4, Financial Management in the Summer 
Food Service Program; 2 CFR part 200, subpart D; and USDA regulations 2 
CFR parts 400 and 415. To demonstrate financial viability and financial 
management, the sponsor's management plan must:
    (i) Describe the community's need for summer meals and the 
sponsor's recruitment strategy:
    (A) Explain how the sponsor's participation will help ensure the 
delivery of Program benefits to otherwise unserved sites or children; 
and
    (B) Describe how the sponsor will recruit sites, consistent with 
any State agency requirements.
    (ii) Describe the sponsor's financial resources and financial 
history:
    (A) Show that the sponsor has adequate sources of funds available 
to operate the Program, pay employees and suppliers during periods of 
temporary interruptions in Program payments, and pay debts if fiscal 
claims are assessed against the sponsor; and
    (B) Provide audit documents, financial statements, and other 
documentation that demonstrate financial viability.
    (iii) Ensure that all costs in the sponsor's budget are necessary, 
reasonable, allowable, and appropriately documented.
    (2) Performance Standard 2. The sponsor must be administratively 
capable. Appropriate and effective management practices must be in 
effect to ensure that Program operations meet the requirements of this 
part. To demonstrate administrative capability, the sponsor must:
    (i) Have an adequate number and type of qualified staff to ensure 
the operation of the Program, consistent with this part; and
    (ii) Have written policies and procedures that assign Program 
responsibilities and duties and ensure compliance with civil rights 
requirements.
    (3) Performance Standard 3. The sponsor must have internal controls 
and other management systems in place to ensure fiscal accountability 
and operation of the Program, consistent with this part. To demonstrate 
Program accountability, the sponsor must:

[[Page 4087]]

    (i) Demonstrate that the sponsor has a financial system with 
management controls specified in written operational policies that will 
ensure that:
    (A) All funds and property received are handled with fiscal 
integrity and accountability;
    (B) All expenses are incurred with integrity and accountability;
    (C) Claims will be processed accurately, and in a timely manner;
    (D) Funds and property are properly safeguarded and used, and 
expenses incurred, for authorized Program purposes; and
    (E) A system of safeguards and controls is in place to prevent and 
detect improper financial activities by employees.
    (ii) Maintain appropriate records to document compliance with 
Program requirements, including budgets, approved budget amendments, 
accounting records, management plans, and site operations.
    (e) Management plan--(1) Compliance. The State agency must require 
the submission of a management plan to determine compliance with 
performance standards established under paragraph (d) of this section.
    (2) Contents. Sponsors must submit a complete management plan that 
includes:
    (i) Detailed information on the sponsor's management and 
administrative structure, including information that demonstrates the 
sponsor's financial viability and financial management described under 
paragraph (d)(1) of this section;
    (ii) Information that demonstrates compliance with each of the 
performance standards outlined under paragraph (d) of this section;
    (iii) A list or description of the staff assigned to perform 
Program monitoring required under Sec.  225.15(d)(2) and (3) of this 
part;
    (iv) An administrative budget that includes projected SFSP 
administrative earnings and expenses, in order for the State agency to 
fulfill responsibilities under paragraph (b)(7) of this section; and
    (v) For each sponsor which submits an application under paragraph 
(c)(1) of this section, information in sufficient detail to demonstrate 
that the sponsor will:
    (A) Provide adequate and not less than annual training of sponsor's 
staff and sponsored sites, as required under Sec.  225.15(d)(1);
    (B) Perform monitoring consistent with Sec.  225.15(d)(2) and (3), 
to ensure that all site operations are accountable and appropriate;
    (C) Accurately classify sites consistent with Sec.  225.6(g)(1) and 
(2);
    (D) Demonstrate the sponsor's compliance with meal service, 
recordkeeping, and other operational requirements of this part;
    (E) Provide meals that meet the meal patterns set forth in Sec.  
225.16;
    (F) Have a food service that complies with applicable State and 
local health and sanitation requirements;
    (G) Comply with civil rights requirements;
    (H) Maintain complete and appropriate records on file; and
    (I) Claim reimbursement only for eligible meals.
    (f) Free meal policy statement--(1) Nondiscrimination statement. 
(i) Each sponsor must submit a nondiscrimination statement of its 
policy for serving meals to children. The statement must consist of:
    (A) An assurance that all children are served the same meals and 
that there is no discrimination in the course of the food service; and
    (B) Except for camps, a statement that the meals served are free at 
all sites.
    (ii) A school sponsor must submit the policy statement only once, 
with the initial application to participate as a sponsor. However, if 
there is a substantive change in the school's free and reduced-price 
policy, a revised policy statement must be provided at the State 
agency's request.
    (iii) In addition to the information described in paragraph (i) of 
this section, the policy statement of all camps that charge separately 
for meals must also include:
    (A) A statement that the eligibility standards conform to the 
Secretary's family size and income standards for reduced-price school 
meals;
    (B) A description of the method to be used in accepting 
applications from families for Program meals that ensures that 
households are permitted to apply on behalf of children who are members 
of households receiving SNAP, FDPIR, or TANF benefits using the 
categorical eligibility procedures described in Sec.  225.15(f);
    (C) A description of the method to be used by camps for collecting 
payments from children who pay the full price of the meal while 
preventing the overt identification of children receiving a free meal;
    (D) An assurance that the camp will establish hearing procedures 
for families requesting to appeal a denial of an application for free 
meals. These procedures must meet the requirements set forth in 
paragraph (f)(2) of this section;
    (E) An assurance that, if a family requests a hearing, the child 
will continue to receive free meals until a decision is rendered; and
    (F) An assurance that there will be no overt identification of free 
meal recipients and no discrimination against any child on the basis of 
race, color, national origin, sex, age, or disability.
    (2) Hearing procedures statement. Each camp must submit a copy of 
its hearing procedures with its application. At a minimum, the camp's 
procedures must provide that:
    (i) A simple, publicly announced method will be used for a family 
to make an oral or written request for a hearing;
    (ii) The family will have the opportunity to be assisted or 
represented by an attorney or other person;
    (iii) The family will have an opportunity to examine the documents 
and records supporting the decision being appealed, both before and 
during the hearing;
    (iv) The hearing will be reasonably prompt and convenient for the 
family;
    (v) Adequate notice will be given to the family of the time and 
place of the hearing;
    (vi) The family will have an opportunity to present oral or 
documented evidence and arguments supporting its position;
    (vii) The family will have an opportunity to question or refute any 
testimony or other evidence and to confront and cross-examine any 
adverse witnesses;
    (viii) The hearing will be conducted and the decision made by a 
hearing official who did not participate in the action being appealed;
    (ix) The decision will be based on the oral and documentary 
evidence presented at the hearing and made a part of the record;
    (x) The family and any designated representative will be notified 
in writing of the decision;
    (xi) A written record will be prepared for each hearing, which 
includes the action being appealed, any documentary evidence and a 
summary of oral testimony presented at the hearing, the decision and 
the reasons for the decision, and a copy of the notice sent to the 
family; and
    (xii) The written record will be maintained for a period of three 
years following the conclusion of the hearing and will be available for 
examination by the family or its representatives at any reasonable time 
and place.
    (g) Site information sheet. The State agency must develop a site 
information sheet for sponsors.
    (1) New sites. The application submitted by sponsors must include a

[[Page 4088]]

site information sheet for each site where a food service operation is 
proposed. At a minimum, the site information sheet must demonstrate or 
describe the following:
    (i) An organized and supervised system for serving meals to 
children who come to the site;
    (ii) The estimated number of meals to be served, types of meals to 
be served, and meal service times;
    (iii) Whether the site is rural, as defined in Sec.  225.2, or non-
rural;
    (iv) Whether the site's food service will be self-prepared or 
vended, as defined in Sec.  225.2;
    (v) Arrangements for delivery and holding of meals until meal 
service times and storing and refrigerating any leftover meals until 
the next day, within standards prescribed by State or local health 
authorities;
    (vi) Access to a means of communication to make necessary 
adjustments in the number of meals delivered, based on changes in the 
number of children in attendance at each site;
    (vii) Arrangements for food service during periods of inclement 
weather; and
    (viii) For open sites and restricted open sites:
    (A) Documentation supporting the eligibility of each site as 
serving an area in which poor economic conditions exist;
    (B) When school data are used, new documentation is required every 
five years;
    (C) When census data are used, new documentation is required every 
five years, or earlier, if the State agency believes that an area's 
socioeconomic status has changed significantly since the last census; 
and
    (D) At the discretion of the State agency, sponsors proposing to 
serve an area affected by an unanticipated school closure may be exempt 
from submitting new site documentation if the sponsor has participated 
in the Program at any time during the current year or in either of the 
prior two calendar years.
    (ix) For closed enrolled sites:
    (A) The projected number of children enrolled and the projected 
number of children eligible for free and reduced-price school meals for 
each of these sites; or
    (B) Documentation supporting the eligibility of each site as 
serving an area in which poor economic conditions exist;
    (C) When school data are used, new documentation is required every 
five years;
    (D) When census data are used, new documentation is required every 
five years, or earlier, if the State agency believes that an area's 
socioeconomic status has changed significantly since the last census.
    (x) For NYSP sites, certification from the sponsor that all of the 
children who will receive Program meals are enrolled participants in 
the NYSP.
    (xi) For camps, the number of children enrolled in each session who 
meet the Program's income standards. If such information is not 
available at the time of application, this information must be 
submitted as soon as possible thereafter, and in no case later than the 
filing of the camp's claim for reimbursement for each session;
    (xii) For sites that will serve children of migrant workers:
    (A) Certification from a migrant organization, which attests that 
the site serves children of migrant workers; and
    (B) Certification from the sponsor that the site primarily serves 
children of migrant workers, if non-migrant children are also served.
    (2) Experienced sites. The application submitted by sponsors must 
include a site information sheet for each site where a food service 
operation is proposed. The State agency may require sponsors of 
experienced sites to provide information described in paragraph (g)(1) 
of this section. At a minimum, the site information sheet must 
demonstrate or describe the following:
    (i) The estimated number of meals, types of meals to be served, and 
meal service times; and
    (ii) For open sites and restricted open sites:
    (A) Documentation supporting the eligibility of each site as 
serving an area in which poor economic conditions exist;
    (B) When school data are used, new documentation is required every 
five years;
    (C) When census data are used, new documentation is required every 
five years, or earlier, if the State agency believes that an area's 
socioeconomic status has changed significantly since the last census; 
and
    (D) Any site that a sponsor proposes to serve during an 
unanticipated school closure, which has participated in the Program at 
any time during the current year or in either of the prior two calendar 
years, is considered eligible without new documentation.
    (iii) For closed enrolled sites:
    (A) The projected number of children enrolled and the projected 
number of children eligible for free and reduced-price school meals for 
each of these sites; or
    (B) Documentation supporting the eligibility of each site as 
serving an area in which poor economic conditions exist;
    (C) When school data are used, new documentation is required every 
five years;
    (D) When census data are used, new documentation is required every 
five years, or earlier, if the State agency believes that an area's 
socioeconomic status has changed significantly since the last census.
    (iv) For NYSP sites, certification from the sponsor that all of the 
children who will receive Program meals are enrolled participants in 
the NYSP.
    (v) For camps, the number of children enrolled in each session who 
meet the Program's income standards. If such information is not 
available at the time of application, this information must be 
submitted as soon as possible thereafter, and in no case later than the 
filing of the camp's claim for reimbursement for each session.
* * * * *
    (h) * * *
    (2) * * *
    (i) * * * The State agency may consider participation at other 
similar sites located in the area, documentation of programming taking 
place at the site, or statistics on the number of children residing in 
the area.
* * * * *
    (iii) * * * The sponsor may request an upward adjustment at any 
point prior to submitting the claim for the impacted reimbursement 
period.
* * * * *
    (i) * * *
    (7) Claim reimbursement only for the types of meals specified in 
the agreement that are served:
    (i) Without charge to children at approved sites, except camps, 
during the approved meal service time;
    (ii) Without charge, in camps, to children who meet the Program's 
income standards;
    (iii) Within the approved level for the maximum number of 
children's meals that may be served, if a maximum approved level is 
required under Sec.  225.6(h)(2);
    (iv) At the approved meal service time, unless a change is approved 
by the State agency, as required under Sec.  225.16(c); and
    (v) At the approved site, unless the requirements in Sec.  
225.16(g) are met.
* * * * *
    (15) Maintain children on site while meals are consumed. Sponsors 
may allow a child to take one fruit, vegetable, or grain item off-site 
for later consumption if the requirements in Sec.  225.16(h) are met; 
and
* * * * *

[[Page 4089]]

0
12. In Sec.  225.7:
0
a. In paragraph (a), add the words ``or via the internet'' at the end 
of the fifth sentence and remove the words ``during the period from 
October through April (or at any time of the year in an area with a 
continuous school calendar)'' in the sixth sentence;
0
b. Revise paragraph (d);
0
c. Redesignate paragraphs (e), (f), and (g) as paragraphs (l), (m), and 
(n), respectively; and
0
d. Add new paragraphs (e) through (k).
    The revision and additions read as follows:


Sec.  225.7  Program monitoring and assistance.

* * * * *
    (d) Pre-approval visits. The State agency shall conduct pre-
approval visits of sponsors and sites, as specified below, to assess 
the applicant sponsor's or site's potential for successful Program 
operations and to verify information provided in the application. The 
State agency shall visit prior to approval:
    (1) All applicant sponsors that did not participate in the program 
in the prior year. However, if a sponsor is a school food authority, 
was reviewed by the State agency under the National School Lunch 
Program during the preceding 12 months, and had no significant 
deficiencies noted in that review, a pre-approval visit may be 
conducted at the discretion of the State agency. In addition, pre-
approval visits of sponsors proposing to operate the Program during 
unanticipated school closures may be conducted at the discretion of the 
State agency;
    (2) All applicant sponsors that had operational problems noted in 
the prior year; and
    (3) All sites that the State agency has determined need a pre-
approval visit.
    (e) Sponsor and site reviews--(1) General. The State agency must 
review sponsors and sites to ensure compliance with Program 
regulations, the Department's non-discrimination regulations (7 CFR 
part 15), and any other applicable instructions issued by the 
Department.
    (2) Sample selection. In determining which sponsors and sites to 
review, the State agency must, at a minimum, consider the sponsors and 
sites' previous participation in the Program, their current and 
previous Program performance, and the results of previous reviews.
    (3) School Food Authorities. When the same school food authority 
personnel administer this Program as well as the National School Lunch 
Program (7 CFR part 210), the State agency is not required to conduct a 
review of the Program in the same year in which the NSLP operations 
have been reviewed and determined to be satisfactory.
    (4) Frequency and number of required reviews. State agencies must:
    (i) Conduct a review of every new sponsor at least once during the 
first year of operation;
    (ii) Annually review a number of sponsors whose program 
reimbursements, in the aggregate, accounted for at least one-half of 
the total program meal reimbursements in the State in the prior year;
    (iii) Annually review every sponsor that experienced significant 
operational problems in the prior year;
    (iv) Review each sponsor at least once every three years; and
    (v) As part of each sponsor review, conduct reviews of at least 10 
percent of each reviewed sponsor's sites, or one site, whichever number 
is greater.
    (5) Site selection criteria. (i) When selecting sites to meet the 
minimum number of sites required under paragraph (e)(4)(v) of this 
section, State agencies should, to the maximum extent possible, select 
sites that reflect the sponsor's entire population of sites. Site 
characteristics that should be reflected in the sites selected include:
    (A) The maximum number of meals approved to serve under Sec.  
225.6(h)(1) and (2);
    (B) Method of obtaining meals (i.e., self-preparation, vended meal 
service);
    (C) Time since last site review by State agency;
    (D) Site type (i.e., open, closed, camp);
    (E) Type of physical location (e.g., school, outdoor area, 
community center);
    (F) Rural designation (i.e., rural, as defined in Sec.  225.2, or 
non-rural); and
    (G) Affiliation with the sponsor, as defined in Sec.  225.2.
    (ii) The State agency may use additional criteria to select sites 
including, but not limited to: Recommendations from the sponsoring 
organization, findings of other audits or reviews, or any indicators of 
potential error in daily meal counts (e.g., identical or very similar 
claiming patterns, or large changes in free meal counts).
    (6) Meal claim validation. As part of every sponsor review, the 
State agency must validate the sponsor's meal claim utilizing a record 
review process developed by the State agency that must include, at a 
minimum, reconciling delivery receipts, daily meal counts from sites, 
and the sponsor's claim consolidation spreadsheet against the meals 
claimed for reimbursement by the sponsor for the period under review. 
For the purposes of this section, the average percent error includes 
both overclaims and underclaims. Claims against sponsors as a result of 
meal claim validation should be assessed after the conclusion of the 
meal claim validation process in accordance with Sec.  225.12. State 
agencies must follow the process identified below to conduct the meal 
claim validation:
    (i) The State agency must complete an initial validation of 100 
percent of meal claims within the review period for the sites under 
review to satisfy the requirements outlined in paragraph (e)(4)(v) of 
this section. In determining the percentage of error, fractions must be 
rounded up (>=0.5) or down (<0.5) to the nearest whole number.
    (ii) If the initial validation yields an average percent error of 
five percent or more, the State agency must expand validation of all 
meal claims within the review period for 25 percent of the sponsor's 
total sites. If the initial validation yields an average percent error 
of five percent or less, the State agency shall disallow any portion of 
a claim for reimbursement and recover any payment to a sponsor not 
properly payable in accordance with Sec.  225.12.
    (iii) If the second round of validation yields an average percent 
error of five percent or more, the State agency must expand validation 
of all meal claims within the review period for 50 percent of the 
sponsor's total sites. If the second round of validation yields an 
average percent error of five percent or less, the State agency shall 
disallow any portion of a claim for reimbursement and recover any 
payment to a sponsor not properly payable in accordance with Sec.  
225.12.
    (iv) If the third round of validation yields an average percent 
error of five percent or more, the State agency must expand validation 
of meal claims to all meal claims within the review period for 100 
percent of the sponsor's total sites. The State agency shall disallow 
any portion of a claim for reimbursement and recover any payment to a 
sponsor not properly payable in accordance with Sec.  225.12.
    (7) Review of sponsor operations. State agencies should determine 
if:
    (i) Expenditures are allowable and consistent with FNS Instructions 
and guidance and all funds accruing to the food service are properly 
identified and recorded as food service revenue;
    (ii) Expenditures are consistent with budgeted costs, and the 
previous year's expenditures taking into consideration any changes in 
circumstances;
    (iii) Reimbursements have not resulted in accumulation of net cash 
resources as defined in paragraph (m) of this section; and

[[Page 4090]]

    (iv) The level of administrative spending is reasonable and does 
not affect the sponsor's ability to operate a nonprofit food service 
and provide a quality meal service.
    (f) Follow-up reviews. The State agency shall conduct follow-up 
reviews of sponsors and sites as necessary.
    (g) Monitoring system. Each State agency shall develop and 
implement a monitoring system to ensure that sponsors, including site 
personnel, and the sponsor's food service management company, if 
applicable, immediately receive a copy of any review reports which 
indicate Program violations and which could result in a Program 
disallowance.
    (h) Records. Documentation of Program assistance and the results of 
such assistance shall be maintained on file by the State agency three 
years after submission in accordance with Sec.  225.8(a).
    (i) Meal quality facility reviews. As part of the review of any 
food service management company or vended sponsor that contracts for 
the preparation of meals, the State agency must review the food service 
management company or vendor's meal production facility and meal 
production documentation for compliance with program requirements.
    (1) Each State agency must establish an order of priority for 
visiting facilities at which food is prepared for the Program. Each 
facility should be reviewed at least one time during a Program year.
    (2) The State agency must respond promptly to complaints concerning 
facilities. If the food service management company or vendor fails to 
correct violations noted by the State agency during a review, the State 
agency must notify the sponsor and the food service management company 
or vendor that reimbursement must not be paid for meals prepared by the 
food service management company or vendor after a date specified in the 
notification.
    (3) Funds provided in Sec.  225.5(f) may be used for conducting 
food service management company or vendor meal quality facility 
reviews.
    (j) Forms for reviews by sponsors. Each State agency shall develop 
and provide monitor review forms to all approved sponsors. These forms 
shall be completed by sponsor monitors. The monitor review form shall 
include, but not be limited to, the time of the reviewer's arrival and 
departure, the site supervisor's printed name and signature, a 
certification statement to be signed by the monitor, the number of 
meals prepared or delivered, the number of meals served to children, 
the deficiencies noted, the corrective actions taken by the sponsor, 
and the date of such actions.
    (k) Corrective actions. Corrective actions which the State agency 
may take when Program violations are observed during the conduct of a 
review are discussed in Sec.  225.11. The State agency shall conduct 
follow-up reviews as appropriate when corrective actions are required.
* * * * *
0
13. In Sec.  225.9,
0
a. Revise paragraphs (d)(4) and (10); and
0
b. In paragraph (f), remove ``Sec.  225.6(d)(2)'' and add ``Sec.  
225.6(h)(2)'' in its place.
    The revisions read as follows:


Sec.  225.9   Program assistance to sponsors.

* * * * *
    (d) * * *
    (4) The State agency must forward reimbursements within 45 calendar 
days of receiving valid claims. If a claim is incomplete, invalid, or 
potentially unlawful per paragraph (d)(10) of this section, the State 
agency must return the claim to the sponsor within 30 calendar days 
with an explanation of the reason for disapproval. If the sponsor 
submits a revised claim, final action must be completed within 45 
calendar days of receipt unless the State agency has reason to believe 
the claim is unlawful per paragraph (d)(10) in this section.
* * * * *
    (10) If a State agency has reason to believe that a sponsor or food 
service management company has engaged in unlawful acts in connection 
with Program operations, evidence found in audits, reviews, or 
investigations shall be a basis for nonpayment of the applicable 
sponsor's claims for reimbursement. The State agency may be exempt from 
the requirement stated in paragraph (d)(4) of this section that final 
action on a claim must be complete within 45 calendar days of receipt 
of a revised claim if the State agency determines that a thorough 
examination of potentially unlawful acts would not be possible in the 
required timeframe.
* * * * *


Sec.  225.11  [Amended]

0
14. In Sec.  225.11, in paragraph (e)(3), remove ``Sec.  225.6(d)(2)'' 
and add ``Sec.  225.6(h)(2)'' in its place.


Sec.  225.13  [Amended]

0
15. In Sec.  225.13, in paragraph (c), remove ``Sec.  225.6(g)'' and 
add ``Sec.  225.6(k)'' in its place.
0
16. In Sec.  225.14:
0
a. Revise paragraph (a);
0
b. At the end of paragraph (b)(5), add the words ``, as determined 
annually'';
0
c. Revise paragraphs (c)(1) and (4); and
0
d. In paragraph (c)(7), remove ``Sec.  225.6(e)'' and add ``Sec.  
225.6(i)'' in its place.
    The revisions read as follows:


Sec.  225.14   Requirements for sponsor participation.

    (a) Applications. Sponsors must make written application to the 
State agency to participate in the Program which must include all 
content required under Sec.  225.6(c). Such application shall be made 
on a timely basis in accordance with the requirements of Sec.  
225.6(b)(1). Sponsors proposing to operate a site during an 
unanticipated school closure may be exempt, at the discretion of the 
State agency, from submitting a new application if they have 
participated in the program at any time during the current year or in 
either of the prior two calendar years.
* * * * *
    (c) * * *
    (1) Demonstrates financial and administrative capability for 
Program operations and accepts final financial and administrative 
responsibility for total Program operations at all sites at which it 
proposes to conduct a food service in accordance with the performance 
standards described under Sec.  225.6(d) of this part.
    (i) If the applicant sponsor is a school food authority in good 
standing in the National School Lunch Program or an institution in good 
standing in the Child and Adult Care Food Program, no further 
demonstration of financial and administrative capability for Program 
operations is required unless requested by the State agency. The State 
agency may request additional evidence of financial and administrative 
capability sufficient to ensure that the school food authority or 
institution has the ability and resources to operate the Program if the 
State agency has reason to believe that this would pose significant 
challenges for the applicant.
    (ii) If the State agency approving the application for the Program 
is not responsible for the administration of the National School Lunch 
Program or the Child and Adult Care Food Program, the State agency must 
develop a process for sharing information with the agency responsible 
for approving these programs in order to receive documentation of the 
applicant sponsor's financial and administrative capability.
* * * * *
    (4) Has adequate supervisory and operational personnel for overall

[[Page 4091]]

monitoring and management of each site, including adequate personnel to 
conduct the visits and reviews required in Sec.  225.15(d)(2) and (3), 
as demonstrated in the Management Plan submitted with the program 
application described under Sec.  225.6(e);
* * * * *
0
17. In Sec.  225.15:
0
a. Remove ``Sec.  225.6(d)(2)'' and add ``Sec.  225.6(h)(2)'' in its 
place in paragraphs (b)(2) and (3);
0
b. In paragraph (d)(1), remove the words ``during the period from 
October through April (or at any time of the year in an area with a 
continuous school calendar)'' from the second sentence;
0
c. Revise paragraphs (d)(2) and (3) and (e);
0
d. Revise the first sentence in paragraph (f)(1); and
0
e. In paragraph (m)(2), remove ``Sec.  225.6(h)(3)'' and add ``Sec.  
225.6(l)(3)'' in its place.
    The revisions read as follows:


Sec.  225.15   Management responsibilities of sponsors.

* * * * *
    (d) * * *
    (2) Sponsors responsible for meal service at 10 or fewer meal sites 
must conduct the first monitoring visit within the first seven calendar 
days after the site begins operations under the Program and must 
promptly take such actions as are necessary to correct any 
deficiencies. Sponsors responsible for meal service at more than 10 
meal sites must conduct the first monitoring visits within the first 14 
calendar days after the site begins operations under the Program and 
must promptly take such actions as are necessary to correct any 
deficiencies. In cases where the site operates for seven calendar days 
or fewer, the first monitoring visit must be conducted during the 
period of operation.
    (3) Sponsors must conduct a full review of food service operations 
at each site at least once during the first four weeks of Program 
operations, and thereafter shall maintain a reasonable level of site 
monitoring. Sponsors shall complete a monitoring form developed by the 
State agency during the conduct of these reviews. Sponsors have the 
option to conduct a full review of food service operations at the same 
time as the first monitoring visit.
    (e) Notification to the community. Each sponsor must annually 
announce in the media serving the area from which it draws its 
attendance the availability of free meals. Sponsors of camps and other 
sites not eligible under Sec.  225.2--``areas in which poor economic 
conditions exist'' sub-sections (a) through (c)--must notify 
participants of the availability of free meals for those enrolled 
children that meet income eligibility guidelines, as outlined in Sec.  
225.15(f). Notification to enrolled children must include: The 
Secretary's family-size and income standards for reduced price school 
meals labeled ``SFSP Income Eligibility Standards;'' a statement that a 
foster child and children who are members of households receiving SNAP, 
FDPIR, or TANF benefits are automatically eligible to receive free meal 
benefits at eligible program sites; and a statement that meals are 
available without regard to race, color, national origin, sex, age, or 
disability. State agencies have the discretion to issue a media release 
for all sponsors operating SFSP sites in the State as long as the 
notification meets the requirements in this section.
* * * * *
    (f) * * *
    (1) * * * The application is used to determine the eligibility of 
children attending camps and the eligibility of sites that do not meet 
the requirements in paragraphs (a) through (c) of the definition of 
``areas in which poor economic conditions exist'' in Sec.  225.2. * * *
* * * * *
0
18. In Sec.  225.16:
0
a. Add a new third sentence in paragraph (b) introductory text;
0
b. Revise paragraphs (c) and (f)(1)(ii); and
0
c. Add paragraphs (g) and (h).
    The additions and revisions read as follows.


Sec.  225.16  Meal service requirements.

* * * * *
    (b) * * * A sponsor may claim reimbursement only for the types of 
meals for which it is approved under its agreement with the State 
agency. * * *
* * * * *
    (c) Meal service times. (1) Meal service times must be:
    (i) Established by sponsors for each site;
    (ii) Included in the sponsor's application; and
    (iii) Approved by the State agency.
    (2) Breakfast meals must be served at or close to the beginning of 
a child's day. Three component meals served after a lunch or supper 
meal service are not eligible for reimbursement as a breakfast.
    (3) At all sites except residential camps, meal services must start 
at least one hour after the end of the previous meal or snack.
    (4) Meals served outside the approved meal service time:
    (i) Are not eligible for reimbursement; and
    (ii) May be approved for reimbursement by the State agency only if 
an unanticipated event, outside of the sponsor's control, occurs. The 
State agency may request documentation to support approval of meals 
claimed when unanticipated events occur.
    (5) The State agency must approve any permanent or planned changes 
in meal service time.
    (6) If meals are not prepared on site:
    (i) Meal deliveries must arrive before the approved meal service 
time; and
    (ii) Meals must be delivered within one hour of the start of the 
meal service if the site does not have adequate storage to hold hot or 
cold meals at the temperatures required by State or local health 
regulations.
* * * * *
    (f) * * *
    (1) * * *
    (ii) Offer versus serve. School food authorities that are Program 
sponsors may permit a child to refuse one or more items that the child 
does not intend to eat. The reimbursements to school food authorities 
for Program meals served under this ``offer versus serve'' option must 
not be reduced because children choose not to take all components of 
the meals that are offered. The school food authority may use the 
following options for meal service:
    (A) The school food authority can elect to provide meal service 
under the rules followed for the National School Lunch Program, as 
described in part 210 of this chapter.
    (B) The school food authority can elect to provide meal service 
under the following guidelines for the Program described in paragraph 
(d) of this section:
    (1) Breakfast meals. Sponsoring organizations must offer four items 
from all three components specified in the meal pattern in paragraph 
(d)(1) of this section. Children may be permitted to decline one item.
    (2) Lunch and supper meals. Sponsoring organizations must offer 
five food items from all four components specified in the meal pattern 
in paragraph (d)(2) of this section. Children may be permitted to 
decline two components.
* * * * *
    (g) Meals served away from approved locations. (1) Sponsors may be 
reimbursed for meals served away from the approved site location if the 
following conditions are met:
    (i) The sponsor notifies the State agency in advance that meals 
will be served away from the approved site;

[[Page 4092]]

    (ii) The State agency has determined that all Program requirements 
in this part will be met, including applicable State and local health, 
safety, and sanitation standards;
    (iii) The meals are served at the approved meal service time, 
unless a change is approved by the State agency, as required under 
paragraph (c) of this section; and
    (iv) Sponsors of open sites continue operating at the approved 
location if feasible, or notify the community of the change in meal 
service and provide information about alternative open sites.
    (2) The State agency may determine that meals served away from the 
approved site location are not reimbursable if the sponsor did not 
provide notification in advance of the meal service. The State agency 
may establish guidelines for the amount of advance notice needed.
    (h) Off-site consumption of food items. Sponsors may allow a child 
to take one fruit, vegetable, or grain item off-site for later 
consumption without prior State agency approval provided that all 
applicable State and local health, safety, and sanitation standards 
will be met. Sponsors should only allow an item to be taken off-site if 
it has adequate staffing to properly administer and monitor the site. 
State agencies may prohibit individual sponsors on a case-by-case basis 
from using this option if the sponsor's ability to provide adequate 
oversight is in question. The State agency's decision to prohibit a 
sponsor from utilizing this option is not an appealable action.

PART 226--CHILD AND ADULT CARE FOOD PROGRAM

0
19. The authority citation for part 226 continues to read as follows:

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

0
20. In Sec.  226.3, add new paragraph (e) to read as follows:


Sec.  226.3   Administration.

* * * * *
    (e) Authority to waive statute and regulations. (1) If authorized 
under the National School Lunch Act or the Child Nutrition Act of 1966, 
as amended, FNS may waive provisions of such acts and the provisions of 
this part with respect to a State agency or eligible service provider.
    (2) A State agency may submit a request for a waiver under 
paragraph (e)(1) of this section in accordance with the provisions of 
this part and any informational instructions issued by FNS under this 
part. A State agency may also submit a request to waive specific 
statutory or regulatory requirements on behalf of eligible service 
providers that operate in the State. Any waiver must be submitted to 
the appropriate FNS Regional office.
    (3)(i) An eligible service provider may submit a request for a 
waiver under paragraph (e)(1) of this section in accordance with the 
provisions of this part and any informational instructions issued by 
FNS under this part and in accordance with any applicable instructions 
issued by a State agency. Any waiver submitted by an eligible service 
provider must be sent to the State agency for review. A State agency 
may deny requests from eligible service providers or it may concur with 
the request.
    (ii) If the State agency concurs with the request, within 15 
calendar days of receipt of the request, the State agency must forward 
to the FNS Regional office the request and a rationale supporting the 
request. By forwarding the request to the FNS Regional office, the 
State agency affirms:
    (A) The request meets all requirements for waiver submissions; and
    (B) The State agency will conduct all monitoring requirements 
related to normal program operations and the implementation of the 
waiver.
    (iii) If the State agency denies the request, it must notify the 
requesting eligible service provider in writing within 30 calendar days 
of receipt of the request. The State agency response is final and may 
not be appealed to FNS.

     Dated: January 8, 2020.
Stephen L. Censky,
Deputy Secretary, U.S. Department of Agriculture.
[FR Doc. 2020-00919 Filed 1-17-20; 4:15 pm]
 BILLING CODE 3410-30-P