[Federal Register Volume 85, Number 15 (Thursday, January 23, 2020)]
[Proposed Rules]
[Pages 4094-4134]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-00926]



[[Page 4093]]

Vol. 85

Thursday,

No. 15

January 23, 2020

Part III





Department of Agriculture





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





Food and Nutrition Service





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





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





Simplifying Meal Service and Monitoring Requirements in the National 
School Lunch and School Breakfast Programs; Proposed Rule

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

[[Page 4094]]


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

DEPARTMENT OF AGRICULTURE

Food and Nutrition Service

7 CFR Parts 210, 215, 220, 226, and 235

[FNS-2019-0007]
RIN 0584-AE67


Simplifying Meal Service and Monitoring Requirements in the 
National School Lunch and School Breakfast Programs

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

ACTION: Proposed rule.

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

SUMMARY: This rulemaking proposes changes to simplify meal pattern and 
monitoring requirements in the National School Lunch and School 
Breakfast Programs. The proposed changes, including optional 
flexibilities, are customer-focused and intended to help State and 
local Program operators overcome operational challenges that limit 
their ability to manage these Programs efficiently. In the National 
School Lunch Program, the proposed rule would add flexibility to the 
existing vegetable subgroups requirement. In the School Breakfast 
Program, the proposed rule would make it easier for menu planners to 
offer meats/meat alternates and grains interchangeably (without 
offering a minimum grains requirement daily), and would allow schools 
to offer \1/2\ cup of fruit in breakfasts served outside the cafeteria 
to reduce food waste. Other proposed changes would make it easier for 
local Program operators to plan menus for different age/grade groups, 
and expand the entr[eacute]e exemption service timeframe for 
competitive foods. To improve efficiency in Program monitoring, the 
proposed rule also would ease several administrative review 
requirements, including the review cycle. The monitoring changes aim to 
decrease the burden associated with administrative reviews while 
rewarding program integrity initiatives at the State and local levels. 
This rule also proposes to make updates, clarifications, and technical 
corrections throughout other parts of its regulations. Implementation 
of the wide range of proposed changes and flexibilities is expected to 
simplify operational requirements, increase efficiency, and make it 
easier for State and local Program operators to feed children.

DATES: 
    Comment date: Online comments submitted through the Federal 
eRulemaking Portal on this proposed rule must be received on or before 
March 23, 2020. Mailed comments on this rule must be postmarked on or 
before March 23, 2020.
    Comments on Paperwork Reduction Act requirements: Comments on the 
information collection requirements associated with this rule must be 
received by March 23, 2020.

ADDRESSES: The USDA, Food and Nutrition Service (FNS) 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.
     Regular U.S. Mail: School Programs Branch, Policy and 
Program Development Division, Food and Nutrition Service, P.O. Box 
2885, Fairfax, Virginia 22031.
     Overnight, Courier, or Hand Delivery: School Programs 
Branch, Policy and Program Development Division, Food and Nutrition 
Service, 1320 Braddock Place, 4th Floor, Alexandria, Virginia 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. FNS will make the written comments 
publicly available via http://www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: Tina Namian, Chief, School Programs 
Branch, Policy and Program Development Division, Food and Nutrition 
Service, 703-305-2590.

SUPPLEMENTARY INFORMATION: 

I. Background and Overview

    The National School Lunch Program (NSLP) and School Breakfast 
Program (SBP) provide nutritious, well-balanced meals to millions of 
children each school day. Section 9(f)(1) of the Richard B. Russell 
National School Lunch Act (NSLA), as amended, 42 U.S.C. 1758(f)(1), 
requires that school meals are consistent with the goals of the latest 
Dietary Guidelines for Americans (Dietary Guidelines). USDA regulations 
at 7 CFR 210.10 and 220.8 detail the nutrition standards for the NSLP 
and SBP, respectively.
    Section 201 of Public Law 111-296 (the Healthy, Hunger-Free Kids 
Act of 2010, HHFKA) amended Section 4(b) of the NSLA (42 U.S.C. 
1753(b)), to require USDA to update the meal patterns and nutrition 
standards for school meals based on recommendations in a report issued 
by the Health and Medicine Division of the National Academies of 
Science, Engineering, and Medicine (formerly, the Institute of 
Medicine). In response, the final rule, Nutrition Standards in the 
National School Lunch and School Breakfast Programs (77 FR 4088, 
published January 26, 2012), updated the school meal requirements 
consistent with the 2010 Dietary Guidelines, as recommended in the 
report School Meals: Building Blocks for Healthy Children.\1\ In part, 
the 2012 final rule: (1) Established weekly vegetable subgroup 
requirements in the NSLP; (2) codified NSLP and SBP meal patterns for 
three distinct age/grade groups (K-5, 6-8, and 9-12); (3) permitted 
meats/meat alternates to be offered in place of grains in the SBP, 
provided that minimum daily grain requirements were met; (4) increased 
the amount of fruit offered in the SBP to one cup for all age/grade 
groups; (5) allowed only flavored and unflavored fat-free and 
unflavored low-fat milk; (6) established calorie and sodium limits, and 
prohibited trans fats in the NSLP and the SBP; and (7) increased the 
frequency of State agency administrative reviews of school food 
authorities (SFAs) to once every 3 years (from 5 years).
---------------------------------------------------------------------------

    \1\ Institute of Medicine. 2010. School Meals: Building Blocks 
for Healthy Children. Washington, DC: The National Academies Press. 
Available at: https://www.fns.usda.gov/sites/default/files/SchoolMealsIOM.pdf.
---------------------------------------------------------------------------

    In Section 4(b)(3)(B) of the NSLA (42 U.S.C. 1753(b)(3)(B)), 
schools were incentivized to adopt the new meal pattern requirements 
through a performance-based reimbursement. SFAs certified as compliant 
with the lunch meal pattern receive an additional reimbursement of 
seven cents per lunch (increased by inflation from six cents on July 1, 
2019) (7 CFR 210.7(d)).\2\ To facilitate the transition to the 2012 
meal pattern, per Section 22(a) of the NSLA, USDA also established a 3-
year administrative review cycle, combining the nutritional assessment 
of school meals with the operations review for stronger Program 
accountability (7 CFR 210.18).
---------------------------------------------------------------------------

    \2\ Notice. National School Lunch, Special Milk, and School 
Breakfast Programs, National Average Payments/Maximum Reimbursement 
Rates (84 FR 38590, published August 7, 2019). Available at: https://www.govinfo.gov/content/pkg/FR-2019-08-07/pdf/2019-16903.pdf.
---------------------------------------------------------------------------

    As part of a holistic effort to improve school nutrition 
environments, Section 208 of HHFKA amended Section 10 of the Child 
Nutrition Act of 1966 (42. U.S.C. 1779) to require that USDA establish 
standards for foods sold to students on campus during the school

[[Page 4095]]

day outside of the school meal programs. These nutrition standards are 
commonly referred to as the Smart Snacks in School (SSIS) standards. 
These requirements, codified in 7 CFR 210.11, established minimum 
nutrition standards for foods and beverages sold to students on campus 
during the school day and permit the sale of calorie-free, flavored 
water to grades 9-12 only (Sec.  210.11(m)). To help manage leftovers 
and prevent food waste, the rule also exempted entr[eacute]es offered 
in the SBP and NSLP from the SSIS nutrition standards on the day 
offered in the SBP or NSLP menu and the day after (7 CFR 210.11(c)).
    Since implementation of these regulatory actions, some Program 
operators have experienced challenges, such as lower student 
participation and increased food waste. To assist operators, in May 
2017, the Secretary committed to giving schools more control over food 
service decisions, and greater ability to offer wholesome, nutritious, 
and appealing meals to students. This commitment resulted in this 
proposed rule, and two previous rulemaking actions intended to increase 
operational flexibilities in the NSLP and SBP,\3\ as described in the 
following section.
---------------------------------------------------------------------------

    \3\ The final rule, Hiring Flexibility Under Professional 
Standards (84 FR 6953, published March 1, 2019) provides 
flexibilities to professional standards requirements. The final 
rule, Child Nutrition Programs: Flexibilities for Milk, Whole 
Grains, and Sodium Requirements (83 FR 63775, published December 12, 
2018), provides flexibilities related to sodium, whole grains, and 
flavored milk.
---------------------------------------------------------------------------

    Ensuring that the school meal programs are carried out as 
prescribed in statute and regulations is a key administrative 
responsibility at every level. Federal, State, and local Program staff 
share the responsibility to ensure that all aspects of the Child 
Nutrition Programs are conducted with integrity and that taxpayer 
dollars are used as intended. Prior to School Year (SY) 2013-2014, two 
separate processes were used to assess compliance with Program 
regulations; the Coordinated Review Effort was conducted on a 5-year 
cycle and the School Meals Initiative, a nutritional assessment of 
meals, was done separately on a 3-year cycle. Section 207 of HHFKA 
amended section 22(a) of the NSLA (42 U.S.C. 1769c), and directed USDA 
to create a unified accountability system under which States would 
``conduct audits and reviews during a 3-year cycle or other period 
prescribed by the Secretary.'' USDA developed a simplified, unified 
monitoring process intended to strengthen Program integrity through 
more robust, effective, and frequent monitoring using a 3-year cycle. 
In 2016, USDA published a final rule establishing the current 
administrative review process at 7 CFR 210.18.\4\ The process is a 
comprehensive review of Program requirements, such as eligibility and 
operational processes (previously covered in the Coordinated Review 
Effort) and the nutritional assessment of school meals (previously 
covered in the School Meals Initiative). The administrative review also 
provides opportunities for States and SFAs to collaborate to ensure 
that students are offered wholesome, nutritious, and appealing meals 
and Programs are successfully operated.
---------------------------------------------------------------------------

    \4\ Final rule. Administrative Reviews in the School Nutrition 
Programs (81 FR 50170, published July 29, 2016).
---------------------------------------------------------------------------

    Some State agencies and SFAs have experienced challenges with parts 
of the new administrative review requirements, particularly the 
requirement to review SFAs more frequently, on a 3-year review cycle. 
In response, USDA allowed States experiencing significant challenges 
meeting the 3-year review cycle requirement to submit waiver requests 
to extend their administrative review cycle.\5\ In the first two months 
after issuing this flexibility, USDA received waiver requests from more 
than 30 State agencies. State agencies that received review cycle 
waivers often faced staffing and operational challenges that negatively 
impacted their ability to fulfill Program administration and oversight 
responsibilities. The waivers give State agencies additional time to 
complete oversight activities and, in some cases, provide technical 
assistance to SFAs to enhance Program operations.
---------------------------------------------------------------------------

    \5\ Policy memo SP 12-2019. Flexibility for the Administrative 
Review Cycle Requirement, published February 22, 2019. Available at: 
https://fns-prod.azureedge.net/sites/default/files/cn/SP12-2019os.pdf.
---------------------------------------------------------------------------

    The transition to the 3-year administrative review cycle coincided 
with a more robust review of the school meal programs, which included a 
review of an SFA's financial practices through the Resource Management 
Module. The Resource Management Module includes an overall assessment 
of risk and comprehensive review of SFAs that are at risk for 
noncompliance in the resource management areas. The transition also 
took place as States put a renewed emphasis on improving State 
oversight of procurement practices. USDA sought extensive input from 
State agencies on how to streamline the review process while 
maintaining effective oversight. Through this engagement, USDA has 
learned more about the unique circumstances and challenges faced by 
States, as well as best practices and potential flexibilities to help 
State agencies fulfill oversight responsibilities.
    This proposed rule builds on operational flexibilities recently 
provided to NSLP and SBP operators, including the administrative review 
waivers. It proposes targeted flexibilities and regulatory changes to 
simplify Program oversight and operations. Most of the operational 
flexibilities proposed in this rule would be optional and primarily 
intended for States or local operators experiencing challenges with 
specific requirements. The intent of this proposed rule is to give the 
public an opportunity to provide comments that will inform USDA's 
development of a final rule on operational flexibilities for meal 
pattern and monitoring requirements.

II. Need for Action

    In the seven years following the 2012 rulemaking, some Program 
operators have experienced challenges with specific requirements. In 
May 2017, Secretary of Agriculture Sonny Perdue issued a proclamation 
emphasizing USDA's commitment to provide operational flexibilities to 
help schools offer wholesome and appealing meals that students want to 
eat.
    The proclamation precipitated an interim final rule that provided 
short-term operational flexibilities for flavored low-fat milk, sodium, 
and whole grains for School Year (SY) 2018-2019. These flexibilities 
were codified in the final rule Child Nutrition Programs: Flexibilities 
for Milk, Whole Grains, and Sodium Requirements (published December 12, 
2018, 83 FR 63775), and adopted permanently for SY 2019-2020 and 
beyond. The 2018 revisions affirm USDA's commitment to giving schools 
more control over food service decisions and greater ability to offer 
wholesome, nutritious, and appealing meals to children that reflect 
local preferences and reduce food waste.
    Some Program operators have successfully implemented the 2012 meal 
pattern requirements in a way that encourages student participation and 
healthy eating; other Program operators require additional flexibility. 
As part of ongoing efforts to support State and local Program 
operators, USDA held seven listening sessions and roundtable 
discussions with school food service staff and school district 
administrators, industry representatives, and State agency staff in 
2018 (on July 11, September 20, October 2, October 23, and December 6) 
and 2019 (on February 25 and July 15) to solicit additional information 
about Program challenges

[[Page 4096]]

and suggestions for improvement. This feedback was consistent with 
feedback that senior Child Nutrition Program policy officials receive 
from stakeholders during in-person meetings and conferences. Some 
Program operators describe persistent challenges with complex 
requirements that limit their ability to feed children. Administrative 
challenges identified by State and local Program operators include:
     Completing more comprehensive administrative reviews in a 
shorter, 3-year cycle;
     Submitting reports required by FNS;
     Preventing food waste;
     Meeting the weekly vegetable requirements; and
     Serving meals that meet the requirements for various age/
grade groups.
    Program operators also suggested improvements to competitive food 
and beverage requirements that would permit schools to reduce food 
waste and offer more appealing foods and beverages to students.
    Additionally, language included in House Report No. 114-531 (2016) 
led USDA to examine administrative and reporting challenges faced by 
State agencies and SFAs. Through discussions and representative 
surveys, USDA identified requirements that are most burdensome for 
Program operators.\6\ The Child Nutrition Reporting Burden Study 
resulted in a set of considerations for reducing burden at the State 
and local levels.\7\
---------------------------------------------------------------------------

    \6\ House Report No. 114-531 (2016) available at: https://www.congress.gov/114/crpt/hrpt531/CROT-114hrpt531.pdf.
    \7\ U.S. Department of Agriculture, Food and Nutrition Service, 
Office of Policy Support, Child Nutrition Reporting Burden Analysis 
Study by Steven Garasky, Linda Piccinino, Kevin Conway, Allison 
Magness, and Elizabeth Gearan. Project Officer: Jinee Burdg. 
Alexandria, VA: July 2019.
---------------------------------------------------------------------------

    One recommendation from the Child Nutrition Reporting Burden Study 
is for USDA to implement a risk-based administrative review cycle. 
About two-thirds of State agency participants identified the 3-year 
cycle as a major burden. State agency and SFA participants suggested 
that a risk-based approach could balance the need to maintain Program 
integrity and the amount of staff time and resources required to 
complete administrative reviews. Study participants suggested that 
lower-risk SFAs could be reviewed less frequently to alleviate burden, 
which would free up more resources for State agencies to provide 
technical assistance to SFAs. High-risk SFAs could be reviewed more 
frequently, focusing limited State agency resources more effectively.
    FNS is committed to listening to our stakeholders and maximizing 
Program efficiency, local control, and customer service in the Child 
Nutrition Programs. To that end, this rule proposes additional 
flexibilities that support State, Tribal, and local Program operators. 
The proposed flexibilities aim to: (1) Facilitate the service of 
wholesome meals within the operational constraints of schools across 
the Nation, (2) support foodservice efficiency, and (3) ease monitoring 
burden for SFAs and States. USDA strives to decrease administrative 
burden so Program operators have more time to focus on the core mission 
of Child Nutrition Programs: feeding children.

III. Discussion of Proposed Changes & Optional Flexibilities

    This preamble groups the proposed changes and flexibilities into 
three broad categories: (1) Proposals to Simplify Monitoring, (2) 
Proposals to Simplify Meal Service, and (3) Proposals to Simplify 
Competitive Foods (i.e., foods sold [agrave] la carte). USDA is also 
seeking public input on multiple items, for which no changes are 
proposed in this rule.

Proposals To Simplify Monitoring

Establish 5-Year Administrative Review Cycle & Targeted, Follow-Up 
Reviews of High-Risk SFAs
Current Requirements
    Section 22 of the NSLA (42 U.S.C. 1769c(b)(1)(C)(i)), requires that 
State agencies ``conduct audits and reviews during a 3-year cycle or 
other period prescribed by the Secretary.'' Current regulatory 
provisions at 7 CFR 210.18(c) require State agencies to conduct an 
administrative review of each SFA participating in the NSLP and SBP at 
least once during a 3-year review cycle. This comprehensive 
administrative review, outlined at 7 CFR 210.18, monitors compliance 
with eligibility, meal counting and claiming, and meal pattern 
requirements.
    The transition to the new, more comprehensive administrative review 
process and shorter 3-year review cycle occurred at the same time as 
States and SFAs were implementing several other Program changes 
required by HHFKA, including implementing new meal pattern 
requirements, paid lunch equity, local wellness policies, direct 
certification improvements, and a new performance-based reimbursement. 
Concurrently, State agencies were devoting significant resources to 
additional oversight responsibilities, such as the review of 
procurement practices and procedures, to better ensure compliance with 
Federal regulations.
    Since the transition to a 3-year review cycle and the introduction 
of the unified administrative review in SY 2013-2014, some State 
agencies and SFAs have struggled to complete reviews and corresponding 
oversight activities. USDA received feedback about difficulties 
associated with administrative reviews--both from State agencies 
conducting reviews and from SFAs preparing for, and responding to, 
reviews. States and SFAs have noted that, in some instances, the 
shorter review cycle reduced time available for technical assistance 
and training, and unduly emphasized compliance over Program 
improvement.
Proposed Changes to the Administrative Review Cycle
    Pursuant to the authority of section 22 of the NSLA, this rule 
proposes changes to the administrative review cycle to ease 
administrative burden for State agencies and SFAs, while continuing to 
promote Program integrity. This rule proposes to allow State agencies 
the option to transition from the current 3-year review cycle back to a 
5-year review cycle. State agencies opting for a 5-year review cycle 
would conduct a comprehensive administrative review of each SFA 
participating in NSLP and SBP at least once during a 5-year cycle and 
identify high-risk SFAs for additional oversight. High-risk SFAs would 
receive a targeted follow-up review within two years of being 
designated high-risk. State agencies would continue to have the option 
to review SFAs more frequently.
    Upon implementation, State agencies would be required to review 
SFAs with significant noncompliance in the areas of meal pattern/
nutrition requirements, certification determinations, and claims 
earlier in the review cycle. In the initial 5-year review cycle, State 
agencies would be required to review SFAs known to be noncompliant in 
the first three years, and rely heavily on the most recent 
administrative review to identify these SFAs. This would ensure that 
SFAs known to be noncompliant are appropriately monitored earlier in 
the review cycle and minimize the time between reviews for these SFAs.
    Targeted follow-up reviews would be less comprehensive than a full 
administrative review and at this time USDA anticipates the scope will 
include areas identified as high-risk for the SFA, along with other 
critical Program areas that include Performance Standard 1

[[Page 4097]]

and 2 violations and Resource Management findings. Performance Standard 
1 includes eligibility, certification, and meal counting/claiming 
requirements. Performance Standard 2 includes meal pattern and 
nutrition requirements. Resource Management areas include the areas 
outlined in 7 CFR 210.14. Prior to July 1, 2012, USDA required follow-
up reviews of SFAs found to have critical area violations in excess of 
certain review thresholds. Since July 1, 2012, follow-up reviews have 
been conducted at State agency discretion, per 7 CFR 210.18(c)(2). This 
rule proposes to reinstate required, targeted follow-up reviews; 
however, based on public input, requirements for follow-up reviews 
implemented in a final rule may be different than follow-up review 
requirements prior to July 1, 2012.
    USDA intends to provide both the high-risk criteria and the scope 
of the targeted follow-up review in regulation. USDA proposes to use 
findings from previous administrative reviews and findings regarding 
any known noncompliance with Federal procurement regulations to 
determine high-risk. USDA seeks comment on which particular 
administrative review findings should be included in the high-risk 
criteria. USDA is also considering using additional risk factors (e.g., 
staff experience and/or staff turnover) and SFA characteristics (e.g., 
enrollment size, funding level, type of meal counting and/or claiming 
system, and/or point-of-service system) to determine high-risk. USDA 
seeks public comment on additional characteristics to be included in 
defining high-risk and the scope of targeted follow-up reviews. USDA 
would allow State agencies to add other risk criteria as they see fit, 
and to designate an SFA as high-risk based on other information on a 
case-by-case basis.
    In developing this proposal, USDA considered two other options, as 
described below. USDA welcomes public comments on these options, even 
though a different approach is proposed in this rulemaking.
    (1) USDA considered establishing two review cycles: A 5-year cycle 
for low-risk SFAs and a 3-year cycle for high-risk SFAs, as some 
stakeholders suggested, but concluded that multiple cycles could create 
additional administrative burden and confusion. USDA believes that 
transitioning to a 5-year cycle, with the requirement to conduct 
targeted, follow-up reviews of high-risk SFAs more often, would achieve 
the same outcome and provide States with flexibility on the timing of 
such reviews.
    (2) USDA also considered a different approach that would return all 
SFAs to a 5-year review cycle. Under that approach, State agencies 
would be required to randomly select a portion of SFAs, using a 
statistically valid sample, which would receive comprehensive reviews 
using all administrative review modules. In addition, for each cycle 
USDA would identify the Program areas of highest risk and impact to the 
Programs, and only those modules would be reviewed for the remaining 
SFAs. USDA explored this option to allow State agencies to review all 
SFAs thoroughly in the areas of highest risk or impact to the Programs, 
while also alleviating burden by not requiring all review modules for 
some SFAs. USDA concluded that this approach could present significant 
risks to Program integrity since not all areas would be reviewed. In 
addition, USDA would likely need to require additional administrative 
reviews of SFAs deemed high-risk for administrative error to fulfill 
statutory requirements, which would negate the burden reduction.
    Therefore, the proposal to return to a 5-year administrative review 
cycle, with targeted, follow-up reviews of high-risk SFAs, responds to 
feedback from some stakeholders who report that the 3-year review cycle 
is too burdensome for both State agencies and SFAs, and limits a 
State's ability to conduct other valuable oversight activities, such as 
providing technical assistance. Giving State agencies discretion to add 
other risk criteria to the risk assessment would allow States to tailor 
monitoring activities to their unique needs, and move away from a ``one 
size fits all'' approach. Allowing State agencies the option to return 
to a 5-year administrative review cycle aims to alleviate burden on 
State agencies by providing more time to complete required reviews and 
devote more resources to technical assistance. Focusing additional 
resources on high-risk SFAs would allow State agencies to target 
limited resources to those SFAs most in need of monitoring and 
technical assistance.
    Based on public input and at the Secretary's discretion, USDA may 
implement and/or modify the proposed operational flexibility in a final 
rule.
What would stay the same?
    State agency reviewers would continue to follow procedures outlined 
in the FNS Administrative Review Manual, as required, to monitor 
general and critical areas of review.
Specific Public Input Requested
    USDA is seeking public comment on:
     The 5-year review cycle models (the model proposed, and 
the two models considered, but not proposed);
     How to determine an SFA's risk of noncompliance, including 
the risk factors to consider;
     The scope of the targeted follow-up review; and
     How risk factors should apply if a State agency opts to 
review SFAs more frequently than on a 5-year cycle.
    The proposed changes to the administrative review cycle are in 7 
CFR 210.18(c) of the regulatory text.
Align Administrative Review and Food Service Management Company Review 
Cycles
Current Requirements
    Regulations at 7 CFR 210.19(a)(5) require that ``each State agency 
shall perform a review of each SFA contracting with a food service 
management company, at least once during each 3-year period.'' The 3-
year review cycle for food service management companies aligns with the 
current 3-year administrative review cycle. This allows States to 
coordinate and streamline review and oversight activities.
    Allowing a 5-year review cycle for administrative reviews while 
maintaining a 3-year review cycle for food service management company 
reviews could present challenges to State agencies' oversight 
activities.
Proposed Changes to the Food Service Management Companies Review Cycle
    This rule proposes to change the food service management company 
review cycle to at least once during a 5-year period, so State agencies 
can align oversight activities. State agencies may opt to review SFAs 
with food service management companies more frequently. This proposal 
would allow State agencies to align and streamline administrative 
reviews and food service management company reviews. This proposal is 
consistent with USDA's focus on Program efficiency.
What would stay the same?
    This proposed rule only changes the minimum time-frame of the 
review cycle and does not make any other changes to the oversight of 
food service management companies, including the requirement for State 
agencies to review each contract between an SFA and food service 
management company annually.
    The proposed changes to the food service management review cycle 
are in 7 CFR 210.19(a)(5) of the regulatory text.

[[Page 4098]]

Address Significant Performance Standard 1 Noncompliance Early in 
Review Cycle
Current Requirements
    If the State agency determines that an SFA demonstrates significant 
noncompliance with the meal pattern and nutrition requirements set 
forth in 7 CFR 210.10 and 220.8, the State agency must select the SFA 
for an administrative review earlier in the review cycle (7 CFR 
210.18(e)(5)). If significant noncompliance is found in other areas, 
including Performance Standard 1, the State agency is not required to 
select the SFA for an administrative review earlier in the review 
cycle.
    Performance Standard 1 includes important eligibility, 
certification, and meal counting/claiming requirements. These include 
the requirements that all free, reduced price, and paid meals claimed 
for reimbursement are served only to children eligible for free, 
reduced price, and paid meals, respectively; and that the meals are 
counted, recorded, consolidated, and reported through a system which 
consistently yields correct claims (7 CFR 210.18(g)). Compliance with 
Performance Standard 1 areas is critical to ensure Program integrity. 
It is inconsistent to require State agencies to review SFAs early in 
the review cycle only when there is significant noncompliance with the 
Performance Standard 2 meal pattern and nutrition requirements, and not 
for Performance Standard 1 requirements.
Proposed Changes to the Early Review of School Food Authorities
    This rule proposes requiring that State agencies also select SFAs 
with significant noncompliance in Performance Standard 1 areas for an 
administrative review earlier in the review cycle. While ``significant 
noncompliance'' has not been formally defined, USDA interprets it to 
mean findings from previous reviews that warrant fiscal action and any 
knowledge that a State agency may have regarding an SFA's 
noncompliance. These areas, including certification determinations, are 
set forth in 7 CFR 210.8 and 245.6.
    It is important for State agencies to prioritize reviewing SFAs 
with significant noncompliance not only in meal pattern and nutrition 
requirements, but also in certification determinations and claims. 
Reviewing these SFAs early allows State agencies to provide prompt 
technical assistance to bring SFAs into compliance with Program 
requirements, rather than allowing noncompliance to continue. 
Addressing these issues early could also limit the fiscal implications 
that SFAs face for errors.
What would stay the same?
    A State agency that determines that an SFA has significant 
noncompliance with meal pattern and nutritional requirements set forth 
in 7 CFR 210.10 and 220.8 must still be reviewed earlier in the review 
cycle. SFAs that are not determined to have significant noncompliance 
would be reviewed in line with State agency procedures and regulations 
outlined in 7 CFR 210.18.
    The proposed changes to require SFAs with significant noncompliance 
in Performance Standard 1 areas to be reviewed earlier in the 
administrative review cycle are in 7 CFR 210.18(e)(5) of the regulatory 
text.
Specific Public Input Requested
    ``Significant noncompliance'' is a term used in Federal regulations 
that USDA has not defined previously. USDA proposes to define this term 
and seeks public input on the definition of ``significant 
noncompliance.''
Allow Expanded Use of Third-Party Audits
Current Requirements
    To prevent duplication of effort, regulations allow State agencies 
to use recent and applicable findings from Federal- or State-required 
audits in lieu of reviewing the same information in an administrative 
review (7 CFR 210.18(f)(3)). When Federal or State audit results are 
used for the administrative review, the State agency must document the 
source and date of the audit. Some State agencies are using this option 
to substitute for parts of the administrative review that require or 
would benefit from specialized financial or accounting expertise. USDA 
encourages States to consider this practice to prevent duplicative 
efforts and minimize burden on review staff.
Proposed Change
    Maintaining State agency staff with the specialized training and 
experience needed can be challenging in some States. This proposed rule 
would allow State agencies to use recent and applicable findings from 
supplementary audit activities, requirements added to Federal or State 
audits by local operators, or other third-party audits initiated by 
SFAs or other local entities. In all cases, the audit activity would 
have to comply with the same standards and principals that govern the 
Federal single audit. These are in addition to the audit information 
that is already allowed to substitute for parts of the administrative 
review.
    This change would provide an additional opportunity for State 
agencies and SFAs to substitute third-party audits for comparable 
sections of the administrative review. The intent is to offer options 
to reduce burden and/or the cost of maintaining qualified State agency 
staff to conduct specialized sections of the administrative review. 
This proposal stems from USDA's focus on increasing operational 
efficiency and is in line with the current provision on audit 
information.
What would stay the same?
    The flexibility that State and local Program operators currently 
have to use results from Federal- or State-required audits in lieu of 
completing parts of the administrative review would continue to be 
available. State agency reviewers would also continue to follow 
administrative review procedures to monitor all other general and 
critical areas of review.
    The proposed changes to expand the use of third-party audits are in 
7 CFR 210.18(f)(3) of the regulatory text.
Allow Completion of Review Requirements Outside of the Administrative 
Review
Current Requirements
    In addition to Federal- or State-required audits, State agencies 
conduct additional monitoring and oversight activities outside of the 
formal administrative review process. Existing administrative review 
requirements do not allow for State agencies that conduct these 
additional oversight or monitoring processes to use that information in 
the formal review process.
    Some State agencies have developed monitoring practices that review 
information identical or similar to certain aspects of the 
administrative review in order to proactively review all SFAs in areas 
that are critical to successful Program operations and may identify 
issues of noncompliance annually, rather than waiting for an 
administrative review. States currently are not able to use some of 
this information from activities outside of the formal administrative 
review, requiring them to duplicate work for no additional gain.
Proposed Change
    This proposed rule would allow State agencies to satisfy sections 
of the administrative review through equivalent State monitoring or 
oversight activities outside of the formal administrative review 
process. For example, State agencies may already

[[Page 4099]]

annually review SFAs' financial documentation, such as reviewing a 
``Statement of Revenues and Expenses'' or similar documentation, in 
order to monitor impacted Program areas, such as allowable costs, 
throughout the year. These documents may then also be reviewed on the 
administrative review, for example, as part of the Resource Management 
Module. This proposal would allow State agencies to omit specific 
redundant areas of the review if States conduct sufficient oversight 
elsewhere. USDA would continue to monitor States' oversight practices 
through the Management Evaluation process to ensure that State agencies 
are fulfilling their oversight responsibilities.
    This proposed change acknowledges that State agencies may be 
conducting activity identical to certain sections of the administrative 
review in monitoring visits or other oversight activities outside of 
the formal administrative review process. Eliminating redundancies 
would allow State agencies to redirect limited resources to technical 
assistance or training.
What would stay the same?
    State agencies that do not conduct additional oversight activities 
as described in this provision would continue to complete all sections 
of the formal administrative review process.
Specific Public Input Requested
    The Department seeks public comment on this proposal and any 
specific oversight activities that States or SFAs are already 
conducting, or are considering, outside of and redundant to the formal 
administrative review, to inform the final rule.
    The proposed changes to allow completion of review requirements 
outside of the administrative review are in 7 CFR 210.18(f), (g), and 
(h) of the regulatory text.
Provide Incentives To Invest in Integrity-Focused Process Improvements
Current Requirements
    The administrative review is an evaluation of SFA compliance with 
procedures meant to ensure proper administration of the school meal 
programs, including the provision of nutritious meals. In many cases, 
the procedures reviewed provide direct and definitive checks on Program 
performance. These include, for example, State agency validation of SFA 
meal counts to ensure that USDA reimbursements match the number of 
meals served.
    In some cases, however, the administrative review monitors SFA 
compliance with procedures that are indirect or incomplete measures of 
compliance with fundamental Program requirements. An example of this is 
SFA management of the application approval and verification processes. 
The administrative review ensures that SFAs process applications and 
verification documents correctly, but it cannot confirm the underlying 
accuracy or completeness of applicant reporting. The administrative 
review process is not designed to validate that all applicants are 
income eligible for Program benefits.
    In other cases, the State agency reviewer is in a position to 
identify errors and provide immediate technical assistance. But neither 
the review, nor the technical assistance, may adequately address an 
underlying challenge that can continue to generate errors after the 
review ends. An example of this is the misidentification of meals as 
reimbursable or non-reimbursable at the point of sale. While the 
underlying challenge may be inadequate training, in which case 
technical assistance and corrective action may be an ideal remedy, the 
challenge may instead be an antiquated point of sale process that 
demands too much from the cashier.
    Reducing improper Program payments in the school meal programs is 
an Agency priority. USDA, along with its State agency and SFA partners, 
have invested in process reforms, technology improvements, and training 
over the past several years to address improper payments. Some of these 
efforts seek to strengthen the administrative review process and the 
training of State agency reviewers, which is critical for effective 
Program management. Others have led to the development of process 
reforms such as real-time direct certification that can improve 
outcomes and reduce error in ways that monitoring cannot. To address 
the improper payment challenges facing the school meal programs, where 
much of the underlying Program error cannot be identified or addressed 
through monitoring reviews alone, additional effort must be directed to 
this kind of process reform.
Proposed Change
    This rule proposes a framework for waiving or bypassing certain 
review requirements for State agencies or SFAs as an incentive to 
invest in one or more USDA-designated systems or process improvements 
that can reduce or eliminate Program errors. The administrative review 
is a resource-intensive process that generates real costs for State 
agencies and SFAs. The goal is to redirect some of those resources into 
process reforms to reduce overall error without increasing overall 
cost.
    USDA will develop a series of optional process reforms that respond 
to the latest findings from USDA research, independent audits, and 
Agency analysis of administrative data. USDA will test potential 
reforms, in cooperation with State and local program administrators, to 
assess their feasibility and effectiveness. States or SFAs may then 
adopt these, at their option, in exchange for elimination, 
modification, or reduction of existing administrative review 
requirements. USDA anticipates that this package of optional reforms 
will grow over time in response to new research and changes in the 
nature of the integrity challenges facing the Programs.
    These process reforms seek to reduce Program error, rather than 
simply maintain the current level of error with a less comprehensive 
review. For that reason, the ideal reforms are unlikely to be direct 
substitutes for the review requirements that they replace. As an 
example, State agencies may be approved to bypass their review of 
applications, or they may be able to select a smaller application 
sample, if the SFA adopts a broad package of certification and 
verification reforms that target both administrative processing error 
and underlying applicant error. Subject to an assessment of feasibility 
and effectiveness, this package could include SFA adoption of an online 
application system that meets USDA-specified integrity standards, high 
uptake of that online application by households, SFA adoption of 
specified direct certification best practices, and for-cause 
verification of applications that exhibit specified error-prone 
characteristics.
    This proposed change seeks to encourage State and local investment 
in integrity-promoting initiatives in exchange for streamlined 
oversight activities. It is consistent with USDA's focus on more local 
control and operational efficiency.
Specific Public Input Requested
    USDA seeks public comments on what specific process reforms might 
be considered for this incentive-based provision, and how the overall 
integrity of the school meal programs may be enhanced if States and 
SFAs were to implement such reforms.
    The proposed changes to provide incentives to invest in integrity-
focused process improvements are in paragraphs 7 CFR 210.18(f), (g), 
and (h) of the regulatory text.

[[Page 4100]]

Omit the On-Site Breakfast Review in Extenuating Circumstances
Current Requirements
    Section 22(a) of the NSLA (42 U.S.C. 1769c(a)), directs USDA to 
create a unified accountability system that requires review of the SBP 
to ensure conformity with Federal requirements. Reviewing the SBP on-
site during an administrative review allows State agencies to provide 
technical assistance and training when an SFA faces challenges 
administering the Program. The review also may result in corrective 
action, which can help improve operations by amending Program errors.
    Program regulations at 7 CFR 210.18(g)(1)(ii) and (g)(2)(i)(B) 
require State agencies to review elements of Program requirements on-
site. To limit the burden on State agencies, the current administrative 
review requires an on-site review of only half of the sites selected 
for review that operate the SBP as outlined in 7 CFR 
210.18(e)(2)(iii)(B). Prior to 2012, SBP on-site reviews were not 
required. While most State agencies are successfully conducting on-site 
breakfast reviews, the Department recognizes that State agencies may 
face unique challenges in conducting SBP on-site reviews at some SFAs, 
especially those in remote locations with limited lodging options. The 
early morning start time of SBP on-site reviews adds to this 
difficulty, particularly when transportation is a barrier. USDA has 
already approved waivers of the on-site breakfast review requirement in 
cases where State agencies have faced extenuating circumstances, such 
as no available lodging within hours of a school or major travel 
challenges (e.g., a helicopter is the only transportation available and 
the flight schedule does not allow reviewers to arrive in time for 
breakfast).
Proposed Changes to SBP On-Site Reviews
    USDA proposes to allow State agencies facing extenuating travel 
circumstances the ability to omit the on-site SBP review and assess an 
SFA's breakfast operations using other existing measures. In addition, 
it may be possible for State agency staff to review some aspects of SBP 
when on-site for the NSLP review. USDA proposes that extenuating travel 
circumstances would be absence of lodging facilities within 50 miles of 
a reviewed school. State agencies in such circumstances would be 
required to notify FNS when omitting the on-site review of SBP due to 
the absence of lodging facilities.
    Including the SBP in the administrative review is required by 
Section 22(a)(1)(B) of the NSLA to develop a unified accountability 
system. This proposed change addresses State agency feedback regarding 
challenges conducting an on-site SBP review. When necessary and 
warranted, this proposal would allow States to use methods other than 
the on-site breakfast review to ensure that SBP requirements are met. 
This proposal retains the State agency requirement to conduct an on-
site review for lunch.
What would stay the same?
    State agencies without extenuating circumstances would still be 
required to conduct on-site SBP reviews, as specified in Program 
regulations.
Specific Public Input Requested
    USDA specifically seeks comments on:
     What extenuating travel or safety circumstances, in 
addition to absence of lodging within 50 miles of a reviewed school, 
could be included in the regulation;
     What parts of the on-site SBP review cannot be satisfied 
during an on-site review of the NSLP;
     Any potential risk to Program integrity posed by omitting 
an on-site SBP review;
     What challenges State agencies and SFAs encounter related 
to the on-site breakfast review, and whether any of those challenges 
would be prevented by conducting the SBP review during the on-site 
review of the NSLP; and
     What off-site processes and tools are, or could be, 
available to States to ensure SFAs are successfully operating the SBP.
    Comments will inform USDA regulations on when and how to apply this 
flexibility and how to mitigate any risks to Program integrity.
    The proposed changes to allow State agencies to omit the 
requirement to conduct an on-site SBP review in extenuating 
circumstances are in 7 CFR 210.18(g)(1)(ii) and (g)(2)(i)(B) of the 
regulatory text.
Add Flexibility to Completion of the Resource Management Module
Current Requirements
    Regulations require State agencies conducting an administrative 
review to do an off-site assessment of an SFA's nonprofit school food 
service account to evaluate the risk of noncompliance with resource 
management requirements (7 CFR 210.18(h)(1)). This requirement helps 
State agencies identify which and how many SFAs need a comprehensive 
review, and helps State agencies acquire information that is vital to 
assess the SFA's financial management before a review begins. If this 
information is not received before the completion of the Resource 
Management Module review during an administrative review, a 
comprehensive review is required.
    USDA received feedback from State agencies after implementation of 
the unified administrative review process. States indicated that 
assessing risk for noncompliance in resource management areas off-site 
can be challenging, depending on when and how the State reviews these 
areas. USDA allows States agencies to conduct comprehensive resource 
management reviews off-site, and separate from the on-site 
administrative review, so there is even more discretion available to 
States in adopting processes. Requiring an off-site assessment prior to 
further review may hinder the State's review process.
Proposed Changes to the Administrative Review Resource Management 
Process
    Instead of requiring that any part of the Resource Management 
module review take place off-site, this proposed rule would allow State 
agencies to conduct the assessment of an SFA's nonprofit school food 
service account at any point in the review process that makes the most 
operational sense to the State agency. Similar to the on-site portion 
of the review, USDA intends this assessment to take place in the school 
year that the review began, but will no longer require this assessment 
to take place off-site. Completion of the Resource Management Module 
may occur before, during, or after the on-site portion of the 
administrative review.
    Since the inclusion of resource management areas in the 
administrative review, State agencies have developed their own 
processes and procedures to review SFAs' financial management practices 
in preparation for an administrative review. This proposed change would 
provide State agencies the discretion and flexibility to set up a 
review process and staff work units in the manner that they see fit.
What would stay the same?
    State agencies will still be required to conduct an assessment of 
the SFA's nonprofit school food service account to evaluate the risk of 
noncompliance with resource management requirements, following 
procedures specified in regulations. If risk indicators show that an 
SFA is at high-risk for noncompliance with resource management 
requirements, the State agency must conduct a comprehensive review.
    The proposed changes to allow State agencies to complete the 
Resource Management Module of the

[[Page 4101]]

administrative review at any point in the review process are in 7 CFR 
210.18(h)(1) of the regulatory text.
Set Consistent Fiscal Action for Repeated Meal Pattern Violations
Current Requirements
    Fiscal action is the recovery of Federal funds provided for 
reimbursable meals when there is an overpayment due to noncompliance or 
ineligible meals served. Fiscal action plays a key role in maintaining 
the integrity of the NSLP and SBP. Reimbursement claims made by SFAs 
must accurately reflect the number of reimbursable meals served to 
eligible children, by type, for each day meals are served. When 
conducting an administrative review, State agencies must identify the 
SFA's correct Federal reimbursement and take fiscal action when an SFA 
claims or receives more Federal funds than warranted. Pursuant to 42 
U.S.C. 1769c(b)(4), the Secretary may require the State agency to 
retain funds that would otherwise be paid to the local educational 
agency, under procedures prescribed by the Secretary, if the local 
educational agency fails to meet administrative performance criteria 
established by the Secretary. Currently, as specified in 7 CFR 
210.18(l)(2), State agencies must take fiscal action for missing food 
components, and for repeated violations of milk type and vegetable 
subgroup requirements. State agencies may take fiscal action for 
repeated violations concerning food quantities, whole grain-rich foods, 
and dietary specifications.
    State agencies and Program operators have expressed to USDA that 
inconsistency in fiscal action procedures for findings related to meal 
pattern noncompliance can be confusing during the fiscal action 
process. USDA initially directed the inconsistent treatment of repeat 
meal pattern violations during a time when State agencies were adapting 
to the meal pattern changes. Now that State agencies better understand 
meal pattern violations, USDA believes that State agencies are better 
equipped to make determinations on whether only technical assistance 
and training is needed, or if fiscal action is warranted.
Proposed Changes to Administrative Review Fiscal Action for Meal 
Pattern Noncompliance
    This proposed rule would no longer require fiscal action for 
repeated violations of milk type and vegetable subgroup requirements. 
Instead, State agencies would have discretion to take fiscal action for 
repeated violations of milk type and vegetable subgroup requirements. 
This change would align with the existing State agency discretion to 
take fiscal action for repeated violations for food quantities, whole 
grain-rich foods, and dietary specifications.
    Students would still receive vegetables and milk when there are 
administrative review findings related to milk type and vegetable 
subgroup requirements, just not the correct type specified in meal 
pattern requirements. Many SFAs are making a good faith effort to offer 
children a healthy meal, but may make a mistake or need additional 
assistance to fully understand the meal pattern requirements. In these 
instances, rather than requiring States to fiscally penalize SFAs, this 
rule would allow State agencies to determine the appropriate response: 
Whether only technical assistance and training is needed, or if fiscal 
action is the best course of action. USDA believes State agencies are 
best positioned to determine the appropriate response. This proposed 
change would make fiscal action consistent across all repeated meal 
pattern violations.
What would stay the same?
    State agencies would still be required to take fiscal action for 
missing food components. The only fiscal action required by USDA for 
meal pattern noncompliance would be disallowing meals when a meal 
component is missing. Fiscal action for any other meal pattern 
violations would not be required by USDA.
    The proposed changes to make fiscal action consistent across all 
repeated meal pattern violations are in 7 CFR 210.18(l)(2) of the 
regulatory text.
Add Buy American to the General Areas of the Administrative Review
Current Requirements
    As part of the administrative review, State agencies conduct an on-
site review of food components to determine compliance with the Buy 
American provision in 7 CFR 210.21(d). The on-site review of food 
components is specified in the FNS Administrative Review Manual, but it 
is not included in the regulations that list the general areas of 
review to be conducted.
    USDA included the on-site monitoring for compliance with Buy 
American requirements as part of the administrative review, which is 
conducted on-site at an SFA. A State agency's responsibility to monitor 
Buy American also includes reviewing procurement documentation, such as 
contracts, that may be completed separate from the administrative 
review.
Proposed Changes To Include Buy American in the Administrative Review 
Requirements
    This rule proposes to add the existing Buy American monitoring 
requirement to the general areas of review listed at 7 CFR 
210.18(h)(2), under the administrative review regulations. This 
proposed change is consistent with guidance in the FNS Administrative 
Review Manual and clarifies existing monitoring requirements for State 
agencies.
What would stay the same?
    State agencies would still be required to review SFA compliance 
with Buy American requirements through the administrative review and 
the State's procurement oversight process, in line with USDA guidance.
    The proposed changes to add the existing Buy American monitoring 
requirement to the general areas of review are in 7 CFR 210.18(h)(2) of 
the regulatory text.

Proposals To Simplify Meal Service

Facilitate the Service of Vegetable Subgroups in the NSLP
Current Requirements
    Vegetables are good sources of nutrients associated with reduced 
risk for chronic disease.\8\ The Dietary Guidelines for Americans, 
2015-2020 (hereafter referred to as the Dietary Guidelines) recommend 
eating a variety of vegetables and categorize vegetables into five 
subgroups based on similar nutrient content: (1) Dark green, (2) red/
orange, (3) beans/peas (hereafter referred to as legumes, as specified 
in 7 CFR 210.10(c)(2)(iii)), (4) starchy, and (5) other.\9\ Bioactive 
compounds in vegetables vary across subgroups, and recommended amounts 
in the Dietary Guidelines aim to optimize health benefits.\10\ A 
healthy eating pattern includes a variety of vegetables from all five 
subgroups.
---------------------------------------------------------------------------

    \8\ Health-promoting components of fruits and vegetables in the 
diet. Liu RH. Adv Nutr. 2013 May 1; 4(3):384S-92S.
    \9\ Dietary Guidelines for Americans, 2015-2020. Key 
Recommendations: Components of Healthy Eating Patterns https://health.gov/dietaryguidelines/2015/guidelines/chapter-1/key-recommendations/.
    \10\ U.S. Department of Health and Human Services and U.S. 
Department of Agriculture. Dietary Guidelines for Americans, 2015-
2020, Appendix 3. 8th ed. U.S. Government Printing Office, 
Washington, DC. Available at: http://health.gov/dietaryguidelines/.
---------------------------------------------------------------------------

    In the NSLP, current regulatory provisions at 7 CFR 210.10 
(c)(2)(iii) require Program operators to offer all five vegetable 
subgroups to children over a school week; minimum amounts

[[Page 4102]]

vary by age/grade group. These standards specify what must be offered 
to students, not what students must select for a reimbursable meal. 
Students must be offered--and, therefore, have an opportunity to 
select--all five types of vegetables during a school week.\11\
---------------------------------------------------------------------------

    \11\ The NSLP meal patterns require a variety of vegetables over 
a typical, 5-day school week. FNS guidance also specifies vegetable 
subgroup requirements for shorter (e.g., 3- or 4-day) and longer 
(e.g., 6- or 7-day) school weeks for institutions that operate on 
different schedules.
---------------------------------------------------------------------------

    Since implementation of the vegetable subgroups requirement in 
2012, some Program operators have experienced challenges, especially 
with the requirement to offer \1/2\ cup of legumes per week. About 80 
percent of lunch menus nationwide offer \1/2\ cup legumes per week; 
this is significantly lower than other vegetable subgroups, which are 
offered on more than 90 percent of lunch menus weekly.\12\ Program 
operators say the NSLP vegetable subgroup requirements are complex and 
confusing, especially the requirement to offer varying amounts of 
vegetables from different subgroups. USDA is sensitive to these ongoing 
challenges faced by Program operators. USDA aims to ensure that 
vegetable requirements are easy to understand and implement in the NSLP 
while still aligning with key subgroups recommended by the Dietary 
Guidelines.
---------------------------------------------------------------------------

    \12\ U.S. Department of Agriculture, Food and Nutrition Service, 
Office of Policy Support, School Nutrition and Meal Cost Study, 
Volume 2: Nutritional Characteristics of School Meals by Elizabeth 
Gearan, Mary Kay Fox, Katherine Niland, Dallas Dotter, Liana 
Washburn, Patricia Connor, Lauren Olsho, and Tara Wommak. Project 
Officer: John Endahl. Alexandria, VA: April 2018.
---------------------------------------------------------------------------

    Some Program operators also report challenges with food waste and 
report that children are throwing required vegetables in the trash. 
USDA's School Nutrition and Meal Cost Study found that approximately 31 
percent of vegetables served in schools are wasted, which mirrors food 
waste in America at large: Approximately 31 percent of retail and 
consumer food is wasted.13 14 This amount of waste has far-
reaching impacts:
---------------------------------------------------------------------------

    \13\ Buzby, Jean C., Hodan F. Wells, and Jeffrey Hyman. The 
Estimated Amount, Value, and Calories of Postharvest Food Losses at 
the Retail and Consumer Levels in the United States, EIB-121, U.S. 
Department of Agriculture, Economic Research Service, February 2014. 
Available at: https://www.ers.usda.gov/webdocs/publications/43833/43680_eib121.pdf.
    \14\ U.S. Department of Agriculture, Food and Nutrition Service, 
Office of Policy Support, School Nutrition and Meal Cost Study, 
Final Report Volume 1: School Meal Program Operations and School 
Nutrition Environments by Sarah Forrestal, Charlotte Cabili, Dallas 
Dotter, Christopher W. Logan, Patricia Connor, Maria Boyle, Ayseha 
Enver, and Hiren Nissar. Project Officer: John Endahl. Alexandria, 
VA: April 2019.
---------------------------------------------------------------------------

     Wholesome food that could feed children in need is sent to 
landfills.
     Land, water, labor, energy, and other inputs are wasted in 
producing, processing, transporting, preparing, storing, and disposing 
of discarded food.
    USDA is committed to reducing food waste, improving Program 
efficiency, and ensuring responsible stewardship of taxpayer dollars.
Proposed Flexibilities for Required Vegetable Subgroups
    This rule proposes the following practical flexibilities to 
facilitate the service of the required vegetable subgroups at lunch. 
The proposed flexibilities would maintain the existing daily and weekly 
total vegetable quantities in the NSLP to help schools continue to 
offer wholesome, balanced meals that support children's growth, 
development, and academic achievement.
     Allow all five subgroups in the same minimum weekly amount 
for all age/grade groups.
    This rule would maintain the five vegetable subgroups recommended 
by the Dietary Guidelines to ensure children are offered a variety of 
vegetables in school lunches. The proposal would also facilitate the 
service of vegetables and minimize food waste by allowing schools to 
offer the same weekly minimum amount from each subgroup: \1/2\ cup 
weekly from each subgroup for all grades. Currently, menu planners are 
required to offer \1/2\ cup of most vegetable subgroups over a school 
week, but must offer larger quantities of red/orange vegetables (for 
all age/grade groups) and ``other'' vegetables (for grades 9-12). USDA 
is committed to implementing measures that reduce food waste in schools 
and promote efficient school food service operations.\15\ Reducing 
operational complexity by requiring the same quantities of all 
vegetable subgroups would simplify menu planning and meal service. The 
proposed change would continue to make the key vegetable subgroups 
recommended by the Dietary Guidelines available to schoolchildren while 
reducing operational complexity and the potential for food waste in 
school food service operations.
---------------------------------------------------------------------------

    \15\ Buzby, Jean C., Hodan F. Wells, and Jeffrey Hyman. The 
Estimated Amount, Value, and Calories of Postharvest Food Losses at 
the Retail and Consumer Levels in the United States, EIB-121, U.S. 
Department of Agriculture, Economic Research Service, February 2014. 
Available at: https://www.ers.usda.gov/webdocs/publications/43833/43680_eib121.pdf.
---------------------------------------------------------------------------

     Allow legumes offered as a meat alternate to count toward 
weekly legume vegetable requirement.
    This rule would also allow more flexible crediting for legumes, a 
consistently under-served and under-consumed vegetable subgroup. 
Legumes are unique vegetables because of their protein content. Under 
current regulations, local menu planners can offer legumes and count 
them as either a vegetable or as a meat alternate. Despite this 
flexibility, some schools are struggling to meet the weekly legumes 
subgroup requirement. As noted above, about 80 percent of menus met the 
weekly requirement to offer \1/2\ cup of legumes. This suggests that 
menu planners who are struggling with the weekly vegetable requirements 
are struggling most with the legumes requirement.
    This proposal would allow menu planners who offer at least \1/2\ 
cup of legumes as a meat alternate to also count the same \1/2\ cup 
legumes toward the weekly legumes requirement. Even though the legumes 
would be included on the menu as a meat alternate, children would still 
be exposed to legumes and the nutrients they provide. Therefore, this 
flexibility would not deprive children of access to legumes, it would 
simply offer flexibility in how legumes are credited toward meal 
pattern requirements. Under this proposal, offering \1/2\ cup of 
legumes as a meat alternate would not count toward the daily or weekly 
vegetable minimums because ``double-counting'' components could reduce 
the overall food quantity and calories in school meals. Therefore, menu 
planners would still have to offer vegetables in addition to the 
legumes (offered as a meat alternate) to meet the established daily and 
weekly minimum required quantities of vegetables. This flexibility 
seeks to provide additional options for local Program operators to 
offer legumes to children.
    These proposed flexibilities are expected to make it easier for 
local Program operators to offer legumes, consistent with the Dietary 
Guidelines' emphasis on legumes. The Dietary Guidelines recommend (1) 
increasing legume consumption (legumes are underconsumed for all 
school-aged children) and (2) increasing the consumption of lean 
protein foods, including legumes.\16\ The proposed changes aim to 
support operational efficiency and facilitate compliance with NSLP 
nutrition requirements.

[[Page 4103]]

Schools using these flexibilities would be able to continue offering 
wholesome and balanced lunches that support children's growth, 
development, and academic achievement, as the existing vegetable 
variety and daily and weekly total vegetable requirements would remain 
in place.
---------------------------------------------------------------------------

    \16\ U.S. Department of Health and Human Services and U.S. 
Department of Agriculture. Dietary Guidelines for Americans, 2015-
2020. 8th Edition. December 2015. Available at: http://health.gov/dietaryguidelines/2015/guidelines/.
---------------------------------------------------------------------------

    The flexibilities would be available to all age/grade groups. As an 
example, the chart below shows differences between the current meal 
pattern and the proposed flexibilities for grades 9-12.

----------------------------------------------------------------------------------------------------------------
                                                                              Proposed alternative for  program
                                                                                operators facing  operational
            Grades 9-12                 Current meal pattern:  Require 5     challenges:  Require 5 groups/week
                                                  groups/week                 (same minimum amounts)  + legumes
                                                                                         flexibility
----------------------------------------------------------------------------------------------------------------
Vegetable Requirements.............  5 cups/week..........................  5 cups/week.
                                     1 cup/day............................  1 cup/day.
Dark green.........................  0.5..................................  0.5.
Red/orange.........................  1.25.................................  0.5.
Beans and peas (Legumes)...........  0.5..................................  * 0.5.
Starchy............................  0.5..................................  0.5.
Other..............................  0.75.................................  0.5.
+ cups to reach weekly 5 cup         1.5..................................  2.5-3.
 minimum.                            Local menu planners decide which       Local menu planners decide which
                                      vegetables to offer.                   vegetables to offer.
----------------------------------------------------------------------------------------------------------------
* Legumes offered as a meat alternate could meet the weekly legumes subgroup requirement. However, legumes
  offered as a meat alternate would not count toward the daily and weekly vegetable minimums (1 cup and 5 cups,
  respectively, in the grades 9-12 example above) because doing so could significantly reduce calories.

    In addition to the changes proposed in this rulemaking, FNS 
recently made several updates to crediting and meal pattern guidance 
that seek to ease vegetable subgroup requirements:
    (1) Pasta made of vegetable flour(s) may credit as a vegetable, 
even if the pasta is not served with another recognizable 
vegetable.\17\
---------------------------------------------------------------------------

    \17\ Policy memo. Crediting Pasta Products Made of Vegetable 
Flour in the Child Nutrition Programs. (SP 26-2019, CACFP 13-2019, 
SFSP 12-2019, published April 19, 2019). Available at: https://www.fns.usda.gov/school-meals/crediting-pasta-products-made-vegetable-flour-child-nutrition-programs.
---------------------------------------------------------------------------

    (2) Menu planners may estimate the amounts of specific subgroups in 
vegetable mixtures and credit them accordingly (assuming the minimum 
creditable amount of \1/8\ cup is present).\18\
---------------------------------------------------------------------------

    \18\ Policy memo. Meal Requirements under the National School 
Lunch Program and School Breakfast Program: Questions and Answers 
for Program Operators. (SP 38-2019, published September 23, 2019). 
Available at: https://www.fns.usda.gov/school-meals/meal-requirements-under-national-school-lunch-program-and-school-breakfast-program.
---------------------------------------------------------------------------

    (3) Salad bars may be located after the point-of-service/point-of-
sale if students have access to instructions and serving utensils 
needed to select required amounts, and provided that the salad bar 
meets State and local health department requirements.\19\
---------------------------------------------------------------------------

    \19\ Policy memo. Salad Bars in the National School Lunch 
Program and School Breakfast Program. (SP 41-2019, published 
September 23, 2019). Available at: https://www.fns.usda.gov/school-meals/salad-bars-national-school-lunch-program-and-school-breakfast-program.
---------------------------------------------------------------------------

    These recent updates and the proposed flexibilities in this rule 
respond to input from State and local Program operators who, at 
listening sessions and roundtable discussions, shared their challenges 
of offering students a wide variety of healthy vegetables while still 
meeting the requirement to offer different quantities of vegetable 
subgroups over the course of a school week. USDA is committed to 
promulgating common-sense flexibilities that help local Program 
operators offer wholesome foods that are appealing to children, while 
maintaining student participation, encouraging meal consumption, and 
minimizing food waste. The proposed alternatives are consistent with 
the Administration's regulatory reform, allows more discretion and 
efficiency in local school food service operations, and maintains 
children's access to key vegetable subgroups recommended for increased 
consumption by the Dietary Guidelines.
What would stay the same?
    Program operators who wish to offer all five vegetable subgroups in 
the amounts specified in the existing lunch meal pattern may continue 
to do so. The proposed flexibility to offer the same weekly amount of 
each subgroup is optional and primarily intended for Program operators 
experiencing challenges with specific vegetable subgroups. Under this 
proposal, schools would continue to offer children at least the same 
minimum amounts of vegetables daily and weekly (varied by age/grade 
group) as established in the existing meal patterns. Under Offer versus 
Serve, at least \1/2\ cup of fruits and/or vegetables would still be 
required for a reimbursable meal.
Specific Public Input Requested
    USDA seeks public comments on the minimum weekly amount(s) that 
SFAs should be required to offer from each vegetable subgroup. The 
proposed changes would retain the daily and weekly total vegetable 
minimums, which ensure that school meals offer children 33-50 percent 
of total vegetables (by volume) that the Dietary Guidelines recommend 
children consume in a typical 5-day school week.\20\ This is consistent 
with the goal of school lunches to provide approximately 32 percent of 
nutrients that children need for optimum growth and development. This 
proposal would lower the required amount of red/orange vegetables 
offered to all age/grade groups, and the required amount of other 
vegetables offered to grades 9-12. Therefore, local Program operators 
would have more flexibility to choose which vegetables are offered to 
meet minimum daily and weekly vegetable requirements. USDA seeks public 
input on how this proposal could be implemented in a way that supports 
menu planners in offering a variety of healthy vegetables to children.
    The proposed flexibility to offer the same weekly amount from all 
vegetable subgroups is in 7 CFR 210.10(m)(4)(ii) of the regulatory 
text. The proposed flexibility to offer legumes as a meat alternate and 
simultaneously meet the

[[Page 4104]]

weekly legume vegetable requirement is in 7 CFR 210.10(c)(2)(iii) of 
the regulatory text.
---------------------------------------------------------------------------

    \20\ The Dietary Guidelines recommended amounts vary by calorie 
levels. School-aged children typically require between 1,200 
calories (sedentary, 5-year-old) and 3,200 calories (active, 18-
year-old) per day. Additional information is available at: https://health.gov/dietaryguidelines/2015/guidelines/.
---------------------------------------------------------------------------

Add Flexibility to Established Age/Grade Group
Current Requirements
    Childhood overweight and obesity are critical public health 
concerns. To avoid excessive calorie intake and provide age-appropriate 
school meals, USDA regulations at 7 CFR 210.10(c)(1) and 220.8(c)(1) 
establish NSLP and SBP meal patterns for three age/grade groups: K-5, 
6-8, and 9-12. These age/grade groups reflect widely used school grade 
configurations and are consistent with the National Academies of 
Sciences, Engineering, and Medicine's Dietary Reference Intake (DRI) 
groupings.\21\ The meal patterns specify amounts of food and dietary 
specifications (calories, saturated fat, trans fat, and sodium) for 
each age/grade group to support healthy weight and minimize chronic 
disease risk in the student population. Use of these age/grade groups 
enables schools to provide meals that meet the nutrition needs of most 
school children.
---------------------------------------------------------------------------

    \21\ Developed by the National Academy of Medicine, the Dietary 
Reference Intakes (DRIs) are nutrient reference values that support 
many program, policy, and regulatory initiatives. The DRIs serve as 
a guide for good nutrition and provide the scientific basis for the 
development of food guidelines in the United States and Canada. More 
information is available at http://nationalacademies.org/hmd/about-hmd/leadership-staff/hmd-staff-leadership-boards/food-and-nutrition-board.aspx.
---------------------------------------------------------------------------

    Through the SBP and NSLP, USDA aims to offer age-appropriate meals 
to provide school children the energy needed for learning and 
development. USDA's School Nutrition and Meal Cost Study found that, 
overall, 41 percent of average weekly lunch menus fell within the 
specified calorie range (that is, they met both the minimum and maximum 
calorie levels). It was more common for average weekly lunch menus in 
elementary and middle schools to exceed the maximum calorie level (40 
percent and 34 percent, respectively) than to fall below the minimum 
calorie level (13 percent and 24 percent, respectively). However, the 
findings were reversed for high schools: Approximately 66 percent of 
average weekly lunch menus for high schools fell below the minimum 
calorie level.
    Existing flexibility permits a school to use one lunch meal pattern 
for students in grades K through 8 as food quantity requirements 
overlap for groups K-5 and 6-8 (7 CFR 210.10(c)(1)). In such a case, 
the school continues to be responsible for meeting the calorie, 
saturated fat, and sodium standards, as well as the meat/meat alternate 
minimums, for each of the age/grade groups receiving the school meals. 
However, due to several non-overlapping requirements for groups 6-8 and 
9-12, USDA does not currently permit flexibility to use one lunch meal 
pattern for these age/grade groups. USDA recognizes that the existing 
flexibility does not meet the needs of some schools, especially small 
schools in rural areas, with unique grade configurations and logistical 
challenges that may interfere with the reasonable use of the 
established age/grade groups and flexibility.
Proposed Flexibility in Age/Grade Groups
    This rule proposes two common-sense flexibilities to help schools 
with unique grade configurations that differ from the age/grade groups 
established in Program regulations (K-5, 6-8, 9-12). In the proposed 
rule, Nutrition Standards in the National School Lunch and School 
Breakfast Programs (76 FR 2494, published January 13, 2011), USDA 
proposed the age/grade groups recommended by the Health and Medicine 
Division of the National Academies of Science, Engineering, and 
Medicine (formerly, the Institute of Medicine (IOM)). In response to 
the proposed rule, a few commenters requested flexibility in use of the 
age/grade groups (e.g., one grade level leeway); however, the 2012 
final rule implemented the IOM recommended age/grade groups to ensure 
that children are offered age-appropriate meals. Experience since 
implementation suggests that some flexibility in age/grade groups would 
ease requirements for local Program operators, and help them offer 
wholesome meals in different types of schools in a more efficient 
manner. The proposed flexibilities are as follows:
     Allow schools with unique grade configurations to use the 
same meal pattern for a broader group of students by adding or 
subtracting one grade on either or both ends of an established age/
grade group.
    This proposed flexibility would enable schools with unique grade 
configurations to be more efficient in menu planning and service, and 
make better use of limited resources. Schools using this proposed 
flexibility would follow the meal pattern and dietary specifications 
corresponding to the majority of grades served. For example, a school 
with students in grades 7-9 could offer the meal pattern for grades 6-8 
to all students (by adding one grade to the 6-8 meal pattern to serve 
students in grade 9). In this example, because the 6-8 age/grade group 
meal pattern may not meet the calorie needs of students in grade 9, the 
school would have the option of offering additional food (e.g., larger 
portions, additional choices) to the older students to ensure they 
receive age-appropriate meals. This flexibility would be available to 
all schools. Any SFA would be able to elect this flexibility by 
notifying their State agency; State agency approval would not be 
required.
     Allow schools with unique grade configurations in small 
SFAs (i.e., SFAs serving fewer than 2,500 students) to use one or two 
meal patterns to plan meals for students in all grades.
    This proposed flexibility would permit schools with unique grade 
configurations in small SFAs to follow one or two NSLP and/or SBP meal 
pattern(s) to plan meals more efficiently. The Dietary Guidelines would 
continue to be the foundation for meal pattern requirements. This 
flexibility would help local Program operators maintain efficient food 
service operations while offering meals to schoolchildren in multiple 
age/grade groups.
    For example, in a K-12 school in a small SFA, it may be 
operationally efficient for a menu planner to use the grades 6-8 meal 
pattern to plan meals for all students. Using a single meal pattern may 
overfeed younger students and underfeed older students, therefore, 
schools would have the option of offering additional food (e.g., larger 
portions, additional choices) to older students to ensure they receive 
age-appropriate meals. This flexibility would only be available to 
schools with unique grade configurations in SFAs serving fewer than 
2,500 students. SFAs that choose to exercise this flexibility would 
work with their State agency to identify which meal pattern(s) best 
balance operational ease and offering children age-appropriate meals.
    The proposed age/grade group flexibilities respond to input from 
State and local Program operators, who shared that the current 
regulatory requirements do not work for the unique and varied age/grade 
group structure of schools across the country, especially small, often 
rural SFAs that adopt unique grade configurations to best serve their 
communities. USDA is committed to easing regulatory requirements so 
that local Program operators, who understand their communities' unique 
situations and needs, have discretion to administer the SBP and NSLP 
most efficiently. Any small SFA would be able to elect this flexibility 
by notifying their State

[[Page 4105]]

agency; State agency approval would not be required.
What would stay the same?
    This proposed rule would maintain the established age/grade groups 
for menu planning for Program operators offering meals to students in 
schools with grade configurations that align with the age/grade groups 
established in 7 CFR 210.10(c)(1). Schools with unique grade 
configurations may benefit from the flexibilities described above.
    Schools adopting one of the proposed flexibilities would be 
encouraged to offer additional foods to older children who receive 
meals based on meal patterns intended for younger children. For 
example, such schools may offer older students larger portions or 
additional choices to ensure their calorie and nutrient needs are met.
Specific Public Input Requested
    USDA seeks public comments on:
     The benefits of each proposed age/grade group flexibility, 
including how the proposals may ease requirements for local Program 
operators;
     The drawbacks of each proposed age/grade group 
flexibility, including the potential of overfeeding or underfeeding 
children by offering meals not designed for their age/grade group; and
     The feasibility of offering additional foods or larger 
portions to older children when schools plan meals based on the meal 
pattern for younger children.
    The proposed flexibilities to the established age/grade groups are 
in 7 CFR 210.10(c)(1) and (m)(4) and 220.8(c)(1) and (m)(2) of the 
regulatory text.
Increase Flexibility To Offer Meats/Meat Alternates at Breakfast
Current Requirements
    Prior to the 2012 meal pattern updates, SBP operators could offer 
meats/meat alternates, grains, or a combination of meats/meat 
alternates and grains at breakfast. Regulations specified that Program 
operators could offer meats/meat alternates only, grains only, or a 
combination of the two. Currently, meats/meat alternates are not 
required in the SBP meal pattern; only fruits, grains, and fluid milk 
are required (7 CFR 220.8(c)(2)). In the proposed rule, Nutrition 
Standards in the National School Lunch and School Breakfast Programs 
(76 FR 2494, published January 13, 2011), USDA proposed a daily meat/
meat alternate requirement in the SBP. However, many school districts 
expressed concerns about offering a daily meat/meat alternate at 
breakfast due to cost, logistical and food safety challenges, and 
availability of meat/meat alternate products that would meet the 
dietary specifications for sodium and saturated fat. Prior to 2012, 
schools had the flexibility to offer one serving each of grains and 
meat/meat alternate, or two servings of either one at breakfast. 
Therefore, some of the longstanding SBP flexibility to offer grains 
and/or meats/meat alternates was retained in the final rule for 
operational efficiency and cost effectiveness: Menu planners that offer 
a minimum amount of grains may offer meats/meat alternates to credit 
toward the grains requirements. Meats/meat alternates may also be 
offered in the SBP as ``extra'' food items that do not count toward 
meal pattern requirements, but are subject to dietary specifications 
(calories, saturated fat, trans fat, and sodium).
    USDA recognizes that Program operators want to offer meals that 
appeal to students and encourage participation in the school meal 
programs. In listening sessions and roundtable discussions, Program 
operators expressed confusion about the requirement to offer a minimum 
amount of grains in order to offer meats/meat alternates.
Proposed Changes to SBP Grains Component
    This rule proposes to allow schools to offer meats/meat alternates 
and/or grains interchangeably in the SBP, with no minimum grain 
requirement. It would remove the requirement to offer a minimum amount 
of grains before meats/meat alternates can be offered. Instead, Program 
operators would be permitted to offer 1-2 ounce equivalents of grains 
or meats/meat alternates, or a combination of the two, daily to total a 
minimum of 7-9 ounce equivalents over a school week (amounts vary 
depending on the age/grade group).
    The proposed flexibility responds to input from State and local 
Program operators who want to offer meats/meat alternates at breakfast 
without the requirement to offer a grain first. In December 2017, USDA 
solicited comments on the Child Nutrition Programs crediting system 
through a Request for Information (RFI).\22\ USDA sought public input 
about specific foods of interest to stakeholders and asked for 
recommendations to make crediting more simple, fair, and transparent. 
FNS received a total of 437 comments. Several commenters from State 
agencies and the food industry, asked USDA to make it easier for local 
Program operators to offer meats/meat alternates in the SBP. This 
proposal responds to those comments, and would allow menu planners to 
offer grains and/or meats/meat alternates in the SBP.
---------------------------------------------------------------------------

    \22\ Food Crediting in the Child Nutrition Programs: Request for 
Information. 82 FR 58792, published December 14, 2017.
---------------------------------------------------------------------------

    USDA is conscious of how complexities in meal pattern requirements 
are challenging for some local school food service staff, and strives 
to simplify Program requirements so local food service staff can focus 
on feeding children.
What would stay the same?
    Program operators would not be required to change menu planning 
practices. Menu planners could continue to offer grains only in the 
SBP, consistent with current requirements. Remaining elements of the 
SBP meal pattern (i.e., fruit and fluid milk requirements) would not 
change.
    The proposed change to the SBP grains component is in 7 CFR 
220.8(c) of the regulatory text.
Flexibility in SBP Fruit Component
Current Requirements
    Fruit is one of three required components in the SBP meal pattern 
(7 CFR 220.8(c)(2)). Schools are required to offer students in all 
grades at least one cup of fruit per day at breakfast. Although offer 
versus serve (OVS) is optional in the SBP, many schools use OVS and 
allow students to take only \1/2\ cup fruit at breakfast if they do not 
want the whole cup.\23\
---------------------------------------------------------------------------

    \23\ Offer versus serve is a provision in the NSLP and SBP that 
allows students to decline some of the food offered. The goals of 
OVS are to reduce food waste in the school meals programs while 
permitting students to decline foods they do not intend to eat.
---------------------------------------------------------------------------

    In addition to the traditional, cafeteria-based breakfast model, 
schools may operate an alternative breakfast model. For example, 
``Breakfast in the Classroom'' involves serving the breakfast meal to 
children during a morning class, often while the teacher is taking 
attendance or giving classroom announcements. Schools operating ``Grab 
& Go Breakfast'' serve children a breakfast ``to go,'' often in a bag, 
before school or during a morning break. Alternative breakfast models 
give more children an opportunity to eat breakfast, ensuring they have 
the nutrition necessary to optimize learning and development.
    SBP meals served outside the cafeteria are often pre-packaged for 
convenience and operational ease. Students generally have fewer choices 
when SBP is offered in a non-cafeteria setting and have limited 
opportunities to decline food

[[Page 4106]]

items, and Program operators are required to offer students a full cup 
of fruit.
Proposed Flexibility in SBP Fruit Component
    To help reduce food waste and encourage breakfast service outside 
the cafeteria, this rule proposes to allow SBP operators to offer \1/2\ 
cup of fruit in reimbursable breakfasts served outside the cafeteria, 
with State agency approval. Consistent with the Dietary Guidelines' 
emphasis on fruit intake, this proposal continues to provide children 
with access to fruit in the SBP, while promoting operational efficiency 
and reducing food waste. This flexibility would make the fruit 
requirement for breakfasts served outside the cafeteria consistent with 
the minimum amount of fruit required for a reimbursable meal in schools 
using OVS in cafeteria settings.
    When breakfast is served outside the cafeteria, food waste is a 
concern. Classrooms, buses, hallways, and other areas where breakfast 
might be offered do not have a cafeteria-like capacity to collect food 
waste. Pre-packaged meals often contain the required one cup of fruit. 
Some Program operators are concerned that one cup is too much fruit for 
younger students who eat less, and assert that excess fruit is ending 
up in the trash. Under OVS, in a cafeteria setting, students are 
offered one cup of fruit, but only required to take \1/2\ cup for a 
federally reimbursable meal (provided that the other required meal 
components are included). Currently, if a school does not use OVS, 
students offered SBP in non-cafeteria settings must take one full cup 
of fruit; food that is not eaten in the time allotted is often thrown 
away. This may contribute to food waste in non-cafeteria settings. In 
recent listening sessions and roundtable discussions about food waste, 
some Program operators suggested this strategy to reduce food waste: 
Allow school breakfasts served outside the cafeteria to be reimbursed 
with only \1/2\ cup of fruit offered. Wasting food is bad business for 
school food service operations; this proposal aims to support financial 
stability and help school food service operations minimize food waste.
    USDA understands this change could result in a concurrent reduction 
in calories in the SBP meal pattern. However, USDA does not propose any 
changes to the average weekly minimum calorie requirements in the SBP. 
Schools that choose to exercise this flexibility would be encouraged to 
offer additional fruit to students who would like a full cup (e.g., 
have a basket of whole fruits available on the breakfast cart for 
students to take more fruit).
    In addition, this flexibility may entice more schools to offer 
school breakfast in non-cafeteria settings. The potential increase in 
alternative SBP service models could result in increased participation 
(i.e., more students eating school breakfast and starting the school 
day well-nourished and ready to learn).
What would stay the same?
    SBP operators that offer breakfast to students in the cafeteria 
must continue to offer one cup of fruit to students in all age/grade 
groups. Schools offering the SBP outside the cafeteria may also 
continue to offer one cup of fruit to all age/grade groups. In all 
settings where breakfast is offered, students would still be required 
to select at least \1/2\ cup of fruit for a reimbursable breakfast. No 
additional changes to the weekly average calorie minimums are being 
proposed, and OVS remains an option for the SBP at all grade levels.
Specific Public Input Requested
    USDA's School Nutrition and Meal Cost Study found that, overall, 
more than half (56 percent) of average weekly breakfast menus fell 
within the specified calorie range (that is, they met both the minimum 
and maximum calorie levels). While it was more common for average 
weekly breakfast menus across all school types to exceed the maximum 
calorie level (36 percent overall), approximately 18 percent of average 
weekly menus for high schools offer too few calories. USDA seeks public 
comments on:
     Expected benefits of permitting schools to offer \1/2\ cup 
of fruit in non-cafeteria breakfasts;
     The potential of underfeeding children by offering less 
fruit; and
     The feasibility of offering additional foods or larger 
portions to older children and children who would like a full cup of 
fruit.
    The proposed change to permit schools to serve \1/2\ cup of fruit 
in breakfasts served in non-cafeteria settings is in 7 CFR 220.8(c)(2) 
and (m)(1) of the regulatory text.
Remove Synthetic Trans Fat Limit as a Dietary Specification
Current Requirements
    Synthetic trans fats are currently prohibited in the NSLP and SBP, 
and in all foods sold to students on campus during the school day (7 
CFR 210.10(f)(4), 220.8(f)(4), and 210.11(g), respectively).\24\ Since 
these USDA regulations were implemented, the Department of Health and 
Human Services' Food and Drug Administration (FDA) determined that 
partially hydrogenated oils--the leading dietary source of synthetic 
trans fats--are not ``Generally Recognized as Safe'' (or GRAS) because 
trans fats are associated with negative health consequences (e.g., 
heart disease, high cholesterol). After reviewing extensive clinical 
data and public comments, the FDA enacted regulations to eliminate 
partially hydrogenated oils from the food supply.\25\ The FDA 
originally established the compliance deadline as June 18, 2018, for 
all products, but has extended the deadline due to the shelf life of 
some food products. The FDA prohibited the addition of partially 
hydrogenated oils to foods effective June 18, 2018; however, petitioned 
uses of partially hydrogenated oils were allowed to continue through 
June 18, 2019. Old inventory may exist in the food supply until January 
1, 2021, after which synthetic trans fats will be effectively 
eliminated from the food supply.
---------------------------------------------------------------------------

    \24\ This restriction does not apply to naturally occurring 
trans fats present in meat and dairy products.
    \25\ https://www.fda.gov/food/ingredientspackaginglabeling/foodadditivesingredients/ucm449162.htm.
---------------------------------------------------------------------------

Flexibilities Proposed by This Rule
    Under this proposal, the current synthetic trans fats limit for 
SBP, NSLP, and competitive foods would be removed effective July 1, 
2021. Beginning SY 2021-2022, State and local Program operators would 
not have to comply with, or monitor, synthetic trans fats in school 
meals or competitive foods.
    FDA's regulations are removing synthetic trans fats from the United 
States food supply. Therefore, it is unnecessary for USDA to maintain 
additional regulations to prohibit synthetic trans fats in school 
meals. The proposed changes to remove the synthetic trans fat limit are 
in 7 CFR 210.10, 210.11, and 220.8 of the regulatory text.
Change the Performance-Based Reimbursement (7 Cents) Quarterly Report 
to an Annual Report
Current Requirement
    States are currently required to submit a quarterly report to USDA 
detailing SFAs certified to receive the performance-based reimbursement 
(7 CFR 210.5(d)(2)(ii)). Currently, more than 99 percent of SFAs are 
certified to

[[Page 4107]]

receive the performance-based reimbursement.\26\ The report is no 
longer needed quarterly because nearly all SFAs are certified to 
receive the performance-based reimbursement.
    As part of the recent Child Nutrition Programs Reducing Burden 
Study, FNS sought feedback from State and local Program operators about 
administrative burden. The study aimed to identify the best means of 
efficiently consolidating Child Nutrition Program administrative and 
reporting requirements, to simplify regulations, and to improve 
efficiencies. Reviewing and reconciling information to submit reports, 
and the amount/type of information required, were noted as frequent 
contributors to State and local reporting burden.
---------------------------------------------------------------------------

    \26\ FNS administrative data, February 2019.
---------------------------------------------------------------------------

Flexibilities Proposed by This Rule
    This rule proposes that the performance-based reimbursement 
quarterly reporting requirement specified in 7 CFR 210.5(d)(2)(ii) be 
changed to an annual reporting requirement.
    USDA is proposing to reduce the frequency of this reporting 
requirement in response to Program operator feedback. USDA seeks to 
ease Program requirements so State and local Program operators have 
more time to focus on feeding children.
    The proposed change to make the performance-based reimbursement (7 
cents) quarterly report an annual report is in 7 CFR 210.5(d)(2)(ii) of 
the regulatory text.
Update Meal Modifications for Disability and Non-Disability Reasons
Current Requirements
    Schools participating in the NSLP and SBP are required to ensure 
that children with disabilities have an equal opportunity to 
participate in, and benefit from, the NSLP and SBP. Likewise, 
institutions, child care facilities, and adult day care facilities 
(``institutions and facilities'') participating in the Child and Adult 
Care Food Program (CACFP) must ensure equal access to Program benefits 
regardless of disability status. This includes providing special meals, 
at no extra charge, to Program participants with a disability that 
restricts their diet. FNS proposes several changes to regulations at 7 
CFR 210.10(m) and 226.20(g) to align Program regulations with statutory 
requirements established in the Americans with Disabilities Act (ADA) 
Amendments Act of 2008, Public Law 110-325 (42 U.S.C. 12101).\27\
---------------------------------------------------------------------------

    \27\ https://www.congress.gov/110/plaws/publ325/PLAW-110publ325.pdf.
---------------------------------------------------------------------------

    Current regulations at 7 CFR 210.10(m) and 226.20(g) describe 
exceptions and variations in reimbursable meals, including exceptions 
due to a disability that restricts a participant's diet. Schools, 
institutions, and facilities are required to make substitutions to 
ensure Program participants with disabilities have an equal opportunity 
to participate in, and benefit from, the Federal meal programs (7 CFR 
210.10(m)(1) and 226.20(g)(1)). Current regulations require 
substitutions to be made only when the need for the substitution is 
supported by a written statement signed by a licensed physician.
    Current regulations also describe ``medical or other special 
dietary needs'' that are not considered disabilities, but prevent a 
Program participant from consuming the regular meal. Schools, 
institutions, and facilities are currently allowed, but not required, 
to make substitutions for ``medical or other special dietary needs'' (7 
CFR 210.10(m)(2) and 226.20(g)(2)). Current regulations require 
schools, institutions, and facilities to obtain a written statement 
signed by a recognized medical authority in order to make a 
substitution due to a participant's ``medical or other special dietary 
need,'' except for fluid milk substitutions. Consistent with statute, 
schools, institutions, and facilities have discretion to provide fluid 
milk substitutions with a note from a medical authority, a note from 
the child's parent or guardian, or a note by, or on behalf of, an adult 
participant (7 CFR 210.10(m)(2)(ii)(B) and 226.20(g)(3)). In the 2004 
Child Nutrition and WIC Reauthorization Act, Congress directed FNS to 
establish nutrition standards for fluid milk substitutions, and 
required FNS to include standards for calcium, protein, vitamin A, and 
vitamin D. Therefore, fluid milk substitutions for ``medical or other 
special dietary needs'' must meet the nutrition standards included in 
FNS regulations at 7 CFR 210.10(d)(3) and 226.20(g)(3).
    Additionally, current regulations encourage schools to consider 
``ethnic, religious, or economic'' factors when planning or preparing 
meals, provided the variations are within the meal pattern requirements 
(7 CFR 210.10(m)(3)). Current regulations allow institutions and 
facilities, with FNS approval, to vary meal components on an 
experimental or continuing basis if the variation is nutritionally 
sound and necessary to meet ethnic, religious, economic, or physical 
needs (7 CFR 226.20(h)).
    According to the U.S. Census Bureau, approximately 56.7 million 
people in the United States had a disability in 2010.\28\ Further, 2.8 
million school-age children (ages 5 to 17) were reported to have a 
disability in 2010.\29\ It is important that FNS provide up-to-date 
guidance so that schools, institutions, and facilities participating in 
the Federal meal programs understand their legal obligation to ensure 
Program participants with disabilities have an equal opportunity to 
participate in and benefit from the Federal meal programs.
---------------------------------------------------------------------------

    \28\ https://www2.census.gov/library/publications/2012/demo/p70-131.pdf.
    \29\ https://www.census.gov/library/publications/2011/acs/acsbr10-12.html.
---------------------------------------------------------------------------

    To that end, FNS has developed policy guidance, consistent with 
applicable Federal law. On September 27, 2016, FNS issued SP 59-2016: 
Policy Memorandum on Modifications to Accommodate Disabilities in the 
School Meal Programs. In 2017, FNS issued SP 26-2017: Accommodating 
Disabilities in the School Meal Programs: Guidance and Questions and 
Answers, SP 40-2017: Accommodating Children with Disabilities in the 
School Meal Programs, and CACFP 14-2017: Modifications to Accommodate 
Disabilities in the Child and Adult Care Food Program and Summer Food 
Service Program. These policy resources provide detailed guidance on 
how the broader vision of the ADA can be implemented in Federal meal 
programs nationwide.
    However, current Program regulations are not consistent with 
statute, as described below. FNS aims to correct this inconsistency 
with this proposed regulation.
Proposed Update to Disability Modifications Requirements
    The basis for these changes is statutory. The ADA Amendments Act of 
2008 made important changes to the meaning and interpretation of the 
term ``disability.''
    According to the ADA, the term ``disability'' means:
     A physical or mental impairment that substantially limits 
one or more major life activities;
     A record of such an impairment; and
     Being regarded as having such an impairment.
    In the ADA, Congress provided a non-exhaustive list of ``major life 
activities,'' including eating and breathing. Additionally, Congress 
clarified that the operation of a ``major bodily function'' is 
considered a major life activity. Examples of major bodily functions 
include (but are not limited to) digestive, bowel, bladder, and 
respiratory functions.

[[Page 4108]]

    The Department of Justice implemented the ADA Amendments Act in 
2016 with the final rule, Amendment of Americans with Disabilities Act 
Title II and Title III Regulations to Implement ADA Amendments Act of 
2008.\30\ The final rule clarified that the terms ``disability'' and 
``substantially limits'' must be construed broadly and in favor of 
expansive coverage. For instance, a food allergy does not need to cause 
anaphylaxis to be considered a disability. A non-life threatening 
allergy may be considered a disability and require a meal modification, 
if it impacts a major bodily function or other major life activity. 
After the passage of the ADA Amendments Act, most physical and mental 
impairments are considered disabilities.
---------------------------------------------------------------------------

    \30\ https://www.ada.gov/regs2016/final_rule_adaaa.html.
---------------------------------------------------------------------------

    Based on this expanded definition of ``disability,'' this rule 
proposes removing the term ``medical or other special dietary needs'' 
from the regulations. ``Medical or other special dietary needs'' that 
prevent a Program participant from consuming a meal or meal component 
are considered a disability under this expanded definition. This rule 
proposes breaking the regulatory language into the following two 
paragraphs--``Reasonable modifications for disability requests'' and 
``Variations for non-disability requests''--to more clearly distinguish 
between these two situations. The proposed ``Variations for non-
disability requests'' paragraph includes variations for cultural, 
ethical, Tribal, and religious preferences.
    Additionally, the Department of Justice's final rule clarified that 
determining whether an individual's impairment is a disability under 
the ADA should not demand extensive analysis. To that end, through 
policy guidance, FNS has broadened the scope of who is permitted to 
write a medical statement, to include State licensed healthcare 
professionals. In guidance, FNS has defined a State licensed healthcare 
professional as an individual authorized to write medical prescriptions 
under State law. For example, in many States, this will include 
licensed nurse practitioners and licensed physicians. This proposal 
incorporates this change into regulation, and adds a definition for 
``State licensed healthcare professional'' at 7 CFR 210.2 and 226.2. 
FNS also considered accepting medical statements from other licensed 
professionals who are not authorized to write medical prescriptions 
under State law, such as dietitians, nutritionists, psychologists, and 
clinical social workers. FNS aims to ensure that meal pattern 
exceptions are based on bona fide medical reasons. Therefore, FNS 
requests public comment on the proposed definition of ``State licensed 
healthcare professional,'' including if the definition should be 
broadened.
    Through policy guidance, FNS has also clarified that a written 
medical statement is only required when a disability modification 
results in a meal that does not meet the meal pattern requirements, 
reducing burden on schools, institutions, facilities, and families. FNS 
proposes to add this clarification to the regulations.
    Finally, when a disability modification is no longer needed, FNS 
has recommended in policy guidance that schools, institutions, and 
facilities obtain written documentation rescinding the original medical 
statement. This could include, for example, a written statement from 
the child's parent or guardian indicating that the disability 
modification is no longer needed. To better align the non-disability 
fluid milk substitution regulations with disability modification 
regulations and current policy guidance, FNS proposes to remove 
language at 7 CFR 210.10(m)(2)(iii) describing the process to revoke a 
non-disability fluid milk substitution request. FNS expects this change 
will allow more flexibility for local Program operators to manage fluid 
milk substitution requests in a way that meets their communities' needs 
and reduces burden for households.
    This proposal would align USDA regulations with current law and 
guidance.
What would stay the same?
    The proposed revisions would not change the overarching requirement 
that schools, institutions, and facilities make reasonable 
modifications for Program participants with disabilities that restrict 
their diet. Rather, the proposed changes align FNS regulations with 
current statutory requirements and make a clearer distinction between 
disability and non-disability situations.
    Schools, institutions, and facilities would still be encouraged to 
meet participants' dietary requests and preferences that are not 
considered disabilities, including those related to cultural, ethical, 
Tribal, or religious preferences and principles, provided the 
variations are within the meal pattern requirements. Because menus are 
planned locally, schools, institutions, and facilities have flexibility 
to determine which foods to serve, the number of choices (if any), and 
how foods are prepared. FNS strives to provide schools, institutions, 
and facilities the resources they need to serve culturally appropriate 
meals to participants. For example, FNS issued guidance in 2015 to 
clarify that traditional foods may be served in the Child Nutrition 
Programs, and provided examples of how several traditional foods (such 
as buffalo, blue cornmeal, and wild rice) may credit towards a 
reimbursable meal.\31\ FNS has also published guidance on procuring 
local meat, including traditional foods like bison and venison, for use 
in the Child Nutrition Programs.\32\ The proposed changes to the 
terminology in this section seeks to align with reasons that variations 
may be requested for participant meals (e.g., an ethical preference for 
vegetarian meals).
---------------------------------------------------------------------------

    \31\ Policy memo TA 01-2015. Child Nutrition Programs and 
Traditional Foods, published July 15, 2015. Available at: https://fns.usda.gov/sites/default/files/TA01-2015_Child_Nutrition_Programs_and_Traditional_Foods.pdf.
    \32\ Policy memo SP 01-2016. Procuring Local Meat, Poultry, 
Game, and Eggs for Child Nutrition Programs, published October 22, 
2015. Available at: https://fns.usda.gov/sites/default/files/cn/SP01_CACFP%2001_SFSP01-2016os.pdf.
---------------------------------------------------------------------------

    Finally, the proposed regulations maintain several requirements 
regarding fluid milk substitutions for non-disability reasons. This is 
due to specific statutory requirements included in the NSLA. The 
proposed regulation maintains the option for schools, institutions, and 
facilities to provide fluid milk substitutions for non-disability 
reasons, and continues to allow SFAs, institutions, and facilities to 
select nondairy beverage(s) that meet FNS nutrition standards. For 
schools that opt to provide fluid milk substitutions, the proposed 
regulation maintains the requirement that they obtain a written request 
from a parent or guardian, or by, or on behalf of, an adult participant 
to support a request for a fluid milk substitution in a non-disability 
situation. Also, as required by statute, the proposed regulations 
maintain the requirement that SFAs notify the State agency if any of 
their schools choose to offer fluid milk substitutions for non-
disability reasons. Finally, the proposed regulation maintains the 
nutrition standards for fluid milk substitutions.
Specific Public Input Requested
    USDA is seeking public comment on the following questions:
     Is it too burdensome to require a note from a State 
licensed healthcare professional for meal modifications that do not 
meet the meal pattern requirements?

[[Page 4109]]

     Would a different definition for State licensed healthcare 
professional better facilitate reasonable meal modifications for 
individuals with disabilities?
    [cir] If so, which additional healthcare professionals (e.g., 
licensed dietitians, nutritionists, psychologists, and clinical social 
workers) should be allowed to write a note to support meal 
modifications that do not meet the meal pattern requirements?
    The proposed updates to regulatory language for meal modifications 
for disability and non-disability requests are in 7 CFR 210.2, 
210.10(d)(3) and (m), 226.2, and 226.20(g) of the regulatory text.

Expand Potable Water Requirement To Include Calorie-Free, 
Noncarbonated, Naturally Flavored Water

Current Requirements
    Section 201 of HHFKA amended section 9(a) of the NSLA (42 U.S.C. 
1758(a)), to require that schools participating in the SBP and NSLP 
make potable water available and accessible without restriction to 
children at no charge in the place(s) where meals are served during the 
meal service. FNS originally required unflavored water.\33\ However, 
since implementation, the availability of calorie-free, noncarbonated, 
naturally flavored water has grown in response to consumer interest in 
healthy beverage options. Local Program operators requested flexibility 
to offer naturally flavored water (e.g., water infused with fruit) to 
meet the potable water requirement. Offering naturally flavored water 
is expected to make water more appealing to children, thereby 
increasing water consumption.
---------------------------------------------------------------------------

    \33\ Policy memo SP 28-2011. Child Nutrition Reauthorization 
2010: Water Availability During National School Lunch Program Meal 
Service, published July 15, 2015. Available at: https://www.fns.usda.gov/water-availability-during-nslp-meal-service.
---------------------------------------------------------------------------

Proposed Update to Potable Water Requirements
    This rule proposes to expand the potable water requirement to 
permit schools to offer calorie-free, naturally flavored, noncarbonated 
water. Flavoring added to water would be required to meet the FDA's 
definition of ``natural flavor or natural flavoring'' described at 21 
CFR 501.22(a)(3).
What would stay the same?
    Schools may continue to meet the potable water requirement by 
making unflavored, potable water available and accessible without 
restriction to children at no charge in the place(s) where meals are 
served during the meal service.

Proposals To Simplify Competitive Foods

Extend the Entr[eacute]e Exemption Timeframe
Current Requirements
    In an effort to create healthy school nutrition environments, 
regulations at 7 CFR 210.11(c)(3) established nutrition standards for 
foods sold to students outside of school meals, on the school campus 
during the school day. Such foods, commonly referred to as competitive 
foods, may be available to students in the cafeteria, vending machines, 
school stores, or other campus locations. The competitive food 
standards establish nutrition requirements that each individual food 
item sold on the school campus during the school day must meet. The 
competitive food standards also include nutrition requirements for 
entr[eacute]es sold [agrave] la carte.
    For a unitized reimbursable Program meal, USDA meal patterns 
establish daily and weekly nutrition standards that provide age-
appropriate, nutritionally balanced portions to children.
    Entr[eacute]es offered as part of a reimbursable meal also may be 
sold [agrave] la carte as a competitive food to students. While an 
entr[eacute]e item could fit into the weekly Program meal pattern 
standards as part of a unitized, reimbursable meal, that same 
entr[eacute]e item may not comply with the competitive food standards, 
which are designed to apply to individual food items.
    Recognizing that foods in school meals are typically healthier due 
to the meal pattern standards, USDA provided schools with the 
flexibility to sell SBP and NSLP entr[eacute]e items as [agrave] la 
carte foods exempt from the competitive food standards on the day the 
entr[eacute]e is offered on the SBP or NSLP menu, and on the next 
school day (e.g., students can buy a piece of pizza separately on the 
day the pizza is also served as part of the unitized school lunch, and 
the day after). This flexibility was particularly designed to account 
for leftovers and reduce food waste (7 CFR 210.11(c)(3)(i)).
    Program operators are responsible for procuring foods to offer in 
the Child Nutrition Programs. When standards differ--as in the case of 
school meals and competitive foods--Program operators may have to 
procure multiple types of food. For example, one pizza may meet the 
unitized school meal standards, while a different pizza meets 
competitive food standards and can be sold [agrave] la carte.
    Program operators are also concerned about food waste. Local 
Program operators appreciated the current flexibility, and suggested 
that exempting SBP and NSLP entr[eacute]es from competitive food 
standards for an additional school day would further reduce waste by 
allowing additional time to sell leftovers.
    Therefore, in response to Program operator concerns, this rule 
proposes to ease requirements and exempt SBP and NSLP entr[eacute]es 
from the competitive food nutrition standards for one additional school 
day. It is proposed that SBP and NSLP entr[eacute]es be exempt from the 
competitive food standards on the day the entr[eacute]e is offered on 
the SBP and NSLP menu, and for two school days after.
    The proposed change to extend the entr[eacute]e exemption is in 7 
CFR 210.11(c)(3) of the regulatory text.
Specific Public Input Requested
    As previously discussed, only entr[eacute]es are exempt from the 
competitive food standards on the day such an entr[eacute]e is offered 
in the school meal programs and the day after. This rule proposes to 
add an extra day to the entr[eacute]e sale exemption. Side dishes 
offered as part of the SBP and NSLP reimbursable meal are not exempt 
from the competitive food nutrition standards. Further, USDA is taking 
this opportunity to solicit public input as to whether or not to extend 
the competitive food entr[eacute]e exemption to all food items offered 
in SBP and NSLP reimbursable meals.
    As background information, the proposed rule, National School Lunch 
Program and School Breakfast Program: Nutrition Standards for All Foods 
Sold in School as Required by the Healthy, Hunger-Free Kids Act of 2010 
(78 FR 9530, February 8, 2013) provided two alternatives by which any 
menu item (both entr[eacute]es and side dishes) provided as part of the 
NSLP and/or SBP school meal would be exempt from all or some of the 
competitive food nutrition standards.
    In an attempt to balance the majority of commenters' opposition to 
allowing exemptions for any SBP/NSLP menu items, the interim final rule 
(78 FR 39068, June 28, 2013), established that, to ensure that 
improvements from the updated school meal standards were not undermined 
and for ease of implementation, entr[eacute]e items were provided an 
exemption, but side dishes were not. This was implemented to ensure the 
nutritional integrity of the meal programs as well as the competitive 
food standards. The

[[Page 4110]]

approach adopted in the interim final rule and the subsequent final 
rule (81 FR 50151, July 29, 2016) was intended to ensure that students 
are provided healthful school meals, while allowing Program operators 
flexibility in planning [agrave] la carte sales and handling leftovers. 
However, given the fact that implementation of the competitive food 
nutrition standards has been in place for a period of time, the 
Department is interested in receiving feedback as to whether or not 
exemptions to the competitive food standards should be extended to all 
menu items offered in the SBP and NSLP.
    Additionally, USDA is seeking specific public input on grain 
products and the definition of entr[eacute]e. Current Program 
requirements specify that entr[eacute]es that include grains and are 
sold [agrave] la carte must be whole grain-rich or have a whole grain 
as the first ingredient. This requirement is inconsistent with the 
updated whole grain-rich requirements in the SBP and the NSLP. 
Therefore, USDA is seeking public comment to determine if the whole 
grain-rich/whole grain as a first ingredient requirement should be 
removed from the definition of ``Entr[eacute]e'' included in 7 CFR 
210.11(a)(3)(i). This change would make the grain requirement for 
entr[eacute]es consistent between school meals and entr[eacute]es sold 
[agrave] la carte as competitive foods. USDA seeks comments on whether 
or not this definition change is necessary, particularly in light of 
the proposed extension of the competitive food exemption for Program 
entr[eacute]es. Based on public input and at the Secretary's 
discretion, USDA may implement and/or modify the proposed operational 
flexibility in a final rule.
Expand Flexibility for the Sale of Calorie-Free, Naturally Flavored 
Waters During the School Day to All Age/Grade Groups
Current Requirement
    Calorie-free, naturally flavored waters (with or without 
carbonation) may be sold to students in grades 9-12 only (7 CFR 
210.11(m)). Calorie-free/low calorie, non-naturally flavored, 
carbonated beverages (i.e., diet soft drinks) may be sold only to high 
school students.
    Program stakeholders expressed interest in having calorie-free, 
naturally flavored water--a healthy beverage choice--available to 
middle and elementary school students.
Flexibilities Proposed by This Rule
    This rule proposes to allow local Program operators to sell 
calorie-free, naturally flavored waters (with or without carbonation), 
in portions up to 20 ounces, to students in all age/grade groups. This 
proposal would expand the current policy for grades 9-12 to all grades.
    Local Program operators seek healthy foods and beverages that 
appeal to students who want to purchase only certain items, and not an 
entire school lunch. Sales from [agrave] la carte foods and beverages 
help support the financial viability of non-profit SFAs. Expanding the 
sale of calorie-free, naturally flavored waters to all students 
increases healthy choices available to students without compromising 
nutritional integrity. Increased water consumption may also offset the 
consumption of other, higher-calorie beverages. This proposal seeks to 
ease Program requirements, permitting local Program operators to decide 
if (and to whom) they would like to sell naturally flavored, carbonated 
or noncarbonated water.
What would stay the same?
    This beverage flexibility does not expand requirements for no/low 
calorie, non-naturally flavored, carbonated beverages (i.e., diet soft 
drinks). The existing policy related to diet soft drinks would stay the 
same: Diet soft drinks may be sold only to high school students.
    The proposed change to expand the sale of calorie-free, naturally 
flavored waters to all age/grade groups is in 7 CFR 210.11(l) of the 
regulatory text.

Clarifications, Updates, and Technical Corrections

Add Flexibility to State Administrative Expense (SAE) Funds
    This rule proposes to update language at 7 CFR 235.5(e)(2) to 
change the word ``unexpended'' to ``unobligated.'' States are currently 
required to return to USDA any unexpended SAE funds at the end of the 
fiscal year following the fiscal year for which the funds are awarded. 
This proposal would give States more flexibility to spend SAE funds.
Correct NSLP Afterschool Snack Eligibility Erroneous Citations & 
Definition
    This rule proposes to correct erroneous citations and a definition 
related to the NSLP Afterschool Snack Service. Regulations at 7 CFR 
210.4(b)(3), 210.7(e), and 210.9(c) refer to 7 CFR 210.10(n)(1) in 
error when referring to NSLP Afterschool Snacks site eligibility. The 
citation would be corrected to refer to 7 CFR 210.10(o)(1). This rule 
would provide a technical correction to those three incorrect citation 
references, remove old citations, and redesignate certain paragraphs.
    There is also an error in the definition of ``child'' in 7 CFR 
210.2 that this rule proposes to correct. The NSLA permits children 
through age 18 to receive reimbursable snacks via the NSLP Afterschool 
Snack Service. The current regulatory definition of ``child'' in 7 CFR 
210.2 restricts snacks to children 12 years of age or under, or in the 
case of children of migrant workers and children with disabilities, not 
more than 15 years of age. This rule proposes to modify the definition 
of ``child'' to be consistent with the NSLA and clarify that children, 
through age 18, are eligible to receive snacks via the NSLP Afterschool 
Snack Service.
Expand List of Outlying Areas
    Regulations at 7 CFR 210.10(c)(3) and 220.8(c)(3) permit schools in 
American Samoa, Puerto Rico and the U.S. Virgin Islands to serve 
vegetables such as yams, plantains, or sweet potatoes to meet the 
grains component. These vegetables are traditional foods and, in 
outlying areas, may be easier to procure than grains. Based on their 
use of traditional foods, this rule proposes adding Guam and Hawaii to 
the list of outlying areas permitted to serve vegetables such as yams, 
plantains, or sweet potatoes to meet the grains component.
Change Vitamin A and Vitamin D Units for Fluid Milk Substitutions
    Nutrition requirements for fluid milk substitutes are detailed in 7 
CFR 210.10(d)(3), 215.7a(b), and 226.20(g)(3). The vitamin A and 
vitamin D requirements are specified in International Units (IUs). The 
FDA published a final rule that changed the labeling requirements for 
vitamins A and D to micrograms (mcg) rather than IUs.\34\ As a 
conforming amendment, this rule proposes to change the units for 
vitamin A and vitamin D requirements for fluid milk substitutes. The 
units for the vitamin A requirement would change from 500 IUs to 150 
mcg per 8 fluid ounces. The units for the vitamin D requirement would 
change from 100 IUs to 2.5 mcg per 8 fluid ounces. The amounts of 
required vitamins A and D in fluid milk substitutes would not change; 
only the unit of measurement would change to conform to FDA labeling 
requirements.
---------------------------------------------------------------------------

    \34\ Final rule. Food Labeling: Revision of the Nutrition and 
Supplement Facts Labels (81 FR 33742, published May 27, 2016). 
Available at: https://www.govinfo.gov/content/pkg/FR-2016-05-27/pdf/2016-11867.pdf.

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

[[Page 4111]]

Seeking Public Input on Specific Items

    This rule does not propose changes to the following items, but USDA 
is seeking public input to inform future policymaking. Based on public 
input and at the Secretary's discretion, USDA may incorporate these 
items, as described or modified based on public comment, in the final 
rule.
Substituting Vegetables for Fruits in the SBP
    SFAs participating in the SBP are required to offer one cup of 
fruit daily to children in all age/grade groups (7 CFR 220.8(c)). To 
meet this requirement, SFAs may offer a vegetable in place of a fruit. 
Under current regulations, SFAs choosing to offer a vegetable in place 
of a fruit at breakfast must ensure that at least two cups per week are 
from the dark green, red/orange, legumes, or ``other'' vegetables 
subgroups (7 CFR 220.8(c), footnote (c)). This substitution requirement 
increases children's access to key food groups recommended by the 
Dietary Guidelines.
    Section 768 of the Consolidated Appropriations Act, 2019 (Pub. L. 
116-6), enacted on February 15, 2019, and effective through September 
30, 2019, provided additional flexibility in planning breakfast menus 
but did not require SFAs to make any menu changes. Through September 
30, 2019, SFAs participating in the SBP could credit any vegetable 
offered, including potatoes and other starchy vegetables, in place of 
fruit without including vegetables from the designated subgroups in the 
weekly menus. Section 749 of H.R. 1865, The Further Consolidated 
Appropriations Act, 2020 (Pub. L. 116-94), enacted December 20, 2019, 
extends this flexibility through June 30, 2021. USDA seeks public 
comments on making this flexibility permanent.
Competitive Foods: Definition of Entr[eacute]e and Expanding 
Entr[eacute]e Exemption to All SBP/NSLP Foods
    As described earlier, USDA is soliciting public input on whether 
the whole grain-rich/whole grain as a first ingredient requirement 
should be removed from the definition of ``Entr[eacute]e'' included in 
7 CFR 210.11(a)(3)(i), and whether or not to extend the competitive 
food entr[eacute]e exemption to all food items offered in SBP and NSLP 
reimbursable meals.
Transparency for Administrative Review Results
    Section 22(b)(1)(C)(iii) of the NSLA directs USDA to ensure that 
State agencies report the final results of administrative reviews to 
the public in an accessible, easily understood manner. To satisfy this 
statutory requirement, State agencies must post a summary of the most 
recent administrative review results for each SFA on the State agency's 
public website, and make a copy of the final administrative review 
report available to the public upon request. The summary must be posted 
no later than 30 days after the State agency provides the results of 
the administrative review to the SFA (7 CFR 210.18(m)). While SFAs may 
have outstanding findings, the intent of the law is to provide 
information on the SFA's review to the public, including parents and 
community members, regardless of whether there are areas of 
noncompliance or needed improvements still pending.
    USDA has received feedback from State agencies that the required 
summary content and the 30-day posting requirement are challenging. 
USDA has specified minimum reporting requirements (the summary must 
cover meal access and reimbursement, meal patterns and nutritional 
quality of school meals, and the school nutrition environment), which 
limit the reporting burden on State agencies but still provide robust 
information to the public in areas of common interest. State agencies 
have discretion to provide additional summary information, including 
commendations for work well done in any area of the review. Some States 
have found posting the review summary to be too burdensome and noted 
that 30 days is not enough time. While USDA considered other 
timeframes, 30 days seemed to be a reasonable amount of time to post a 
summary of an already completed review.
    The Department is seeking comments to simplify the transparency 
requirement, including the process of posting a summary of the 
Administrative Review report, the content of that summary, and the 30-
day timeline. USDA is seeking comments to consider how to address any 
challenges or unintended burden in this requirement. In addition, the 
Department would like to know what resources or updated guidance would 
be helpful, if any, to help State agencies satisfy this important 
requirement that helps the public engage with Programs supported by 
Federal tax payer dollars.
Grain-Based Desserts in the Child and Adult Care Food Program
    Under current regulations, grain-based desserts do not count toward 
the grains requirement in the Child and Adult Care Food Program (CACFP) 
(7 CFR 226.20(a)(4)(iii)). In 2015, USDA issued a proposed rule to 
update the CACFP meal patterns that excluded grain-based desserts from 
crediting toward the grains requirement (80 FR 2037, published January 
15, 2015). A majority of commenters supported the exclusion, and the 
final rule adopted the proposal (81 FR 24348, published April 25, 
2016). Since implementation of the final rule, USDA issued two requests 
for information soliciting ideas from the public on (1) how to make 
Child Nutrition Program food crediting more simple, fair, and 
transparent; \35\ and (2) how USDA can provide better customer service 
and remove unintended barriers to Program participation.\36\ In 
response, commenters expressed a need for increased flexibility for 
local Program operators to plan wholesome menus that entice children to 
participate and also stated a desire for more consistency across Child 
Nutrition Program requirements. Commenters also mentioned the 
importance of balancing nutrition standards and children's taste 
preferences. Some commenters expressed a desire to serve grain-based 
desserts in the CACFP, which would offer menu planners an additional 
opportunity to incorporate whole grains into foods that children like 
to eat. Based on this stakeholder feedback and in its continued 
commitment to customer service, USDA seeks comments on:
---------------------------------------------------------------------------

    \35\ Food Crediting in the Child Nutrition Programs: Request for 
Information. 82 FR 58792, published December 14, 2017.
    \36\ Identifying Regulatory Reform Initiatives: Request for 
Information. 82 FR 32649, published July 17, 2017.
---------------------------------------------------------------------------

     Allowing up to 2 ounce equivalents (oz. eq.) of grain-
based desserts per week in the CACFP (consistent with requirements in 
SBP and NSLP); and/or
     Other approaches that would permit grain-based desserts to 
credit toward the grains requirement in CACFP and support healthy 
nutrition standards.

Summary of Flexibilities and Changes Proposed by This Rule

    In summary, the changes and flexibilities proposed in this rule are 
the following:

[[Page 4112]]



----------------------------------------------------------------------------------------------------------------
                                                                                                   Regulations
             Area                    Program       Current requirement       Proposed rule          impacted
----------------------------------------------------------------------------------------------------------------
                                        Proposals to Simplify Monitoring
----------------------------------------------------------------------------------------------------------------
Establish 5-year                SBP, NSLP.......  All SFAs are reviewed  State agencies would   7 CFR 210.18(c).
 Administrative Review Cycle &                     on a 3-year cycle.     be required to
 Targeted, Follow-up Reviews                                              review SFAs once
 of High-Risk SFAs.                                                       every 5 years, with
                                                                          high-risk SFAs
                                                                          receiving additional
                                                                          oversight.
Align Administrative Review     SBP, NSLP.......  SFAs operating with a  State agencies would   7 CFR
 and Food Service Management                       food service           be required to         210.19(a)(5).
 Company Review Cycles.                            management company     review SFAs
                                                   must be reviewed       operating with a
                                                   once every 3 years.    food service
                                                                          management company
                                                                          once every 5 years.
Address Significant             SBP, NSLP.......  SFAs with significant  SFAs with significant  7 CFR
 Performance Standard 1                            performance standard   performance standard   210.18(e)(5).
 Noncompliance Early in Review                     2 noncompliance must   1 and/or performance
 Cycle.                                            be reviewed earlier    standard 2
                                                   in the                 noncompliance would
                                                   administrative         be reviewed earlier
                                                   review cycle.          in the
                                                                          administrative
                                                                          review cycle.
Allow Expanded Use of Third-    SBP, NSLP.......  State agencies may     State agencies also    7 CFR
 Party Audits.                                     use recent and         would be allowed to    210.18(f)(3).
                                                   currently applicable   use recent and
                                                   findings from          applicable findings
                                                   federally required     from supplementary
                                                   audit activity or      audit activities,
                                                   from any State-        requirements added
                                                   imposed audit          to Federal or State
                                                   requirements.          audits by local
                                                                          operators, or other
                                                                          third-party audits
                                                                          initiated by SFAs or
                                                                          other local entities.
Allow Completion of Review      SBP, NSLP, SMP,   State agencies cannot  State agencies would   7 CFR 210.18(f),
 Requirements Outside of the     FFVP \37\.        satisfy                be allowed to          (g), and (h).
 Administrative Review.                            administrative         satisfy sections of
                                                   review requirements    the administrative
                                                   by conducting          review through
                                                   monitoring and         equivalent State
                                                   oversight activities   monitoring or
                                                   outside of the         oversight activities
                                                   formal                 conducted outside of
                                                   administrative         the established
                                                   review process.        administrative
                                                                          review process.
Provide Incentives to Invest    SBP, NSLP.......  State agencies         Proposes a framework   7 CFR 210.18(f),
 in Integrity-Focused Process                      conduct                for waiving or         (g), and (h).
 Improvements.                                     administrative         bypassing certain
                                                   reviews to monitor     administrative
                                                   compliance with        review requirements
                                                   Program requirements.  for State and/or
                                                                          local agencies that
                                                                          implement FNS-
                                                                          specified process
                                                                          improvements.
Omit the On-Site Breakfast      SBP.............  State agencies must    State agencies would   7 CFR
 Review in Extenuating                             conduct on-site SBP    be allowed to omit     210.18(g)(1)(ii
 Circumstances.                                    reviews of half of     the on-site SBP        ), 7 CFR
                                                   review sites that      review in              210.18(g)(2)(i)
                                                   operate SBP.           extenuating            (B).
                                                                          circumstances.
Add Flexibility to Completion   SBP, NSLP.......  State agencies must    State agencies would   7 CFR
 of the Resource Management                        conduct an off-site    be allowed to assess   210.18(h)(1).
 Module.                                           assessment of an       an SFA's risk for
                                                   SFA's financial        noncompliance in
                                                   practices before the   Resource Management
                                                   review of Resource     areas at any point
                                                   Management             in the review
                                                   requirements.          process.
Set Consistent Fiscal Action    SBP, NSLP.......  State agencies must    Proposal would allow   7 CFR
 for Repeated Meal Pattern                         take fiscal action     State agencies         210.18(l)(2).
 Violations.                                       for repeated           discretion to take
                                                   violations for milk    fiscal action for
                                                   type and vegetable     repeated violations
                                                   subgroups.             for milk type and
                                                                          vegetable subgroups.
Add Buy American to the         SBP, NSLP.......  State agencies         Proposal would add     7 CFR
 General Areas of the                              conduct an on-site     Buy American on-site   210.18(h)(2).
 Administrative Review.                            review of food         compliance check to
                                                   components to check    the regulations
                                                   compliance with Buy    under general areas
                                                   American provision,    of the
                                                   as specified in        administrative
                                                   guidance, but not in   review.
                                                   regulations.
----------------------------------------------------------------------------------------------------------------
                                       Proposals to Simplify Meal Service
----------------------------------------------------------------------------------------------------------------
Facilitate the Service of       NSLP............  SFAs must offer        Proposal would allow   7 CFR
 Vegetable Subgroups in the                        different amounts of   SFAs to offer the      210.10(c)(2)(ii
 NSLP.                                             five vegetable         same amount of         i), 7 CFR
                                                   subgroups identified   vegetables from all    210.10(m)(4)(ii
                                                   in the Dietary         five subgroups to      ).
                                                   Guidelines over the    all age/grade
                                                   school week (Dark      groups. It would
                                                   Green, Red/Orange,     also allow legumes
                                                   Legumes, Starchy,      offered as a meat
                                                   and Other).            alternate to count
                                                                          toward the weekly
                                                                          legumes vegetable
                                                                          requirement.
Add Flexibility to Established  SBP, NSLP.......  Schools are required   Proposal would allow   7 CFR
 Age/Grade Groups.                                 to offer meals that    schools with unique    210.10(c)(1), 7
                                                   meet requirements      grade configurations   CFR
                                                   established for        to add or subtract a   210.10(m)(4), 7
                                                   three established      grade on either or     CFR
                                                   age/grade groups (K-   both ends of an        220.8(c)(1), 7
                                                   5, 6-8, 9-12).         established age/       CFR
                                                                          grade group. Also,     220.8(m)(2).
                                                                          schools with unique
                                                                          grade configurations
                                                                          in SFAs with fewer
                                                                          than 2,500 students
                                                                          would have the
                                                                          option to use one
                                                                          (or two) meal
                                                                          patterns for
                                                                          established age/
                                                                          grade groups for all
                                                                          students.
Increase Flexibility to Offer   SBP.............  Schools may offer      Proposal would allow   7 CFR
 Meats/Meat Alternates at                          meats/meat             schools to offer a     220.8(c)(2).
 Breakfast.                                        alternates at          meat/meat alternate
                                                   breakfast after the    or a grain at
                                                   minimum daily grains   breakfast (or a
                                                   requirement is         combination of the
                                                   offered.               two) with no daily
                                                                          minimum grain
                                                                          requirement.
Flexibility in SBP Fruit        SBP.............  Schools must offer 1   With State agency      7 CFR
 Component.                                        cup of fruit per day   approval, schools      220.8(c)(2), 7
                                                   and 5 cups of fruit    serving SBP in a non-  CFR
                                                   per week. Students     cafeteria setting      220.8(m)(1).
                                                   may select \1/2\ cup   would be allowed to
                                                   of fruit for a         offer \1/2\ cup
                                                   reimbursable meal      fruit per day (2\1/
                                                   under Offer versus     2\ cups per week) as
                                                   Serve (OVS).           part of reimbursable
                                                                          breakfasts.
Remove Trans Fat Limit as a     SBP, NSLP,        Trans fats are         Proposal would remove  7 CFR
 Dietary Specification.          Competitive       prohibited in NSLP,    USDA's trans fat       210.10(f)(4), 7
                                 Foods.            SBP, and competitive   prohibition            CFR 210.11(g),
                                                   foods.                 effective July 1,      7 CFR
                                                                          2021. The Food &       220.8(f)(4).
                                                                          Drug Administration
                                                                          is removing trans
                                                                          fats from the food
                                                                          supply.
Change Performance-based        NSLP............  States are required    Proposal would reduce  7 CFR
 Reimbursement (7 cents)                           to submit a            the frequency of the   210.5(d)(2)(ii)
 Quarterly Report to an Annual                     quarterly report       performance-based      .
 Report.                                           detailing the SFAs     report from
                                                   to receive the         quarterly to
                                                   performance-based 7    annually.
                                                   cents reimbursement.
Update Meal Modifications for   SBP, NSLP, CACFP  Schools,               Proposal would:......  7 CFR 210.2, 7
 Disability and Non-Disability                     institutions, and     Remove the term         CFR
 Reasons.                                          facilities are         ``special dietary      210.10(d)(3), 7
                                                   required to obtain a   needs,'' which is      CFR 210.10(m),
                                                   written statement      encompassed in the     7 CFR 226.2, 7
                                                   from a licensed        expanded definition    CFR 226.20(g).
                                                   physician to make      of ``disability''.
                                                   meal substitutions    Add a definition for
                                                   for a child's          ``State licensed
                                                   disability.            healthcare
                                                                          professional''.
                                                                         Clarify that a
                                                                          medical statement is
                                                                          only required for
                                                                          accommodations that
                                                                          fall outside the
                                                                          meal patterns.

[[Page 4113]]

 
Expand Potable Water            SBP, NSLP.......  Schools are required   Proposal would permit  7 CFR
 Requirement to Include                            to make unflavored,    schools to offer       210.10(a)(1)(i)
 Calorie-free, Noncarbonated,                      potable water          naturally flavored     , 7 CFR
 Naturally Flavored Water.                         available and          water to meet the      220.8(a)(1).
                                                   accessible without     potable water
                                                   restriction to         requirement.
                                                   children at no
                                                   charge in the
                                                   place(s) where
                                                   lunches are served
                                                   during the meal
                                                   service.
----------------------------------------------------------------------------------------------------------------
                                     Proposals to Simplify Competitive Foods
----------------------------------------------------------------------------------------------------------------
Extend the Entr[eacute]e        Competitive       Currently, an          Would exempt           7 CFR
 Exemption Timeframe.            Foods.            entr[eacute]e is       entr[eacute]es from    210.11(c)(3).
                                                   exempt from            standards the day
                                                   competitive food       offered on the SBP
                                                   standards the day      and NSLP menu and
                                                   offered on the NSLP    for two days after.
                                                   and SBP menu and the
                                                   day after.
Expand Flexibility for the      Competitive       Calorie-free,          Proposal would allow   7 CFR 210.11(l).
 Sale of Calorie-Free,           Foods.            flavored waters,       the sale of calorie-
 Naturally Flavored Waters                         with or without        free, flavored
 During the School Day to All                      carbonation may be     waters, with or
 Age/Grade Groups.                                 sold to students in    without carbonation
                                                   grades 9-12.           to students in all
                                                                          grades.
----------------------------------------------------------------------------------------------------------------
                                Clarifications, Updates, & Technical Corrections
----------------------------------------------------------------------------------------------------------------
Add Flexibility to State        SBP, NSLP, SMP,   States are required    Changes                7 CFR
 Administrative Expense (SAE)    CACFP, SFSP       to return any          ``unexpended'' to      235.5(e)(2).
 Funds.                          \38\.             unexpended SAE funds   ``unobligated'' to
                                                   at the end of the      allow States more
                                                   fiscal year            flexibility to spend
                                                   following the fiscal   SAE funds.
                                                   year for which the
                                                   funds are awarded.
Correct NSLP Afterschool Snack  NSLP............  7 CFR 210 contains     Corrects erroneous     7 CFR 210.2, 7
 Eligibility Erroneous                             erroneous citations    citations and          CFR
 Citations & Definition of                         related to NSLP        definition.            210.4(b)(3), 7
 ``child''.                                        Afterschool Snack                             CFR 210.7(e), 7
                                                   site eligibility.                             CFR 210.9(c).
                                                   Definition of
                                                   ``child'' is
                                                   outdated.
Expand List of Outlying Areas.  SBP, NSLP.......  Certain outlying       Adds Guam and Hawaii   7 CFR
                                                   areas are permitted    to the list of         210.10(c)(3), 7
                                                   to serve vegetables    outlying areas         CFR
                                                   such as yams,          permitted to serve     220.8(c)(3).
                                                   plantains, or sweet    vegetables such as
                                                   potatoes to meet the   yams, plantains, or
                                                   grains component.      sweet potatoes to
                                                                          meet the grains
                                                                          component.
Change Vitamin A and Vitamin D  SBP, NSLP, SMP,   Fluid milk             The required levels    7 CFR
 Units for Fluid Milk            CACFP.            substitutes must       of vitamin A and D     210.10(d)(3), 7
 Substitutions.                                    contain at least 500   are unchanged.         CFR 215.7a(b),
                                                   International Units    Consistent with FDA    7 CFR
                                                   (IUs) of vitamin A     labeling changes for   226.20(g)(3).
                                                   and 100 IUs of         vitamins A and D,
                                                   vitamin D per 8        the proposal would
                                                   fluid ounces.          change the units of
                                                                          the vitamin A and
                                                                          vitamin D
                                                                          requirements for
                                                                          fluid milk
                                                                          substitutes to 150
                                                                          mcg and 2.5 mcg,
                                                                          respectively, per 8
                                                                          fluid ounces.
----------------------------------------------------------------------------------------------------------------
                          Seeking Public Input on Specific Items (no changes proposed)
----------------------------------------------------------------------------------------------------------------
Substituting Vegetables for     SBP.............  SFAs choosing to       Proposal requests      7 CFR 220.8(c).
 Fruits at Breakfast.                              offer a vegetable in   public comments on
                                                   place of a fruit       whether or not to
                                                   must ensure that at    permanently allow
                                                   least two cups per     SFAs to credit any
                                                   week are from the      vegetable offered,
                                                   dark green, red/       including potatoes
                                                   orange, legumes, or    and other starchy
                                                   ``other vegetables''   vegetables, in place
                                                   subgroups \39\.        of fruit without
                                                                          including vegetables
                                                                          from the designated
                                                                          subgroups in the
                                                                          weekly menus.
Definition of Entr[eacute]e     Competitive       Entrees are required   Proposal requests      7 CFR
 and Expanding Entr[eacute]e     Foods.            to be whole grain-     public comments on     210.11(a)(3), 7
 Exemption to All SBP/NSLP                         rich. Entrees are      whether the whole      CFR
 Foods.                                            exempt from            grain-rich/whole       210.11(c)(3).
                                                   competitive foods      grain as a first
                                                   standards on the day   ingredient
                                                   offered on the SBP/    requirement should
                                                   NSLP menu and one      be removed from the
                                                   day after.             definition of
                                                                          ``Entr[eacute]e''
                                                                          included in 7 CFR
                                                                          210.11(a)(3)(i), and
                                                                          whether or not to
                                                                          extend the
                                                                          competitive food
                                                                          entr[eacute]e
                                                                          exemption to all
                                                                          food items offered
                                                                          in SBP and NSLP
                                                                          reimbursable meals.
Transparency for                SBP, NSLP.......  State agencies must    Proposal requests      7 CFR 210.18(m).
 Administrative Review Results.                    report the final       public comments on
                                                   results of an          how to simplify this
                                                   administrative         transparency
                                                   review to the public   requirement,
                                                   (in an accessible,     including the
                                                   easily understood      process of posting
                                                   manner) no later       results, the summary
                                                   than 30 days after     content, and the 30
                                                   the State agency       day timeframe.
                                                   provides the results
                                                   to the SFA.
Grain-based Desserts in the     CACFP...........  Grain-based desserts   Proposal requests      7 CFR 226.20.
 Child and Adult Care Food                         do not count toward    comments on
 Program.                                          the Grains             permitting grain-
                                                   requirement.           based desserts: up
                                                                          to 2 oz. eq. per
                                                                          week (same as SBP
                                                                          and NSLP) or other
                                                                          approaches.
----------------------------------------------------------------------------------------------------------------

IV. Timeline and Instructions to Commenters
---------------------------------------------------------------------------

    \37\ SMP = Special Milk Program, FFVP = Fresh Fruit and 
Vegetable Program.
    \38\ SMP = Special Milk Program; CACFP = Child and Adult Care 
Food Program; SFSP = Summer Food Service Program.
    \39\ Through September 30, 2019, the Consolidated Appropriations 
Act, 2019 (Pub. L. 116-6) permitted any vegetable offered, including 
potatoes and other starchy vegetables, to credit in place of fruit 
without including vegetables from the designated subgroups in the 
weekly menus. The Further Consolidated Appropriations Act, 2020 
(Pub. L. 116-94), enacted December 20, 2019, extends this 
flexibility through June 30, 2021.
---------------------------------------------------------------------------

    Comments from State agencies, local Program operators, food 
industry, nutrition advocates, parents, and other stakeholders on the 
day-to-day impact of these proposals will be extremely helpful in the 
development of a final rule. USDA will carefully consider all relevant 
comments submitted during the 60-day comment period for this rule, and 
intends to issue a final rule promptly.

Procedural Matters

Economic Summary
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, reducing costs, harmonizing rules, and promoting flexibility.
    This proposed rule is significant and was reviewed by the Office of 
Management and Budget (OMB) in conformance with Executive Order 12866. 
This rule proposes a number of changes to simplify the monitoring and 
meal service requirements for the National School Lunch Program, School 
Breakfast Program, and Child and Adult Care Food Program. The proposed 
changes are a direct result of operator feedback, and intend to provide 
State

[[Page 4114]]

and local Program operators necessary flexibilities to ensure they can 
operate the programs effectively and efficiently.
    While there are a number of proposed changes in this rule, the 
increase in administrative review cycle length from reviewing all SFAs 
once every 3 years to once every 5 years and a reduction in the 
frequency of the reporting performance-based certification requirement 
impact burden hours and result in minimal administrative savings. 
Existing NSLP requirements for recordkeeping and reporting do not 
reflect the current 3-year administrative cycle or the reporting 
requirement for the performance-based reporting. These errors will be 
corrected during the scheduled renewal process in fall 2019. The 
reduction in burden hours in this rule are based on the estimated 
corrected hours. This rule is estimated to reduce school meal 
administrative burden by 171,372 hours, which is $11.4 million in 
annualized savings at a 7 percent discount rate, discounted to a 2016 
equivalent, over a perpetual time horizon.
    The proposed rule includes a detailed table that lists each change. 
This economic summary follows the order of this table to discuss each 
proposed change.

Proposals To Simplify Monitoring Requirements

    USDA published a final rule in 2012 to establish a 3-year 
monitoring cycle for SFAs. This rule merged the prior requirements to 
conduct a Coordinated Review Effort on a 5-year cycle and the School 
Meals Initiative, a nutritional assessment of meals, on a separate 3-
year cycle. USDA published regulations in 2016 that created the 
administrative review, which is a unified review process that includes 
both the operational and nutritional assessment in one process that 
follows a 3-year review cycle. Increasing the review frequency--from 
once every 5 years to once every 3 years--along with the introduction 
of a more comprehensive and unified review resulted in a number of 
challenges. Some State agencies had difficulty completing the new 
administrative review process within the 3-year cycle, while also 
providing technical assistance and maintaining effective and efficient 
program operations. Some State agencies needed to hire additional staff 
to complete reviews more frequently; however, not all State agencies 
could do this due to financial constraints.
    These challenges and resource constraints resulted in USDA allowing 
State agencies to submit waiver requests to extend the administrative 
review cycle to 4 or 5 years instead of 3 years. The changes proposed 
in this rule are to alleviate monitoring burden to State and local 
Program operators. The changes are intended to streamline the review 
process and target limited resources toward SFAs most at-risk for 
noncompliance. This proposed rule responds to on-going concerns from 
Program operators who are challenged to fulfill oversight 
responsibilities. Some of these changes are estimated to have minimal 
impact on burden and the associated administrative costs for completing 
program monitoring requirements.
5-Year Administrative Review Cycle and Targeted, Follow-Up Reviews for 
High-Risk SFAs
    The transition from a 5-year cycle to a 3-year cycle for the 
administrative review process resulted in some State agencies and SFAs 
struggling to complete reviews and oversight activities. USDA has 
received feedback through a number of avenues regarding the 
difficulties faced by State agencies. The Child Nutrition Burden Study 
was conducted in SY 2017-2018 in response to a Congressional mandate in 
House Report 114-531 to identify areas to reduce burden in the Child 
Nutrition Programs. This study collected data through workgroups with 
State and local Program operators, as well as a survey from a census of 
all State agencies and a nationally representative sample of SFAs. One 
reoccurring theme in this study, from both the State agency and SFA 
perspectives, was the burden associated with the 3-year administrative 
review cycle. To comply with the 3-year administrative review 
requirements, some State agencies and SFAs were sacrificing staff 
resources needed for program administration, including providing 
technical assistance. State agencies face a number of time and resource 
constraints, and Program operators struggled to adopt the new 
procedures and timeframes.
    According to the Child Nutrition Burden Study results, both State 
agencies and SFAs reported administrative reviews to be time-consuming 
and resource intensive. The top factors cited by State agency 
respondents as contributing to administrative review efforts were the 
amount of information required (77 percent) and preparation time (73 
percent). About two-thirds of State agency respondents identified the 
frequency of administrative reviews and staff availability as key 
contributors to the effort needed to conduct administrative reviews. 
Time and resource constraints disproportionately affected smaller State 
agencies as they were nearly twice as likely to cite staff availability 
to participate in administrative reviews as a burden factor, compared 
to the very large States. Both State respondents and SFA workgroup 
participants noted that they had to hire extra staff to prepare for and 
conduct administrative reviews. One of 10 key considerations in the 
report is to implement a risk-based administrative review process where 
low-risk SFAs are reviewed less frequently than high-risk SFAs.\40\
---------------------------------------------------------------------------

    \40\ https://fns-prod.azureedge.net/sites/default/files/resource-files/CN-Reducing%20Burden.pdf.
---------------------------------------------------------------------------

    This proposed rule would provide State agencies with the ability to 
conduct a comprehensive NSLP and SBP review of each SFA at least once 
during a 5-year cycle, instead of once during a 3-year cycle. State 
agencies would be required to identify high-risk SFAs for additional 
oversight. SFAs designated as high-risk must receive a follow-up review 
within two years of being identified as high-risk. State agencies may 
still opt to review SFAs more frequently.
    Determining the high-risk designation is still under consideration 
but USDA anticipates factoring in prior administrative review findings, 
operational history of SFA (to include staff experience), and SFA 
characteristics such as funding level, type of meal counting and 
claiming system, and point-of-service system.
    The follow-up review process proposed in this rule is not new to 
Child Nutrition Program monitoring. Prior to the implementation of the 
current administrative review process, the Coordinated Review Effort 
included follow-up reviews. The Coordinated Review Effort procedures 
required States to conduct follow-up reviews of all large, and at least 
25 percent of all small, SFAs when certain review thresholds were 
exceeded. State agencies were encouraged to conduct the follow-up 
review in the same school year as the coordinated review. While similar 
in structure, the proposed addition of follow-up reviews in high-risk 
SFAs would likely be different from follow-up reviews in the prior 
Coordinate Review Effort. The administrative review process is now a 
more comprehensive review, and the high-risk criteria and follow-up 
reviews will likely differ in selection and scope from the Coordinated 
Review Effort.
    It is important to assess the impact of returning to a 5-year 
cycle. Fewer SFAs would be reviewed each year, resulting in the 
potential for program error to continue for longer. Table 1 shows the

[[Page 4115]]

projected number of annual reviews that would be conducted using a 5-
year cycle and the number of annual reviews that would be conducted 
using a 3-year cycle. It also provides the number of actual reviews 
conducted in SY 2016-2017 \41\ when 48 States were on a 3-year cycle. 
Six States were on either a 4 or 5-year cycle (due to receiving a 
waiver to extend the review cycle) in SY 2016-2017.
---------------------------------------------------------------------------

    \41\ This is the first complete year of administrative data USDA 
collected on the administrative review process. States' report data 
lagged one year, meaning review results for SY 2016-2017 were 
reported in SY 2017-2018.

                                   Table 1--Number of Annual Reviews Conducted
----------------------------------------------------------------------------------------------------------------
                                                        Number of SFAs      Number of SFAs      Number of SFAs
        Total number of SFAs in  SY 2016-2017         reviewed during  5- reviewed during  3- reviewed  SY 2016-
                                                          year cycle          year cycle             2017
----------------------------------------------------------------------------------------------------------------
19,240..............................................              3,848               6,413               5,537
----------------------------------------------------------------------------------------------------------------

    If all State agencies use a 5-year cycle, and conduct an equal 
number of reviews each year, approximately 40 percent (or 2,565) fewer 
SFAs would be reviewed each year (compared to a 3-year cycle). In SY 
2016-2017 due to the review cycle flexibilities (that currently remain 
in effect), 5,537 SFAs were actually reviewed. This is 876 fewer 
reviewed SFAs than the expected 6,413 SFAs receiving annual reviews on 
a 3-year cycle. These figures do not take into account follow-up 
reviews proposed in this rule.
    To better understand the impact of the proposed follow-up review, 
the data from the SY 2016-2017 review year was analyzed to estimate the 
potential number of follow-up reviews that may have been conducted, if 
the proposed follow-up reviews were implemented. The criteria used in 
this simulation only focuses on the results of the administrative 
reviews, and does not account for other important criteria that the 
State agency may identify or items that may be identified through 
public comments on this proposed rule.
    To estimate the potential number of follow-up reviews, reviewed 
SFAs were grouped by the number of error flags triggered during 
administrative reviews in SY 2016-2017. SFAs with any application 
errors (for example missing child or household name or income 
information) were assigned an error flag for applications, the same 
process was done for SFAs with certification benefit issuance errors 
(for example, during a review, a sampled student was approved for free 
meals but was not eligible). SFAs with a fiscal action amount that was 
not disregarded were assigned a fiscal action error flag. SFAs were 
also assigned an error flag if they triggered the risk flag for the 
resource management errors (nonprofit school food service account, Paid 
Lunch Equity, revenue from nonprogram foods, and indirect costs) or 
served meals missing components.
    The number of SFAs by type of error flag is presented in Table 2. 
Similarly, the number of SFAs reviewed by total number of error flags 
is in Table 3. It is important to note this analysis does not consider 
the magnitude of a particular error, just the presence of an error 
found during an administrative review.

                                               Table 2--Number of SFAs by Error Flag--SY 2016-2017 Reviews
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                       Certification
         Total SFAs  reviewed with data *            No error flags    Application     benefit error    Fiscal action       Resource     Incomplete meal
                                                                        error flag          flag          taken flag    management flag     error flag
--------------------------------------------------------------------------------------------------------------------------------------------------------
4,224.............................................             103            1,070              661              347            3,668            3,162
--------------------------------------------------------------------------------------------------------------------------------------------------------
* The total number of SFAs reviewed in SY 2016-2017 is less than the total in Table 1 above, due to USDA providing 13 State agencies the flexibility to
  only report data for a percentage of total SFAs reviewed (due to resource constraints on State agencies).


        Table 3--Number of Reviewed SFAs by Count of Error Flags
------------------------------------------------------------------------
                                                        Percent of  SFAs
                                                          reviewed by
       Number of error flags          Count of SFAs     number of flags
                                                           (percent)
------------------------------------------------------------------------
0.................................                103                2.4
1.................................                874               20.7
2.................................              2,173               51.4
3.................................                678               16.1
4.................................                326                7.7
5.................................                 70                1.7
------------------------------------------------------------------------

    The top two most common flags assigned were (1) SFAs flagged for 
triggering resource management risk criteria (and, thereby, triggering 
a comprehensive resource management review), followed by (2) meals 
served missing one or more components. The resource management error 
flag does not necessarily mean there is noncompliance; it only means 
that the SFA was triggered to require a comprehensive review based on 
an off-site risk assessment. The SFA may not actually be in error. 
Table 3 shows the total number of SFAs by total count of flags. About 
9.4 percent of SFAs were flagged for four or more flags and 2.4 percent 
had zero flags assigned. The vast majority of SFAs received two or 
fewer flags. The group of SFAs with zero flags may be over-representing 
one

[[Page 4116]]

State that has about 40 percent of the SFAs with no flags. For the 
groups of SFAs with one or more flags there were no discernable 
patterns with respect to State and SFA size.
    To estimate the number of potential follow-up reviews that would be 
required as proposed in this rule, the total number of SFAs with at 
least three flags could be assumed to be SFAs with errors across almost 
all, if not all, major review categories and, therefore, in need of a 
follow-up review. This would mean about 25 percent of the reviewed SFAs 
would be triggered for a targeted follow-up review in a given year, 
which would add about 962 total follow-up reviews in a year across the 
nation.
    It is likely that, for some SFAs, it may take more than one follow-
up review to remedy major or systemic issues. Assuming that about 15 
percent of SFAs with follow-up reviews would require additional 
technical assistance through a site visit or validation measure, this 
would add about 144 more review activities in select SFAs.\42\
---------------------------------------------------------------------------

    \42\ This is assuming the 70 SFAs with five error flags plus 85 
of the SFAs with four error flags including the fiscal action taken 
error flag.
---------------------------------------------------------------------------

    The total number of estimated SFAs receiving annual reviews under 
this proposal including the targeted follow-up reviews and other review 
activities would be about 4,954 SFAs, which is about 26 percent of all 
SFAs in the nation. This would mean around 1,459 (22 percent) fewer 
SFAs would be reviewed each year across the nation, than if all State 
agencies were using a 3-year cycle (where State agencies review about 
33 percent of SFAs each year). This estimated number of follow-up 
review is on average, across the nation, in a given year. The actual 
number of follow-up reviews will vary by individual State agencies. As 
systemic and significant issues are identified and resolved through the 
administrative review process, the number of follow-up reviews may 
decrease over time.
    Regarding the number of SFAs reviewed with little to no error; 
there were 23 percent with zero or one flag. Among SFAs with two flags, 
almost all were errors requiring corrective action only, with no fiscal 
action taken. This means there is likely little risk in allowing more 
time between reviews for these SFAs. However, moving to a 5-year cycle 
would delay the identification of any potential new errors in low-risk 
SFAs for two additional years.
    There would be about 1,459 fewer annual reviews conducted under 
this proposed change, leaving the potential for issues to continue for 
additional years. However, the targeted nature of the follow-up review, 
in both selection and scope, would aim to redirect resources to fixing 
program issues and providing the necessary technical assistance that is 
currently difficult to do for some resource-strapped States under the 
current 3-year cycle.
    An overall decrease in burden hours (-171,330 hours \43\) is 
expected for moving from a 3-year to a 5-year review cycle. The 
targeted nature of the follow-up reviews are intended to be more 
directly focused on noncompliance and high-risk areas, therefore less 
burdensome than the initial review. This aids in streamlining the 
review procedures while balancing the need to quickly resolve program 
errors and the importance of addressing noncompliance in high-risk 
SFAs. This is intended to help State and local operators focus 
resources toward technical assistance and technology to improve Program 
operations. These changes are anticipated to save $60 million over 5 
years.
---------------------------------------------------------------------------

    \43\ This total only includes the reduction due to the change in 
the administrative review and does not include the reduction of 42 
reporting hours associated with decreasing the frequency of the 
performance based reporting requirement.

  Table 3--Annual and 5-Year Savings--Optional 5-Year Administrative Review Cycle & Targeted, Follow-Up Reviews
                                               for High-Risk SFAs
                                                   [Millions]
----------------------------------------------------------------------------------------------------------------
     FY 2020            FY 2021            FY 2022            FY 2023            FY 2024             5-Year
----------------------------------------------------------------------------------------------------------------
       $(11.16)           $(11.56)           $(11.98)           $(12.41)           $(12.86)           $(59.97)
----------------------------------------------------------------------------------------------------------------

Align Administrative Review and Food Service Management Company Review 
Cycles
    This rule proposes to change review of SFAs that contract with a 
Food Service Management Company to a 5-year review cycle. Currently 
SFAs with Food Service Management Companies receive a review once every 
3 years. This rule proposes giving State agencies the ability to align 
Food Service Management Company reviews with the administrative review 
cycle and streamline oversight activities. About 20 percent of SFAs 
utilize a Food Service Management Company for some or all of their meal 
service.\44\ This proposal will likely alleviate burden in State 
agencies with SFAs using Food Service Management Companies due to the 
alignment in review cycles.
---------------------------------------------------------------------------

    \44\ U.S. Department of Agriculture, Food and Nutrition Service, 
Office of Policy Support, School Nutrition and Meal Cost Study, 
Final Report Volume 1: School Meal Program Operations and School 
Nutrition Environments by Sarah Forrestal, Charlotte Cabili, Dallas 
Dotter, Christopher W. Logan, Patricia Connor, Maria Boyle, Ayseha 
Enver, and Hiren Nissar. Project Officer: John Endahl. Alexandria, 
VA: April 2019.
---------------------------------------------------------------------------

Address Significant Performance Standard 1 Noncompliance Early in 
Review Cycle
    This proposed change places the same emphasis on noncompliance with 
meal pattern requirements and other review areas. SFAs with significant 
noncompliance issues in Performance Standard 1, which includes 
certification determinations, may also be reviewed early. Currently, 
SFAs with meal pattern issues were to be prioritized in the review 
cycle. This change would require State agencies to review SFAs with 
significant noncompliance issues across all program areas early in the 
cycle. This change seeks to increase overall program integrity by 
allowing State agencies to apply local knowledge to prioritize the SFA 
review order. There are minimal impacts to program costs with this 
change. However, prioritizing SFAs with significant noncompliance 
issues of all types may result in earlier identification of program 
errors, which may offset some of the delay in identifying program error 
due to changing to a 5-year administrative review cycle.
Allow Expanded Use of Third-Party Audits
    This change would provide States the flexibility to use State/local 
or third-party audits to count for comparable sections of the 
administrative review. This proposal intends to take advantage of other 
relevant audit activities, some of which require specialized experience

[[Page 4117]]

to complete, to streamline program operations and minimize monitoring 
burden. This change may result in minimal administrative savings for 
State agencies that are able to utilize audits for comparable sections 
of the administrative review. Due to the variation in how State 
agencies may apply this proposed change, these savings cannot be 
quantified.
Allow Completion of Review Requirements Outside of the Administrative 
Review
    This proposal would allow State agencies to use review activities 
conducted outside the administrative review to fulfill the relevant 
areas of the administrative reviews. Some State agencies proactively 
conduct technical assistance and review activities throughout the year 
to ensure compliance across SFAs. This change would allow these 
activities, if determined to be sufficient by USDA, to count toward the 
applicable areas of the administrative review. This is intended to 
reduce duplicative Program oversight efforts. This proposal would allow 
the use of existing information to fulfill administrative review 
requirements. There may be minimal administrative savings in State 
agencies that are able to utilize activities completed outside of 
review to satisfy administrative review requirements. Due to the wide 
variation in which State agencies may apply this proposed change, 
program impacts cannot be quantified.
Provide Incentives To Invest in Integrity-Focused Process Improvements
    This proposed change introduces a new concept to encourage program 
integrity-focused reforms. The proposed framework would include 
optional reforms that State agencies and SFAs can adopt in exchange for 
alleviating existing administrative review requirements. This 
incentive-based approach is intended to encourage States and SFAs to 
adopt research-based approaches to directly reduce improper payments. 
This proposal provides a new framework for redirecting program 
resources toward solving Program integrity challenges. The State and 
local investments made under this proposal aim to improve and 
streamline program integrity efforts. There is no immediate impact to 
Program costs with this proposal because existing program funds are 
used and impact on Program integrity is unknown. As new integrity 
challenges arise and solutions determined to impact improper payments 
are implemented, an impact on Program cost is anticipated; however, the 
impact cannot be quantified at this time.
Omit the On-Site Breakfast Review in Extenuating Circumstances
    The administrative review requires an on-site review of the SBP. 
The review of SBP is imperative to ensure compliance with Program 
requirements. Current procedures require on-site review of the SBP in 
half of the sites selected for review that offer the SBP. This 
requirement was established at half of sites to reduce the burden 
associated with reviewing the SBP in all sites. Some SFAs still 
struggle to review half of the SBP sites. These challenges are unique 
to certain States with SFAs in remote areas with limited transportation 
and lodging options. The proposed change would allow States with 
extenuating circumstances to omit the on-site review and use other 
existing processes to review the SBP. This rule requests comments on 
identifying areas of the on-site SBP review that cannot be met during 
the review of the NSLP, risks to Program integrity, challenges 
encountered by State agencies and SFAs, and various tools available 
that could be used to review the SBP. USDA will consider public 
comments to this proposed rule to inform guidance on if/how this 
proposed change will be implemented. Pending more information from the 
comment process, impacts to Program costs cannot be estimated at this 
time.
Add Flexibility to Resource Management Review
    This proposed change is in response to feedback received by USDA on 
concerns about the off-site assessment of the Resource Management 
module. The current process requires an off-site resource management 
assessment, conducted at least four weeks prior to the on-site 
administrative review, to identify how many SFAs need a comprehensive 
review. State agencies voiced concerns that evaluating the financial 
health of the nonprofit school food service account can be challenging 
to complete off-site, depending on State agency procedures. State 
agencies also have flexibility to conduct the comprehensive Resource 
Management review off-site, providing more discretion on how this 
financial oversight is executed.
    In the SY 2016-2017 review dataset, 87 percent of the reviewed SFAs 
triggered a Resource Management risk flag requiring a comprehensive 
review. Based on the feedback received from States, some of these SFAs 
may have been identified as at risk due to the complications of 
conducting the assessment off-site within the proper timeframes. 
Ensuring Program integrity is imperative; however, if the current off-
site assessment does not accurately reflect the SFA operations once the 
on-site review is conducted, the result is undue burden and the 
misdirection of important Program resources.
    This proposed change would provide State agencies the flexibility 
to conduct the Resource Management portion of the review in a way that 
makes the most operational sense for the State agency. This does not 
change the requirement that State agencies must conduct as assessment 
of the SFA's nonprofit school food service account following the 
administrative review procedures. This proposed change would allow 
State agencies the flexibility to conduct the Resource Management 
module at any point in the review process, including the discretion to 
conduct the risk assessment and/or the comprehensive review off- or on-
site. There are negligible impacts to Program costs associated with 
this proposed change.
Set Consistent Fiscal Action for Repeated Meal Pattern Violations
    This proposal aligns fiscal action requirements for repeated 
violations concerning milk type and vegetable subgroup requirements to 
increase consistency and reduce confusion. Currently, State agencies 
must take fiscal action for missing food components and for repeated 
violations of milk type and vegetable subgroup requirements. State 
agencies may take fiscal action for repeated violations concerning food 
quantities, whole grain-rich foods, and dietary specifications 
(calories, saturated fat, trans fat, and sodium). This proposal would 
allow State discretion for fiscal action for repeated violations for 
milk type and vegetable subgroup requirements to be consistent with the 
requirements for food quantities, whole grain-rich foods, and dietary 
specifications.
    In this instance, students are still receiving the correct food 
components, just not the specific type of food component that fully 
meets the meal standards. State agencies are in the best position to 
use discretion to determine an appropriate course of action for 
repeated violations of this nature. Fiscal action is still required for 
meals missing components. This proposed change would allow State 
discretion and align requirements with similar intent. There are 
negligible impacts to program costs with this proposed change.

[[Page 4118]]

Add Buy American to General Areas of Administrative Review
    This proposed change would add the Buy American provisions to the 
regulations that list the general areas of review. Currently, the Buy 
American provision review is specified in the FNS Administrative Review 
Manual, but it is not included in the general areas of review listed at 
Sec.  210.18(h)(2). This proposed change aligns the regulations with 
guidance and clarifies existing monitoring requirements. There are no 
program cost impacts to this proposed change.

Simplifying Meal Service

    The following section proposes a number of changes to facilitate 
school meals service operations for local Program operators. These 
proposed changes are customer service-focused and intended to simplify 
program procedures and requirements to address existing challenges. The 
proposed changes do not significantly affect program costs, but rather 
allow State and local Program operators to focus critical resources to 
ensure sustained meal service success. There is a small reduction in 
burden due to changing the reporting frequency (of a report on the 
status of SFA compliance with the meal standards) from quarterly to 
annually.
Facilitate the Service of Vegetable Subgroups in the NSLP
    The specific proposed changes in this section are intended to 
reduce operator challenges with two areas of the vegetable subgroup 
requirements. The proposed changes would: (1) For all age/grade groups, 
change the weekly minimums for all subgroups to \1/2\ cup; and (2) 
allow legumes offered as a meat alternate to simultaneously meet the 
weekly legumes vegetable subgroup requirement. The overall daily and 
weekly vegetable quantity requirements remain intact across all age/
grade groups.
    As stated in the preamble, these flexibilities are proposed to 
assist program operators struggling with different quantity 
requirements across subgroups, and challenges with meeting the legumes 
subgroup requirement.\45\ Between 92 and 95 percent of weekly menus met 
the quantity requirements for dark green vegetables, red/orange 
vegetables, starchy vegetables, and ``other'' vegetables. About 80 
percent of weekly menus met the quantity requirement for legumes.
---------------------------------------------------------------------------

    \45\ Due to high protein content, menu planners may offer 
legumes as a meat alternate or a vegetable, but not both in the same 
meal. This rule proposes to allow menu planners that offer legumes 
as a meat alternate to credit those same legumes toward the weekly 
legumes subgroup requirement, without reducing the total amount of 
vegetables that students are offered daily or weekly.
---------------------------------------------------------------------------

    While the vast majority of menus were meeting the weekly quantity 
requirements for each of the vegetable subgroups (aside from legumes), 
offering enough vegetables to satisfy the overall weekly quantity 
requirement proved more difficult. Nearly 80 percent of weekly lunch 
menus met the quantity requirement for vegetables overall.\46\ The 
proposed changes would lower the requirement for the red/orange 
vegetable subgroup for all age grade groups to \1/2\ cup and the 
requirement for the ``other'' vegetable subgroup to \1/2\ cup for the 
9-12 age grade group.\47\ This flexibility would still ensure students 
are exposed to all vegetable subgroups over a school week, but seeks to 
eliminate confusion caused by requiring different quantities of 
different vegetable subgroups for different age/grade groups. Lower 
amounts of vegetables required from some subgroups would give menu 
planners more space to offer additional vegetables that students prefer 
to meet daily and weekly vegetables requirements (which remain 
unchanged from the original 2012 meal standards). The ability to offer 
more vegetables that students prefer may result in lower food waste. 
About 31 percent of vegetables served were wasted according to a study 
conducted in SY 2014-2015 and this did not vary much by subgroup with 
the exception of starchy vegetables (e.g., white potatoes, corn, green 
peas). Starchy vegetables were wasted slightly less at about 25 percent 
compared to around 30 percent for the other vegetable subgroups.\48\ 
This proposed change would allow any one subgroup to make up one-third 
to one-half of the weekly requirement of vegetables offered; therefore, 
children could be offered less vegetable variety.
---------------------------------------------------------------------------

    \46\ U.S. Department of Agriculture, Food and Nutrition Service, 
Office of Policy Support, School Nutrition and Meal Cost Study, 
Final Report Volume 2: Nutritional Characteristics of School Meals 
by Elizabeth Gearan, Mary Kay Fox, Katherine Niland, Dallas Dotter, 
Liana Washburn, Patricia Connor, Lauren Olsho, and Tara Wommak. 
Project Officer: John Endahl. Alexandria, VA: April 2019.
    \47\ Current requirement for red/orange for K-5 and 6-8 is \3/4\ 
cup. Current requirement for 9-12 for red/orange is 1\1/4\ cups and 
\3/4\ cup for other vegetables. The Dietary Guidelines for Americans 
group vegetables into categories based on similar nutrient content. 
The Other vegetable subgroup contains vegetables (e.g., cabbage, 
green beans, onions, mushrooms) that are not nutritionally similar 
enough to fit into one of the already named subgroups.
    \48\ U.S. Department of Agriculture, Food and Nutrition Service, 
Office of Policy Support, School Nutrition and Meal Cost Study, 
Final Report Volume 4: Student Participation, Satisfaction, Plate 
Waste, and Dietary Intakes by Mary Kay Fox, Elizabeth Gearan, 
Charlotte Cabili, Dallas Dotter, Katherine Niland, Liana Washburn, 
Nora Paxton, Lauren Olsho, Lindsay LeClair, and Vinh Tran. Project 
Officer: John Endahl. Alexandria, VA: April 2019.
---------------------------------------------------------------------------

    This proposed change is not expected to impact program costs as the 
total vegetable quantity requirements for daily and weekly remain 
unchanged. This proposal allows local Program operators more 
flexibility to include in their menus vegetables that align with 
student acceptability.
    Compared to other vegetable subgroups, the legume vegetable 
subgroup requirement proved to be more difficult to meet. Some of this 
difficulty may be explained by current requirements: Beans may credit 
as a vegetable or a meat alternate, but not both in the same meal 
(i.e., menu planners cannot ``double-credit'' beans to meet both the 
vegetable and meat/meat alternate requirement). Nearly all (99 percent) 
daily lunch menus included one or more vegetables that were not part of 
a combination entr[eacute]e or an entr[eacute]e salad bar. Most daily 
lunch menus (84 percent) included cooked vegetables. Beans and peas 
(legumes) were the second most common cooked vegetable (second to 
starchy) not served as part of a combination entr[eacute]e with 23 
percent of all daily lunch menus offering legumes (including black, 
baked beans, and other beans--such as white beans, chickpeas, and 
hummus--as well as pinto and kidney beans).
    However, legumes are often an ingredient in combination 
entr[eacute]es where the meat/meat alternate component is typically 
available especially in Mexican-style entr[eacute]es. These type of 
entr[eacute]es are common in lunch menus, especially in high schools 
with about 25 percent of daily menus including a Mexican-style 
entr[eacute]e.\49\ About 17 percent of daily lunch menus had an 
``other'' protein credited as a meat alternate. This was primarily 
cheese, but legumes were also included in this group. Children will 
still benefit from the array of essential nutrients legumes offer, 
including protein and fiber, regardless of how legumes credit toward 
vegetable or meat alternate requirements. This proposed change allows 
legumes that are offered as a meat alternate to simultaneously meet the 
weekly legumes requirement. This aims to help local Program operators

[[Page 4119]]

meet the weekly legumes requirement. The daily and weekly menus must 
still meet minimum quantity requirements for vegetables, which ensures 
this change does not result in a reduction in calories or vegetables, 
but rather allows local Program operators the ability to develop menus 
that better reflect student preferences. The daily and weekly vegetable 
and meat/meat alternate quantities are unchanged. There is negligible 
impact to program costs associated with this proposed change.
---------------------------------------------------------------------------

    \49\ U.S. Department of Agriculture, Food and Nutrition Service, 
Office of Policy Support, School Nutrition and Meal Cost Study, 
Final Report Volume 2: Nutritional Characteristics of School Meals 
by Elizabeth Gearan, Mary Kay Fox, Katherine Niland, Dallas Dotter, 
Liana Washburn, Patricia Connor, Lauren Olsho, and Tara Wommak. 
Project Officer: John Endahl. Alexandria, VA: April 2019.
---------------------------------------------------------------------------

Add Flexibility to Established Age/Grade Groups
    This proposed change addresses challenges in SFAs that serve 
children in multiple age/grade groups. Currently, schools are required 
to serve an age-appropriate meal pattern--for grades K-5, 6-8, and/or 
9-12--to all age/grade groups in a school. The only exception is the 
narrow overlap between K-5 and 6-8 age/grade group meal pattern 
requirements: Because of overlapping requirements, local Program 
operators can use one meal pattern to plan menus for students in grades 
K-8. The food component requirements are the same, but meals must meet 
the calorie and sodium standards in the narrow overlap between both 
age/grade groups.
    The requirement to offer meals for specific age/grade groups 
resulted in a number of challenges for local Program operators, 
especially for smaller SFAs with unique grade configurations that do 
not align with established age/grade groups. A goal of the school meal 
programs is to ensure students are offered age-appropriate meals that 
meet specific nutrient targets to optimize growth and development. In 
SFAs of all sizes (including SFAs with and without schools serving 
multiple age/grade groups), the School Nutrition Meal Cost Study found 
that local Program directors reported that it was a moderate challenge 
(mid-way between ``not a challenge'' and ``a significant challenge'') 
to offer varying portion sizes to different age/grade groups within a 
school. About 30 percent (about 27,500) of schools participating in the 
National School Lunch Program have unique age/grade group 
combinations.\50\ The majority of these schools are likely in SFAs with 
2,500 or fewer students enrolled.\51\
---------------------------------------------------------------------------

    \50\ U.S. Department of Agriculture, Food and Nutrition Service, 
Office of Policy Support, School Nutrition and Meal Cost Study, 
Final Report Volume 1: School Meal Program Operations and School 
Nutrition Environments by Sarah Forrestal, Charlotte Cabili, Dallas 
Dotter, Christopher W. Logan, Patricia
    \51\ FNS administrative data show that about 80 percent of SFAs 
participating in the NSLP have 2,500 or less students enrolled in SY 
2017-2018.
---------------------------------------------------------------------------

    The proposed changes in this rule would: (1) Allow all schools with 
multiple age/grade groups (in SFAs of any size) to serve the 
established meal patterns to a broader range of students. This allows 
the addition or subtraction of a grade on either or both ends of the 
current meal pattern age/grade groups (K-5, 6-8, and 9-12); and (2) 
Allow schools with multiple or unique grade configurations in small 
SFAs (with 2,500 students or fewer enrolled) to use one or two meal 
patterns to plan meals for all children.
    The first proposed change would allow schools in any SFA to serve 
one meal pattern if the age/grade groups in the school include one or 
two grades from an established age/grade group. This means that the K-5 
meal pattern could be expanded to serve students in grades K-6; the 6-8 
meal pattern could be expanded to serve any students in grades 5-9; and 
the 9-12 meal pattern could be expanded to serve any students in grades 
8-12. For example, a school serving students in grades K-6 could either 
(1) use the existing K-8 meal pattern age/grade group overlap, or (2) 
exercise this proposed flexibility and serve the K-5 meal pattern for 
all children in the K-6 school by adding one year (grade 6) to the 
upper end of the established K-5 age/grade group. Providing this 
flexibility seeks to alleviate Program operator burden in schools with 
students in grades close to the next established meal pattern age/grade 
group by giving them the ability to serve one meal pattern to all 
students.
    The second proposed change targets schools with multiple or unique 
grade groupings in smaller SFAs that serve 2,500 or fewer students. 
This change would allow smaller SFAs, with multiple or unique grade 
configurations, to use one or two meal patterns to plan meals for 
students in all grades. This proposed change could impact about 23 
percent of total schools (approximately 22,000 schools).\52\ However, 
some of these schools that have successfully implemented the existing 
age/grade groups would likely continue with their existing practices. 
In addition, schools serving grades that overlap between grades K-5 and 
grades 6-8 that have been successful planning meals that meet the K-8 
meal pattern overlap could choose to continue that practice.
---------------------------------------------------------------------------

    \52\ The difference in the number of schools that may be 
impacted is the number of schools in large SFAs including those that 
would not be able to utilize the first flexibility (for example, a 
K-12 school in a SFA that has over 2,500 enrolled students).
---------------------------------------------------------------------------

    As stated in the preamble, meeting the calorie requirements in 
school meal offerings proved to be a challenge: Overall, 41 percent of 
average weekly lunch menus fell within the specified calorie range 
(that is, they met both the minimum and maximum calorie levels). 
Elementary and middle schools were more likely to offer meals above the 
calorie maximums, while high schools were more likely offer meals with 
too few calories. Schools adopting these proposed flexibilities are 
encouraged to find solutions to offer older students larger portions or 
additional choices to meet their calorie and nutrient needs.
    USDA is requesting public comments on solutions to balance 
operational constraints and student nutritional needs. There may be 
some minimal savings associated with streamlining menus for some SFAs; 
however, we do not anticipate significant impacts at this time pending 
the public comments on this proposed rule.
Increase Flexibility To Offer Meats/Meat Alternates in SBP
    This proposed change would allow schools to offer meat/meat 
alternates or grains interchangeably in the SBP. Currently, schools may 
offer meat/meat alternate foods in SBP only after one ounce equivalent 
of grains is offered, then meats/meat alternates may be counted towards 
the grain component requirements. Meats/meat alternates may also be 
offered as ``extra'' foods that do not credit toward meal pattern 
requirements, but must meet the dietary specifications for calories, 
saturated fat, and sodium.
    This proposed change would allow Program operators to offer 1-2 
ounce equivalents of grains or meat/meat alternates, or a combination 
of the two, daily to meet the minimum of 7-9 ounce equivalents over the 
course of a school week (amounts vary depending on age/grade group). 
This would allow Program operators the ability to use grains and meat/
meat alternates interchangeably in the SBP. This proposed change 
recognizes the need for flexibility in SBP offerings. While the meal 
pattern for SBP does not specifically require meats/meat alternates to 
be offered, meats/meat alternates were included in nearly half (48 
percent) of all daily breakfast menus.\53\
---------------------------------------------------------------------------

    \53\ U.S. Department of Agriculture, Food and Nutrition Service, 
Office of Policy Support, School Nutrition and Meal Cost Study, 
Final Report Volume 2: Nutritional Characteristics of School Meals 
by Elizabeth Gearan, Mary Kay Fox, Katherine Niland, Dallas Dotter, 
Liana Washburn, Patricia Connor, Lauren Olsho, and Tara Wommak. 
Project Officer: John Endahl. Alexandria, VA: April 2019.

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

[[Page 4120]]

    This would not change the SBP meal pattern, and Program operators 
may continue to offer grains only in the SBP (consistent with the 
current requirements). The remaining SBP requirements would not change 
under this proposal. This change is intended to allow Program operators 
local control to develop SBP menus that include meats/meat alternates 
without a requirement to serve a minimum amount of grains. This change 
is not anticipated to impact Program costs, but rather provide 
flexibility for local Program operators to work within current 
resources and student preferences when planning SBP menus.
Allow Schools To Serve \1/2\ Cup of Fruit in Breakfasts Served in Non-
Cafeteria Settings
    This proposed change would allow schools that serve breakfast in 
non-cafeteria settings to offer \1/2\ cup of fruit--consistent with the 
offer-vs-serve (OVS) option in SBP--instead of offering the full-
required 1 cup of fruit. In a cafeteria setting, students in schools 
with OVS have the option to only take \1/2\ cup of fruit. OVS is 
mandatory for SBP and NSLP for high schools and optional for middle and 
elementary schools, however about 80 percent of both middle and 
elementary schools use the option. This practice helps control food 
waste as the use of OVS at breakfast was associated with lower 
percentages of waste for calories (15 percent in OVS schools versus 19 
percent in non-OVS schools) and fruits (14 percent in OVS schools 
versus 23 percent in non-OVS schools).\54\
---------------------------------------------------------------------------

    \54\ U.S. Department of Agriculture, Food and Nutrition Service, 
Office of Policy Support, School Nutrition and Meal Cost Study, 
Final Report Volume 4: Student Participation, Satisfaction, Plate 
Waste, and Dietary Intakes by Mary Kay Fox, Elizabeth Gearan, 
Charlotte Cabili, Dallas Dotter, Katherine Niland, Liana Washburn, 
Nora Paxton, Lauren Olsho, Lindsay LeClair, and Vinh Tran. Project 
Officer: John Endahl. Alexandria, VA: April 2019.
---------------------------------------------------------------------------

    The cafeteria or other foodservice area was the most common place 
where students ate breakfast (82 percent of schools). Many schools do 
use other SBP models, often in non-cafeteria settings. Breakfast in the 
classroom was offered in more than a quarter of elementary schools, 
which was more frequent than middle and high schools. However, pre-
packaged ``grab-and-go'' breakfasts were offered more frequently in 
high schools (21% of high schools) than middle and elementary schools. 
Due to cited concerns about students being offered sufficient calories, 
especially older students,\55\ local Program operators are encouraged 
to have additional fruits, such as a basket of whole fruits, available 
for students to select additional fruit if desired. The proposed change 
is not expected to significantly impact program costs but may result in 
minimal savings by reducing the amount of fruit offered in non-
cafeteria SBP models.
---------------------------------------------------------------------------

    \55\ USDA's School Nutrition and Meal Cost Study found that, 
overall, more than half (56 percent) of average weekly breakfast 
menus fell within the specified calorie range (that is, they met 
both the minimum and maximum calorie levels). While it was more 
common for average weekly breakfast menus across all school types to 
exceed the maximum calorie level (36 percent overall), approximately 
18 percent of average weekly menus for high schools offer too few 
calories
---------------------------------------------------------------------------

Remove Synthetic Trans Fat Limit as a Dietary Specification
    This proposed change would eliminate the requirement for SBP, NSLP, 
and competitive foods to have zero synthetic trans fat effective July 
1, 2021.\56\ FDA regulations are removing synthetic trans fat from the 
United States food supply by January 1, 2021 and the requirement to 
monitor synthetic trans fat in the school meal programs will be 
unnecessary. This proposed change would eliminate additional 
regulations that are not necessary after synthetic trans fat is no 
longer in the food supply (January 1, 2021). This proposed change will 
align Program regulations with the food supply standards. There are 
negligible impacts to program costs associated with this change.
---------------------------------------------------------------------------

    \56\ This restriction does not apply to naturally occurring 
trans fats, which are present in meat and dairy products.
---------------------------------------------------------------------------

Change Performance-Based Reimbursement Quarterly Report to an Annual 
Report
    This proposed change would reduce, from quarterly to annually, the 
frequency of a State agency report on the status of SFAs certified for 
the performance-based reimbursement. As of February 2019, 99 percent of 
SFAs are certified to receive the performance-based reimbursement. This 
change responds to feedback from the Child Nutrition Program Reducing 
Burden Study: State agencies requested USDA to review the reporting 
requirements and determine areas to streamline reporting.\57\ USDA 
currently receives a count of the monthly number of lunches receiving 
the performance-based reimbursement on the Report of School Meal 
Operations (form FNS-10) from States.\58\
---------------------------------------------------------------------------

    \57\ https://fns-prod.azureedge.net/sites/default/files/resource-files/CN-Reducing%20Burden.pdf.
    \58\ 99.7% of lunches served in FY 2018 received the 
performance-based reimbursement.
---------------------------------------------------------------------------

    The reduced frequency of the quarterly certification report aims to 
enable State and local Program operators to direct resources to 
maintain effective and efficient program operations, while still 
providing USDA the necessary information on SFA certification. Along 
with the monthly FNS-10 reporting, the annual update will be sufficient 
for USDA to track the status of SFA certification. This proposed change 
slightly decreases the burden hours associated with moving the 
frequency of reporting from quarterly to annually. This is a small 
reduction of 42 annual burden hours, which is about $3,000 annually.
Update Meal Accommodations for Disability and Non-Disability Reasons
    The proposed changes in this section are intended to align current 
FNS regulations with current statutory requirements and do not change 
the requirement that schools, institutions, and facilities make 
reasonable modifications for Program participants with a disability 
that restricts their diet. The proposed changes aim to make a clear 
distinction between reasonable modifications for disability requests 
and variations for non-disability requests. The proposal would also 
broaden who is authorized to write medical statements consistent with 
the Department of Justice's final rule that determining an individual's 
impairment as a disability under ADA should not demand extensive 
analysis. Schools, institutions, and facilities are still encouraged to 
meet Program participants' dietary preferences that are not considered 
disabilities, which includes those related to cultural, ethical, 
Tribal, or religious preferences. The proposed alignment of USDA 
regulations with statutory requirements and existing FNS guidance is 
not expected to impact program costs, but clarify procedures for 
Program participants with disabilities that restrict their diets.

Proposals To Simplify Foods Sold A La Carte

Extend the Entr[eacute]e Exemption Timeframes
    The proposed change in this section would address concerns from 
Program operators regarding the number of days schools are permitted to 
sell reimbursement meal entr[eacute]es as a competitive food (i.e., 
[agrave] la carte). The majority of schools had at least one

[[Page 4121]]

source of competitive foods available to students. Availability of 
foods for [agrave] la carte purchase in the school cafeteria during 
meal times was the most common source (in 87 percent of schools for 
lunch and 56 percent for breakfast). About 40 percent of schools offer 
entr[eacute]es (these are not separated out by reimbursable meal 
entr[eacute]es and other entr[eacute]es) as part of their competitive 
food service. This practice was more common in middle and high schools, 
where over half of schools sold entr[eacute]es as competitive foods. In 
elementary schools, a little over a quarter sold entr[eacute]es as 
competitive foods.\59\
---------------------------------------------------------------------------

    \59\ U.S. Department of Agriculture, Food and Nutrition Service, 
Office of Policy Support, School Nutrition and Meal Cost Study, 
Final Report Volume 1: School Meal Program Operations and School 
Nutrition Environments by Sarah Forrestal, Charlotte Cabili, Dallas 
Dotter, Christopher W. Logan, Patricia Connor, Maria Boyle, Ayseha 
Enver, and Hiren Nissar. Project Officer: John Endahl. Alexandria, 
VA: April 2019.
---------------------------------------------------------------------------

    There are some entr[eacute]es that meet the reimbursable meal 
standards (as part of the unitized, reimbursable meal); an 
entr[eacute]e alone may not meet the competitive food standards, which 
are based on individual items. In these cases, USDA, recognizing that 
foods sold in reimbursable meals are typically healthier due to the 
meal pattern standards, allows these entr[eacute]es to be sold on the 
same day as served as part of the reimbursable meal, and the day after 
to help use leftovers and reduce waste. This proposed rule would extend 
this flexibility by allowing SBP and NSLP entr[eacute]es to be sold 
[agrave] la carte on the day offered in SBP and NSLP, and two school 
days after (or for one additional school day). The proposed change 
promotes improved meal planning flexibility and leftover usage.\60\ 
This proposed change is intended to further reduce waste and streamline 
operations between the reimbursable meal service and competitive food 
service. There are minimal impacts to Program costs associated with 
this change.
---------------------------------------------------------------------------

    \60\ To ensure the food safety of food offered or sold to 
children, schools must maintain a food safety management system that 
includes Standard Operating Procedures related to basic sanitation 
and all Hazard Analysis and Critical Control Point (HACCP) 
principles. Final rule. School Food Safety Program Based on the 
Hazard Analysis and Critical Control Point Principles (74 FR 66213, 
published December 15, 2009).
---------------------------------------------------------------------------

    This proposed rule also requests specific public comment on whether 
SBP and NSLP side dishes that do not meet the competitive foods 
standards should also receive exemptions. Currently only 
entr[eacute]es, as noted above, are exempt with this proposed rule 
extending the exemption for an additional school day. USDA is not 
proposing a change to the side dish requirements in this rule. However, 
since the competitive food standards have been in place for a period of 
time, the Department is taking the opportunity to solicit public input 
on whether to extend the competitive food entr[eacute]e exemption to 
all food items offered as part of the reimbursable SBP and NSLP meals. 
There are no impacts to program costs at this time as the proposed rule 
is only seeking public comment on extending the competitive foods 
exemptions to all menu items in reimbursable meals.
Seeking Public Input on Whether To Remove the Requirement To Make 
[Agrave] La Carte Entr[eacute]es Whole Grain-Rich
    USDA is also taking this opportunity to solicit public input on 
grain products and the definition of entr[eacute]e. Currently 
competitive food standards require that entr[eacute]es that include 
grains, and are sold [agrave] la carte, must be whole grain-rich or 
have whole grain as the first ingredient. This requirement is not 
consistent with the NSLP and SBP, where whole grain-rich refers to 
products that contain at least 50 percent whole grains and any 
remaining grains must be enriched. USDA is seeking public input to 
determine if the whole grain-rich/whole grain as a first ingredient 
requirement should be removed from the definition of entr[eacute]e for 
competitive foods. This change would make the whole grains requirement 
consistent between SBP/NSLP and entr[eacute]es sold [agrave] la carte 
as competitive foods. At this point, USDA is only seeking public input 
to determine if this change is necessary, especially in light of the 
proposal to extend the exemption for SBP/NSLP entr[eacute]es. There are 
no impacts to program costs as USDA is not proposing a change, but 
using this opportunity to seek public input.
Expand Flexibility for Sale of Calorie-Free, Flavored Waters to All 
Age/Grade Groups
    This proposed change would expand the ability to sell calorie-free, 
naturally-flavored waters (with or without) carbonation in middle and 
elementary schools. Currently only high schools can sell these 
products. Calorie-free/low calorie, non-naturally flavored, carbonated 
beverages (i.e., diet soft drinks) may also be sold to high school 
students. This proposed change is not extending the ability to sell 
diet soft drinks to middle and elementary school students. This rule 
also proposes to expand the potable water requirement to permit schools 
to offer calorie-free, naturally-flavored, noncarbonated water. These 
waters would be required to meet the FDA's definition of ``natural 
flavor or natural flavoring.''
    This rule proposes to allow local Program operators to sell 
calorie-free, naturally flavored waters (with or without carbonation), 
in portions up to 20 ounces, to students in all age/grade groups. This 
proposed change would allow local Program operators the flexibility to 
expand calorie-free beverages to students who wish to purchase only 
certain items and not an entire school lunch. Competitive food sales 
support the financial health of the nonprofit school food service 
account and can be used to cover costs of operating the school meal 
programs. Over 40 percent of schools offer bottled water (includes 
plain, flavored, or sparkling) for purchase [agrave] la carte. This 
varies quite a bit by school type, with only 30 percent of elementary 
schools, 58 percent of middle schools, and 61 percent of high schools 
offering bottled water for sale.\61\ This proposed change would 
increase the types of beverages local Program operators may offer 
[agrave] la carte. It may however, impact the amount of milk purchased 
through [agrave] la carte sales; milk was the most commonly offered 
[agrave] la carte item at lunch (73 percent of all schools offered milk 
as an [agrave] la carte item at lunch) \62\ followed by water and 100 
percent juice (48 percent of all schools). This proposal is not 
expected to impact program costs but rather provide flexibility for 
local Program operators to offer calorie-free beverage choices to 
students across all grades.
---------------------------------------------------------------------------

    \61\ U.S. Department of Agriculture, Food and Nutrition Service, 
Office of Policy Support, School Nutrition and Meal Cost Study, 
Final Report Volume 1: School Meal Program Operations and School 
Nutrition Environments by Sarah Forrestal, Charlotte Cabili, Dallas 
Dotter, Christopher W. Logan, Patricia Connor, Maria Boyle, Ayseha 
Enver, and Hiren Nissar. Project Officer: John Endahl. Alexandria, 
VA: April 2019.
    \62\ U.S. Department of Agriculture, Food and Nutrition Service, 
Office of Policy Support, School Nutrition and Meal Cost Study, 
Final Report Volume 1: School Meal Program Operations and School 
Nutrition Environments by Sarah Forrestal, Charlotte Cabili, Dallas 
Dotter, Christopher W. Logan, Patricia Connor, Maria Boyle, Ayseha 
Enver, and Hiren Nissar. Project Officer: John Endahl. Alexandria, 
VA: April 2019.
---------------------------------------------------------------------------

    Local Program operators have also requested flexibility to offer 
naturally flavored noncarbonated water (e.g., water infused with fruit) 
to meet the potable requirement. This rule proposes to allow the 
flexibility to offer this type of water to meet the requirement. This 
proposal is not expected to increase costs as Program operators will 
need to work with existing resources to utilize this flexibility. The 
addition of naturally flavored potable water may encourage water 
consumption but may impact the

[[Page 4122]]

consumption of milk if students choose to consume water in lieu of 
milk.\63\
---------------------------------------------------------------------------

    \63\ The School Nutrition Meal Cost Study found that milk 
consumption among school meal participants declined to 66% in SY 
2014-2015 compared to 75% in SY 2004-2005.
---------------------------------------------------------------------------

Clarifications, Updates, and Technical Corrections

Add Flexibility to State Administrative Expenses
    This rule proposes to change the word ``unexpended'' to 
``unobligated'' in the regulations for the State Administrative Expense 
(SAE) Funds. Currently States must return to USDA any unexpended SAE 
funds at the end of the fiscal year following the fiscal year for which 
the funds were awarded. This proposed change would allow State agencies 
some additional time to expend SAE funds they have already obligated. 
There are negligible impacts to program costs with this proposed change 
as it is increasing flexibility within the current funding level.
Correct Afterschool Snack Eligibility Erroneous Citations and 
Definition of ``Child''
    The proposed changes in this section would provide a technical 
correction to three erroneous citations and correct a definition 
relating to the NSLP Afterschool snack service. The rule also proposes 
to correct an error in the definition of ``child'' to align with the 
NSLA. Currently the regulatory definition restricts snacks to children 
12 years and younger, or in the case of migrant workers and children 
with disabilities not more than 15 years of age. This rule proposes to 
modify the definition of child to consistent with the NSLA and clarify 
that children through age 18 are eligible to receive snacks through the 
NSLP Afterschool Snack Service. These proposed changes are not expected 
to impact program costs, as children through age 18 are currently 
eligible to receive snacks, but instead provide clarification and 
correct erroneous citations and definitions.
Add Guam and Hawaii to the List of Outlying Areas Permitted To Serve 
Vegetables Such as Yams, Plantains, or Sweet Potatoes To Meet the 
Grains Component
    Regulations currently permit schools in American Samoa, Puerto Rico 
and the U.S. Virgin Islands to serve vegetables such as yams, 
plantains, or sweet potatoes to meet the grains component. These foods 
are traditional foods and may be easier to procure than grains in 
outlying areas. This proposed change includes Guam and Hawaii in the 
list of outlying areas permitted to serve vegetables such as yams, 
plantains, or sweet potatoes to meet the grains requirement. This 
proposed change is not anticipated to impact program costs, but provide 
local Program operators in Guam and Hawaii the ability to develop menus 
that include traditional foods that align with local preferences.
Change Vitamin A and Vitamin D Units for Fluid Milk Substitutions
    This proposed change aligns USDA regulations with the FDA published 
final rule that changed the labeling requirements for vitamin A and 
vitamin D: both now must be listed in micrograms (mcg) rather than 
International Units (IUs). As a conforming amendment, this rule 
proposes to change the vitamin A requirement for fluid milk substitutes 
from 500 IUs to 150 mcg per 8 fluid ounces. This rule also proposes to 
change the units for the vitamin D requirement for fluid milk 
substitutes from 100 IUs to 2.5 mcg per 8 fluid ounces. This proposed 
change aligns the labeling requirements with the final FDA rule, so 
there are negligible impacts to program costs associated with this 
change.
Proposed Rule Is Seeking Public Input To Determine Change
    USDA is seeking public comments to determine any changes on the 
following areas. Any impacts to program costs will have to be assessed 
after public comments are received.
Substituting Vegetables for Fruits at Breakfast
    This proposed rule requests public comments on whether or not to 
permanently allow SFAs to credit any vegetable offered, including 
potatoes and other starchy vegetables, in place of fruit in the SBP, 
without including vegetables from the specific subgroups in the weekly 
menus.
Competitive Foods: Definition of Entr[eacute]e and Expanding 
Entr[eacute]e Exemption to All SBP/NSLP Foods
    As described earlier, USDA is soliciting public input on whether 
the whole grain-rich/whole grain as a first ingredient requirement 
should be removed from the definition of ``Entr[eacute]e'' included in 
7 CFR 210.11(a)(3)(i), and whether or not to extend the competitive 
food entr[eacute]e exemption to all food items offered in SBP and NSLP 
reimbursable meals.
Transparency for Administrative Review Results
    NSLA directs USDA to ensure that State agencies report the final 
results of administrative reviews to the public in an accessible, 
easily understood manner. To satisfy this statutory requirement, State 
agencies must post a summary of the most recent administrative review 
results for each SFA on the State agency's public website, and make a 
copy of the final administrative review report available to the public 
upon request. The summary must be posted no later than 30 days after 
the State agency provides the results of the administrative review to 
the SFA. This proposed rule requests public comments on how to simplify 
this transparency requirement, including the process of posting 
results, the summary content, and the 30-day timeframe.
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 economic impact on a substantial number of 
small entities. This proposed rule would not have an adverse impact on 
small entities in the National School Lunch Program and School 
Breakfast Program; it would ease Program operations by adding 
flexibilities for State monitoring staff and menu planners in small 
local educational agencies.
    Factual Basis: The provisions of this proposed rule would apply to 
small LEAs with less than 2,500 students operating the National School 
Lunch Program and School Breakfast Program, and to State agency staff 
who have to monitor school food authorities in remote locations. These 
entities meet the definitions of ``small governmental jurisdiction'' 
and ``small entity'' in the Regulatory Flexibility Act. These entities 
would benefit from the meal pattern and monitoring flexibilities 
proposed in this rule.
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. This proposed rule is expected to be an E.O. 13771 
deregulatory action. The changes

[[Page 4123]]

proposed by this rule aim to simplify meal pattern, monitoring, and 
reporting requirements in the National School Lunch and School 
Breakfast programs. This rule is estimated to reduce school meal 
administrative burden by 171,372 hours, which is $11.4 million in 
annualized savings at a 7 percent discount rate, discounted to a 2016 
equivalent, over a perpetual time horizon.
Unfunded Mandates Reform Act
    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) 
established requirements for Federal agencies to assess the effects of 
their regulatory actions on State, local and Tribal governments and the 
private sector. Under section 202 of the UMRA, FNS generally must 
prepare a written statement, including a cost-benefit analysis, for 
proposed and final rules with ``Federal mandates'' that may result in 
expenditures by State, local or Tribal governments, in the aggregate, 
or the private sector, of $100 million or more in any one year. When 
such a statement is needed for a rule, Section 205 of the UMRA 
generally requires FNS to identify and consider a reasonable number of 
regulatory alternatives and adopt the least costly, more cost effective 
or least burdensome alternative that achieves the objectives of the 
rule.
    This 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 $100 million or more in any 
one year. Thus, the rule is not subject to the requirements of sections 
202 and 205 of the UMRA.
Executive Order 12372
    The NSLP, SMP, SBP, CACFP, and the SFSP are listed in the Catalog 
of Federal Domestic Assistance under NSLP No. 10.555, SMP No. 10.556, 
SBP No. 10.553, CACFP No. 10.558, and SFSP 10.559 respectively, and are 
subject to Executive Order 12372, which requires intergovernmental 
consultation with State and local officials. (See 2 CFR chapter IV.) 
Since the Child Nutrition Programs are State-administered, USDA's Food 
and Nutrition Service (FNS) Regional Offices have formal and informal 
discussions with State and local officials, including representatives 
of Indian Tribal Organizations, on an ongoing basis regarding Program 
requirements and operations. Discussions also take place in response to 
technical assistance requests submitted by the State agencies to the 
FNS Regional Offices. This regular interaction with State and local 
operators provides FNS valuable input that informs rulemaking. Based on 
the inquiries and information from State agencies disclosing challenges 
with Program requirements, FNS is proposing specific flexibilities to 
address the requirement issues in a manner that promotes program 
efficiency and effectiveness.
Federalism Summary Impact Statement
    Executive Order 13132 requires Federal agencies to consider the 
impact of their regulatory actions on State and local governments. 
Where such actions have federalism implications, agencies are directed 
to provide a statement for inclusion in the preamble to the regulations 
describing the agency's considerations in terms of the three categories 
called for under Section (6)(b)(2)(B) of Executive Order 13132.
    The Department has considered the impact of this final rule on 
State and local governments and has determined that this rule does not 
have federalism implications. Therefore, under Section 6(b) of the 
Executive Order, a federalism summary 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 intended to have preemptive effect 
with respect to any State or local laws, regulations or policies which 
conflict with its provisions or which would otherwise impede its full 
and timely implementation. This rule is not intended to have 
retroactive effect. Prior to any judicial challenge to the provisions 
of this rule, all applicable administrative procedures must be 
exhausted.
Civil Rights Impact Analysis
    FNS has reviewed this proposed rule in accordance with USDA 
Regulation 4300-4, ``Civil Rights Impact Analysis,'' to identify any 
major civil rights impacts the rule might have on Program participants 
on the basis of age, race, color, national origin, sex, or disability. 
A comprehensive Civil Rights Impact Analysis (CRIA) was conducted on 
the proposed rule, including an analysis of participant data and 
provisions contained in the rule. The CRIA indicated the regulatory 
changes contained in the proposed rule simplify oversight and offer 
flexibilities that simplify local operations. These proposed 
flexibilities aim to: (1) Facilitate schools offering wholesome meals 
that fit the operational constraints of schools across the Nation, (2) 
support operational efficiency, and (3) ease the States' monitoring 
responsibility. The proposed changes also codify meal modification 
updates making it easier for Program participants who require meal 
modifications (that fall outside the meal patterns) to obtain the 
necessary documentation. After a careful review of the rule's intent 
and provisions, FNS has determined that this rule is not expected to 
limit or reduce the ability of protected classes of individuals to 
participate in the NSLP, SMP, SBP, CACFP, and SFSP or have a 
disproportionate adverse impact on the protected classes.
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, and other policy statements or 
actions that have substantial direct effects on one or more Indian 
Tribes, on the relationship between the Federal Government and Indian 
Tribes, or on the distribution of power and responsibilities between 
the Federal Government and Indian Tribes. FNS has assessed the impact 
of this proposed rule on Indian Tribes and determined that this rule 
does not, to the best of its knowledge, have Tribal implications that 
require Tribal consultation under E.O. 13175. FNS provided opportunity 
for consultation on the issue but received no feedback. If a tribe 
requests consultation in the future, FNS will work with the Office of 
Tribal Relations to ensure meaningful consultation is provided.
Paperwork Reduction Act
    The Paperwork Reduction Act of 1995 (44 U.S.C. Chap. 35; 5 CFR part 
1320) requires the Office of Management and Budget (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.
    This rule proposes changes to simplify meal pattern and monitoring 
requirements in the National School Lunch and School Breakfast 
Programs. The proposed changes, including optional flexibilities, are 
customer-focused and are intended to help State and local Program 
operators overcome operational challenges that limit their ability to 
manage these Programs efficiently.

[[Page 4124]]

Explanatory Note on Existing Information Collection Requirements (OMB# 
0584-0006)
    As explained above, this proposed rule would revise the National 
School Lunch Program (NSLP) requirements, including recordkeeping and 
reporting requirements, to ease administrative burden for State 
agencies and School Food Authorities (SFAs), while continuing to ensure 
Program integrity. However, in two areas, these existing information 
collection requirements are not accurately reflected under OMB# 0584-
0006. These errors were corrected in a revision of this collection 
submitted in September 2019. However, for transparency and to provide 
clarity regarding the impact of the changes proposed in this 
rulemaking, we are describing the burden of these existing requirements 
here:
     Administrative Review Cycle: This rule proposes to allow 
State agencies to revert from the current 3-year review cycle to a 
longer review cycle of 5 years, which would reduce the current 
reporting and recordkeeping burden by increasing the length of the 
review cycle. However, the burden associated with these reviews, which 
have been a regulatory requirement since 2016, has not reflected in the 
approved collection under #0584-0006. The needed change in 
recordkeeping burden estimates to correct this error is described in 
the table below:

                                                                               Recordkeeping Under OMB# 0584-0006
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                     Estimated                                        Average        Estimated         Hours         Corrected
           Description of activities                  Regulation  citation           number of     Frequency of    Total annual    burden hours    total annual      currently      burden hour
                                                                                    respondents      response        responses     per response    burden hours      approved        estimate
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
SA completes and maintains documentation used   210.18 (c-h)....................              56             113           6,347              48         304,640               0         304,640
 to conduct Administrative Review.
                                               -------------------------------------------------------------------------------------------------------------------------------------------------
Total SA Recordkeeping........................  ................................  ..............  ..............  ..............  ..............  ..............  ..............  ..............
                                               -------------------------------------------------------------------------------------------------------------------------------------------------
    Total Recordkeeping.......................  ................................  ..............  ..............  ..............  ..............  ..............  ..............         304,640
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

     Reporting on Performance-Based Reimbursement: This rule 
proposes that the performance-based reimbursement quarterly reporting 
requirement specified in Sec.  210.5(d)(2)(ii) be changed to an annual 
reporting requirement. However, the burden associated with the existing 
quarterly review requirement was inadvertently omitted from the renewal 
of #0584-0006 approved on November 13, 2016. The needed change in 
reporting burden estimates to correct this error is described in the 
table below:

                                                                                 Reporting Under OMB# 0584-0006
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                     Estimated                                        Average        Estimated         Hours         Corrected
           Description of activities                  Regulation  citation           number of     Frequency of    Total annual    burden hours    total annual      currently      burden hour
                                                                                    respondents      response        responses     per response    burden hours      approved        estimate
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
SAs submit an annual report to FNS detailing    210.5(d)(2)(ii).................              56               4             224             .25              56               0              56
 the disbursement of performance-based
 reimbursement to SFAs.
                                               -------------------------------------------------------------------------------------------------------------------------------------------------
Total SA Reporting............................  ................................  ..............  ..............  ..............  ..............  ..............  ..............              56
                                               -------------------------------------------------------------------------------------------------------------------------------------------------
    Total Reporting...........................  ................................  ..............  ..............  ..............  ..............  ..............  ..............              56
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

    Relative to these corrected burden estimates specifically, FNS 
estimates that this proposed rule will decrease the reporting burden by 
42 hours and decrease the recordkeeping burden by 121,856 hours. 
Specific changes proposed to the existing burdens above are explained 
in Table for 0584-NEW below.
    The rule makes other changes to recordkeeping and reporting that 
results in additional reductions in burden of 49,474 fewer hours. The 
currently approved burden inventory for the requirements outlined in 
this proposed rule, inclusive of pending corrections to #0584-0006, is 
469,986 hours. The average burden per response and the annual burden 
hours are explained below and summarized in the charts that follow.
    In accordance with the Paperwork Reduction Act of 1995, this 
proposed rule will create information collection requirements and 
revise existing information collection requirements that are subject to 
review and approval by the Office of Management and Budget; therefore, 
FNS is submitting for public comment the information collection burden 
that would result from adoption of the proposals in the rule. Some 
information collection requirements being amended by the rule are 
currently approved under OMB# 0584-0006 7 CFR part 210 National School 
Lunch Program. Others are new burdens resulting from this rulemaking. 
Because OMB# 0584-0006 is under review by OMB, FNS is requesting a new 
OMB Control Number for the new and existing information requirements 
which are impacted by this proposed rule in order to ensure that the 
review of this proposed rule does not interfere with this renewal. 
After OMB has approved the information collection requirements 
submitted in conjunction with the final rule, FNS will merge these 
requirements and their burden into OMB# 0584-0006.
    These changes are contingent upon OMB approval. When the 
information collection requirements have been approved, FNS will 
publish a separate action in the Federal Register announcing OMB's 
approval. Comments on this proposed rule and changes in the information 
collection burden must be received by March 23, 2020.
    Comments on this proposed rule must be received by March 23, 2020. 
Comments are invited on: (a) Whether

[[Page 4125]]

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: Simplifying Meal Service and Monitoring Requirements in the 
National School Lunch and School Breakfast Programs.
    OMB Control Number: 0584-NEW.
    Expiration Date: [Not Yet Determined.]
    Type of Request: New collection.
    Abstract: This is a new information collection that revises 
existing information collection requirements from OMB Number 0584-0006 
7 CFR part 210 National School Lunch Program which are being impacted 
by this rulemaking, as well as imposing new information collection 
requirements. This proposed rule would revise the National School Lunch 
Program (NSLP) administrative review requirements to ease 
administrative burden for State agencies and SFAs, while continuing to 
ensure Program integrity. This rule proposes to allow State agencies to 
revert from the current 3-year review cycle to a longer review cycle of 
5 years. This proposed rule would require State agencies to conduct a 
comprehensive administrative review of each SFA participating in NSLP, 
School Breakfast Program, and other Federal school nutrition programs 
at least once during a 5-year cycle and require State agencies to 
identify high-risk SFAs for additional oversight. State agencies would 
continue to have the option to review SFAs more frequently. These 
changes to the administrative review cycle are intended to reduce 
reporting and recordkeeping burden currently approved under OMB# 0584-
0006 by increasing the length of the review cycle, which FNS estimates 
will reduce the number of responses submitted by the State agencies. 
The change to the frequency of the review cycle will reduce the 
recordkeeping burdens associated with the requirements that State 
agencies maintain documentation of Local Education Agency/SFA 
compliance with nutrition standards for competitive foods, maintain 
records of all reviews (including Program violations, corrective 
action, fiscal action and withholding of payments), and maintain 
documentation of fiscal action taken to disallow improper claims 
submitted by SFAs, as determined through claims processing, reviews, 
and USDA audits. The change to the frequency of the review cycle will 
also reduce reporting burden associated with the requirements that 
State agencies notify SFAs in writing of review findings, corrective 
actions, deadlines, and potential fiscal action with grounds and right 
to appeal as well as the reporting burden associated with the 
requirement that SFAs submit to their State agency a written response 
to reviews documenting corrective action for Program deficiencies. The 
burden for the public notification requirement--that State agencies 
must post a summary of the most recent administrative review results of 
SFAs on the SA website and make a copy available upon request--is also 
reduced by the change in the frequency of the review cycle.
    The rule also proposes to change the frequency of the performance-
based reimbursement reporting requirement from quarterly to annually. 
These proposed changes are expected to simplify operational 
requirements, increase efficiency, and make it easier for State and 
local Program operators to feed children. This proposed rule will also 
add recordkeeping burdens for high-risk SFAs that would receive a 
targeted follow-up review within two years of being designated high-
risk.
    Unless adjustments are made to these requirements during the final 
rulemaking stage, FNS estimates that this proposed rule will decrease 
the burden for 0584-0006 by 171,372 burden hours (reporting burden by 
44,834 hours, recordkeeping burden by 125,754 hours, and public 
notification burden by 784 hours). The total burden inventory for this 
new information collection as a result of this proposed rule is 298,614 
hours. The average burden per response and the annual burden hours are 
explained below and summarized in the charts which follow.
    Affected Public: School Food Authorities and State Agencies.
    Estimated Number of Respondents: 3,864.
    Estimated Number of Responses per Respondent: 7.25.
    Estimated Total Annual Responses: 28,000.
    Estimated Time per Response: 10.66.
    Estimated Total Annual Burden on Respondents: 298,614.

                                                                              Estimated Annual Burden for 0584-New
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                                       Hours         Estimated
                                                                                     Estimated                                        Average        Estimated       currently       change in
           Description of activities                   Regulation citation           number of     Frequency of    Total annual    burden hours    total annual     approved *     burden hours
                                                                                    respondents      response        responses     per response    burden hours     under OMB#        due to
                                                                                                                                                                     0584-0006      rulemaking
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                            Reporting
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
SA notifies SFAs in writing of review           210.18(i)(3)....................              56              68           3,808               8          30,464          52,864         -22,400
 findings, corrective actions, deadlines, and
 potential fiscal action with right to appeal.
SAs submit an annual report to FNS detailing    210.5(d)(2)(ii).................              56               1              56             .25              14         56 (0)*             -42
 the disbursement of performance-based
 reimbursement to SFAs.
                                               -------------------------------------------------------------------------------------------------------------------------------------------------
Total SA Reporting............................  ................................              56  ..............           3,864  ..............          30,478  ..............         -22,442
SFA submits to the SA a written response to     210.15(a)(3) & 210.18(k)(2).....           3,808               1           3,808               8          30,464          52,856         -22,392
 reviews documenting corrective action for
 Program deficiencies.
                                               -------------------------------------------------------------------------------------------------------------------------------------------------
Total SFA Reporting...........................  ................................           3,808  ..............           3,808  ..............          30,464  ..............         -22,392
                                               -------------------------------------------------------------------------------------------------------------------------------------------------
    Total Reporting...........................  ................................           3,864  ..............           7,672  ..............          60,942  ..............         -44,834
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

[[Page 4126]]

 
                                                                                          Recordkeeping
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
SA maintains documentation of LEA/SFA           210.18(h)(2)(iv)................              56              68           3,808             .25             952           1,652            -700
 compliance with nutrition standards for
 competitive foods.
SA maintains records of all reviews and audits  210.20(b)(6) &                                56              68           3,808               8          30,472          52,878         -22,406
 (including Program violations, corrective       210.18(o)(f)(k,l,m) & 210.23(c).
 action, fiscal action and withholding of
 payments). (FNS-640).
SA maintains documentation of fiscal action     210.20(b)(7) & 210.19(c) &                    56              68           3,808             .50           1,904           3,304          -1,400
 taken to disallow improper claims submitted     210.18(o).
 by SFAs, as determined through claims
 processing, reviews, and USDA audits.
SA completes and maintains documentation used   210.18 (c-h)....................              56              68           3,808              48         182,784   * 304,640 (0)        -121,856
 to conduct Administrative Review.
SA completes and maintains documentation used   210.18(c).......................              56              23           1,288              16          20,608               0         +20,608
 to conduct targeted Follow Up Administrative
 Review..
                                               -------------------------------------------------------------------------------------------------------------------------------------------------
Total SA Recordkeeping........................  ................................              56  ..............          16,520  ..............         236,720  ..............        -125,754
                                               -------------------------------------------------------------------------------------------------------------------------------------------------
    Total Recordkeeping.......................  ................................              56  ..............          16,520  ..............         236,720  ..............        -125,754
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                       Public Notification
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
State agencies must post a summary of the most  210.18(m)(1)....................              56              68           3,808             .25             952           1,736            -784
 recent administrative review results of SFAs
 on the SA website and make a copy available
 upon request.
                                               -------------------------------------------------------------------------------------------------------------------------------------------------
Total SA Public Notification..................  ................................              56  ..............           3,808  ..............             952  ..............            -784
                                               -------------------------------------------------------------------------------------------------------------------------------------------------
    Total Public Notification.................  ................................              56  ..............           3,808  ..............             952  ..............            -784
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
* Denotes corrected estimate of current burden hours; parenthetical indicates actual approved hours (before pending corrections).

    Total Number of Respondents: 3,864.
    Average Number of Responses per Respondent: 7.246.
    Total Annual Responses: 28,000.
    Average Hours per Response: 10.664791.
    Total Burden Hours: 298,614.
    In summary, although the Information Collection Request for this 
proposed rule is being submitted as a new information collection, this 
proposed rule actually impacts existing information and imposes new 
information collection requirements for OMB# 0584-0006. The current 
inventory under OMB# 0584-0006 for the information requirements 
outlined in this proposed rule is 469,986 (165,290) hours.* Once the 
final rule has been published and the final ICR is approved, these 
proposals will be merged into OMB# 0584-0006. FNS estimates that these 
proposed changes will decrease the burden hours by 171,372 hours.
E-Government Act Compliance
    The Department 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 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.

7 CFR Part 235

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

    Accordingly, 7 CFR parts 210, 215, 220, 226, and 235 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.  210.2:
0
a. Revise the definition of ``Child'';
0
b. In the definition of ``School'', redesignate paragraphs (a), (b), 
and (c) as paragraphs (1), (2) and (3); and
0
c. Add a definition for ``State licensed healthcare professional'' in 
alphabetical order.
    The revision and addition read as follows:


Sec.  210.2  Definitions.

* * * * *
    Child means--
    (1) A student of high school grade or under as determined by the 
State educational agency, who is enrolled in an educational unit of 
high school grade or under as described in paragraphs (1) and (2) of 
the definition of ``School,'' including students who are mentally or 
physically disabled as defined by the State and who are participating 
in a

[[Page 4127]]

school program established for the mentally or physically disabled; or
    (2) A person under 21 chronological years of age who is enrolled in 
an institution or center as described in paragraph (3) of the 
definition of ``School;'' or
    (3) For purposes of reimbursement for meal supplements served in 
afterschool care programs, an individual enrolled in an afterschool 
care program operated by an eligible school who is 18 years of age or 
under at the start of the school year, or a mentally or physically 
disabled individual, as defined by the State, enrolled in an agency or 
a child care facility serving a majority of persons 18 years of age or 
younger.
* * * * *
    State licensed healthcare professional means an individual who is 
authorized to write medical prescriptions under State law. This may 
include, but is not limited to, a licensed physician, nurse 
practitioner, and physician's assistant, depending on State law.
* * * * *


Sec.  210.4  [Amended]

0
3. Amend paragraph (b)(3) introductory text by removing the words 
``Sec.  210.10(n)(1)'' and adding, in its place ``Sec.  210.10(o)(1)''.
0
4. In Sec.  210.5, revise paragraph (d)(2)(ii) to read as follows:


Sec.  210.5  Payment process to States.

* * * * *
    (d) * * *
    (2) * * *
    (ii) Each State agency must also submit an annual report detailing 
the disbursement of performance-based cash assistance described in 
Sec.  210.4(b)(1). Such report must be submitted no later than 30 days 
after the end of each fiscal year. State agencies will no longer be 
required to submit the annual report once all school food authorities 
in the State have been certified. The report must include the total 
number of school food authorities in the State and the names of 
certified school food authorities.
* * * * *


Sec.  210.7  [Amended]

0
5. Amend paragraph (e) by removing ``Sec.  210.10(n)(1)'' and adding, 
in its place ``Sec.  210.10(o)(1)''.


Sec.  210.9  [Amended]

0
6. Amend paragraph (c) introductory text by removing ``Sec.  
210.10(n)(1)'' and adding, in its place ``Sec.  210.10(o)(1)''.
0
7. In Sec.  210.10:
0
a. At the end of paragraph (a)(1)(i) add a sentence;
0
b. In paragraph (a)(3), add ``through June 30, 2021'' at the end of the 
third sentence;
0
c. In paragraph (b)(1)(ii), remove ``Food'' and in its place add 
``Through June 30, 2021, food'';
0
d. Revise paragraph (c) introductory text and table;
0
e. Revise paragraph (c)(1);
0
f. At the end of paragraph (c)(2) introductory text, add a sentence;
0
g. Revise the last two sentences of paragraph (c)(2)(iii) introductory 
text;
0
h. Revise paragraph (c)(3);
0
i. Revise paragraph (d)(3);
0
j. Revise the table in paragraph (f)(1);
0
k. In the first sentence of paragraph (f)(4), remove ``Food'' and add 
in its place ``Through June 30, 2021, food'';
0
l. In paragraph (g), revise the first sentence;
0
m. In paragraph (h)(2) introductory text, add ``Through June 30, 
2021,'' at the beginning of the first sentence; and
0
n. Revise paragraphs (j) and (m).
    The additions and revisions read as follows:


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

    (a) * * *
    (1) * * *
* * * * *
    (i) * * * Potable water must be calorie-free, noncarbonated, and 
may be unflavored or naturally flavored.
* * * * *
    (c) Meal pattern for school lunches. Schools must offer the food 
components and quantities required in the lunch meal pattern 
established in the following table, except as permitted in paragraph 
(m) of this section:

----------------------------------------------------------------------------------------------------------------
                                                                                Lunch meal pattern
                         Food components                         -----------------------------------------------
                                                                    Grades K-5      Grades 6-8      Grades 9-12
----------------------------------------------------------------------------------------------------------------
                                                                  Amount of food \a\ per week (minimum per day).
                                                                 -----------------------------------------------
Fruits (cups) \b\...............................................  2\1/2\ (\1/2\)  2\1/2\ (\1/2\)           5 (1)
Vegetables (cups) \b\...........................................  3\3/4\ (\3/4\)  3\3/4\ (\3/4\)           5 (1)
    Dark green \c\..............................................           \1/2\           \1/2\           \1/2\
    Red/Orange \c\..............................................           \3/4\           \3/4\          1\1/4\
    Beans and peas (legumes) \c\................................           \1/2\           \1/2\           \1/2\
    Starchy \c\.................................................           \1/2\           \1/2\           \1/2\
    Other c d...................................................           \1/2\           \1/2\           \3/4\
    Additional Vegetables to Reach Total \e\....................               1               1          1\1/2\
Grains (oz eq) \f\..............................................         8-9 (1)        8-10 (1)       10-12 (2)
Meats/Meat Alternates (oz eq)...................................        8-10 (1)        9-10 (1)       10-12 (2)
Fluid milk (cups) \g\...........................................           5 (1)           5 (1)           5 (1)
----------------------------------------------------------------------------------------------------------------
                    Other Specifications: Daily Amount Based on the Average for a 5-Day Week
----------------------------------------------------------------------------------------------------------------
Min-max calories (kcal) \h\.....................................         550-650         600-700         750-850
Saturated fat (% of total calories) \h\.........................             <10             <10             <10
Sodium Target 2 (mg) \e\........................................           <=935         <=1,035         <=1,080
rrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrr
Trans fat h i j.................................................  Nutrition label or manufacturer specifications
                                                                     must indicate zero grams of trans fat per
                                                                         serving (through June 30, 2021).
----------------------------------------------------------------------------------------------------------------
\a\ Food items included in each group and subgroup and amount equivalents. Minimum creditable serving is \1/8\
  cup.
\b\ One quarter-cup of dried fruit counts as \1/2\ cup of fruit; 1 cup of leafy greens counts as \1/2\ cup of
  vegetables. No more than half of the fruit or vegetable offerings may be in the form of juice. All juice must
  be 100% full-strength.
\c\ Larger amounts of these vegetables may be served.
\d\ This category consists of ``Other vegetables'' as defined in paragraph (c)(2)(iii)(E) of this section. For
  the purposes of the NSLP, the ``Other vegetables'' requirement may be met with any additional amounts from the
  dark green, red/orange, and beans/peas (legumes) vegetable subgroups as defined in paragraph (c)(2)(iii) of
  this section.

[[Page 4128]]

 
\e\ Any vegetable subgroup may be offered to meet the total weekly vegetable requirement.
\f\ At least half of the grains offered weekly must be whole grain-rich as specified in FNS guidance, and the
  remaining grain items offered must be enriched.
\g\ All fluid milk must be fat-free (skim) or low-fat (1 percent fat or less). Milk may be unflavored or
  flavored provided that unflavored milk is offered at each meal service.
\h\ The average daily calories for a 5-day school week menu must be within the range (at least the minimum and
  no more than the maximum values). Discretionary sources of calories (solid fats and added sugars) may be added
  to the meal pattern if within the specifications for calories, saturated fat, trans fat (through June 30,
  2021), and sodium. Foods of minimal nutritional value and fluid milk with fat content greater than 1 percent
  are not allowed.
\i\ Sodium Target 1 is effective from July 1, 2014 (SY 2014-2015) through June 30, 2024 (SY 2023-2024). Sodium
  Target 2 (shown) is effective July 1, 2024 (SY 2024-2025).
\j\ Through June 30, 2021, food products and ingredients must contain zero grams of trans fat (less than 0.5
  grams) per serving.

    (1) Age/grade groups. Schools must plan menus for students using 
the following age/grade groups: Grades K-5 (ages 5-10), grades 6-8 
(ages 11-13), and grades 9-12 (ages 14-18), except as permitted in 
paragraph (m) of this section. If an unusual grade configuration in a 
school prevents the use of these established age/grade groups, students 
in grades K-5 and grades 6-8 may be offered the same food quantities at 
lunch provided that the calorie and sodium standards for each age/grade 
group are met.
    (2) * * * Allowable modifications, exceptions, and variations are 
listed in paragraph (m) of this section. * * *
* * * * *
    (iii) * * * Cooked dry beans and peas (legumes) offered as a meat 
alternate may also count toward the weekly legumes requirement, but may 
not count toward the minimum amount of vegetables that must be offered 
daily and weekly. Vegetable offerings at lunch over the course of the 
week must include the following five vegetable subgroups, as defined in 
this section, in the quantities specified in the meal pattern in this 
paragraph (c), except as permitted in paragraph (m) of this section:
* * * * *
    (3) Food components in outlying areas. Schools in American Samoa, 
Guam, Hawaii, Puerto Rico, and the U.S. Virgin Islands may serve 
vegetables such as yams, plantains, or sweet potatoes to meet the 
grains component.
* * * * *
    (d) * * *
    (3) Fluid milk substitutions for non-disability reasons. If a 
school food authority chooses to offer one or more substitutions for 
fluid milk for non-disability reasons, the nondairy beverage(s) must 
provide the nutrients listed in the following table. Fluid milk 
substitutions must be fortified in accordance with fortification 
guidelines issued by the Food and Drug Administration. A school food 
authority need only offer the nondairy beverage(s) that it has 
identified as allowable fluid milk substitutions according to the 
following chart.

------------------------------------------------------------------------
                  Nutrient                        Per cup (8 fl oz)
------------------------------------------------------------------------
Calcium....................................  276 mg.
Protein....................................  8 g.
Vitamin A..................................  150 mcg.
Vitamin D..................................  2.5 mcg.
Magnesium..................................  24 mg.
Phosphorus.................................  222 mg.
Potassium..................................  349 mg.
Riboflavin.................................  0.44 mg.
Vitamin B-12...............................  1.1 mcg.
------------------------------------------------------------------------

* * * * *
    (f) * * *
    (1) * * *

----------------------------------------------------------------------------------------------------------------
                                                                            Calorie ranges for lunch
                                                              --------------------------------------------------
                                                                  Grades K-5       Grades 6-8      Grades 9-12
----------------------------------------------------------------------------------------------------------------
Min-max calories (kcal) a b..................................         550-650          600-700          750-850
----------------------------------------------------------------------------------------------------------------
\a\ The average daily amount for a 5-day school week must fall within the minimum and maximum levels.
\b\ Discretionary sources of calories (solid fats and added sugars) may be added to the meal pattern if within
  the specifications for trans fat (through June 30, 2021), calories, saturated fat, and sodium.

* * * * *
    (g) * * * The State agency and school food authority must provide 
technical assistance and training to assist schools in planning lunches 
that meet the meal pattern in paragraph (c) of this section; the trans 
fat (through June 30, 2021), calorie, saturated fat, and sodium 
specifications established in paragraph (f) of this section; and the 
meal pattern requirements in paragraphs (o), (p), and (q) of this 
section as applicable. * * *
* * * * *
    (j) Responsibility for monitoring meal requirements. Compliance 
with the meal requirements in paragraph (b) of this section, including 
dietary specifications for trans fat (through June 30, 2021), calories, 
saturated fat, and sodium and paragraphs (o), (p), and (q) of this 
section, as applicable, will be monitored by the State agency through 
administrative reviews authorized in Sec.  210.18.
* * * * *
    (m) Modifications, exceptions, and variations allowed in 
reimbursable meals--(1) Reasonable modifications for disability 
requests. School food authorities must make reasonable modifications, 
including substitutions, to lunches and afterschool snacks for students 
who have a disability under Federal law and 7 CFR 15b.3 and whose 
disability restricts their diet. The modification requested must be 
related to the disability or limitations caused by the disability and 
must be offered at no additional cost to the student or household. In 
order to receive reimbursement when a modified meal does not meet the 
meal pattern requirements specified in paragraph (c) of this section, 
households must submit to school food authorities a written medical 
statement from a State licensed healthcare professional that provides 
sufficient information about the impairment and how it restricts the 
student's diet. Modified meals that meet the meal pattern requirements 
in paragraph (c) of this section are reimbursable with or without a 
medical statement. School food authorities must ensure that parents/
guardians and students have notice of the procedure for requesting meal 
modifications and the process for resolving disputes related to 
modifications for disabilities. See 7 CFR 15b.6(b) and 15b.25. Expenses 
incurred when making reasonable modifications that exceed program 
reimbursement rates must be paid by the school food authority; costs 
may be paid from the nonprofit food service account.

[[Page 4129]]

    (2) Variations for non-disability requests--(i) Dietary 
preferences. School food authorities should consider cultural, ethical, 
Tribal, and religious preferences when planning and preparing meals. 
For example, school food authorities are encouraged to provide meals to 
accommodate students' religious needs and practices, unless 
modifications cannot be made for legitimate, non-discriminatory 
reasons, such as operational constraints. Any variations must be 
consistent with the meal pattern requirements specified in paragraph 
(c) of this section. Expenses incurred from meal pattern variations 
that exceed program reimbursement rates must be paid by the school food 
authority; costs may be paid from the nonprofit food service account.
    (ii) Option to provide fluid milk substitutions for non-disability 
reasons. A school food authority opting to provide fluid milk 
substitutions for non-disability reasons has discretion to provide the 
nondairy beverage(s) of its choice, provided the beverage(s) meets the 
nutritional requirements outlined in paragraph (d) of this section. A 
school food authority must obtain a written request from a State 
licensed healthcare professional or a student's parent or legal 
guardian that identifies the need for the substitute prior to providing 
a fluid milk substitution. A school food authority must inform the 
State agency if any of its schools choose to offer fluid milk 
substitutions for non-disability reasons. Expenses incurred when 
providing substitutions for fluid milk that exceed program 
reimbursements must be paid by the school food authority.
    (3) Exceptions for natural disasters. If there is a natural 
disaster or other catastrophe, FNS may temporarily allow schools to 
serve meals for reimbursement that do not meet the requirements in this 
section.
    (4) Variations for operational reasons. Schools should consider 
operational factors when planning and preparing meals. With prior State 
agency written notification, FNS allows variations as described in this 
paragraph (m) on an experimental or continuing basis in the food 
components for the meal pattern in paragraph (c) of this section for 
operational reasons. Variations allowed under this paragraph (m) must 
be necessary to meet operational needs.
    (i) Age/grade group variations for operational reasons--(A) Age/
grade group variations for schools with unique grade configurations. 
Schools with unique grade configurations that do not align with the 
grade groups established in paragraph (c)(1) of this section may use 
the meal pattern appropriate for the majority of students to one grade 
above and/or below the established grade groups. For example, a school 
with students in grades 5-9 may use the grades 6-8 meal pattern for all 
student meals.
    (B) Age/grade group variations for schools with unique grade 
configurations in small school food authorities. In school food 
authorities serving fewer than 2,500 students, schools with unique 
grade configurations that do not align with the grade groups 
established in paragraph (c)(1) of this section may use one or two meal 
patterns to plan meals for all students. For example, a school with 
students in grades K-12 in a small school food authority may use the 
grades 6-8 meal pattern for all student meals.
    (ii) Vegetable subgroups variations for operational reasons. School 
food authorities that experience operational challenges offering varied 
amounts of vegetable subgroups over a school week, as specified in 
paragraph (c) of this section, may offer \1/2\ cup of each vegetable 
subgroup to all age/grade groups over a school week. The total amount 
of vegetables offered daily and weekly for each age/grade group must 
reflect the meal pattern in paragraph (c) of this section.
* * * * *
0
8. In Sec.  210.11:
0
a. In the first sentence of paragraph (c)(3)(i), remove ``the school 
day'' and in its place add ``two school days'';
0
b. In paragraph (f)(2), remove ``trans fat'' and in its place add 
``trans fat (through June 30, 2021)'';
0
c. In the first sentence of paragraph (f)(3)(i), remove ``trans fat'' 
and in its place add ``trans fat (through June 30, 2021)'';
0
d. In the first sentence of paragraph (f)(3)(ii), remove ``trans fat'' 
and in its place add ``trans fat (through June 30, 2021)'';
0
e. In paragraph (f)(3)(iii), remove ``trans fat'' and in its place add 
``trans fat (through June 30, 2021)'';
0
f. In paragraph (g), remove ``The'' and add in its place ``Through June 
30, 2021, the'';
0
g. In paragraph (h)(2)(i), remove ``, trans fat'' and add in its place 
add ``trans fat (through June 30, 2021)'';
0
h. In paragraph (h)(2)(ii), remove ``trans fat'' and add in its place 
add ``trans fat (through June 30, 2021)'';
0
i. In paragraph (m)(1)(iv), remove ``and'' after the semicolon;
0
j. Revise paragraph (m)(1)(v);
0
k. Add paragraph (m)(1)(vi);
0
l. In paragraph (m)(2)(iv), remove the word ``and'' after the 
semicolon;
0
m. Revise paragraph (m)(2)(v); and
0
n. Add paragraph (m)(2)(vi).
    The additions and revisions read as follows:


Sec.  210.11   Competitive food service and standards.

* * * * *
    (m) * * *
    (1) * * *
    (v) 100 percent fruit/vegetable juice, and 100 percent fruit and/or 
vegetable juice diluted with water (with or without carbonation and 
with no added sweeteners) (no more than 8 fluid ounces); and
    (vi) Calorie-free, flavored water, with or without carbonation (no 
more than 20 fluid ounces).
    (2) * * *
    (v) 100 percent fruit/vegetable juice, and 100 percent fruit and/or 
vegetable juice diluted with water (with or without carbonation and 
with no added sweeteners) (no more than 12 fluid ounces); and
    (vi) Calorie-free, flavored water, with or without carbonation (no 
more than 20 fluid ounces).
* * * * *
0
9. In Sec.  210.18:
0
a. In paragraph (b), revise the definition of ``Administrative 
reviews'';
0
b. Revise paragraph (c) introductory text;
0
c. In paragraph (c)(1), remove the two occurrences of ``3'' and in 
their place add ``5'';
0
d. Revise paragraph (c)(2);
0
e. Revise paragraph (e)(5);
0
f. In paragraph (f) introductory text, add a new second sentence;
0
g. Revise paragraph (f)(3);
0
h. In paragraph (g) introductory text, add a new third sentence;
0
i. In paragraph (g)(1)(ii) introductory text, add a sentence at the 
end;
0
j. Add paragraph (g)(2)(i)(B)(4);
0
k. In paragraph (h) introductory text, add a new second sentence;
0
l. In paragraph (h)(1) introductory text, revise the first sentence;
0
m. Add paragraph (h)(2)(xi);
0
n. In paragraph (l), revise the first sentence;
0
o. Remove paragraph (l)(2)(ii) and redesignate paragraphs (l)(2)(iii), 
(iv), and (v) as paragraphs (l)(2)(ii), (iii), and (iv), respectively;
0
p. Revise newly redesignated paragraphs (l)(2)(ii) and (l)(2)(iii) 
introductory text; and
0
q. In newly redesignated paragraph (l)(2)(iv), remove ``through (iv)'' 
and in its place add ``and (iii)''.
    The additions and revisions read as follows:


Sec.  210.18   Administrative reviews.

* * * * *

[[Page 4130]]

    (b) * * *
    Administrative reviews. Administrative reviews means the 
comprehensive off-site and/or on-site evaluation of all school food 
authorities participating in the programs specified in paragraph (a) of 
this section. The term ``administrative review'' refers to a review of 
both critical and general areas in accordance with paragraphs (g) and 
(h) of this section, as applicable for each reviewed program. The 
administrative review may include other areas of program operations 
determined by the State agency to be important to program performance. 
In addition, the Secretary shall establish criteria that provides State 
agencies the option to omit designated areas of the administrative 
review when a State or school food authority utilizes FNS-specified 
monitoring efficiencies outside of the administrative review, or adopts 
FNS-specified error reduction strategies.
* * * * *
    (c) Timing of reviews. State agencies must conduct administrative 
reviews of all school food authorities participating in the National 
School Lunch Program (including the Afterschool Snacks and the Seamless 
Summer Option) and School Breakfast Program at least once during a 5-
year review cycle, provided that each school food authority is reviewed 
at least once every 6 years. At a minimum, the on-site portion of the 
administrative review must be completed during the school year in which 
the review was begun.
* * * * *
    (2) Targeted follow-up reviews. The State agency must identify 
school food authorities that are high-risk. High-risk school food 
authorities include any school food authorities that have had previous 
findings on an administrative review, findings found through the 
oversight of Federal procurement regulations, and as otherwise 
prescribed by the Secretary. Within two years of being designated high-
risk, such school food authorities must receive a targeted follow-up 
review. Targeted follow-up review areas include the critical areas 
found in (g) and (h)(1) of this section, and as otherwise prescribed by 
the Secretary. Nothing in this section shall preclude the State agency 
from conducting additional reviews. The State agency may conduct 
targeted follow-up and additional reviews in the same school year as 
the administrative review.
* * * * *
    (e) * * *
    (5) Noncompliance with eligibility determinations, meal counting 
and claiming, and meal pattern requirements. If the State agency 
determines there is significant noncompliance with eligibility 
determinations or meal counting and claiming requirements set forth in 
Sec. Sec.  210.8 and 245.6, or the meal pattern and nutrition 
requirements set forth in Sec. Sec.  210.10 and 220.8 of this chapter, 
as applicable, the State agency must select the school food authority 
for an administrative review early in the review cycle.
    (f) * * * State agencies may omit designated areas of review, in 
part or entirely, where a school food authority or State agency has 
implemented FNS-specified error reduction strategies or utilized FNS-
specified monitoring efficiencies. * * *
* * * * *
    (3) Audit results. To prevent duplication of monitoring efforts, 
the State agency may use any recent and currently applicable results 
from federally required audit activity or from State-imposed audit 
requirements. In addition, State agencies may use recent and currently 
applicable results from local audit activity to assess compliance. Such 
results may be used only insofar as they pertain to the reviewed 
school(s) or the overall operation of the school food authority, that 
they are relevant to the review period, and that they adhere to audit 
standards contained in 2 CFR part 200, subpart F. The State agency must 
document the source and the date of the audit.
    (g) * * * However, State agencies may omit designated critical 
areas of review, in part or entirely, where a school food authority or 
State agency has implemented FNS-specified error reduction strategies 
or utilized FNS-specified monitoring efficiencies. * * *
    (1) * * *
    (ii) * * * The State agency may omit the on-site visit for 
breakfast in extenuating travel circumstances, such that lodging is not 
available within 50 miles of the reviewed school, and with prior notice 
to FNS.
    (2) * * *
    (i) * * *
    (B) * * *
    (4) The State agency may omit the observation of the on-site 
breakfast review in extenuating travel circumstances, such that lodging 
is not available within 50 miles of the reviewed school, and with prior 
notice to FNS.
* * * * *
    (h) * * * However, State agencies may omit designated general areas 
of review, in part or entirely, where the school food authority or 
State agency has implemented FNS-specified error reduction strategies 
or utilized FNS-specified monitoring efficiencies. * * *
    (1) * * * The State agency must conduct an assessment of the school 
food authority's nonprofit school food service to evaluate the risk of 
noncompliance with resource management requirements as prescribed in 
the FNS Administrative Review Manual. * * *
    (2) * * *
    (xi) Buy American. The State agency shall ensure that the school 
food authority complies with the Buy American requirements set forth in 
Sec.  210.21(d), as specified in the FNS Administrative Review Manual 
for the general areas of review.
* * * * *
    (l) * * * The State agency must take fiscal action for all 
Performance Standard 1 violations and specific Performance Standard 2 
violations identified during an administrative review, including 
targeted follow-up or other reviews, as specified in this section. * * 
*
    (2) * * *
    (ii) For repeated violations involving food quantities, whole 
grain-rich foods, milk type, and vegetable subgroups cited under 
paragraph (g)(2) of this section, the State agency has discretion to 
apply fiscal action as follows:
    (A) If the meals contain insufficient quantities of the required 
food components, the affected meals may be disallowed/reclaimed;
    (B) If no whole grain-rich foods are offered during the week of 
review, meals for the entire week of review may be disallowed and/or 
reclaimed;
    (C) If insufficient whole grain-rich foods are offered during the 
week of review, meals for one or more days during the week of review 
may be disallowed/reclaimed.
    (D) If an unallowable milk type is offered or no milk variety is 
offered, any of the deficient meals selected may be disallowed/
reclaimed; and
    (E) If one vegetable subgroup is not offered over the course of the 
week reviewed, the reviewer should evaluate the cause(s) of the error 
and may determine the appropriate fiscal action. All meals served in 
the deficient week may be disallowed/reclaimed.
    (F) If a weekly vegetable subgroup is offered in insufficient 
quantity to meet the weekly vegetable subgroup requirement, meals for 
one day of the week of review may be disallowed/reclaimed; and
    (G) If the amount of juice offered exceeds the weekly limitation, 
meals for the entire week of review may be disallowed/reclaimed.

[[Page 4131]]

    (iii) For repeated violations of trans fat (through June 30, 2021), 
calorie, saturated fat, and sodium dietary specifications cited under 
paragraph (g)(2)(ii) of this section, the State agency has discretion 
to apply fiscal action to the reviewed school as follows:
* * * * *


Sec.  210.19  [Amended]

0
10. In Sec.  210.19, in paragraph (a)(5), remove ``3'' and in its place 
add ``5''.

PART 215--SPECIAL MILK PROGRAM FOR CHILDREN

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

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

0
12. In Sec.  215.7a, revise paragraph (b) to read as follows:


Sec.  215.7a  Fluid milk and non-dairy milk substitute requirements.

* * * * *
    (b) Fluid milk substitutes. Non-dairy fluid milk substitutions that 
provide the nutrients listed in the following table and are fortified 
in accordance with fortification guidelines issued by the Food and Drug 
Administration may be provided for non-disabled children who cannot 
consume fluid milk due to medical or special dietary needs when 
requested in writing by the child's parent or guardian. A school or day 
care center need only offer the non-dairy beverage that it has 
identified as an allowable fluid milk substitute according to the 
following table.

------------------------------------------------------------------------
                  Nutrient                        Per cup (8 fl oz)
------------------------------------------------------------------------
Calcium....................................  276 mg.
Protein....................................  8 g.
Vitamin A..................................  150 mcg.
Vitamin D..................................  2.5 mcg.
Magnesium..................................  24 mg.
Phosphorus.................................  222 mg.
Potassium..................................  349 mg.
Riboflavin.................................  0.44 mg.
Vitamin B-12...............................  1.1 mcg.
------------------------------------------------------------------------

* * * * *

PART 220--SCHOOL BREAKFAST PROGRAM

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

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

0
14. In Sec.  220.2:
0
a. Amend the definition of ``Breakfast'' by removing ``Sec. Sec.  220.8 
and 220.23'' and adding ``Sec.  220.8'' in its place;
0
b. Amend the definition of ``Fiscal year'' by removing ``the period of 
15 calendar months beginning July 1, 1976, and ending September 30, 
1977; and'' and by removing ``1977'' and adding, in its place ``2019'';
0
c. Revise the definition of ``Menu item'';
0
d. Remove the definition of ``Nutrient Standard Menu Planning/Assisted 
Nutrient Standard Menu Planning''; and
0
e. Amend the definition of ``School week'' by removing ``and Sec.  
220.23''.
    The revision reads as follows:


Sec.  220.2  Definitions.

* * * * *
    Menu item means a food offered as part of the reimbursable meal.
* * * * *
0
15. In Sec.  220.8:
0
a. In paragraph (a)(1), add a sentence at the end;
0
b. In paragraph (a)(3), revise the third sentence;
0
c. In paragraph (b)(1)(ii), remove ``Food'' and in its place add 
``Through June 30, 2021, food'';
0
d. In paragraph (b)(1)(iii), add ``, except as allowed in paragraph 
(m)'' before the period;
0
e. Revise the table in paragraph (c) introductory text;
0
f. In paragraph (c)(1), revise the last sentence;
0
g. Revise paragraph (c)(2)(i);
0
h. Revise the first sentence of paragraph (c)(2)(ii);
0
i. Remove paragraph (c)(2)(iv);
0
j. Revise paragraph (c)(3);
0
k. Revise the table in paragraph (f)(1);
0
l. In the first sentence of paragraph (f)(4), remove ``Food'' and in 
its place add ``Through June 30, 2021, food'';
0
m. Revise the first sentence of paragraph (g);
0
n. In paragraph (h)(2) introductory text, add ``Through June 30, 
2021,'' at the beginning of the sentence; and
0
o. Revise paragraph (m).
    The addition and revisions read as follows:


Sec.  220.8   Meal requirements for breakfasts.

* * * * *
    (a) * * *
    (1) * * * Potable water must be calorie-free, noncarbonated, and 
may be unflavored or naturally flavored.
* * * * *
    (3) * * * Through June 30, 2021, labels or manufacturer 
specifications for food products and ingredients used to prepare school 
meals for students in grades K through 12 must indicate zero grams of 
trans fat per serving (less than 0.5 grams). * * *
* * * * *
    (c) * * *

----------------------------------------------------------------------------------------------------------------
                                                                              Breakfast meal pattern
                         Food components                         -----------------------------------------------
                                                                    Grades K-5      Grades 6-8      Grades 9-12
----------------------------------------------------------------------------------------------------------------
                                                                   Amount of food \a\ per week (minimum per day)
                                                                 -----------------------------------------------
Fruits (cups) b c...............................................           5 (1)           5 (1)           5 (1)
Vegetables (cups) \c\...........................................               0               0               0
    Dark green..................................................               0               0               0
    Red/Orange..................................................               0               0               0
    Beans and peas (legumes)....................................               0               0               0
    Starchy.....................................................               0               0               0
    Other.......................................................               0               0               0
    Additional Vegetables to Reach Total \e\....................               0               0               0
Grains (oz eq) \d\ and/or Meats/Meat Alternates (oz eq) \e\.....        7-10 (1)        8-10 (1)        9-10 (1)
Fluid milk (cups) \f\...........................................           5 (1)           5 (1)           5 (1)
----------------------------------------------------------------------------------------------------------------
                    Other Specifications: Daily Amount Based on the Average for a 5-Day Week
----------------------------------------------------------------------------------------------------------------
Min-max calories (kcal) g h.....................................         350-500         400-550         450-600
Saturated fat (% of total calories) \h\.........................             <10             <10             <10
Sodium Target 2 (mg) h i........................................           <=485           <=535           <=570
                                                                 -----------------------------------------------

[[Page 4132]]

 
Trans fat h j...................................................  Nutrition label or manufacturer specifications
                                                                     must indicate zero grams of trans fat per
                                                                         serving (through June 30, 2021).
----------------------------------------------------------------------------------------------------------------
\a\ Food items included in each group and subgroup and amount equivalents. Minimum creditable serving is \1/8\
  cup.
\b\ One quarter cup of dried fruit counts as \1/2\ cup of fruit; 1 cup of leafy greens counts as \1/2\ cup of
  vegetables. No more than half of the fruit or vegetable offerings may be in the form of juice. All juice must
  be 100% full-strength.
\c\ Schools must offer 1 cup of fruit daily and 5 cups of fruit weekly, except for service variations allowed
  under paragraph (m) of this section. Vegetables may be substituted for fruits, but the first two cups per week
  of any such substitution must be from the dark green, red/orange, beans and peas (legumes) or ``Other
  vegetables'' subgroups, as defined in Sec.   210.10(c)(2)(iii) of this chapter. Schools offering breakfast in
  a non-cafeteria setting may offer \1/2\ cup of fruits daily, as permitted in paragraph (m) of this section.
\d\ At least half of the grains offered weekly must be whole-grain-rich as specified in FNS guidance, and the
  remaining grain items offered must be enriched.
\e\ There is a combined grains and/or meat/meat alternate component. Schools may offer meats/meat alternates and/
  or grains interchangeably to meet the daily and/or weekly ounce equivalents requirement.
\f\ All fluid milk must be fat-free (skim) or low-fat (1 percent fat or less). Milk may be unflavored or
  flavored provided that unflavored milk is offered at each meal service.
\g\ The average daily calories for a 5-day school week must be within the range (at least the minimum and no
  more than the maximum values).
\h\ Discretionary sources of calories (solid fats and added sugars) may be added to the meal pattern if within
  the specifications for calories, saturated fat, trans fat (through June 30, 2021), and sodium. Fluid milk with
  fat content greater than 1 percent milk fat is not allowed.
\i\ Sodium Target 1 (shown) is effective from July 1, 2014 (SY 2014-2015) through June 30, 2024(SY 2023-2024).
  Sodium Target 2 (shown) is effective July 1, 2024 (SY 2024-2025).
\j\ Through June 30, 2021, food products and ingredients must contain zero grams of trans fat (less than 0.5
  grams) per serving.

    (1) * * * Age/grade group variations are allowed as specified in 
Sec.  210.10(m) of this chapter.
    (2) * * *
    (i) Grains and/or meats/meat alternates component. Schools may 
offer grains and/or meats/meat alternates interchangeably to meet the 
daily and weekly ounce equivalents for this component requirement.
    (A) Grains--(1) Enriched and whole grains. All grains offered must 
be made with enriched and/or whole grain meal or flour. Whole grain-
rich products must contain at least 50 percent whole grains and the 
remaining grains in the product must be enriched.
    (2) Daily and weekly servings. The grains component is based on 
minimum daily servings plus total servings over a 5-day school week. 
Schools serving breakfast 6 or 7 days per week must increase the weekly 
grains quantity by approximately 20 percent (\1/5\) for each additional 
day. When schools operate less than 5 days per week, they may decrease 
the weekly quantity by approximately 20 percent (\1/5\) for each day 
less than 5. The servings for biscuits, rolls, muffins, and other 
grain/bread varieties are specified in FNS guidance. At least half of 
the grains offered weekly must meet the whole grain-rich criteria 
specified in FNS guidance, and the remaining grain items offered must 
be enriched.
    (B) Meats/meat alternates--(1) Enriched macaroni. Enriched macaroni 
with fortified protein as defined in appendix A to part 210 may be used 
to meet part of the meats/meat alternates requirement when used as 
specified in appendix A to part 210. An enriched macaroni product with 
fortified protein as defined in appendix A to part 210 may be used to 
meet part of the meats/meat alternates component or the grains 
component but may not meet both food components in the same lunch.
    (2) Nuts and seeds. Nuts and seeds and their butters are allowed as 
meat alternates in accordance with program guidance. Acorns, chestnuts, 
and coconuts may not be used because of their low protein and iron 
content. Nut and seed meals or flours may be used only if they meet the 
requirements for Alternate Protein Products established in appendix A 
to part 220. Nuts or seeds may be used to meet no more than one-half 
(50 percent) of the meats/meat alternates component with another meats/
meat alternates to meet the full requirement.
    (3) Yogurt. Yogurt may be used to meet all or part of the meats/
meat alternates component. Yogurt may be plain or flavored, unsweetened 
or sweetened. Noncommercial and/or non-standardized yogurt products, 
such as frozen yogurt, drinkable yogurt products, homemade yogurt, 
yogurt flavored products, yogurt bars, yogurt covered fruits and/or 
nuts or similar products are not creditable. Four ounces (weight) or 
\1/2\ cup (volume) of yogurt equals one ounce of the meats/meat 
alternates requirement.
    (4) Tofu and soy products. Commercial tofu and soy products may be 
used to meet all or part of the meats/meat alternates component in 
accordance with FNS guidance. Noncommercial and/or non-standardized 
tofu and products are not creditable.
    (5) Beans and peas (legumes). Cooked dry beans and peas (legumes) 
may be used to meet all or part of the meats/meat alternates component. 
Beans and peas (legumes) are identified in this section and include 
foods such as black beans, garbanzo beans, lentils, kidney beans, 
mature lima beans, navy beans, pinto beans, and split peas.
    (6) Other meat alternates. Other meat alternates, such as cheese 
and eggs, may be used to meet all or part of the meats/meat alternates 
component in accordance with FNS guidance.
    (ii) * * * Schools must offer daily the fruit quantities specified 
in the breakfast meal pattern in this paragraph (c), except for fruit 
service variations allowed under paragraph (m) of this section.
* * * * *
    (3) Food components in outlying areas. Schools in American Samoa, 
Guam, Hawaii, Puerto Rico, and the U.S. Virgin Islands may serve a 
vegetable such as yams, plantains, or sweet potatoes to meet the grains 
component.
* * * * *
    (f) * * *
    (1) * * *

[[Page 4133]]



                              Calorie Ranges for Breakfast--Effective SY 2013-2014
----------------------------------------------------------------------------------------------------------------
                                                                  Grades K-5       Grades 6-8      Grades 9-12
----------------------------------------------------------------------------------------------------------------
Minimum-maximum calories (kcal) a b..........................         350-500          400-550          450-600
----------------------------------------------------------------------------------------------------------------
\a\ The average daily amount for a 5-day school must fall within the minimum and maximum levels.
\b\ Discretionary sources of calories (solid fats and added sugars) may be added to the meal pattern if within
  the specifications for calories, saturated fat, trans fat (through June 30, 2021), and sodium.

* * * * *
    (g) * * * The State agency and school food authority must provide 
technical assistance and training to assist schools in planning 
breakfasts that meet the meal pattern in paragraph (c) of this section, 
the dietary specifications for trans fat (through June 30, 2021), 
calories, saturated fat, and sodium established in paragraph (f) of 
this section, and the meal pattern in paragraphs (o) and (p) of this 
section, as applicable. * * *
* * * * *
    (m) Exceptions and variations allowed in reimbursable meals. (1) 
With State agency approval, schools that offer breakfast in a non-
cafeteria setting may serve students \1/2\ cup of fruit as part of the 
reimbursable meal.
    (2) The modifications, exceptions, variations, and requirements in 
Sec.  210.10(m) of this chapter also apply to this Program.
* * * * *

PART 226--CHILD AND ADULT CARE FOOD PROGRAM

0
16. 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
17. In Sec.  226.2, add a definition for ``State licensed healthcare 
professional'' in alphabetical order to read as follows:


Sec.  226.2  Definitions.

* * * * *
    State licensed healthcare professional means an individual who is 
authorized to write medical prescriptions under State law. This may 
include, but is not limited to, a licensed physician, nurse 
practitioner, and physician's assistant, depending on State law.
* * * * *
0
18. In 226.20, revise the paragraph (g) subject heading and paragraphs 
(g)(1) introductory text and (g)(1)(i), (g)(2) introductory text, 
(g)(2)(i), and (g)(3) to read as follows:


Sec.  226.20  Requirements for Meals.

* * * * *
    (g) Modifications, exceptions, and variations allowed in 
reimbursable meals--(1) Reasonable modifications for disability 
requests. Reasonable modifications, including substitutions, must be 
made on a case-by-case basis for foods and meals described in 
paragraphs (a), (b), and (c) of this section for individual 
participants who have a disability under Federal law and 7 CFR 15b.3 
and whose disability restricts their diet. The modification requested 
must be related to the disability or limitations caused by the 
disability and must be offered at no additional cost to the child or 
adult participant. Institutions and facilities must ensure that 
parents, guardians, adult participants, and persons on behalf of adult 
participants have notice of the procedure for requesting meal 
modifications and the process for resolving disputes related to 
modifications for disabilities. See 7 CFR 15b.6(b) and 15b.25. Expenses 
incurred when making reasonable modifications that exceed program 
reimbursement rates must be paid by the institution or facility; costs 
may be paid from the institution's nonprofit food service account.
    (i) In order to receive reimbursement when a modified meal does not 
meet the meal pattern requirements specified in paragraphs (a), (b), 
and (c) of this section, households must submit to the institution or 
facility a written medical statement from a State licensed healthcare 
professional that provides sufficient information about the impairment 
and how it restricts the child or adult participant's diet. Modified 
meals that meet the meal pattern requirements in paragraph (a), (b), or 
(c) of this section are reimbursable with or without a medical 
statement.
* * * * *
    (2) Variations for non-disability requests--(i) Dietary 
preferences. Institutions and facilities should consider cultural, 
ethical, tribal, and religious preferences when planning and preparing 
meals. For example, institutions and facilities are encouraged to 
provide meals to accommodate participants' religious needs and 
practices, unless modifications cannot be made for legitimate, non-
discriminatory reasons, such as operational constraints. Any variations 
must be consistent with the meal pattern requirements specified in 
paragraphs (a), (b), and (c) of this section. Expenses incurred from 
meal pattern variations that exceed program reimbursement rates must be 
paid by the institution or facility. These costs may be paid from the 
institution's nonprofit food service account.
* * * * *
    (3) Fluid milk substitutions for non-disability reasons. Non-dairy 
fluid milk substitutions that provide the nutrients listed in the 
following table and are fortified in accordance with fortification 
guidelines issued by the Food and Drug Administration may be provided 
for non-disabled child and adult participants when requested in writing 
by a State licensed healthcare professional, the child's parent or 
guardian, or by, or on behalf of, an adult participant. Expenses 
incurred when providing substitutions for fluid milk that exceed 
program reimbursements must be paid by the participating institution, 
family or group day care home, or sponsored center. An institution or 
facility need only offer the non-dairy beverage that it has identified 
as an allowable fluid milk substitute according to the following table.

------------------------------------------------------------------------
                  Nutrient                        Per cup (8 fl oz)
------------------------------------------------------------------------
Calcium....................................  276 mg.
Protein....................................  8 g.
Vitamin A..................................  150 mcg.
Vitamin D..................................  2.5 mcg.
Magnesium..................................  24 mg.
Phosphorus.................................  222 mg.
Potassium..................................  349 mg.
Riboflavin.................................  0.44 mg.
Vitamin B-12...............................  1.1 mcg.
------------------------------------------------------------------------

* * * * *

PART 235--STATE ADMINISTRATIVE EXPENSE FUNDS

0
19. The authority citation for part 235 continues to read as follows:

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

0
20. In Sec.  235.5:
0
a. Revise the third sentence of paragraph (d);

[[Page 4134]]

0
b. Revise the second sentence of paragraph (e)(1); and
0
c. In paragraph (e)(2), remove ``unexpended'' and add in its place 
``unobligated''.
    The revisions read as follows:


Sec.  235.5  Payments to States.

* * * * *
    (d) * * * Based on this information or on other available 
information, FNS shall reallocate, as it determines appropriate, any 
funds allocated to State agencies in the current fiscal year which will 
not be obligated in the following fiscal year and any funds carried 
over from the prior fiscal year which remain unobligated at the end of 
the current fiscal year. * * *
    (e) * * *
    (1) * * * In subsequent fiscal years, up to 20 percent may remain 
available for obligation and expenditure in the second fiscal year. * * 
*
* * * * *

     Dated: January 8, 2020.
Stephen L. Censky,
Deputy Secretary.
[FR Doc. 2020-00926 Filed 1-17-20; 4:15 pm]
 BILLING CODE 3410-30-P