[Federal Register: December 6, 2007 (Volume 72, Number 234)]
[Rules and Regulations]               
[Page 68965-69032]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr06de07-8]                         


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Part II





Department of Agriculture





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Food and Nutrition Service



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7 CFR Part 246



 Special Supplemental Nutrition Program for Women, Infants and Children 
(WIC): Revisions in the WIC Food Packages; Interim Rule


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DEPARTMENT OF AGRICULTURE

Food and Nutrition Service

7 CFR Part 246

[FNS-2006-0037]
RIN 0584-AD77

 
Special Supplemental Nutrition Program for Women, Infants and 
Children (WIC): Revisions in the WIC Food Packages

AGENCY: Food and Nutrition Service, USDA.

ACTION: Interim rule.

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SUMMARY: This interim rule revises regulations governing the WIC food 
packages to align the WIC food packages with the Dietary Guidelines for 
Americans (DGA) \1\ and current infant feeding practice guidelines of 
the American Academy of Pediatrics, better promote and support the 
establishment of successful long-term breastfeeding, provide WIC 
participants with a wider variety of food, and provide WIC State 
agencies with greater flexibility in prescribing food packages to 
accommodate participants with cultural food preferences.

DATES: Effective Date: This rule is effective February 4, 2008.
    Implementation Date: State agencies must implement the provisions 
of this rule no later than August 5, 2009.
    Comment Date: To be considered, comments on this interim rule must 
be postmarked on or before February 1, 2010.

ADDRESSES: The Food and Nutrition Service (FNS) invites interested 
persons to submit comments on this interim rule. Comments may be 
submitted by any of the following methods:
     Federal eRulemaking Portal: Go to http://www.regulations.gov
, select ``Food and Nutrition Service,'' from the 

agency drop-down menu, then click ``Submit.'' In the Docket ID column, 
select FNS-2006-0037 to submit or view public comments and to view 
supporting and related materials available electronically. Information 
on using Regulations.gov, including instructions for accessing 
documents, submitting comments, and viewing the docket after the close 
of the comment period, is available through the site's ``User Tips'' 
link.
     Mail: Send comments to Patricia N. Daniels, Director, 
Supplemental Food Programs Division, Food and Nutrition Service, USDA, 
3101 Park Center Drive, Room 528, Alexandria, Virginia 22302, (703) 
305-2746.
    Comments submitted in response to this interim rule will be 
included in the record and will be made available to the public. Please 
be advised that the substance of the comments and the identities of the 
individuals or entities submitting the comments will be subject to 
public disclosure. FNS will make the comments publicly available on the 
Internet via http://www.regulations.gov Information regarding the interim rule will be available on the FNS Web site at http://.

http://www.fns.usda.gov/wic. A regulatory impact analysis has been prepared 

for this rule. It follows this regulation as an Appendix.

FOR FURTHER INFORMATION CONTACT: Debra Whitford, Chief, Policy and 
Program Development Branch, Supplemental Food Programs Division, 
Supplemental Food Programs Division, Food and Nutrition Service, USDA, 
3101 Park Center Drive, Room 528, Alexandria, Virginia 22302, (703) 
305-2746, or Debbie.Whitford@fns.usda.gov.

SUPPLEMENTARY INFORMATION: 

I. Overview

    This interim rule implements the first comprehensive revisions to 
the WIC food packages since 1980. These revised food packages were 
developed to better reflect current nutrition science and dietary 
recommendations than do current food packages, within the parameters of 
current program costs.

II. Background

    The WIC food packages provide supplemental foods designed to 
address the nutritional needs of low-income pregnant, breastfeeding, 
non-breastfeeding postpartum women, infants and children up to five 
years of age who are at nutritional risk. WIC food packages and 
nutrition education are the chief means by which WIC affects the 
dietary quality and habits of participants. WIC is a unique nutrition 
assistance program in that it also serves as an adjunct to good health 
care during critical times of growth and development to prevent the 
occurrence of health problems and to improve the health status of 
Program participants. WIC was never intended to be a primary source of 
food, nor of general food assistance. Rather, WIC food benefits are 
scientifically-based and intended to address the supplemental 
nutritional needs of a specific population--low income pregnant, 
breastfeeding, non-breastfeeding postpartum women, infants and children 
up to five years of age who are at nutritional risk. In addition to 
WIC, the Food and Nutrition Service (FNS) administers a variety of 
other complementary nutrition assistance programs that work together to 
provide a more complete diet to low-income persons. Low-income families 
can, and frequently do, receive benefits from more than one of these 
programs. The largest of these programs, the Food Stamp Program, 
provides general food assistance intended to increase the food buying 
power of low-income households.
    The ability of the WIC food packages to reinforce nutrition 
education messages provided to participants is critical to affecting 
the dietary quality and habits of infants, children and mothers served 
by WIC. The nutrition education provided by WIC enables participants to 
make informed decisions in choosing foods that, together with the 
supplemental foods contained in the WIC food packages, can meet their 
total dietary needs. The intent is to help participants continue 
healthful dietary practices after leaving the Program.
    Since the creation of the WIC Program in the 1970s, and the last 
major revision of the WIC food packages in the early 1980's, much has 
been learned about the nutritional needs of Americans, including WIC's 
target population of pregnant and postpartum women, infants, and 
preschool aged children. In recent years the ability of the WIC Program 
to address the supplemental nutritional needs of WIC participants 
through its food packages and nutrition education has received growing 
attention. Significant interest in updating the food packages based on 
new information about the needs of low-income, culturally diverse 
women, infants, and children has been voiced by WIC Program 
administrators, the medical and scientific communities, advocacy 
groups, and Congress.

III. General Summary of Comments Received on the Proposed Rule To 
Revise the WIC Food Packages

    The Proposed Rule to revise regulations pertaining to the 
supplemental foods provided through the WIC Program was published in 
the Federal Register on August 7, 2006 (71 FR 44784), with a 90-day 
comment period. The proposed rule largely reflected recommendations 
made by the National Academies' Institute of Medicine (IOM) in its 
Report ``WIC Food Packages--Time for a Change,'' \(2)\ with 
modifications found necessary by FNS to ensure cost neutrality.
    A total of 46,502 comment letters were received on the Proposed 
Rule; of those, 23,908 were form letters. A total of 38,257 letters 
were received from program participants; 18,080 of those were form 
letters. The remaining comment letters were submitted from a

[[Page 68967]]

variety of sources, including WIC State and local agencies and Indian 
Tribal Organizations, the National WIC Association (NWA), professional 
organizations and associations, advocacy groups, healthcare 
professionals (including universities), members of Congress, the food 
industry, vendors, farmers, and private citizens.
    In general, the proposed changes to the WIC food packages garnered 
broad support from public commenters. A total of 21,042 commenters 
(8,293 of these form letters) made explicit statements regarding the 
merits of the proposed rule as a whole. Of those, 20,438 (8,292 of 
which were form letters) expressed support for the majority of the 
proposed revisions. A total of 604 commenters (1 of these a form 
letter) disagreed with the majority of the proposed rule provisions--
these letters were primarily from participants who did not want to see 
any changes to the current WIC food packages. FNS considered all 
comments without regard to whether they were provided by a single 
commenter or repeated by many. Importance was given to the substance or 
content of the comment, rather than the number of times a comment was 
submitted.

IV. Discussion of the Proposed Provisions

    The following is a discussion of the major provisions set forth in 
the proposed rule, a brief summary of the comments received that 
addressed these issues, and FNS' rationale for either modifying each 
section in the interim rule, or retaining its provisions as initially 
proposed. Provisions not addressed in the preamble to this interim rule 
did not receive significant or substantial public comments and are 
retained in this interim rule as proposed.
    This preamble articulates the basis and purpose behind significant 
changes from the August 7, 2006, proposal. The reasons supporting 
provisions of the proposed regulations were carefully examined in light 
of the comments to determine the continued applicability of the 
justifications. Unless otherwise stated, or unless inconsistent with 
the interim rule or this preamble, the rationales contained in the 
preamble to the proposed regulations should be regarded as a basis for 
the interim rule. Therefore, a thorough understanding of the rationales 
for the interim regulations may require reference to the preamble of 
the August 7, 2006 proposal (71 FR 44784).

A. Definitions

    1. Participation. FNS proposed to revise the definition for WIC 
``participation'' to include the number of breastfeeding women who 
receive no supplemental foods or food instruments but whose breastfed 
infant(s) receives the supplemental foods or food instruments. The 
definition means, therefore, that a partially breastfeeding woman who 
requests, after the sixth month postpartum, more than the maximum 
amount of formula allowed for a partially breastfed infant would no 
longer receive a food package but would continue to count as a WIC 
participant and receive other Program benefits and nutrition services 
(nutrition education, including breastfeeding promotion and support, 
and referrals to health and social services.) Thirty-two commenters (15 
form letters) were opposed to not providing a food package to partially 
breastfeeding women who request, after the sixth month postpartum, more 
formula than the maximum.
    The IOM recommended that a partially breastfeeding woman who 
requests, after the sixth month postpartum, more than the maximum 
amount of formula for a partially breastfed infant, no longer be 
certified for the WIC Program. However, FNS determined that this 
approach is incongruous with the definition of breastfeeding in WIC 
regulations at 7 CFR 246.2--the practice of feeding a mother's 
breastmilk to her infant(s) on the average of at least once per day. In 
WIC, this definition is used to determine Program eligibility, and 
allows all breastfeeding women, regardless of feeding pattern, to 
participate in the WIC Program, be counted as a breastfeeding woman, 
and receive supplemental foods, breastfeeding promotion and support, 
and referrals to health care. The definition recognizes that any 
breastfeeding, even if only on an average of once a day, provides some 
immunological and nutritional benefits that would otherwise not be 
provided to an infant. Rather than adopt IOM's recommendation in its 
entirety, FNS proposed to revise the definition for WIC 
``participation'' to include breastfeeding women who receive no 
supplemental foods or food instruments but whose breastfed infant(s) 
receives supplemental food or food instruments. Counting these women, 
although they are not receiving a food package, is consistent with the 
current practice of counting the infants of exclusively breastfeeding 
women. Therefore, a partially breastfeeding woman who requests, after 
the sixth month postpartum, more than the maximum amount of formula 
allowed for a partially breastfed infant would no longer receive a food 
package but would continue to count as a WIC participant and receive 
other Program benefits (nutrition education, including breastfeeding 
promotion and support, and referrals to health and social services). 
This would serve to meet the intent of IOM's recommendations within the 
context of WIC regulations.
    As recommended by some commenters, FNS clarifies that breastfeeding 
women who receive no supplemental foods or food instruments but whose 
breastfed infant(s) receives the supplemental foods or food instruments 
continue to be eligible to receive nutrition services, and breast pumps 
are a part of nutrition services. With this clarification, the 
definition of participation is retained in this interim rule as 
proposed at 7 CFR 246.2.
    2. WIC-eligible medical foods. FNS proposed to revise the 
definition for ``WIC-eligible medical foods'' to clarify that medical 
foods are designed for children 12 months and older and adults and that 
WIC-eligible medical foods are not conventional foods, drugs, 
flavorings or enzymes. A few commenters disagreed with the proposed 
definition for WIC-eligible medical foods stating that the definition 
as proposed would exclude infants from receiving certain medical foods 
that are appropriate for them such as modular formulas that are not 
nutritionally complete but add specific nutrients such as protein, fat, 
and carbohydrate. FNS acknowledges that certain medical foods exist 
that are appropriate for use by infants and that medically fragile 
infants should be included as a participant category in the WIC-
eligible medical food definition. Several other commenters believe that 
FNS should rely on Food and Drug Administration (FDA) expertise for the 
definition of medical foods since FDA is the regulatory authority for 
medical foods. FNS acknowledges FDA's role in the regulation of medical 
foods. However, specific requirements for the safety or appropriate use 
of medical foods have not yet been established by FDA.
    FNS agrees with commenter concerns that the proposed definition for 
WIC-eligible medical foods excludes infants as a participant category. 
Therefore, the proposed definition for WIC-eligible medical foods is 
revised in this interim rule to include infants as a participant 
category.

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B. General Provisions That Affect All WIC Food Packages

1. Food Lists
    The proposed rule would have continued to require State agencies to 
identify brands and package sizes that are acceptable for use in their 
States from among those authorized and to provide to local agencies a 
list of acceptable foods and their maximum monthly allowances in 
accordance with WIC requirements. This provision is retained in this 
interim rule at 7 CFR 246.10(b)(2)(i). A conforming amendment in this 
interim rule at 7 CFR 246.4 clarifies that a copy of the food list must 
be included in the State Plan.
2. Nutrition Tailoring
    Current FNS policy allows both categorical and individual nutrition 
tailoring of WIC food packages. Categorical nutrition tailoring is the 
process of modifying the WIC food packages for participant groups or 
subgroups with similar supplemental nutrition needs, based on 
scientific nutrition rationale and State established policies. The 
proposed rule would have prohibited categorical nutrition tailoring, 
but continue to allow individual nutrition tailoring based on the 
Competent Professional Authority's assessment of a participant's 
supplemental nutrition needs.
    A total of 528 commenters (of these, 505 were form letters) agreed 
with the proposal to eliminate State authority to categorically tailor 
food packages, stating that the careful balance achieved by the IOM's 
recommendations to revise the WIC food packages should be maintained. 
In contrast, 187 commenters (of these, 151 were form letters) were 
opposed to the provision, stating that States need the flexibility to 
propose modifications to food packages that respond to rapid changes in 
food industry, science, demographics, and other factors.
    As discussed at length in the preamble to the proposed rule, the 
revised food packages have the potential to address current nutrient 
inadequacies and excesses; discrepancies between dietary intake and 
dietary guidance; and current and future health-related problems in 
WIC's target population. The IOM was also charged with considering the 
cultural needs of WIC participants and its recommendations for 
revisions to the WIC food packages, and the proposed rule, reflect 
those considerations. The IOM had the resources and capacity to conduct 
an independent, rigorous scientific review of the nutritional needs of 
WIC participants in each category prior to recommending the quantities 
and types of WIC foods to address those needs in its Report.\(2)\ 
Because the IOM based the revisions to the WIC food packages on current 
nutrition science, FNS proposed that State agencies would no longer be 
authorized to categorically tailor food packages.
    FNS believes that State agencies will best be able to meet the 
nutritional needs of each WIC participant through nutrition assessment 
and individual tailoring of the food package. Therefore, the provision 
to disallow State agency proposals to categorically tailor WIC food 
packages is retained in this interim rule at 7 CFR 246.10(c). FNS 
clarifies that, in addition to having the authority to individually 
tailor food packages, State agencies continue to have the authority to 
make adjustments to WIC foods for administrative convenience and to 
control costs. Such adjustments may involve packaging methods, 
container sizes, brands, types and physical forms of WIC foods.
3. Cultural Food Package Proposals
    A total of 174 commenters (of these, 149 were form letters) were 
opposed to FNS' proposal to no longer consider WIC State agency 
requests for cultural food substitutions. Commenters cited the need for 
State agencies to have the flexibility to keep pace with demographic 
changes in the WIC population.
    FNS believes that the increased variety and choice in the 
supplemental foods in this interim rule provide State agencies expanded 
flexibility in prescribing culturally appropriate packages for diverse 
groups. Section 203(c) of Public Law 108-265 amended Section 17(c)(2) 
of the Child Nutrition Act of 1966, as amended (42 U.S.C. 1786), by 
requiring the Secretary to conduct, as often as necessary, a scientific 
review of supplemental foods available under the program and to amend 
the foods, as needed, to reflect nutrition science, public health 
concerns, and cultural eating patterns. As such, future reviews of the 
WIC food packages by FNS will be used to determine the need for 
additional cultural accommodations. However, in response to requests by 
commenters to allow State agencies the flexibility to meet 
unanticipated cultural needs of participants, a new 7 CFR 246.10(i) has 
been added to this interim rule that allows State agencies to submit to 
FNS a plan for substitution of food(s) to allow for different cultural 
eating patterns. The criteria for submitting plans for substitutions 
for different cultural eating patterns and the criteria FNS will use to 
evaluate such plans are the same as those under current WIC regulations 
at 7 CFR 246.10(e).
4. Medical Documentation and Supervision Requirements
    Under the proposed rule, medical documentation would have been 
required for certain milk alternatives for children and women and for 
any supplemental foods authorized in proposed Food Package III. Under 
the proposed rule, medical documentation would continue to be required 
for any contract brand infant formula that does not meet the 
requirements of an infant formula as specified in Table 4 of 7 CFR 
246.10(e)(12) of the proposed rule, any non-contract brand infant 
formula, any exempt infant formula, or any WIC-eligible medical food.
    Under current WIC regulations, the technical requirements for 
medical documentation include:
     Brand name of the WIC formula prescribed;
     Medical diagnosis warranting the WIC formula;
     Length of time the prescribed WIC formula is medically 
required by the participant; and
     Signature (or name, if the initial documentation was 
received by telephone) of the requesting health care provider.
    Under the proposed rule, additional technical requirements would 
have been added as follows:
     Contact information for the participant's healthcare 
provider making the medical determination;
     Date of medical determination;
     Name of specific supplemental food(s) to be prescribed;
     Amount prescribed per day of WIC formula and/or 
supplemental foods;
     Qualifying condition that warrants the issuance of the 
specific supplemental food(s); and
     Length of time the specific supplemental food(s) is 
medically required.
    A total of 2,107 comment letters (1,945 of these were form letters) 
opposed the proposed medical documentation, primarily the documentation 
for children to receive soy-based beverage. Commenter's stated that the 
medical documentation requirement for soy-based beverage for children 
would create barriers to services and undermine FNS' efforts to provide 
foods that meet the cultural needs of participants. A small number of 
comments received from WIC staff primarily at the local level expressed 
concern that requiring medical documentation for the additional 
supplemental foods allowed in proposed Food Package III and requiring

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a prescribed amount per day is burdensome to participants, the medical 
community and WIC agencies.
    FNS understands the potential administrative impact of requiring 
medical documentation for the provision of supplemental foods in Food 
Package III. However, these medical documentation requirements were 
proposed to ensure that the participant's healthcare provider, licensed 
in the State to write prescriptions, has determined that the 
supplemental foods are not medically contraindicated by the 
participant's qualifying condition. Participants that receive Food 
Package III are medically fragile and should be under the care of a 
healthcare professional for the purpose of close medical supervision 
essential for the participant's overall dietary management. 
Participants that receive Food Package III have qualifying medical 
conditions that preclude or restrict their use of conventional foods. 
Requiring medical documentation to include the additional supplemental 
foods allowed in proposed Food Package III and requiring an amount 
prescribed per day will ensure that the participant's health care 
provider is aware that WIC is providing supplemental foods that the 
health care provider has determined are not medically contraindicated 
by the participant's qualifying medical condition. Requiring the health 
care provider to designate an amount of WIC formula and the WIC 
supplemental foods allowed in the participant's diet will help the 
Certified Professional Authority (CPA) in designing nutrition education 
and a food package prescription that is appropriate to the 
participant's medical needs.
    FNS acknowledges that some additional administrative tasks will 
occur because of medical documentation requirements for dairy 
alternatives. However, requiring medical documentation for soy-based 
beverage for children ensures that a child's health care provider is 
aware that the child may be at nutritional risk when milk is replaced 
by other foods. The DGA \(1)\ stress the importance of milk consumption 
in the development of bone mass for children. The IOM noted that while 
soy products may be an appropriate choice for children who cannot 
consume milk, soy should not be made available to satisfy participant 
preference in the absence of medical need. Therefore, the proposed 
provisions for medical documentation for certain milk alternatives for 
children and women and for any supplemental foods authorized in 
proposed Food Package III are retained in this interim rule at 7 CFR 
246.10(d). Proposed provisions related to revised medical documentation 
requirements that are not addressed in this preamble did not receive 
significant or substantial public comments and are retained in this 
interim rule as proposed.
5. Organic Foods
    A number of commenters asked FNS to allow organic products within 
the authorized categories of foods in the WIC food packages. FNS points 
out that some organic forms of WIC-eligible foods meet the nutritional 
requirements set forth in current WIC regulations and are therefore 
authorized; this interim rule continues to authorize organic forms of 
foods that meet minimum nutrition requirements described in Table 4 of 
7 CFR 246.10(e)(12). However, WIC State agencies are responsible for 
determining the brands and types of foods to authorize on their State 
WIC food lists. Some State agencies may allow organic foods on their 
foods lists, but this will vary by State. The decision may be 
influenced by a number of factors such as cost, product distribution 
within a State, and WIC participant acceptance.

C. Supplemental Foods and Food Packages

    Note: In the interest of clarity, specific food package issues 
are discussed according to food item rather than food package and 
then the food package categories are discussed. The order of some of 
the topics in this section is modified from the proposed rule for 
the purposes of discussion.

1. Fruits and Vegetables in Food Packages III Through VII
    The addition of fruits and vegetables to the WIC food packages was 
the most welcomed provision of the proposed rule across all commenter 
categories. Of the total of 40,026 comment letters that addressed 
fruits and vegetables, 39,961 (22,935 of these form letters) were 
favorable. The majority of the few opposing comments were from 
participants who did not want to see any changes to the current WIC 
food packages.
a. Maximum Monthly Allowances
    The IOM recommended that fruits and vegetables be provided at 
levels of $10 per month for women and $8 per month for children. To 
achieve cost neutrality, the proposed rule would have established the 
value of fruit and vegetable vouchers at levels of $8 per month for 
women and $6 per month for children. A total of 3,166 commenters (2,940 
of these form letters) asked FNS to increase the cash-value vouchers to 
the level recommended by the IOM so that participants could receive one 
additional serving of fruits and vegetables per day. Commenters cited 
(1) the important benefits of fruits and vegetables in decreasing high 
blood pressure, heart disease, obesity, and cancer; (2) the generally 
low consumption of fruits and vegetables among WIC participants; and 
(3) the role that WIC can play in helping participants meet the 
DGA\(1)\ for fruit and vegetable intake. Commenters urged FNS to seek 
additional funds to provide the cash-value vouchers at the level 
recommended by IOM.
    A total of 692 commenters (562 of these form letters) asked FNS to 
consider, at a minimum, increasing the cash-value fruit and vegetable 
voucher to $10 for fully breastfeeding women to further enhance the 
attractiveness of this package and provide an additional incentive for 
women to breastfeed.
    While FNS is in full agreement with the IOM and commenters 
regarding the benefits of fruits and vegetables for WIC participants, 
it is important that revisions to the WIC food packages be cost neutral 
to protect the program's ability to serve the greatest number of 
eligible women, infants, and children. For fruits and vegetables, the 
IOM's intent was to move WIC participants towards some amount of 
increased fruit and vegetable consumption and, at the same time, 
reinforce the role of the WIC food packages in nutrition education. The 
proposed $8 and $6 cash-value fruit and vegetable voucher fulfilled 
this intent while ensuring cost neutrality. Therefore, the provision 
will be retained in this interim rule as proposed for children and 
women in Food Packages III-VI in Table 2 of 7 CFR 246.10(e)(10) and 
Table 3 of 7 CFR 246.10(e)(11). However, FNS has considered the 
benefits of increasing the value of the vouchers for fully 
breastfeeding women and has determined that a $2 increase can be 
accomplished while maintaining cost neutrality. This provision is 
therefore revised in the interim rule in Table 2 of 7 CFR 246.10(e)(10) 
and Table 3 of 7 CFR 246.10(e)(11) to reflect a cash-value voucher of 
$10 for fully breastfeeding women in Food Packages III and VII.
    Thirty commenters (23 of which were form letters) preferred that a 
set amount of fruits and vegetables be authorized per month, e.g., 3 
pounds for a child, in lieu of a cash-value voucher, for administrative 
ease and to control costs. FNS disagrees with this approach. A voucher, 
rather than a more narrowly defined fruit and vegetable option, offers 
flexibility, ensures participant access, and minimizes costs of

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compliance by administrative agencies and WIC-approved vendors. 
Allowing participants to choose a wide variety of fruits or vegetables 
is intended to increase consumption by accommodating individual and 
culturally-based preferences.
    (1) State agency responsibility to make available to participants 
at least two fruits and two vegetables from the category of fruits and 
vegetables in each authorized food package. FNS proposed that State 
agencies be required to make available at least two fruits and two 
vegetables to participants in Food Packages III-VII. A total of 487 
commenters (of which 418 were form letters) opposed the provision, 
believing that it undermines the IOM's recommendation to allow 
participants a wide variety of choices within the authorized fruit and 
vegetable options by authorizing State agencies to limit the number and 
variety of fruits and vegetables.
    FNS' intention with this proposed provision was to ensure 
participant choice among the fruit and vegetables authorized by the 
State agency by expanding current WIC regulations that require State 
agencies to make available at least one food from each group in each 
food package. As described in the preamble to the proposed rule, it was 
FNS' expectation that more than two varieties each of fruits and 
vegetables would be authorized by State agencies. Therefore, the 
proposed provision is clarified in the interim rule at 7 CFR 
246.10(b)(2)(ii)(B) to ensure its original intent to require State 
agencies to allow participants to use their cash value vouchers to 
purchase any WIC-eligible fruits and vegetables from among those 
authorized in Table 4 of 7 CFR 246.10(e)(12). This allows participants 
a wide variety of choices within the authorized fruit and vegetable 
options without restriction, in keeping with IOM recommendations. 
Further, the proposed provision at 7 CFR 246.10(b)(1)(i) is revised in 
this interim rule to disallow further restrictions on eligible fruits 
and vegetables.
    (2) Minimum vendor stocking requirement. Similarly, at 7 CFR 
246.12(g)(3)(i), FNS proposed that WIC authorized vendors carry a 
minimum of two varieties of fruits and vegetables to ensure participant 
choice at the retail level, while acknowledging that certain smaller 
vendors may not be able to stock as wide a variety of fruits and 
vegetables as larger vendors. A total of 472 commenters (418 form 
letters) disagreed with this provision, stating that setting a minimum 
vendor stocking requirement of two fruits and vegetables undermines the 
IOM recommendation to allow participants a wide variety of choices. Of 
these commenters, 269 (221 form letters) stated that State agencies 
should be allowed to specify minimum stocking requirements.
    FNS points out that the proposed provision authorizes State 
agencies to establish different minimums for different vendor peer 
groups, thus allowing State agencies the flexibility to work with 
vendors to provide the maximum number and variety of fruits and 
vegetables that are locally accessible, culturally appropriate and 
affordable. However, it is required that all authorized vendors must 
stock at least two varieties of fruits, two varieties of vegetables, 
and one whole grain cereal authorized by the State agency. Therefore, 
the provision at 7 CFR 246.12(g)(3)(i) is retained in the interim rule 
as proposed; however, a technical oversight in the proposed rule has 
been corrected by clarifying that authorized vendors must stock at 
least two different varieties of fruits and two different varieties of 
vegetables.
b. Inflation Adjustment
    FNS proposed an option to increase the value of the cash-value 
fruit and vegetable vouchers by a whole dollar increment. A total of 
124 commenters (75 of which were form letters) asked that FNS commit to 
a yearly inflation adjustment. FNS agrees with commenter that it is 
important to maintain the value of the vouchers over time. Cash-value 
vouchers will be set at $6 for children and $8 for pregnant and 
partially breastfeeding and $10 for fully breastfeeding women in the 
year in which the food package revisions take effect. This interim rule 
adds a provision at 7 CFR 246.16(j) to adjust the maximum value of the 
vouchers in whole dollar increments using the Bureau of Labor 
Statistics' Consumer Price Index for Fresh Fruits and Vegetables.
c. Minimal Restrictions on Authorized Fresh Fruits and Vegetables
    To improve the consumption of fresh fruits and vegetables and to 
appeal to participants of different cultural backgrounds, the proposed 
rule would have authorized a wide variety of choices within the 
authorized fruit and vegetable options. To ensure nutritional integrity 
and cost neutrality, some minimal restrictions were proposed, e.g., no 
herbs or spices, edible blossoms of flowers, fruit leathers and fruit 
roll-ups. The majority of commenters favored the provision to authorize 
a wide variety of fruits and vegetables; however, 9 commenters (1 of 
which was a form letter) stated the opinion that the fruit and 
vegetable selections should be limited to sources of priority 
nutrients.
    As stated in the Regulatory Impact Analysis that was published in 
the Federal Register as an appendix to the proposed rule, FNS 
considered alternatives to the proposed provision, including 
authorizing a more restrictive dark green and orange vegetable 
provision. This alternative was rejected because FNS believes that WIC 
food packages that reflect the IOM recommendations as closely as 
possible within the constraints of cost neutrality best reflect current 
scientific consensus on how to meet the supplemental dietary needs of 
WIC participants. The IOM chose not to emphasize the dark green and 
orange vegetable groups that tend to offer the highest concentrations 
of certain priority nutrients and instead recommended a fruit and 
vegetable option with few restrictions. Nutrition education offered by 
local WIC agencies will remain the primary method of encouraging 
participants to incorporate these high nutrient fruits and vegetables 
into their diets; under this interim rule participants remain largely 
free to choose the fruits and vegetables that they find most appealing.
    Thirteen commenters (2 of which were form letters) believe that FNS 
should simplify the proposed minimal restrictions to ease 
interpretation and implementation for participants, vendors, and staff. 
A total of 128 commenters (125 of which were form letters) asked FNS to 
allow State agencies flexibility to promote produce selections that 
come in standard packages with Universal Product Codes to minimize 
burden. As stated above, the nutrition education provided to 
participants is intended not only to encourage participant choice in 
the selection of fruits and vegetables, but also to provide information 
on shopping tips to obtain the maximum value of the voucher.
    FNS is aware that State agencies will need to provide training and 
technical assistance to participants and vendors in implementing the 
food package changes. State agencies generally update their food lists 
on a biennial basis which requires training for both participants and 
vendors. Recognizing the extensive changes that will be necessary as a 
result of this rule, FNS will assist State agencies on vendor training, 
participant education, and other implementation issues. FNS also 
encourages State agencies to work with their vendor associations as 
they develop their new State procedures, particularly in regard to the 
cash-value fruit/vegetable voucher.

[[Page 68971]]

d. Disallowance of White Potatoes
    Under the proposed rule, white potatoes would have been excluded 
from authorization in the WIC food packages. A total of 324 commenters 
(of these 291 were form letters) opposed the restriction of white 
potatoes. Twenty-four commenters stated that white potatoes should be 
included in the WIC food packages because they are versatile, 
economical and contain key nutrients. Thirteen commenters (1 form 
letter) from WIC State and local agencies stated that the exclusion of 
white potatoes would be hard to administer.
    The restriction of white potatoes, as recommended by the IOM, is 
based on the amounts suggested in the DGA\(1)\ for consumption of 
starchy vegetables; food intake data indicating that consumption of 
starchy vegetables meets or exceeds these suggested amounts; and food 
intake data showing that white potatoes are the most widely used 
vegetable. Therefore, this provision is retained in the interim rule as 
proposed in Table 4 of 7 CFR 246.10(e)(12).
e. Implementation of Fruit and Vegetable Options
    (1) Small dollar denomination of fruit and vegetable food 
instruments. In the preamble to the proposed rule, FNS encouraged State 
agencies to issue small denomination, i.e., $2, cash-value fruit and 
vegetable food instruments. The small denominations were encouraged so 
the participant could obtain small amounts of fresh produce at various 
times during the month, lessening the chance of food spoilage and 
waste. A total of 200 commenters (of which 133 were form letters) 
disagreed with FNS' recommendation to provide the fruit and vegetable 
value in small denominations. The majority of those in opposition were 
WIC State and local agencies who stated that they should be allowed to 
determine, in partnership with vendors, the most cost effective method 
to provide the fruit and vegetable food instrument. FNS clarifies that 
although State agencies are encouraged to provide the cash-value food 
instrument in small denominations for the reasons cited above and in 
the proposed rule, State agencies will determine the dollar 
denomination that is most beneficial to participants and cost effective 
given the State agency's infrastructure and environment.
    (2) Paying cash with the fruit/vegetable voucher. Nineteen 
commenters asked that participants be allowed to pay the difference 
when the purchase exceeds the value of the fruit/vegetable voucher. 
Under current rules at 7 CFR 246.12(c), State agencies must ensure that 
participants receive their authorized supplemental foods free of 
charge. Such a restriction is necessary with the ``traditional'' WIC 
food instrument which reflects a specific quantity of foods that a 
participant must receive. In contrast, the fruit/vegetable cash-value 
voucher reflects a maximum dollar allotment for the participant. 
Because it may be difficult to accurately estimate the exact purchase 
price of the fruit and vegetable selections, particularly when fresh 
and canned or frozen items are combined in one purchase, FNS concurs 
with commenters that participants should be allowed to pay the 
difference when the purchase of allowable fruits and vegetables exceeds 
the value of the fruit/vegetable voucher. This option would promote 
increased consumption of fruits and vegetables because participants 
would be more likely to utilize the full cash value, rather than 
partially redeem the voucher for fear of exceeding its cash value. The 
rule prohibits giving cash or credit to the participant for any unused 
portion of the fruit/vegetable voucher.
    (3) Benefit delivery. While most of the food package changes will 
be administered via existing State benefit delivery systems, the cash-
value fruit/vegetable voucher will require changes to WIC benefit 
delivery systems to accommodate a more open-ended benefit determined by 
a cash value rather than a fixed quantity of a specific food item. 
State agencies and vendors must modify operations and procedures to 
issue, transact, and process the redemption of a cash value benefit. As 
described in the proposed rule, options for benefit delivery include 
Electronic Benefit Transfer (EBT) and farmers' markets.
    (4) Farmers' markets. A total of 936 commenters (of which 170 were 
form letters) agreed with the provision to allow the fruit/vegetable 
cash-value voucher to be redeemed by farmers at farmers' markets. 
Eleven commenters disagreed with the provision. Many commenters 
suggested that FNS ``Do no harm to the WIC Farmers' Market Nutrition 
Program (FMNP),'' and that funding for the FMNP not be reduced or 
procedures established that would adversely affect its operation or 
effectiveness.
    FNS would like to clarify that the regulatory requirements for the 
FMNP are unchanged by this interim rule. Many commenters incorrectly 
believed that the proposal would have allowed FMNP coupons to be 
redeemed at authorized WIC vendors. This is not true; the proposal 
would have allowed the WIC fruit/vegetable cash-value voucher to be 
redeemed at farmers' markets.
    Of the commenters supporting the provision to allow farmers at 
farmers' markets to accept the fruit/vegetable cash-value voucher, 
clarification was requested on several issues--would State agencies be 
required to authorize farmers at farmers' markets if they do not 
currently administer the FMNP; can farmers at farmers' markets be 
treated as seasonal vendors and only be allowed to accept the fruit/
vegetable voucher; can the State agency enter into one contract with 
the farmer that includes requirements for both WIC and the FMNP; and, 
can farmers' markets be excluded from the WIC vendor monitoring and 
audit requirements?
    In response to commenter questions, this interim rule will not 
require State agencies to authorize farmers to accept the WIC fruit/
vegetable voucher. If a State agency chooses to authorize farmers at 
farmers' markets, it may modify its standard vendor agreement to 
address the unique circumstances of farmers' markets, as allowed by 7 
CFR 246.12(h)(2). For example, the farmer's market agreement may only 
allow the farmer to accept the fruit/vegetable cash-value voucher. In 
addition, the State agency can choose to enter into one agreement with 
the farmer that includes the requirements for both the WIC and WIC 
Farmers' Market Nutrition Programs. Further, farmers would be excluded 
from the vendor cost containment requirements. The farmers may also be 
excluded from the WIC monitoring requirements provided that they are 
included in the sample of farmers upon which the FMNP monitoring 
requirement is drawn. A new 7 CFR 246.12(v) has been added that 
specifies the requirements regarding the authorization of farmers at 
farmers' markets. The rule also adds definitions for cash-value voucher 
and farmer (the same as that used in the FMNP), and modifies the food 
instrument requirements to identify the provisions that do not apply to 
the cash-value voucher. As a result of the addition of the definitions 
of farmer and cash-value voucher, we have made conforming amendments to 
the definitions of ``compliance buy,'' ``employee fraud and abuse,'' 
``participants,'' ``participant violations,'' ``proxy,'' and 
``nutrition services and administration'' to include these new terms as 
appropriate.
    (5) Electronic Benefit Transfer (EBT). While the majority of State 
WIC agencies deliver benefits via paper checks or vouchers, 5 States 
are testing the feasibility of EBT and an additional State has adopted 
EBT statewide.

[[Page 68972]]

Although it will take a number of years to implement WIC EBT fully in 
all States, the fruit and vegetable benefit may provide opportunities 
for alternative forms of benefit delivery and allow some States to move 
toward limited electronic benefit processing prior to the 
implementation of EBT for all WIC purchases. In an effort to explore 
the range of possibilities for using existing commercial infrastructure 
to administer the fruit and vegetable benefit including WIC EBT 
smartcard and online solutions, commercial debit cards, and other 
technologies, FNS commissioned a study by the State Information 
Technology Consortium (SITC). Although the report is not yet final, 
preliminary findings indicate that for redemption of the fruit/
vegetable benefit, paper fruit and vegetable cash-value checks or 
vouchers appear to be the least costly and easiest to implement by 
State agencies and food vendors within a 12-month time period. The 
accountability for purchasing authorized fruits and vegetables remains 
the same as other food instruments--subject to training store clerks 
regarding eligible food items and State compliance monitoring.
    Debit type cards (EBT or credit/debit) with a magnetic strip offer 
potentially cost-effective solutions that leverage the widely available 
card payment infrastructure in the United States. Magnetic strip cards 
in volume can be purchased for less than 25 cents each. There are, for 
instance, many large and smaller food vendors that already accept 
credit card payments or accept EBT cards using a four digit Personal 
Identification Number (PIN). These vendors include most authorized WIC 
vendors. Focus groups with participants were favorable to this type of 
alternative because of lessened stigma while shopping and the ability 
to purchase foods incrementally rather than forfeiting some items with 
a paper instrument. Technical standards would need to be modified to 
enable card use only within authorized WIC vendor locations and there 
may be a need to define standards to facilitate retailer and/or EBT 
contractor changes to existing store equipment and software. The 
accountability for purchasing eligible foods only is similar to paper 
food instruments.
    WIC EBT solutions, on-line using magnetic-strip cards or off-line 
using smart cards, offer the greatest potential to ensure that only 
eligible fruits and vegetables are purchased with WIC cash-value 
vouchers, but it would be more costly for all stakeholders. These 
solutions would match each item scanned to a State list of authorized 
UPC's and/or Price Look-Up codes or PLUs. These solutions require 
additional investment by State agencies in cards, equipment, and 
maintenance of a much larger number of product Universal Product Codes 
and Price Look-Up (PLUs) codes for fresh produce. The fresh produce 
industry has taken steps to institute greater standardization of PLUs; 
however, the seasonal and local produce suppliers do not always have 
means to use PLUs effectively. The draft SITC report suggests that 
pilot design and development will be necessary to identify cost 
effective solutions that can be widely adopted by State agencies and 
authorized vendors.
2. Peanut Butter and Legumes
    The proposed rule would have added 18 ounces of peanut butter in 
Food Package V to improve the intake of several nutrients in the diets 
of pregnant and breastfeeding women. The proposed rule would also add 
legumes (dried beans/peas or peanut butter) in Food Package VI for 
postpartum women. Canned beans were proposed as an optional substitute 
for dry beans in Food Packages III-VII. Of the 3,091 comment letters 
that addressed these provisions, 3,085 commenters (21 form letters)--a 
large majority of whom were participants--were in favor of the proposed 
changes.
    Six commenters asked that FNS eliminate peanut butter in the food 
packages for children because of concerns about peanut allergies. The 
IOM advised that children should avoid eating peanut butter from a 
spoon for safety reasons until age 3, but recommended that peanut 
butter continue to be offered in the WIC food packages for young 
children from 1 to 5 years of age. IOM has advised FNS that assessing 
for allergies and tailoring a young child's food package based on such 
assessment, as is current practice in WIC, is appropriate.
    Therefore, the proposed peanut butter and legume provisions are 
retained in this interim rule as proposed.
3. Milk and Milk Alternatives
a. Maximum Monthly Milk Allowances
    The proposed rule would have decreased the maximum monthly 
allowances for milk in all food packages--for children and postpartum 
women, from 24 quarts to 16 quarts; for pregnant and partially 
breastfeeding women, from 28 to 22 quarts; and for fully breastfeeding 
women, from 28 quarts to 24 quarts of milk. Reducing the amount of milk 
provided through WIC is consistent with recommended limits on saturated 
fat, total fat, and cholesterol consumption put forth in the DGA,\(1)\ 
better aligns the amount of milk provided by WIC with the amounts 
recommended by the DGA\(1)\ and is consistent with the supplemental 
nature of the WIC Program.
    The majority of non-participant commenters were in favor of the 
proposed reductions in milk. A total of 2,088 non-participant 
commenters (1,874 of which were form letters) were supportive of the 
reductions, while 66 commenters were opposed. Commenters opposing the 
reductions cited the contribution of milk to intakes of priority 
nutrients for WIC participants, e.g., calcium, Vitamin A, and 
potassium. Seventeen commenters stated that the food package for 
postpartum women should be increased to the levels provided to pregnant 
and partially breastfeeding women. Six commenters urged FNS to maintain 
milk at current levels and increase funding for other proposed food 
package provisions.
    Comment letters from program participants reflected disappointment 
with the reductions in milk. A total of 1,831 comment letters were 
received from program participants who opposed the reductions; 225 
participants wrote in favor of the proposed reductions.
    FNS believes that the IOM set forth a series of science-based 
recommendations that, taken together, balance the various supplemental 
nutritional needs of participants. According to the IOM, amounts of 
milk provided by the WIC food packages need not exceed amounts 
recommended by the DGA.\(1)\ The proposed dairy levels for children (2 
cups/day) and pregnant and breastfeeding women (3 cups/day) provide at 
least 100 percent of the servings recommended by the DGA.\(1)\ The 
level for non-breastfeeding postpartum women is at least \2/3\ of the 
amount set forth by the DGA.\(1)\ The proposed maximum monthly 
allowance of milk allows a more balanced food package to provide the 
various high priority nutrients within cost constraints. Therefore, the 
proposed maximum allowances for milk are retained in this interim rule 
in Table 2 of 7 CFR 246.10(e)(10) and Table 3 of 7 CFR 246.10(e)(11).
b. Low-Fat Milk
    Under the proposed rule, only whole milk (not less than 3.25% milk 
fat) would have been authorized for children less than 2 years of age. 
For children two years of age and older and women, the proposed rule 
would have authorized only milk with no more than 2% milk fat to be 
consistent with current recommendations of the DGA

[[Page 68973]]

2005 to limit saturated fat and dietary cholesterol intake. A total of 
3,058 commenters (2,663 of which were form letters) agreed with the 
provisions as written; 222 (10 of which were form letters) were 
opposed. One hundred seventy of those opposed were program 
participants. A total of 1,379 commenters (1,338 of which were form 
letters) stated that the fat content of milk for children and women 
should be reduced even further--to no more than 1% of milk fat.
    Seventy-eight commenters (23 of which were form letters) asked FNS 
to allow the CPA the authority to prescribe the type of milk (whole 
milk or low fat milk) to participants, regardless of age or category, 
if medically necessary for such reasons as failure to thrive, 
underweight or overweight. FNS' position is that participants who have 
medical conditions that lead to a diagnosis of failure to thrive will 
likely be issued Food Package III. Therefore, to address commenters' 
concerns, this interim rule will authorize whole milk for children 1 
through 4 years of age and women in Food Package III, with medical 
documentation. As proposed, only milk with no more than 2% milk fat is 
authorized for children 2 years of age and older and women in Food 
Packages IV-VII. For these participants, nutrition education directed 
towards appropriate foods and food amounts should be provided for 
underweight or overweight participants. Nutrition education and 
individual tailoring of the food package within authorized parameters 
remain the most effective tools for WIC staff to use to help 
participants make appropriate choices based on their specific needs.
c. Lactose Free Milk
    Under the proposed rule, as long as a milk conforms to the FDA 
standard of identity for milk as defined by 21 CFR Part 131 and meets 
WIC Federal requirements, it would be an authorized milk in Food 
Packages IV, V, VI, and VII. Although not specified in the proposed 
rule, authorized milks that conform to the FDA standard of identity 
include, but are not limited to, calcium-fortified, lactose-reduced and 
lactose-free, acidified, and ultra-high temperature (UHT) milks. FNS 
clarifies that these products are authorized, and that lactose-free or 
lactose-reduced dairy products should be offered before non-dairy milk 
alternatives to those participants with lactose intolerance who cannot 
drink milk. FNS also clarifies that medical documentation is not 
required for participants to receive lactose-reduced and lactose-free 
milk.
d. Authorized Substitutions for Milk (Cheese, Tofu, Soy-Based Beverage)
    (1) Cheese. The proposed rule would have reduced the amount of 
cheese that may be substituted for milk to one pound per month for 
children and pregnant, postpartum and partially breastfeeding women, 
and two pounds for fully breastfeeding women. Reducing the amount of 
cheese that may be substituted for milk will reduce saturated fat and 
total fat intake by children age two and older and women consistent 
with the DGA\(1)\ recommendations. Amounts of cheese that exceed the 
maximum substitution amounts may be authorized with medical 
documentation in cases of lactose intolerance or other qualifying 
conditions.
    The majority of non-participant commenters were in favor of the 
proposed reduced cheese substitution amounts. A total of 754 non-
participant commenters (of which 589 were form letters) were supportive 
of the reduced substitution amounts, while 53 commenters were opposed. 
A total of 917 comment letters were received from program participants 
who opposed the proposed cheese allowances; 119 participants wrote to 
express support for the proposed amounts. Commenters opposing the 
cheese substitution amounts stated that cheese is culturally acceptable 
to most populations, and provides nutrients in a convenient and 
familiar way. Fourteen commenters asked FNS to maintain cheese at its 
current substitution levels and emphasize or require reduced-fat 
cheese.
    Reducing the maximum amount of cheese lowers the amount of 
saturated fat, total fat, and cholesterol in the WIC food packages. 
Within the context of the proposed revisions to the WIC food packages 
as a whole, the reductions in the current levels of cheese ensure that 
FNS is able to provide a more balanced nutrient intake for WIC 
participants while maintaining cost neutrality. Therefore, the proposed 
substitution levels for cheese are retained in this interim rule.
    (2) Soy-based beverage and tofu. To provide more flexibility for 
WIC State agencies and more variety and choice for WIC participants, 
the proposed rule would have authorized soy-based beverage to be 
substituted for milk for women in Food Packages V, VI and VII at the 
rate of 1 quart of soy-based beverage for 1 quart of milk up to the 
total maximum allowance of milk. The proposal also would have allowed 
calcium-set tofu to be substituted at the rate of 1 pound of tofu per 1 
quart of milk. A maximum of 4 quarts of milk could be substituted in 
this manner in Food Packages V and VI, and a maximum of 6 quarts of 
milk may be substituted in Food Package VII. Under the proposed rule, 
soy-based beverage and tofu would not be allowed as substitutes for 
milk for children in Food Package IV without medical documentation. The 
qualifying conditions may include, but are not limited to, milk 
allergy, severe lactose maldigestion, and vegan diets. Amounts of tofu 
that exceed the maximum substitution amounts may be authorized for 
women, with medical documentation, in cases of lactose intolerance or 
other qualifying conditions.
    A total of 8,932 commenters (4,615 form letters) were supportive of 
adding soy-based beverage and tofu to the WIC food packages as milk 
substitutes; 368 commenters (148 form letters) were not supportive. 
Comments received on medical documentation requirements for soy-based 
beverage for children and FNS' rationale for retaining the provision in 
this interim rule as initially proposed are discussed in section 
IV.B.4. of this preamble.
    As stated in the preamble to the proposed rule, Section 102 of the 
Child Nutrition and WIC Reauthorization Act of 2004 (Pub. L. 108-265) 
requires that nondairy beverages offered as an alternative to fluid 
milk in the National School Lunch Program and School Breakfast Program 
must be nutritionally equivalent to fluid milk and meet nutritional 
standards set by the Secretary of Agriculture. FNS, therefore, proposed 
that authorized soy-based beverage provide, at a minimum, the following 
nutrients:

Calcium.............................  276 milligrams (mg) per cup.
Protein.............................  8 grams per cup.
Vitamin A...........................  500 International Units (IU) per
                                       cup.
Vitamin D...........................  100 IU per cup.
Magnesium...........................  24 mg per cup.
Phosphorus..........................  222 mg per cup.
Potassium...........................  349 mg per cup.
Riboflavin..........................  0.44 mg per cup.
Vitamin B12.........................  1.1 mcg per cup.


    A total of 340 commenters (255 form letters) were opposed to the 
proposed minimum nutrient standard, stating that fortification at these 
levels is not necessary, and that soy-based beverage meeting the 
proposed minimum nutrition standard are not available in the 
marketplace. FNS believes that it is imperative for WIC and the school 
nutrition programs to use the same standards for defining allowable 
soy-based beverage as alternatives to fluid milk. Therefore, the 
proposed minimum nutrient standard for soy-based beverage

[[Page 68974]]

is retained in this interim rule. FNS is aware of at least one soy-
based beverage in the marketplace that meets these requirements and 
anticipates that the marketplace will respond with additional products. 
To the extent that the marketplace doesn't respond with additional 
products, other options, such as tofu, are available for participants.
    (3) Yogurt. The IOM recommended adding yogurt to the WIC food 
packages as a milk substitute for children and women. However, in order 
to maintain cost neutrality, the proposed rule did not include yogurt. 
Of the 758 commenters that addressed yogurt, 749 (617 form letters) 
disagreed with FNS' decision not to include yogurt. Commenters stated 
that yogurt provides priority nutrients, and is convenient, popular, 
and culturally acceptable to WIC participants.
    FNS agrees that yogurt would be a desirable dairy alternative to 
milk for WIC participants; however, the cost is simply prohibitive 
($413.9 million over 5 years). In addition, FNS has determined that WIC 
participants will be able to get the calcium provided by yogurt through 
other foods authorized in these revised food packages. Lactose-free and 
lactose-reduced dairy products, for example, are readily available in 
both urban and rural areas for those WIC participants with lactose 
intolerance. Calcium-set tofu and soy-based beverages are available to 
accommodate cultural preferences. Also, as noted earlier, a new 7 CFR 
246.10(i) has been added to this interim rule to allow State agencies 
the flexibility to meet unanticipated cultural needs of participants.
    It is important that revisions to the WIC food packages be cost 
neutral to protect the program's ability to serve the greatest number 
of eligible women, infants, and children. Therefore, FNS is unable to 
authorize yogurt in the WIC food packages in this interim final rule.
    However, FNS solicits comments from State agencies as they 
implement the provisions of this interim rule about the extent to which 
WIC participants would benefit from the addition of yogurt, and whether 
that addition would be achieved in a cost-effective way. In particular, 
we are interested in the impact of adding yogurt for women in Food 
Packages V-VII.
    FNS also solicits comments as to the feasibility of rebate 
agreements between yogurt manufacturers and individual States, so that 
yogurt could be provided to specific participant groups in the WIC 
program while maintaining cost-neutrality. State agencies are currently 
encouraged to explore the feasibility of cost containment systems, 
especially rebates, and to implement such a system where feasible for 
other WIC foods. In an effort to use their food grants more 
efficiently, 13 State agencies, which include 3 multi-State contracts, 
have rebate contracts for juice (frozen and shelf), infant juice and/or 
infant cereal. If FNS were to consider including yogurt as a WIC-
eligible food through future rulemaking, FNS would be interested in the 
following types of information:
     Which participant groups would most benefit from having 
yogurt included as part of their food package?
     Would States be able to secure rebates sufficient enough 
to add yogurt for all or certain participant groups while maintaining 
cost-neutrality?
    Finally, and as noted earlier, Section 203(c) of Public Law 108-265 
amended Section 17(c)(2) of the Child Nutrition Act of 1966, as amended 
(42 U.S.C. 1786), by requiring the Secretary to conduct, as often as 
necessary, a scientific review of supplemental foods available under 
the program and to amend the foods, as needed, to reflect nutrition 
science, public health concerns, and cultural eating patterns. As such, 
future reviews of the WIC food packages by FNS will be used to 
determine the need for yogurt.
4. Eggs
    Under the proposed rule, the maximum monthly allowance for fresh 
shell eggs would have been reduced from the current 2 or 2\1/2\ to 1 
dozen fresh shell eggs for children and women in Food Packages IV, V, 
and VI. For fully breastfeeding women in Food Package VII, the maximum 
monthly allowance was proposed at 2 dozen eggs.
    A total of 1,469 commenters (266 of which were form letters) 
addressed the proposed egg reduction provision. Of the 492 non-
participant commenters, 406 were in favor of the proposed reductions. 
Those opposing stated that eggs provide important nutrients at 
relatively low cost. Of the 1,009 program participants who commented, 
923 were opposed to the reduction in eggs.
    The proposed maximum monthly allowance of eggs is consistent with 
recommendations of the IOM \(3)\ and the DGA \(1)\ to reduce 
cholesterol. In addition, the IOM determined that protein is no longer 
a priority nutrient for the WIC population. Within the context of the 
proposed revisions to the WIC food packages as a whole, the reductions 
in the current levels of eggs ensures that FNS is able to provide a 
more balanced nutrient intake for WIC participants while maintaining 
cost neutrality. Therefore, the proposed maximum monthly allowances for 
eggs are retained in this interim rule.
5. Juice for Children and Adults
    The proposed rule would have reduced the maximum allowances of 
juice for women and children in Food Packages IV-VII. According to the 
IOM, deleting or reducing the quantity of juice in the WIC food 
packages helps allow for the inclusion of whole fruits and vegetables 
while containing food costs, and is consistent with recommendations of 
the DGA\(1)\ and the American Academy of Pediatrics (AAP).
    For children, the proposed maximum monthly allowance of juice would 
have been reduced from 288 fluid ounces to 128 fluid ounces. For 
pregnant and partially breastfeeding women, the proposed maximum 
monthly allowance of juice was reduced from 288 fluid ounces to 144 
fluid ounces; for postpartum women from 192 fluid ounces to 96 fluid 
ounces; and for fully breastfeeding women, from 336 fluid ounces to 144 
fluid ounces.
    A total of 2,256 commenters (846 form letters) addressed the 
proposed reductions in juice. Of these, 1,610 commenters (846 form 
letters) were supportive of the juice reductions. Eighty two of those 
commenters recommended that juice be eliminated entirely from the WIC 
food packages and replaced with fruits and vegetables. Of the 646 
commenters that opposed the reduction in juice, 633 were program 
participants. Non-participant commenters who opposed the reductions 
cited the nutritional benefits of juice and stated that the proposed 
reductions were too drastic.
    Reducing the quantity of juice in the WIC food packages helps allow 
for the inclusion of whole fruits and vegetables while containing food 
costs. The reduction in the amount of juice provided for children to 
about 4 ounces per day is consistent with the AAP recommendation for 
that age group. The AAP also notes that juice does not provide any 
additional nutritional benefit beyond that of whole fruit. The reduced 
amount of juice for women is consistent with the recommendation of the 
DGA\(1)\ that whole fruits be used for a majority of the total daily 
amount of fruit.
    Additionally, 34 commenters (14 form letters) expressed concern 
that juice package sizes need to be considered to ensure the full 
nutritional benefit of juice is received by participants. Over the 
years, there have been many changes in package sizes for all WIC-
eligible food categories, and FNS has struggled with how to manage 
these changes

[[Page 68975]]

within WIC Program regulations that allow for a monthly maximum 
allowance of food that cannot be exceeded (except for the rounding 
option for infant formula and infant foods). It is not practical for 
FNS to be able to respond to all the variations in package sizing. 
Basing the maximum monthly allowance on package sizes would not 
guarantee that those package sizes will not change over time.
    Therefore, FNS is retaining the proposed maximum juice allowances 
for children and women in this interim rule.
6. Whole Grains and Breakfast Cereals
    To support the DGA\(1)\ recommendations to consume at least 3 
servings per day of whole grains to reduce the risk of coronary heart 
disease and type 2 diabetes, to help with body weight maintenance, and 
to increase intake of dietary fiber, the proposed rule would have 
established a whole grain requirement for breakfast cereal in Food 
Packages III-VII and added whole wheat bread or other whole grain 
options for children and pregnant and breastfeeding women in Food 
Packages III, IV, V and VII.
    The addition of whole grains to the WIC food packages was popular 
across all commenter categories. A total of 17,165 comment letters 
(7,983 form letters) agreed with the whole grain provisions and 113 
comment letters (5 form letters) disagreed with the provisions. While 
strongly supporting FNS' emphasis on whole grains, 876 commenters (764 
form letters) expressed concern that the proposed nutritional 
requirement for whole grain breakfast cereal--using labeling 
requirements for making a health claim as a ``whole grain food with 
moderate fat content'' as defined by the Food and Drug Administration 
(FDA) in its December 9, 2003, Health Claim Notification for Whole 
Grain Foods with Moderate Fat Content at http://www.cfsan.fda.gov/~dms/flgrain2.html_is
 too restrictive. Commenters stated that the proposed 

provision would eliminate corn and rice-based cereals that are 
necessary for participants with wheat allergies or strong preferences 
for corn and rice-based cereals, as well as severely limit the total 
variety and choice of WIC-eligible cereals. In addition, 77 commenters 
(21 form letters) also stated that whole grain foods are less palatable 
to young children, may not be preferred by certain cultures, and 
therefore may not be chosen by participants, potentially negating FNS' 
goal to help participants increase whole grain consumption. 
Additionally, commenters pointed to (1) potential administrative 
difficulties in the identification of whole wheat bread and whole grain 
cereals by State agency staff when determining which products are WIC-
eligible; and (2) confusion by vendors and participants at the point of 
purchase due to lack of consistency in food labels that do not clearly 
identify foods as meeting the FDA standard of identity for whole wheat 
bread or the labeling requirement for making the health claim as ``a 
whole grain with moderate fat content.''
    Commenters suggested several alternatives for determining a 
nutritional standard for whole grain cereals including the elimination 
of any requirement for whole grain, adoption of an 8-gram per serving 
standard, and exemption of certain cereals from the whole grain 
requirement. FNS finds merit in commenters' concerns that the proposed 
whole grain nutritional requirement for breakfast cereal would 
eliminate corn and rice-based cereals, as well as severely limit the 
variety and choice of WIC-eligible breakfast cereals; and that whole 
grain breakfast cereals may be less palatable to participants, 
especially children, and less preferred by certain cultures. WIC-
eligible breakfast cereals are the major source of iron in the WIC food 
packages for children and women and research shows that participation 
in WIC has a positive impact on the iron status of its participants. 
The IOM pointed out that despite declines in the prevalence of iron-
deficiency, this deficiency remains a nutrition-related health risk for 
children and women of reproductive age.
    Acceptability of eligible foods by participants is an important 
factor in the decision to authorize types and brands of foods for State 
food lists and therefore, in this interim rule, the provision at 7 CFR 
246.10(e)(12) is revised to require that at least one half of the total 
number of breakfast cereals on the State's authorized food list meet 
the whole grain requirement using the FDA labeling requirements for 
making a health claim as a ``whole grain food with moderate fat 
content.'' Further, to assist in the identification of whole grain 
cereals for State agencies, vendors and participants, the interim rule 
adds the requirement that the primary ingredient by weight must be a 
whole grain. The remaining authorized breakfast cereals are required to 
meet only the iron and sugar requirements. State agencies may opt that 
all or more than half of the cereals on the State's authorized food 
list meet the whole grain requirement. However, in establishing minimum 
requirements for the variety and quantity of foods that a vendor must 
stock to be authorized, State agencies must require that at least one 
whole grain cereal be available.
    FNS believes that the revisions to the proposed whole grain 
provisions for cereals in this interim rule will continue to support 
the goals of the DGA\(1)\ for increasing whole grain consumption. State 
agencies are reminded that 7 CFR 246.10(b)(1)(i) allows the State to 
establish criteria in addition to the minimum Federal requirements for 
WIC supplemental foods, e.g., no artificial sweeteners.
    FNS also finds merit in commenters' concerns about administrative 
difficulties in the identification of whole wheat bread and whole grain 
products. It is important that WIC nutritional requirements be simple 
and accurate for State agencies to use when determining foods to 
authorize for State food lists and that authorized whole wheat and 
whole grain products make significant contributions of whole wheat or 
whole grain to the WIC food packages. Therefore, the proposed 
requirements for whole wheat bread --any bread that conforms to the FDA 
standard of identity for whole wheat bread as defined by 21 CFR 136.180 
will be retained in this interim rule. However, to assist in the 
identification of whole wheat bread products for State agencies, 
vendors and participants, the interim rule adds the requirement that 
the primary ingredient by weight must be whole wheat. FNS also 
clarifies in this interim rule that whole wheat buns and rolls that 
meet the FDA standard of identity for whole wheat bread, and have whole 
wheat as their primary ingredient, are WIC-eligible.
    The proposed requirements for whole grain breads--any bread product 
that meets labeling requirements for making a health claim as a ``whole 
grain food with moderate fat content'' as defined by FDA in its 
December 9, 2003, Health Claim Notification for Whole Grain Foods with 
Moderate Fat Content at http://www.cfsan.fda.gov/~dms/flgrain2.html_will
 also be retained in this interim rule. However, the interim rule 

adds the requirement that the primary ingredient by weight must be 
whole grain.
    The revisions to the whole wheat and whole grain bread requirements 
will allow products that are 100% whole grain, or are primarily whole 
wheat or multi-grain, to be WIC-eligible as well as provide an easy way 
for participants and vendors to identify whole wheat and whole grain 
bread products by using the food label. The primary ingredient is 
easily identified on the food label since ingredients are listed in

[[Page 68976]]

descending order of predominance by weight.
    To ensure that the whole grain options are consistent with the 
intent of the IOM recommendations, this interim rule also clarifies 
that the brown rice, bulgur (cracked wheat), oatmeal, and barley 
(whole-grain) are the whole unprocessed grain, and that soft corn and 
whole wheat tortillas must have the whole grain as the primary 
ingredient by weight according to the food label. A technical oversight 
in the proposed food package rule has been corrected in this interim 
rule by removing the requirement that authorized soft corn or whole 
wheat tortillas contain no added fats or oils.
    In the interim rule, State agencies will continue to be responsible 
for determining which types and brands of whole wheat bread and whole 
grain products and breakfast cereals to authorize on State food lists 
using the minimum requirements and specifications in Table 4 at 7 CFR 
246.10(e)(12). FNS will provide information on label reading and 
marketplace availability to State agencies to assist in the 
identification of whole wheat and whole grain foods and on nutrition 
education that encourages increased consumption of whole grains. The 
assistance of industry is requested in notifying FNS of whole wheat and 
whole grain bread products, whole grain cereals, and whole grain 
options that may meet the newly established nutritional requirements. 
Information may be mailed or sent electronically to FNS at the 
addresses provided at the beginning of this preamble.
Maximum Monthly Allowance
    The proposed rule would have established a maximum monthly 
allowance of 2 pounds of whole wheat bread or other whole grain options 
for children in Food Packages III and IV; and 1 pound of whole wheat 
bread or other whole grain options for women in Food Packages III, V 
and VII. The rule proposed a maximum monthly allowance of 36 ounces of 
breakfast cereal for children and women in Food Packages III-VII. While 
supporting the addition of whole wheat bread and other whole grain 
options to the WIC food packages, 95 comment letters (38 form letters) 
expressed concern that the package sizes of bread are not commonly 
available in either one- or two-pound loaves and that the participants 
would have difficulty purchasing the maximum monthly allowance for 
whole wheat bread. FNS has long recognized that package sizes of WIC-
eligible foods vary among manufacturers and those manufacturers may 
change package sizes at any time. Over the years, there have been many 
changes in package sizes for all WIC-eligible food categories, and FNS 
has struggled with how to manage these changes within WIC Program 
regulations that allow for a monthly maximum allowance of food that 
cannot be exceeded (except for the rounding option for infant formula 
and infant foods). It is not practical for FNS to be able to respond to 
all the variations in package sizing. Basing the maximum monthly 
allowance on package sizes would not guarantee that those package sizes 
will not change over time and, therefore, the maximum monthly allowance 
for whole wheat bread and other whole grain options and breakfast 
cereal remains as proposed.
7. Canned Fish
    The proposed rule would have authorized 30 ounces of a variety of 
canned fish in Food Package VII for fully breastfeeding women. The 
following varieties of canned fish were proposed--light tuna, salmon, 
and sardines. In the proposed rule, FNS solicited input on additional 
canned fish to offer in Food Package VII.
    A total of 3,546 commenters (26 form letters) expressed support for 
the proposed canned fish provisions; 555 commenters opposed. Of the 
opposing comment letters received, 506 were variations of one form 
letter submitted as part of a letter writing campaign initiated by an 
advocacy organization concerned with the public's exposure to 
methylmercury. These and other opposing commenters believe that canned 
light tuna should be eliminated from the WIC food packages until more 
study is conducted on its mercury content. Two commenters (1 form 
letter) opposed the omission of albacore tuna from the list of 
authorized varieties of canned fish.
    The IOM recommended that a variety of canned fish that do not pose 
a mercury hazard be offered in Food Package VII. As identified by 
federal advisories of the Food and Drug Administration (FDA) and the 
U.S. Environmental Protection Agency (EPA),\(4)\ canned light tuna, 
salmon, and sardines are among those fish that are lower in mercury. 
For ease of administration by State agencies, to accommodate 
participant preferences, and to minimize intake of mercury, this 
interim rule retains the proposed varieties of canned fish in Food 
Package VII for fully breastfeeding women. In response to commenters' 
requests, canned mackerel--N. Atlantic and Chub (Pacific)--also 
identified as lower in mercury, has been added in this interim rule as 
an authorized canned fish in Food Package VII.
8. Proposed Food Packages I and II for Infants
    The rule proposed the following changes in Food Packages I and II 
for infants:
     Revise age specifications for assignment to infant food 
packages;
     Delay introduction of complementary food to six months of 
age;
     Establish 3 feeding options within each infant food 
package--fully breastfed, partially breastfed, or fully formula fed;
     Revise maximum monthly infant formula allowances;
     Add infant food fruits and vegetables in Food Package II;
     Eliminate juice from both infant food packages;
     Disallow provision of infant formula for breastfed infants 
during the first month after birth;
     Disallow low iron infant formula;
     Allow commercial infant food meat for fully breastfed 
infants in Food Package II; and
     Reassign infants with a qualifying condition to proposed 
Food Package III--Participants With Qualifying Conditions--and 
authorize the issuance of exempt infant formulas only in Food Package 
III.
    The proposed revisions to Food Packages I and II for infants were 
designed to better promote and support the establishment of successful 
long-term breastfeeding among women who choose that feeding method, 
address differences in nutritional needs of breastfed and formula fed 
infants, address developmental needs of infants, bring the infant food 
packages in line with current infant feeding practice guidelines from 
the AAP, and serve all participants with certain medical conditions 
under one food package to facilitate efficient management of medically 
fragile participants.
a. Food Package I for Infants Under Six Months
    Under current WIC regulations, a maximum formula allowance is 
specified for all infants assigned to Food Package I, regardless of 
infant feeding practice; WIC staff may tailor the amount of formula to 
reflect the individual needs of the infants. The proposed rule would 
have extended the age range of infants covered by Food Package I by two 
months, thereby delaying introduction of complementary foods previously 
offered in this food package (juice and cereal) until six months of 
age. In proposed Food

[[Page 68977]]

Package I, fully formula fed infants four through five months of age 
would receive a slightly increased amount of infant formula to 
compensate in part for the decrease in nutrients and calories that 
results from the omission of juice and infant cereal. Also, to more 
actively support successful breastfeeding, the proposed rule would set 
a maximum formula amount for partially breastfed infants in Food 
Package I that is roughly half the maximum provided to fully formula 
fed infants.
b. Food Package II for Infants Six Through Eleven Months
    Under the proposed rule, the amounts of formula and the amounts and 
type of infant foods would vary by infant feeding option. Infant food 
fruits and vegetables would be added to Food Package II, infant juice 
eliminated, and maximum formula allowances reduced for both partially 
breastfed and fully formula fed infants.
    The majority of commenters were supportive of the revisions to the 
infant food packages as proposed. The discussion that follows pertains 
to those provisions that received significant or substantial opposing 
comments, suggested alternatives, or requests for clarifications. 
Provisions related to the proposed food packages for infants that are 
not addressed in this preamble did not receive significant or 
substantial public comments and are therefore retained in this interim 
rule as proposed.
c. Breastfeeding Provisions
    The proposed food packages for infants and women were designed to 
strengthen WIC's breastfeeding promotion efforts and provide additional 
incentives to assist mothers in making the decision to initiate and 
continue to breastfeed. The IOM's three-pronged approach to better 
promote and support breastfeeding through the WIC food packages was 
proposed. The approach focuses on the market value of the package for 
the mother/infant pair for the first year after birth, addresses 
differences in supplementary nutrition needs of breastfed and formula 
fed infants, and considers how to minimize early supplementation with 
infant formula through continued or increased efforts to promote and 
support the breastfeeding dyad.
    Because early supplementation may contribute to the short duration 
of breastfeeding, only two infant feeding options were recommended 
initially after delivery--either full breastfeeding or full infant 
formula-feeding. The IOM recommended this approach because physiology 
provides a strong basis for avoiding supplemental formula. The amount 
of milk a breastfeeding woman produces depends directly on how often 
and how long she nurses. Providing supplemental formula to a new 
breastfeeding mother may interfere with her milk production and success 
at continued breastfeeding.
    The differences in the proposed packages for the mother-infant 
pairs were based on differences in nutritional needs. For example, 
fully breastfeeding women require additional calories per day during 
the first six months postpartum as well as higher levels of most 
vitamins and minerals. Thus, the package for fully breastfeeding women 
provides the most food energy and nutrients, and the package for fully 
formula-feeding women provides the least. Similarly, starting at age 
six months, the proposed package for fully breastfed infants would have 
included commercial infant food meats to add a source of iron and zinc.
    These proposed food package changes, as recommended by the IOM, 
were intended to strengthen WIC's efforts to promote and support 
breastfeeding as the optimal infant feeding choice for WIC mothers.
    In general, commenters expressed support for the proposed 
breastfeeding provisions. Of the 1,057 commenters (774 form letters) 
that made statements regarding the breastfeeding provisions, 1,017 (753 
form letters) were supportive of the provisions, stating that they add 
value and incentive for mothers to breastfeed and support WIC's efforts 
to promote breastfeeding as the optimal infant feeding choice.
    The largest number of opposing comments on the breastfeeding 
provisions focused on those related to the establishment of infant 
feeding options the first month after birth, as described below.
Establishment of Infant Feeding Options--First Month After Birth
    To support the successful establishment of breastfeeding, the 
proposed rule would have established two infant feeding options for the 
first month after birth, either full breastfeeding or full formula-
feeding. Under the proposed rule, infant formula would not be provided 
for fully or partially breastfeeding infants during the first month of 
life after birth. The IOM recommended this approach because providing 
supplemental formula to a new breastfeeding mother may interfere with 
her milk production and success at continued breastfeeding.
    A total of 862 commenters (540 form letters) addressed this 
provision. Of those, 195 commenters (102 form letters) agreed with the 
provision as written. A total of 667 commenters (438 form letters) were 
opposed. While agreeing with its premise--that early supplementation 
inhibits the establishment of successful breastfeeding in the critical 
early weeks of an infants life--opposing commenters expressed concern 
that some WIC State and local agencies may not be prepared to provide 
support services (peer counselors, breast pumps, consultation with 
lactation experts) to the extent necessary to make this provision work 
for every mother. As a result, a mother who feels less than confident 
about her ability to breastfeed may choose to either (1) categorize her 
infant as fully formula fed, thus receiving more formula than is 
necessary for the breastfeeding infant and further compromising the 
establishment of successful breastfeeding, or (2) not breastfeed at 
all. Other commenters pointed to legitimate medical reasons that a 
breastfeeding mother/infant dyad may have which result in the need for 
supplemental formula in the early postpartum period, such as infants 
with metabolic disorders. Commenters urged FNS to consider allowing 
State agencies the option to provide a small amount of infant formula 
during the first month in limited situations.
    FNS finds the arguments put forth by commenters compelling. 
Therefore, the provisions at 7 CFR 246.10(e)(1)(ii)(A) and in Table 1 
of 7 CFR 246.10(e)(9) are revised as follows. Three infant feeding 
options will be authorized in the first month after birth--either (1) 
fully formula feeding; (2) fully breastfeeding; or (3) partially 
breastfeeding. As proposed, no supplemental formula will be provided 
for fully breastfeeding infants. The third infant feeding option--
partially breastfeeding--will be offered to the infant who is breastfed 
but also receives not more than 104 reconstituted fluid ounces of 
formula from the WIC program. Food Package V will be provided to 
mothers of these partially breastfeeding infants.
    Partially breastfed infants ages 0 to 1 month may receive the 
equivalent of not more than 104 fluid ounces of reconstituted infant 
formula. This will allow State agencies to issue one can of powder 
infant formula commonly used in WIC, and is responsive to commenters' 
requests to make a small amount of infant formula available for 
partially breastfeeding infants in the first month. Powder infant 
formula is recommended until the partially breastfed infant reaches 
four months of age due to its longer shelf life and to minimize waste. 
The CPA is expected to individually tailor the amount based on

[[Page 68978]]

the carefully assessed needs of the individual breastfeeding infant. 
This means that mothers of partially breastfed infants should not 
``automatically'' be provided a can of formula in the first month of 
life. If, after a careful assessment, the CPA determines that some 
formula is appropriate for the infant in the first month, the mother 
should be advised on the appropriate amount of that one can of formula 
to feed the infant. The goal is to provide as minimal amount of 
supplemental formula as is needed, while offering counseling and 
support, in order to help the mother establish a successful milk 
supply.
    FNS is aware that adequate breastfeeding support for mothers is 
important for the success of both the partially and fully breastfeeding 
options in the first month after birth. FNS is committed to 
strengthening WIC's efforts to promote and support breastfeeding, 
through the provision of peer counseling funding to State agencies and 
other means. Judicious use of NSA funds by State agencies directed 
toward research-based support known to be effective--i.e., peer 
counseling, consultation with lactation experts--will further enhance 
the ability of State and local agencies to assist mothers in 
establishing and continuing successful breastfeeding in the critical 
weeks after birth and beyond. FNS' view is that the provision of a 
small amount of formula for certain infants in the first month of life 
is a temporary option that State agencies may invoke to assist 
breastfeeding mothers who may otherwise choose to fully formula feed. 
FNS expects that the proportion of participants offered the partially 
breastfeeding option in the first month will decrease over time as 
State agencies strengthen their breastfeeding support infrastructure.
d. Maximum Monthly Allowances of Infant Formula
    Under the proposed rule, the maximum monthly allowance of infant 
formula would be revised from current levels to reflect the proposed 
feeding options (fully formula feeding, partially breastfeeding, and 
fully breastfeeding), physical form of infant formula provided (liquid 
concentrate, powder, or ready-to-feed), and the age of the infant. A 
total of 574 commenters (143 form letters) addressed the maximum 
monthly allowances of infant formula. Two hundred forty four commenters 
were opposed to changes in the maximum monthly allowances; of these, 
148 were program participants. The majority of comments centered on two 
specific issues: (1) The variation in amounts of formula provided 
during the different age specifications; and (2) a decrease in amount 
of formula available, especially for the 6-12 month old infant. Non-
participant commenters in opposition to revising formula allowances 
stated that reducing formula will result in supplementation with whole 
milk or inappropriate liquids. Some non-participant commenters stated 
that formula amounts should stay the same as in current regulations and 
the CPA should tailor the packages as appropriate for the needs of 
individual infants. Participant commenters expressed concern that 
formula is expensive and if WIC reduces the amount provided it will 
increase their out-of-pocket expenses to purchase the additional 
formula.
    The proposed maximum formula allowances for infants were determined 
based on a scientific review of the calorie and nutrient needs of 
infants at different ages. The proposed amounts of infant formula for 
partially breastfeeding infants in Food Packages I and II are designed 
to enhance the promotion and support of breastfeeding. The provision is 
part of the IOM's comprehensive approach resulting from thorough 
consideration of scientific research and public comments on how to 
promote and support breastfeeding. The maximum amount for partially 
breastfed infants provides approximately half the amount provided to 
fully formula fed infants--to provide about half of the infant's 
nutritional needs to encourage the mother to breastfeed enough to 
provide at least half of the infant's nutritional needs. This approach 
is preferable to current tailoring because it establishes a standard 
procedure that promotes breastfeeding as the optimal way to feed 
infants across WIC programs. The addition of infant foods, along with 
the proposed amount of formula for infants in Food Package II, provides 
close to recommended amounts of nutrients, introduces more variety into 
the infant's diet and encourages healthy dietary patterns. FNS believes 
that the nutrition education and anticipatory guidance on infant 
feeding provided by WIC local agencies will enable participants and 
caregivers to make informed choices about appropriate liquids for 
infants.
    Other commenters asked for clarification on the maximum monthly 
allowances of infant formula per physical form and suggested that the 
maximum monthly allowance for infant formula be the same for all 
physical forms. The IOM recommended a maximum monthly allowance of 
liquid concentrate but stated that powder or ready-to-feed formula 
(RTF) may be substituted for liquid concentrate at rates that provide 
the approximate number of fluid ounces as the liquid concentrate. The 
IOM recommended rounding to whole cans to approximate the target 
amount. FNS recognizes that powder infant formula is an increasingly 
popular physical form with WIC agencies and participants. In 
determining the amount of powder formula to authorize, FNS considered 
the cans sizes commonly used in WIC, their reconstituted yields, and 
the range of dry powder ounces recommended by the IOM. The maximum 
monthly allowance of powder infant formula provides at least the number 
of fluid ounces as the same reconstituted liquid concentrate for the 3 
major milk-based infant formulas manufactured that State agencies 
issue, thereby ensuring a minimum level of nutrition for infants 
regardless of physical form.
    As described in section C.8.c. of this preamble, partially 
breastfed infants ages 0 to 1 month may receive the equivalent of not 
more than 104 fluid ounces of reconstituted infant formula. This will 
allow State agencies to issue one can of powder infant formula commonly 
used in WIC, and is responsive to commenters' requests to make a small 
amount of infant formula available for partially breastfeeding infants 
in the first month. The maximum allowances of infant formula for 
infants 1 month and older in Food Package I and II are retained in this 
interim rule as proposed.

[[Page 68979]]



                     Exhibit A.--Maximum Monthly Allowances for Food Package I for Infants Ages Birth to 6 Months, by Feeding Option
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                    Fully breastfed                   Partially breastfed infants                        Fully formula fed infants
                                        infants      ---------------------------------------------------------------------------------------------------
            WIC food             --------------------
                                  0 through 5 months  Birth to one month  1 through 3 months  4 through 5 months  0 through 3 months  4 through 5 months
--------------------------------------------------------------------------------------------------------------------------------------------------------
Infant Formula..................  NA................  104 fl oz           364 fl oz           442 fl oz           806 fl oz           884 fl oz
                                                       reconstituted       reconstituted       reconstituted       reconstituted       reconstituted
                                                       powder.             liquid              liquid              liquid              liquid
                                                                           concentrate\*\.     concentrate.        concentrate.        concentrate.
--------------------------------------------------------------------------------------------------------------------------------------------------------
NA= not applicable.
\*\ The maximum monthly allowance is specified in the liquid concentrate form; however, powder and RTF are allowable substitutes and the powder form is
  recommended for partially breastfed infants, ages 0 through 3 months of age.

    Two technical oversights in the proposed food package rule have 
been corrected in this interim rule by adjusting the maximum monthly 
allowance of RTF formula in Food Package I.A. from 800 fluid ounces to 
832 fluid ounces, and in Food Package II.A. from 364 fluid ounces to 
384 fluid ounces.
e. Elimination of Juice for Infants and Addition of Infant Foods in 
Food Package II
    A total of 629 commenters (69 form letters) addressed the 
elimination of juice from the infant food packages. The majority of 
commenters were in agreement with the provision to eliminate juice from 
the infant food packages, stating that juice is not nutritionally 
valuable or necessary for infants. A total of 242 commenters were 
opposed; 228 of those opposed were program participants. Twelve non-
participant commenters stated that the elimination of juice may lead to 
substitution of lower-cost sweetened beverages. The IOM specifically 
recommended that infant food fruits and vegetables replace juice for 
infants 6 through 12 months of age. An important part of the nutrition 
education provided by WIC staff to parents and caregivers of infant 
participants' is information on the timing and types of complementary 
foods appropriate for infants.
    The addition of jarred infant foods (fruits, vegetables, meat) to 
Food Package II was well received by commenters. Of the 5,953 
commenters that addressed infant foods, 5,887 commenters (of these, 131 
were form letters) expressed support for the addition of infant foods. 
Those that opposed asked that fresh, canned, or frozen fruits and 
vegetables be allowed in Food Package II instead of, or as an option, 
to jarred infant foods. Some of these commenters believe that jarred 
infant foods are environmentally wasteful and costly. Others stated 
that the provision of jarred foods undermines nutrition education 
messages about home prepared foods for infants. Some commenters stated 
that providing a cash value voucher for fruits and vegetables for 
infants 9-12 months of age may be more developmentally appropriate for 
this age group.
    The IOM specifically recommended ``commercial baby food fruits and 
vegetables and fresh bananas'' for (1) early introduction to new 
flavors and textures over time; (2) nutrient content; (3) availability 
in developmentally appropriate textures; and (4) food safety. Further, 
the provision of commercial baby food fruits and vegetables helps 
ensure that these items are consumed by infants and not other 
participants, an important consideration since the amount of infant 
formula in Food Package II is reduced from current levels and replaced 
with complementary infant foods. Therefore, the proposed provisions 
about jarred infant foods in Food Package II are retained in this 
interim rule. FNS does not believe that the provision of jarred infant 
foods is incompatible with the nutrition education provided by WIC 
staff related to appropriate food choices and home preparation of foods 
for infants since the amount of infant foods provided by WIC is 
supplemental to an infant's entire needs.
    (1) Authorized infant meat. A technical oversight in the proposed 
rule has been corrected in this interim rule by clarifying the minimum 
requirements and specifications for authorized infant meat as--any 
variety of commercial infant food meat or poultry, as a single major 
ingredient, with added broth or gravy. Added sugars or salt (i.e. 
sodium) are not allowed. Texture may range from pureed through diced.
    (2) Infant cereal. As proposed, the maximum quantity of infant 
cereal was not changed from current WIC regulations. Thirteen 
commenters believe that the amount of infant cereal should be reduced. 
These commenters stated that in their experience infants did not eat 
the volume of infant cereal provided by WIC. The IOM recommended that 
the amount of iron-fortified infant cereal for infants six months and 
older remain at 24 ounces. Therefore, the proposed maximum amount of 
infant cereal is retained in this interim rule.
f. Rounding Up of Infant Foods
    Public Law 108-265, the Child Nutrition and WIC Reauthorization Act 
of 2004, enacted on June 30, 2004, contains a provision that allows a 
State agency to round up to the next whole can of infant formula to 
allow all participants to receive the full-authorized nutritional 
benefit specified by regulation. This provision only applies to infant 
formula (not exempt infant formula or WIC-eligible medical foods) 
issued as a result from a solicitation bid on or after October 1, 2004. 
The proposed rule described the ``full-authorized nutritional benefit'' 
as well as a methodology that State agencies would be required to use 
if choosing to implement the option to round up. Consistent with the 
authority allowing State agencies to round up infant formula, FNS 
proposed rounding up of infant foods (infant cereal, fruit, vegetables 
and meat) to provide administrative flexibility to State agencies to 
ensure that infants would receive the full nutritional benefit 
recommended by the IOM.
    Of the 139 comments received on this issue, 129 commenters (66 form 
letters) disagreed with the proposed methodology for rounding up. 
Seventy-seven commenters (40 form letters) stated that the proposed 
methodology was confusing and time-consuming to calculate. Twenty-four 
commenters (21 form letters) urged FNS to allow State agencies to 
determine their own methodology for rounding up. FNS is sensitive to 
commenters' concerns and will further assist State agencies that choose 
to implement the option to round up. FNS believes, however, that a 
standard methodology for rounding up, uniformly applied across State 
agencies, is imperative. Therefore, the

[[Page 68980]]

rounding up provisions are retained in this interim rule as proposed, 
except that this interim rule clarifies that the full nutritional 
benefit for infant formula is provided as a minimum on average during 
the timeframe that the food package is provided. This means that when 
the rounding methodology is applied, in some months participants will 
receive less than the full nutritional benefit amount, and other months 
will receive more; however, on average, participants will receive the 
full nutritional benefit. The full nutritional benefit is defined as 
the maximum monthly allowance of reconstituted fluid ounces of liquid 
concentrate infant formula for the food package category and feeding 
option, e.g. partially breastfed infants 4 through 5 months of age.
9. Revisions in Food Package III and Their Effect on Food Packages I 
and II
    Under proposed Food Package III, infants with qualifying conditions 
would be added and other supplemental foods would be authorized. The 
revisions were intended to provide flexibility in accommodating the 
wide range of nutritional needs of participants served by this food 
package, and facilitate the efficient management and tracking of the 
costs of providing supplemental foods to persons with the most serious 
medical conditions. Of the 86 comment letters that addressed the 
proposed revisions to Food Package III, 74 commenters (38 form letters) 
agreed with the proposed changes, especially the addition of 
supplemental foods other than WIC formula, cereal and juice that are 
currently authorized. Twelve commenters (5 form letters) disagreed with 
the proposed revisions. Commenters remarked on a few specific 
provisions. While agreeing with the majority of provisions, 21 
commenters (19 form letters) from State and local agencies asked that 
FNS clarify the scope of Food Package III since infants receiving an 
exempt infant formula for a medical condition would now be served under 
that package rather than under Food Packages I and II as in current 
regulations. These same commenters wanted clarification on the 
qualifying conditions that would allow a participant to receive Food 
Package III. FNS realizes that serving infants with certain medical 
conditions under Food Package III rather than under Food Packages I and 
II will be a major change for WIC staff. As stated in the preamble of 
the proposed rule, only infant formula would be authorized in Food 
Packages I and II. Infant formula is a food substitute for human milk 
for generally healthy, full-term infants. Infant formula includes milk-
based, soy-based and lactose-free products. Therefore, infants served 
under Food Packages I and II will be generally healthy, full-term 
infants. Conversely, infants with a serious nutritionally-related 
medical condition that requires an exempt infant formula or WIC-
eligible medical food would be served under Food Package III. Women and 
children with serious medical conditions would also be served under 
Food Package III. FNS reminds readers that the WIC Works Formula 
Database, http://www.nal.usda.gov/wicworks provides helpful information 

on the identification and indications for use of infant formulas, 
exempt infant formulas and WIC-eligible medical foods.
    Commenters were also concerned about medically fragile infants 6 
months of age or greater whose medical condition prevents them from 
consuming complementary infant foods. Commenters requested that these 
infants receive more WIC formula in replacement of the nutrition that 
would result from the addition of complementary foods. FNS finds merit 
in this concern and therefore will revise the provision in Table 1 of 7 
CFR 246.10(e)(9) to allow medically fragile infants 6 months of age or 
greater whose medical condition prevents them from consuming 
complementary infant foods (cereal, fruit and vegetables, and meat) to 
receive exempt infant formula or WIC-eligible medical foods at the same 
maximum monthly allowance as infants ages 4 through 5 months of the 
same feeding option. The provision of exempt infant formula or WIC-
eligible medical foods for these infants is in lieu of provision of 
complementary infant foods.
    In the proposed rule, FNS requested comments on WIC-eligible 
medical foods. Of the 36 comments received, 21 commenters (14 form 
letters) agreed with the WIC-eligible medical food provisions and 15 
(all form letters) disagreed. As discussed in section IV.A. of this 
preamble, commenters disagreed with the proposed definition for WIC-
eligible medical foods.
    Of the 27 commenters (14 form letters) who addressed ways to 
determine nutritional equivalency for other than liquid forms of ready-
to-feed (RTF) medical foods, e.g. bars and puddings, 17 commenters (14 
form letters) recommended that protein equivalents be used and 10 
commenters felt that the CPA, in consultation with the health care 
provider, should determine the amount of WIC-eligible medical foods to 
prescribe, based on a thorough nutritional assessment. One commenter 
also suggested that FNS consider a serving per day equivalent. FNS has 
determined that more information is needed about nutritional 
equivalency for other than liquid RTF forms of WIC-eligible medical 
foods. FNS will consult with experts from industry as well as the FDA 
prior to developing guidance for WIC agencies on ways to determine 
nutritional equivalency for various physical forms of WIC-eligible 
medical foods.

D. Implementation Timeframe for Revised Food Packages

    FNS proposed a one-year implementation timeframe for the majority 
of the revisions to the WIC food packages, with the following 
exceptions--(1) a six-month timeframe was proposed for the elimination 
of juice for infants; and (2) a limitation was proposed on the ability 
to implement the partially breastfeeding food packages for infants and 
women to not more than 32 sites within up to eight selected State 
agencies so that FNS could examine the effects of the revisions on the 
initiation and duration of breastfeeding before allowing full 
implementation by all State agencies.
    Of the 203 commenters (137 form letters) who addressed the proposed 
one-year implementation of the revised food package changes for 
pregnant, postpartum, and fully breastfeeding women, fully formula fed 
and fully breastfeeding infants, children, and participants with 
certain medical conditions, 191 commenters (135 form letters) were 
opposed. Commenters asked for a longer implementation timeframe due to 
the complexity of the provisions, changes to management information 
systems, and training needs of staff, vendors and participants. FNS is, 
therefore, extending the timeframe for implementation of these new food 
packages to 18 months after the effective date of this interim rule.
    A total of 611 commenters (501 form letters) addressed the proposed 
implementation plan for the partially breastfeeding food packages for 
infants and women. Of these, 590 commenters (501 form letters) were 
strongly opposed to the plan. Commenters stated that deferring access 
to these packages denies WIC Programs a vital tool to encourage women 
to breastfeed and unnecessarily delays participant access to the 
proposed improvements in these food packages. Commenters also expressed 
concern that offering both new and old food packages for up to 3 years 
after implementing the new food packages would create an administrative 
burden for State agencies and could cause confusion for WIC 
participants.

[[Page 68981]]

Finally, commenters pointed out that under the proposed implementation 
plan, partially breastfed infants 6 months to 11 months old could 
receive more infant formula than fully formula fed infants.
    In light of the viewpoints expressed by commenters, and as a result 
of further review and determination by FNS, the implementation 
timeframe for the partially breastfeeding food packages for infants and 
women is revised to be concurrent with implementation of the other food 
packages--18 months from the effective date of this interim rule. FNS 
remains committed to examining the impact of the significant changes to 
these food packages on the breastfeeding mother/infant dyad, and is 
developing a study design that allows an assessment of the effects of 
these changes without delaying national implementation. In addition, 
FNS encourages State WIC agencies to examine the impact of these food 
package changes in the first month following birth on breastfeeding 
initiation, intensity and duration and to share the results with FNS 
and the WIC community.
    The following chart summarizes the revised implementation 
timeframes for all food package changes.

          Timelines for Implementation of Food Package Changes
------------------------------------------------------------------------
                                     Who must          Timeframe for
     Food package category          implement          implementation
------------------------------------------------------------------------
Pregnant Women................  All State          18 Months from
                                 Agencies.          Effective Date of
                                                    Interim Rule.
Postpartum Women..............  All State          18 Months from
                                 Agencies.          Effective Date of
                                                    Interim Rule.
Fully Breastfeeding Women.....  All State          18 Months from
                                 Agencies.          Effective Date of
                                                    Interim Rule.
Partially Breastfeeding Women.  All State          18 Months from
                                 Agencies.          Effective Date of
                                                    Interim Rule.
Fully Formula fed Infants.....  All State          18 Months from
                                 Agencies.          Effective Date of
                                                    Interim Rule.
Partially Breastfed Infants...  All State          18 Months from
                                 Agencies.          Effective Date of
                                                    Interim Rule.
Fully Breastfed Infants.......  All State          18 Months from
                                 Agencies.          Effective Date of
                                                    Interim Rule.
Juice Elimination from Infant   All State          18 Months from
 Food Packages.                  Agencies.          Effective Date of
                                                    Interim Rule.
Children......................  All State          18 Months from
                                 Agencies.          Effective Date of
                                                    Interim Rule.
Participants with Certain       All State          18 Months from
 Medical Conditions (Women,      Agencies.          Effective Date of
 Infants and Children).                             Interim Rule.
------------------------------------------------------------------------

    During the 18-month phase-in period, State agencies are required to 
issue food benefits based on either the new food packages or current 
food packages but may not combine the two. For example, a State agency 
may not add whole wheat bread and fresh fruits and vegetables to the 
current foods and quantities available under the children's food 
package. The State agency may, however, phase-in the new food packages 
on a participant category basis. To minimize participant and vendor 
confusion, once the State agency begins issuing the new food packages, 
it must be done on a Statewide basis. FNS will collaborate with the 
National WIC Association on developing recommendations and options for 
rolling out the new food packages, based on ease of administration and 
other issues. State agencies must, however, roll out the food packages 
for the partially breastfeed mother/infant dyad concurrently, and are 
also strongly encouraged to concurrently roll out the food packages for 
the fully breastfed mother/infant dyad.

V. Endnotes

    (1) U.S. Department of Health and Human Services/U.S. Department 
of Agriculture, Dietary Guidelines for Americans, 2005. Available at 
Internet site: http://www.healthierus.gov/dietaryguidelines/.

    (2) Institute of Medicine, National Academy of Sciences. ``WIC 
Food Packages: Time for a Change,'' 2005. Available at Internet 
site: http://www.fns.usda.gov/oane/menu/Published/WIC/FILES/Time4AChange
(mainrpt).pdf.

    (3) Institute of Medicine, National Academy of Sciences, 2002a. 
Dietary Reference Intakes for Energy, Carbohydrate, Fiber, Fat, 
Fatty Acids, Cholesterol, Protein, and Amino Acids. Washington, DC: 
National Academy Press.
    (4) Environmental Protection Agency/Food and Drug 
Administration. ``What You Need to Know About Mercury in Fish and 
Shellfish.'' EPA and FDA Advice for: Women Who Might Become 
Pregnant, Women Who Are Pregnant, Nursing Mothers, and Young 
Children. 2004. Available at Internet site: http://www.cfsan.fda.gov/dms/admehg3.html
.


VI. Procedural Matters

Executive Order 12866

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

Regulatory Impact Analysis

    As required for all rules that have been designated as Significant 
by the Office of Management and Budget, a Regulatory Impact Analysis 
(RIA) was developed for this interim rule. It follows this regulation 
as an Appendix. The conclusions of this analysis are summarized below.
    Need for Action. As the population served by WIC has grown and 
become more diverse over the last 20 years, the nutritional risks faced 
by participants have changed, and though nutrition science has 
advanced, the WIC supplemental food packages have remained largely 
unchanged. A rule is needed to implement recommended changes to the WIC 
food packages based on the current nutritional needs of WIC 
participants and advances in nutrition science.
    Benefits. Benefits of this rule include bringing the WIC food 
packages in line with the Dietary Guidelines for Americans\(1)\ and 
current infant feeding practice guidelines of the American Academy of 
Pediatrics, better promoting and supporting the establishment of 
successful long-term breastfeeding, providing WIC participants with a 
wider variety of food, providing WIC State agencies with greater 
flexibility in prescribing food packages to accommodate participants 
with cultural food preferences, and serving all participants with 
certain medical conditions under one food package to facilitate 
efficient management of medically fragile participants.
    Costs. FNS estimates that the provisions in this interim rule will 
have minimal impact on total costs over 5 years.

Regulatory Flexibility Act

    This interim rule has been reviewed with regard to the requirements 
of the Regulatory Flexibility Act (5 U.S.C 601-612). Nancy Montanez 
Johner, Under Secretary, Food, Nutrition and Consumer Services, has 
certified that this rule will not have a significant economic impact on 
a substantial number of small entities. State and local agencies and 
WIC participants will be most affected by the rule and WIC authorized 
vendors and the food industry may be indirectly affected.

[[Page 68982]]

    Although not required by the Regulatory Flexibility Act, FNS has 
prepared a Regulatory Flexibility Analysis (RFA) describing the impact 
of this interim rule on small entities. The RFA reflects comments that 
were received on the Initial Regulatory Flexibility Analysis that was 
included in the WIC Food Package Proposed Rule published at 71 FR 
44784. Additional analysis of the regulatory flexibility considerations 
of this interim rule may be found in the Regulatory Impact Analysis 
section of this preamble and the cited RIA itself.
Need For, and Objectives of, the Interim Rule
    This interim rule revises regulations governing the WIC food 
packages to change the maximum monthly allowances and minimum 
requirements for certain supplemental foods, and add new foods such as 
fruits, vegetables and whole grains. The revisions largely reflect 
recommendations made by the Institute of Medicine of the National 
Academies in its Report ``WIC Food Packages: Time for a Change.'' \(2)\ 
These revisions bring the WIC food packages in line with the Dietary 
Guidelines for Americans\(1)\ and current infant feeding practice 
guidelines of the American Academy of Pediatrics, better promote and 
support the establishment of successful long-term breastfeeding, 
provide WIC participants with a wider variety of food, and provide WIC 
State agencies with greater flexibility in prescribing food packages to 
accommodate participants with cultural food preferences.
Description and Estimate of Number of Small Entities To Which the 
Interim Rule Would Apply
    This interim rule applies to WIC State agencies with respect to 
their selection of foods to be included on their food lists. As a 
result, vendors will be indirectly affected and the food industry will 
realize increased sales of some foods and decreases in other foods, 
with an overall neutral effect on sales nationally. The rule may have 
an indirect economic affect on certain small businesses because they 
may have to carry a larger variety of certain foods to be eligible for 
authorization as a WIC vendor. Currently, approximately 46,000 stores 
are authorized to accept WIC food instruments, some of which are small 
businesses. With the high degree of State flexibility allowable under 
this interim rule, small vendors will be impacted differently in each 
State depending upon how that State chooses to meet the new 
requirements. It is, therefore, not feasible to accurately estimate the 
rule's impact on small vendors. Since neither FNS nor the State 
agencies regulate food producers under the WIC Program, it is not known 
how many small entities within that industry may be indirectly affected 
by the interim rule.
Description of Projected Reporting, Recordkeeping, and Other Compliance 
Requirements
    This interim rule provides State agencies with greater flexibility 
in prescribing food packages to WIC participants. The information 
collection burden estimated for this rule is 14,598 hours. The burden 
reflects requirements associated with medical documentation for the 
issuance of any supplemental foods issued to participants who receive 
Food Package III; any authorized soy-based beverage or tofu issued to 
children who receive Food Package IV; and, any additional authorized 
tofu and cheese issued to women who receive Food Packages V and VII 
that exceeds the maximum substitution rate.
Steps Taken To Minimize Significant Economic Impact on Small Entities, 
and Significant Alternatives Considered
    FNS has considered significant alternatives in developing this 
interim rule including those that may reduce the indirect impact on 
small business. These considerations include (among others) the 
establishment of differing compliance or reporting requirements or 
timetables that take into account the resources available to small 
entities; the clarification, consolidation, or simplification of 
compliance and reporting requirements under the rule for small 
entities; the use of performance, rather than design, standards; and an 
exemption from coverage of the rule, or any part thereof, for small 
entities.
    In general, the alternatives of exempting small entities from the 
requirements in this interim rule or altering the requirements for 
small entities were rejected. The WIC food packages provide 
supplemental foods designed to address the nutritional needs of low-
income pregnant, breastfeeding, non-breastfeeding postpartum women, 
infants and children up to age five who are at nutritional risk. 
Exempting small entities from providing the specific foods intended to 
address the nutritional needs of participants or altering the 
requirements for small entities would undermine the purpose of the WIC 
Program and endanger the health status of participants.
    FNS has, however, modified the new food provision in an effort to 
mitigate the impact on small entities. Currently, State agencies must 
establish minimum requirements for the variety and quantity of foods 
that a vendor must stock in order to receive WIC Program authorization. 
This rule adds new food items, such as fruits and vegetables and whole 
grain breads, which may require some WIC vendors, particularly smaller 
stores, to expand the types and quantities of food items stocked in 
order to maintain their WIC authorization. In addition, vendors also 
have to make available more than one food type from each WIC food 
category, except for the categories of peanut butter and eggs, which 
may be a change for some vendors. To mitigate the impact of the fruit 
and vegetable requirement, the rule allows canned, frozen and dried 
fruits and vegetables to be substituted for fresh produce.
Federal Rules That May Duplicate, Overlap, or Conflict With the Interim 
Rule
    There are no Federal rules that may duplicate, overlap, or conflict 
with the provisions of this interim rule.

Public Law 104-4, Unfunded Mandates Reform Act of 1995 (UMRA)

    Title II of the UMRA establishes requirements for Federal agencies 
to assess the effects of their regulatory actions on State, local, and 
tribal governments and the private sector. Under Section 202 of the 
UMRA, 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 to State, local, or tribal 
governments, in the aggregate, or to the private sector, of $100 
million or more in any one year. When such a statement is needed for a 
rule, section 205 of the UMRA generally requires 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 interim rule contains no Federal mandates (under the 
regulatory provisions of Title II of the UMRA) that impose costs on 
State, local, or tribal governments or to the private sector of $100 
million or more in any one year. This rule is, therefore, not subject 
to the requirements of sections 202 and 205 of the UMRA.

Executive Order 12372

    The Special Supplemental Nutrition Program for Women, Infants and 
Children (WIC) is listed in the Catalog of Federal Domestic Assistance 
under

[[Page 68983]]

No. 10.557. For reasons set forth in the final rule in 7 CFR part 3015, 
Subpart V and related Notice (48 FR 29114, June 24, 1983), this Program 
is included in the scope of Executive Order 12372, which requires 
intergovernmental consultation with State and local officials.

Federalism Summary Impact Statement

    Executive Order 13132 requires Federal agencies to consider the 
impact of their regulatory actions on State and local governments. 
Where such actions have federalism implications, agencies are directed 
to provide a statement for inclusion in the preamble to the regulations 
describing the agency's considerations in terms of the three categories 
called for under section (6)(b)(2)(B) of Executive Order 13132.
Prior Consultation With WIC State and Local Agency Officials
    Over the years FNS has received numerous requests from WIC State 
and local agencies to modify the current food packages to permit 
greater substitution of foods or introduction of additional foods. 
These requests have come from formal and informal discussions and with 
State and local officials on an ongoing basis regarding program 
implementation and food package policy issues, and from written 
proposals and comments submitted to FNS by WIC State and local agencies 
to allow modifications and/or substitutions to the WIC food packages. 
Requests for revisions to the WIC food packages have also been received 
from Congress, participants, and organizations with interests in the 
welfare of WIC participants.
    Examples of the different forums and methods FNS has used over the 
years to solicit WIC State and local agency staff input on the WIC food 
packages include the following.
     Publishing an advanced notice of proposed rulemaking 
(ANPR) in 2003 to solicit comments to determine if the WIC food 
packages should be revised to better improve the nutritional intake, 
health and development of participants; and, if so, what specific 
changes should be made to the food packages. In response to the ANPR, 
FNS received 195 total comments;
     Commissioning the National Academies' Institute of 
Medicine (IOM) to independently review the WIC Food Packages. IOM 
solicited public comment on revisions to the WIC food packages, via 3 
public hearings, letters and e-mail, throughout its 22-month study 
period. IOM considered these comments, as well as comments FNS received 
in response to the ANPR, in developing recommendations to revise the 
WIC food packages. IOM published its reports of these recommendations 
on April 27, 2005: ``WIC Food Packages: Time for a Change.'' \(2)\ This 
rule incorporates IOM's recommendations;
     Hosting annual meetings (1977-present) of the National 
Advisory Council on Maternal, Infant and Fetal Nutrition that includes 
WIC staff as members of the Council; the Council develops 
recommendations for FNS on how to improve operations of the WIC and 
Commodity Supplemental Food Programs, including aspects related to the 
authorized foods and food packages; and
     Consulting and collaborating with NWA on a wide variety of 
WIC issues, including those related to the WIC food packages (1983-
present). NWA is a non-profit organization that was founded in 1983 by 
State and local agencies that administer the WIC Program. In 2006, 
NWA's paid membership included 75 of the 89 WIC State agencies, 675 
local agencies, 5 State WIC Associations, and 19 sustaining members 
(i.e., for-profit and non-profit businesses or organizations). 
Functioning as a coalition of WIC agencies, NWA is dedicated to 
maximizing WIC resources through effective management practices. NWA 
also serves in a leadership role for WIC agencies by developing 
position papers on issues of concern to the WIC community.
Nature of Concerns and the Need To Issue This Rule
     Congress has requested a WIC food package rule that 
includes fruits and vegetables and allows for cultural food 
accommodations and responds to the needs of the WIC population.
     The National Advisory Council on Maternal, Infant, and 
Fetal Nutrition, in its annual Reports to FNS, recommends better 
accommodation of the nutritional and cultural needs of WIC participants 
through the WIC food packages; and
     In 1999, NWA (then the National Association of WIC 
Directors (NAWD)) published a position paper entitled ``NAWD WIC Food 
Prescription Recommendations'' and in 2003, NWA published a position 
paper entitled ``NWA WIC Culturally Sensitive Food Prescription 
Recommendations.'' NWA's major recommendations in these two reports 
were to reframe the WIC food packages to be consistent with the Dietary 
Guidelines for Americans and allow State agencies flexibility to 
accommodate cultural eating patterns.
    Based upon the need to address the nutritional needs of the WIC 
population given current scientific information and consumption 
patterns as exemplified by the concerns and recommendations of NWA, and 
others, FNS was aware of the need to revise the WIC food packages.
Extent to Which We Meet Those Concerns
    FNS has considered the impact of the interim rule on State and 
local agencies. FNS believes that the rule is responsive to the 
expressed concerns and requests of commenters representing State and 
local concerns. A few commenters stated that the Department did not 
conduct a regulatory risk assessment as required for certain 
Departmental regulations under section 304 of the Federal Crop 
Insurance Reform and Department of Agriculture Reorganization Act of 
1994, Public Law 103-354. However, based on the statutory language and 
legislative intent, the Department determined that a regulatory risk 
assessment is not required for this regulation.

Executive Order 12988

    This 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 
implementation. This rule is not intended to have retroactive effect 
unless so specified in the DATES paragraph of the preamble of the 
interim rule. Prior to any judicial challenge to the provisions of this 
rule or the application of its provisions, all applicable 
administrative procedures must be exhausted.

Civil Rights Impact Analysis

    FNS has reviewed this interim rule in accordance with FNS 
Regulation 4300-4, ``Civil Rights Impact Analysis,'' to identify and 
address any major civil rights impacts the rule might have on 
minorities, women, and persons with disabilities. After a careful 
review of the rule's intent and provisions, and the characteristics of 
WIC Program applicants and participants, FNS has determined that it 
does not have a deleterious effect on the participation of protected 
individuals in the WIC Program. All data available to FNS indicate that 
protected individuals have the same opportunity to participate in the 
WIC Program as non-protected individuals. FNS specifically prohibits 
State and local agencies operating the WIC Program from discrimination 
based on race, color, national origin, sex, age, or disability. Section 
246.8(a) of WIC regulations requires State agencies to ensure that no 
person will be excluded from participation based on race, color,

[[Page 68984]]

national origin, age, sex or disability. Where State agencies have 
options, and they choose to implement a certain provision, they must 
implement it in such a way that it complies with the regulations at 7 
CFR 246.8.
    This rule merely addresses revisions to the WIC food packages to 
bring them into line with the Dietary Guidelines for Americans \(1)\ 
and current infant feeding recommendations from the American Academy of 
Pediatrics. Several provisions are specifically designed to better 
accommodate WIC's highly diverse population. This interim rule provides 
WIC State agencies with greater flexibility in prescribing food 
packages to accommodate participants with cultural food preferences, 
including allowing participants a broad selection of fruits and 
vegetables; tofu and soy-based beverage as substitutes for milk; 
participant choice for whole grains (including tortillas); and salmon 
and sardines as substitutions for tuna. This interim rule also makes 
provisions to better accommodate the special dietary needs of high-risk 
participants served in Food Package III, helping to protect the health 
and well-being of this nutritionally vulnerable subset of WIC 
participants.

Paperwork Reduction Act

    The Paperwork Reduction Act of 1995 (44 U.S.C. Chap. 35; see 5 CFR 
part 1320) requires that the Office of Management and Budget (OMB) 
approve all collections of information by a Federal agency before they 
can be implemented. In the publication of the proposed rule on August 
7, 2006, FNS solicited comments on the burden estimate; the need for 
the information; its practical utility; ways to enhance its quality, 
utility and clarity; and ways to minimize the burden on respondents, 
including the use of automated collection techniques or other forms of 
information technology. FNS received no public comments in response to 
this solicitation. On November 1, 2006, OMB filed comment in accordance 
with 5 CFR 1320.11(c), requiring FNS to review public comments in 
response to the proposed rule and address any such comments in the 
preamble of the final rule. As a result, FNS has submitted a new 
clearance package for OMB review and approval. These information 
collection requirements will not become effective until approved by 
OMB. When OMB has approved these information collection requirements, 
FNS will publish separate action in the Federal Register.

E-Government Act Compliance

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

List of Subjects in 7 CFR Part 246

    Administrative practice and procedure, Civil rights, Food 
assistance programs, Grant programs--health, Grant programs--social 
programs, Indians, Infants and children, Maternal and child health, 
Nutrition, Penalties, Reporting and recordkeeping requirements, Women.

0
For reasons set forth in the preamble, 7 CFR Part 246 is amended as 
follows:

PART 246--SPECIAL SUPPLEMENTAL NUTRITION PROGRAM FOR WOMEN, INFANTS 
AND CHILDREN

0
1. The authority citation for part 246 continues to read as follows:

    Authority: 42 U.S.C. 1786.

0
2. In Sec.  246.2:
0
a. Add new definitions of ``Cash-value voucher'' and ``Farmer'' in 
alphabetical order;
0
b. Amend the definitions of ``Compliance buy'', ``Employee fraud and 
abuse'', ``Participants'' and ``Proxy'' by removing the words ``food 
instruments'' and adding in their place the words ``food instruments or 
cash-value vouchers'';
0
c. Amend the definition ``Nutrition Services and Administration (NSA) 
Costs'' by removing the words ``food instruments'' and adding in their 
place the words ``food instruments and cash-value vouchers'';
0
d. Revise the definition of ``Participant violation'';
0
e. Revise the definition of ``Participation''; and
0
f. Amend the definition of ``WIC-eligible medical foods'' by removing 
the words ``with a diagnosed medical condition'' and adding in their 
place the words ``with a qualifying condition'', and by revising the 
second sentence.
    The additions and revisions read as follows:


Sec.  246.2  Definitions.

* * * * *
    Cash-value voucher means a fixed-dollar amount check, voucher, 
electronic benefit transfer (EBT) card or other document which is used 
by a participant to obtain authorized fruits and vegetables.
* * * * *
    Farmer means an individual authorized by the State agency to sell 
eligible fruits and vegetables to participants at a farmers' market or 
roadside stands. Individuals who exclusively sell produce grown by 
someone else, such as wholesale distributors, cannot be authorized.
* * * * *
    Participant violation means any intentional action of a 
participant, parent or caretaker of an infant or child participant, or 
proxy that violates Federal or State statutes, regulations, policies, 
or procedures governing the Program. Participant violations include 
intentionally making false or misleading statements or intentionally 
misrepresenting, concealing, or withholding facts to obtain benefits; 
exchanging cash-value vouchers, food instruments or supplemental foods 
for cash, credit, non-food items, or unauthorized food items, including 
supplemental foods in excess of those listed on the participant's food 
instrument; threatening to harm or physically harming clinic, farmer or 
vendor staff; and dual participation.
    Participation means the sum of:
    (1) The number of persons who received supplemental foods or food 
instruments during the reporting period;
    (2) The number of infants who did not receive supplemental foods or 
food instruments but whose breastfeeding mother received supplemental 
foods or food instruments during the report period; and
    (3) The number of breastfeeding women who did not receive 
supplemental foods or food instruments but whose infant received 
supplemental foods or food instruments during the report period.
* * * * *
    WIC-eligible medical foods * * * Such WIC-eligible medical foods 
must serve the purpose of a food, meal or diet (may be nutritionally 
complete or incomplete) and provide a source of calories and one or 
more nutrients; be designed for enteral digestion via an oral or tube 
feeding; and may not be a conventional food, drug, flavoring, or 
enzyme.* * *

0
3. In Sec.  246.4:
0
a. Revise paragraph (a)(11)(iii).
0
b. Amend paragraph (a)(14)(iii) by revising the heading and the first 
sentence;
0
c. Revise paragraph (a)(14)(vi);
0
 d. Revise paragraph (a)(14)(xi);
0
e. Amend paragraph (a)(14)(xii) by removing the words ``food 
instrument'' wherever they appear and adding in their place the words 
``food instrument and cash-value voucher'';

[[Page 68985]]

0
f. Amend paragraph (a)(21) by removing the words ``food instruments'' 
and adding in their place the words ``food instruments and cash-value 
vouchers''; and
0
g. Amend paragraph (a)(25)(iii) by removing the words ``food 
instruments'' and adding in their place the words ``food instruments, 
cash-value vouchers''.
    The revisions read as follows:


Sec.  246.4  State plan.

    (a) * * *
    (11) * * *
    (iii) Instructions concerning all food delivery operations 
performed at the local level, including the list of acceptable foods 
and their maximum monthly quantities as required by Sec.  246.10(b)(1).
* * * * *
    (14) * * *
    (iii) Vendor and farmer agreement. A sample vendor and farmer, if 
applicable, agreement, including the sanction schedule, which may be 
incorporated as an attachment or, if the sanction schedule is in the 
State agency's regulations, through citation to the regulations. * * *
* * * * *
    (vi) Food instruments and cash-value vouchers. A facsimile of the 
food instrument and cash-value voucher, if used, and a description of 
the system the State agency will use to account for the disposition of 
food instruments and cash value vouchers in accordance with Sec.  
246.12(q);
* * * * *
    (xi) Vendor and farmer training. The procedures the State agency 
will use to train vendors in accordance with Sec.  246.12(i) and 
farmers. State agencies that intend to delegate any aspect of training 
to a local agency, contractor, or vendor representative must describe 
the State agency supervision and instructions that will be provided to 
ensure the uniformity and quality of vendor training.
* * * * *

0
4. In Sec.  246.7:
0
a. Amend paragraphs (c)(2)(i) and (f)(2)(i) by removing the words 
``food or food instruments'' and adding in their place the words `` 
food, cash-value vouchers or food instruments''; and
0
b. Revise paragraphs (f)(2)(iv), (h)(3)(i), (j)(3) and (j)(6).
    The revisions read as follows:


Sec.  246.7  Certification of participants.

* * * * *
    (f) * * *
    (2) * * *
    (iv) Each local agency using a retail purchase system shall issue a 
food instrument(s) and if applicable cash-value voucher(s) to the 
participant at the same time as notification of certification. Such 
food instrument(s) and cash-value vouchers shall provide benefits for 
the current month or the remaining portion thereof and shall be 
redeemable immediately upon receipt by the participant. Local agencies 
may mail the initial food instrument(s) and if applicable cash-value 
vouchers with the notification of certification to those participants 
who meet the criteria for the receipt of food instruments through the 
mail, as provided in Sec.  246.12(r)(4).
* * * * *
    (h) * * *
    (3) * * *
    (i) A State agency may allow local agencies to disqualify a 
participant for failure to obtain food instruments, cash-value vouchers 
or supplemental foods for several consecutive months. As specified by 
the State agency, proof of such failure includes failure to pick up 
supplemental foods, cash-value vouchers or food instruments, nonreceipt 
of food instruments or cash-value vouchers (when mailed instruments or 
vouchers are returned), or failure to have an electronic benefit 
transfer card revalidated for purchase of supplemental foods; or
* * * * *
    (j) * * *
    (3) If the State agency implements the policy of disqualifying a 
participant for not picking up supplemental foods, cash-value vouchers 
or food instruments in accordance with paragraph (h)(3)(i) of this 
section, it shall provide notice of this policy and of the importance 
of regularly picking up cash-value vouchers, food instruments or 
supplemental foods to each participant, parent or caretaker at the time 
of each certification.
* * * * *
    (6) A person who is about to be suspended or disqualified from 
program participation at any time during the certification period shall 
be advised in writing not less than 15 days before the suspension or 
disqualification. Such notification shall include the reasons for this 
action, and the participant's right to a fair hearing. Further, such 
notification need not be provided to persons who will be disqualified 
for not picking up cash-value vouchers, supplemental foods or food 
instruments in accordance with paragraph (h)(3)(i) of this section.
* * * * *

0
5. Revise Sec.  246.10 to read as follows:


Sec.  246.10  Supplemental foods.

    (a) General. This section prescribes the requirements for providing 
supplemental foods to participants. The State agency must ensure that 
local agencies comply with this section.
    (b) State agency responsibilities. (1) State agencies may:
    (i) Establish criteria in addition to the minimum Federal 
requirements in Table 4 of paragraph (e)(12) of this section, except 
that the State agency may not establish further restrictions on the 
eligible fruits and vegetables, for the supplemental foods in their 
States. These State criteria could address, but not be limited to, 
other nutritional standards, competitive cost, State-wide availability, 
and participant appeal; and
    (ii) Make food package adjustments to better accommodate 
participants who are homeless. At the State agency's option, these 
adjustments would include, but not be limited to, issuing authorized 
supplemental foods in individual serving-size containers to accommodate 
lack of food storage or preparation facilities.
    (2) State agencies must:
    (i) Identify the brands of foods and package sizes that are 
acceptable for use in the Program in their States in accordance with 
the requirements of this section. State agencies must also provide to 
local agencies, and include in the State Plan, a list of acceptable 
foods and their maximum monthly allowances as specified in Tables 1 
through 4 of paragraphs (e)(9) through (e)(12) of this section; and
    (ii) Ensure that local agencies:
    (A) Make available to participants the maximum monthly allowances 
of authorized supplemental foods, except as noted in paragraph (c) of 
this section, and abide by the authorized substitution rates for WIC 
food substitutions as specified in Tables 1 through 3 of paragraphs 
(e)(9) through (e)(11) of this section;
    (B) Make available to participants more than one food from each WIC 
food category except for the categories of peanut butter and eggs, and 
any of the WIC-eligible fruits and vegetables (fresh or processed) in 
each authorized food package as listed in paragraph (e) of this 
section;
    (C) Authorize only a competent professional authority to prescribe 
the categories of authorized supplemental foods in quantities that do 
not exceed the regulatory maximum and are appropriate for the 
participant, taking into consideration the participant's age and 
nutritional needs; and
    (D) Advise participants or their caretaker, when appropriate, that 
the supplemental foods issued are only for their personal use. However, 
the supplemental foods are not authorized for participant use while 
hospitalized

[[Page 68986]]

on an in-patient basis. In addition, consistent with Sec.  
246.7(m)(1)(i)(B), supplemental foods are not authorized for use in the 
preparation of meals served in a communal food service. This 
restriction does not preclude the provision or use of supplemental 
foods for individual participants in a nonresidential setting (e.g., 
child care facility, family day care home, school, or other educational 
program); a homeless facility that meets the requirements of Sec.  
246.7(m)(1); or, at the State agency's discretion, a residential 
institution (e.g., home for pregnant teens, prison, or residential drug 
treatment center) that meets the requirements currently set forth in 
Sec.  246.7(m)(1) and (m)(2).
    (c) Nutrition tailoring. The full maximum monthly allowances of all 
supplemental foods in all food packages must be made available to 
participants if medically or nutritionally warranted. Reductions in 
these amounts cannot be made for cost-savings, administrative 
convenience, caseload management, or to control vendor abuse. 
Reductions in these amounts cannot be made for categories, groups or 
subgroups of WIC participants. The provision of less than the maximum 
monthly allowances of supplemental foods to an individual WIC 
participant in all food packages is appropriate only when:
    (1) Medically or nutritionally warranted (e.g., to eliminate a food 
due to a food allergy);
    (2) A participant refuses or cannot use the maximum monthly 
allowances; or
    (3) The quantities necessary to supplement another programs' 
contribution to fill a medical prescription would be less than the 
maximum monthly allowances.
    (d) Medical documentation--(1) Supplemental foods requiring medical 
documentation. Medical documentation is required for the issuance of 
the following supplemental foods:
    (i) Any non-contract brand infant formula;
    (ii) Any infant formula prescribed to a child or adult who receives 
Food Package III;
    (iii) Any exempt infant formula;
    (iv) Any WIC-eligible medical food;
    (v) Any authorized supplemental food issued to participants who 
receive Food Package III;
    (vi) Any authorized soy-based beverage or tofu issued to children 
who receive Food Package IV;
    (vii) Any additional authorized cheese issued to children who 
receive Food Package IV that exceeds the maximum substitution rate;
    (viii) Any additional authorized tofu and cheese issued to women 
who receive Food Packages V and VII that exceeds the maximum 
substitution rate; and
    (ix) Any contract brand infant formula that does not meet the 
requirements in Table 4 of paragraph (e)(12) of this section.
    (2) Supplemental foods not requiring medical documentation. (i) 
State agencies may authorize local agencies to issue a non-contract 
brand infant formula that meets the requirements in Table 4 of 
paragraph (e)(12) of this section without medical documentation in 
order to meet religious eating patterns; and
    (ii) The State agency has the discretion to require medical 
documentation for any contract brand infant formula and may decide that 
some contract brand infant formula may not be issued under any 
circumstances.
    (3) Medical Determination. For purposes of this program, medical 
documentation means that a health care professional licensed to write 
medical prescriptions under State law has:
    (i) Made a medical determination that the participant has a 
qualifying condition as described in paragraphs (e)(3) through (e)(7) 
of this section that dictates the use of the supplemental foods, as 
described in paragraph (d)(1) of this section; and
    (ii) Provided the written documentation that meets the technical 
requirements described in paragraphs (d)(4)(ii) and (d)(4)(iii) of this 
section.
    (4) Technical Requirements--(i) Location. All medical documentation 
must be kept on file (electronic or hard copy) at the local clinic. The 
medical documentation kept on file must include the initial telephone 
documentation, when received as described in paragraph (d)(4)(iii)(B) 
of this section.
    (ii) Content. All medical documentation must include the following:
    (A) The name of the authorized WIC formula (infant formula, exempt 
infant formula, WIC-eligible medical food) prescribed, including amount 
needed per day;
    (B) The authorized supplemental food(s) appropriate for the 
qualifying condition(s) and their prescribed amounts;
    (C) Length of time the prescribed WIC formula and/or supplemental 
food is required by the participant;
    (D) The qualifying condition(s) for issuance of the authorized 
supplemental food(s) requiring medical documentation, as described in 
paragraphs (e)(3) through (e)(7) of this section; and
    (E) Signature, date and contact information (or name, date and 
contact information), if the initial medical documentation was received 
by telephone and the signed document is forthcoming, of the health care 
professional licensed by the State to write prescriptions in accordance 
with State laws.
    (iii) Written confirmation--(A) General. Medical documentation must 
be written and may be provided as an original written document, an 
electronic document, by facsimile or by telephone to a competent 
professional authority until written confirmation is received.
    (B) Medical documentation provided by telephone. Medical 
documentation may be provided by telephone to a competent professional 
authority who must promptly document the information. The collection of 
the required information by telephone for medical documentation 
purposes may only be used until written confirmation is received from a 
health care professional licensed to write medical prescriptions and 
used only when absolutely necessary on an individual participant basis. 
The local clinic must obtain written confirmation of the medical 
documentation within a reasonable amount of time (i.e., one or two 
week's time) after accepting the initial medical documentation by 
telephone.
    (5) Medical supervision requirements. Due to the nature of the 
health conditions of participants who are issued supplemental foods 
that require medical documentation, close medical supervision is 
essential for each participant's dietary management. The responsibility 
remains with the participant's health care provider for this medical 
oversight and instruction. This responsibility cannot be assumed by 
personnel at the WIC State or local agency. However, it would be the 
responsibility of the WIC competent professional authority to ensure 
that only the amounts of supplemental foods prescribed by the 
participant's health care provider are issued in the participant's food 
package.
    (e) Food packages. There are seven food packages available under 
the Program that may be provided to participants. The authorized 
supplemental foods must be prescribed from food packages according to 
the category and nutritional needs of the participant. The food 
packages are as follows:
    (1) Food Package I--Infants birth through 5 months--(i) Participant 
category served. This food package is designed for issuance to infant 
participants from birth through age 5

[[Page 68987]]

months who do not have a condition qualifying them to receive Food 
Package III.
    (ii) Infant feeding categories--(A) Birth to one month. Three 
infant feeding options are available during the first month after 
birth--fully breastfeeding, i.e., the infant receives no infant formula 
from the WIC Program; partially breastfeeding, i.e., the infant 
receives not more than 104 reconstituted fluid ounces of formula; or 
fully formula-feeding. Infant formula is not provided during the first 
month after birth to fully breastfed infants to support the successful 
establishment of breastfeeding.
    (B) One through 5 months. Three infant feeding options are 
available from 1 months through 5 months--fully breastfeeding, fully 
formula-feeding, or partially breastfeeding, i.e., the infant is 
breastfed but also receives infant formula from the WIC Program in an 
amount not to exceed approximately half the amount of infant formula 
allowed for a fully formula fed infant.
    (iii) Infant formula requirements. This food package provides iron-
fortified infant formula that is not an exempt infant formula. The 
issuance of any contract brand or noncontract brand infant formula that 
contains less than 10 milligrams of iron per liter at standard dilution 
(i.e., approximately 20 kilocalories per fluid ounce of prepared 
formula) is prohibited. Except as specified in paragraph (d) of this 
section, local agencies must issue a contract brand infant formula that 
meets the requirements in Table 4 of paragraph (e)(12) of this section.
    (iv) Physical forms. Local agencies must issue all WIC formulas 
(WIC formulas mean all infant formula, exempt infant formula and WIC-
eligible medical foods) in concentrated liquid or powder physical 
forms. Ready-to-feed WIC formulas may be authorized when the competent 
professional authority determines and documents that:
    (A) The participant's household has an unsanitary or restricted 
water supply or poor refrigeration;
    (B) The person caring for the participant may have difficulty in 
correctly diluting concentrated or powder forms; or
    (C) The WIC infant formula is only available in ready-to-feed.
    (v) Authorized category of supplemental foods. Infant formula is 
the only category of supplemental foods authorized in this food 
package. Exempt infant formulas and WIC-eligible medical foods are 
authorized only in Food Package III.
    (2) Food Package II--Infants 6 through 11 months--(i) Participant 
category served. This food package is designed for issuance to infant 
participants from 6 through 11 months of age who do not have a 
condition qualifying them to receive Food Package III.
    (ii) Infant feeding options. Three infant feeding options are 
available--fully breastfeeding, fully formula-feeding, or partially 
breastfeeding.
    (iii) Infant formula requirements. The requirements for issuance of 
infant formula in Food Package I, specified in paragraphs (e)(1)(iii) 
and (e)(1)(iv) of this section, also apply to the issuance of infant 
formula in Food Package II.
    (iv) Authorized categories of supplemental foods. Infant formula, 
infant fruits and vegetables, infant meat, and infant cereal are the 
categories of supplemental foods authorized in this food package.
    (3) Food Package III--Participants with qualifying conditions--(i) 
Participant category served and qualifying conditions. This food 
package is reserved for issuance to women, infants and child 
participants who have a documented qualifying condition that requires 
the use of a WIC formula (infant formula, exempt infant formula or WIC-
eligible medical food) because the use of conventional foods is 
precluded, restricted, or inadequate to address their special 
nutritional needs. Medical documentation must meet the requirements 
described in paragraph (d) of this section. Participants who are 
eligible to receive this food package must have one or more qualifying 
conditions, as determined by a health care professional licensed to 
write medical prescriptions under State law. The qualifying conditions 
include but are not limited to premature birth, low birth weight, 
failure to thrive, inborn errors of metabolism and metabolic disorders, 
gastrointestinal disorders, malabsorption syndromes, immune system 
disorders, severe food allergies that require an elemental formula, and 
life threatening disorders, diseases and medical conditions that impair 
ingestion, digestion, absorption or the utilization of nutrients that 
could adversely affect the participant's nutrition status. This food 
package may not be issued solely for the purpose of enhancing nutrient 
intake or managing body weight.
    (ii) Non-authorized issuance of Food Package III. This food package 
is not authorized for:
    (A) Infants whose only condition is:
    (1) A diagnosed formula intolerance or food allergy to lactose, 
sucrose, milk protein or soy protein that does not require the use of 
an exempt infant formula; or
    (2) A non-specific formula or food intolerance.
    (B) Women and children who have a food intolerance to lactose or 
milk protein that can be successfully managed with the use of one of 
the other WIC food packages (i.e., Food Packages IV-VII); or
    (C) Any participant solely for the purpose of enhancing nutrient 
intake or managing body weight without an underlying qualifying 
condition.
    (iii) Restrictions on the issuance of WIC formulas in ready-to-feed 
(RTF) forms. WIC State agencies must issue WIC formulas (infant 
formula, exempt infant formula and WIC-eligible medical foods) in 
concentrated liquid or powder physical forms unless the requirements 
for issuing RTF are met as described in paragraph (e)(1)(iv) of this 
section. In addition to those requirements, there are two additional 
conditions which may be used to issue RTF in Food Package III:
    (A) If a ready-to-feed form better accommodates the participant's 
condition; or
    (B) If it improves the participant's compliance in consuming the 
prescribed WIC formula.
    (iv) Unauthorized WIC costs. All apparatus or devices (e.g., 
enteral feeding tubes, bags and pumps) designed to administer WIC 
formulas are not allowable WIC costs.
    (v) Authorized categories of supplemental foods. The supplemental 
foods authorized in this food package require medical documentation for 
issuance and include infant formula (for children or women), exempt 
infant formula, WIC-eligible medical foods, infant cereal, infant food 
fruits and vegetables, milk and milk alternatives, cheese, eggs, canned 
fish, fruits and vegetables, breakfast cereal, whole wheat bread or 
other whole grains, juice, legumes and/or peanut butter.
    (vi) Coordination with medical payors and other programs that 
provide or reimburse for formulas. WIC State agencies must coordinate 
with other Federal, State or local government agencies or with private 
agencies that operate programs that also provide or could reimburse for 
exempt infant formulas and WIC-eligible medical foods benefits to 
mutual participants. At a minimum, a WIC State agency must coordinate 
with the State Medicaid Program for the provision of exempt infant 
formulas and WIC-eligible medical foods that are authorized or could be 
authorized under the State Medicaid Program for reimbursement and that 
are prescribed for WIC participants who are also Medicaid recipients. 
The WIC State agency is responsible for providing up to the

[[Page 68988]]

maximum amount of exempt infant formulas and WIC-eligible medical foods 
under Food Package III in situations where reimbursement is not 
provided by another entity.
    (4) Food Package IV--Children 1 through 4 years--(i) Participant 
category served. This food package is designed for issuance to 
participants 1 through 4 years of age who do not have a condition 
qualifying them to receive Food Package III.
    (ii) Authorized categories of supplemental foods. Milk, breakfast 
cereal, juice, fruits and vegetables, whole wheat bread or other whole 
grains, eggs, and legumes or peanut butter are the categories of 
supplemental foods authorized in this food package. Cheese may be 
substituted for milk in amounts described in Table 2 of paragraph 
(e)(10) of this section. Substitutions exceeding the maximum 
substitution allowance of cheese, up to the maximum allowance for fluid 
milk, may be allowed with medical documentation of the qualifying 
condition. Soy-based beverage and tofu can be substituted for milk only 
with medical documentation in this food package, in amounts described 
in Table 2 of paragraph (e)(10) of this section. A health care 
professional licensed by the State to write prescriptions must make a 
medical determination and provide medical documentation that a child 
cannot drink milk and requires soy-based beverage, tofu, or additional 
cheese as a substitute for milk. Such determination can be made for 
situations that include, but are not limited to, milk allergy, severe 
lactose maldigestion, and vegan diets. Medical documentation must meet 
the requirements described in paragraph (d) of this section.
    (5) Food Package V--Pregnant and partially breastfeeding women--(i) 
Participant category served. This food package is designed for issuance 
to women participants with singleton pregnancies who do not have a 
condition qualifying them to receive Food Package III. This food 
package is also designed for issuance to breastfeeding women 
participants, up to 1 year postpartum, who do not have a condition 
qualifying them to receive Food Package III and whose partially 
breastfed infants receive formula from the WIC program in amounts that 
do not exceed the maximum allowances described in Table 1 of paragraph 
(e)(9) of this section. Women participants breastfeeding more than one 
infant, and women participants pregnant with more than one fetus, are 
eligible to receive Food Package VII as described in paragraph (e)(7) 
of this section.
    (ii) Authorized categories of supplemental foods. Milk, breakfast 
cereal, juice, fruits and vegetables, whole wheat bread or other whole 
grains, eggs, legumes and peanut butter are the categories of 
supplemental foods authorized in this food package. Cheese or calcium-
set tofu may be substituted for milk in amounts described in Table 2 of 
paragraph (e)(10) of this section. Amounts of cheese or calcium-set 
tofu exceeding the maximum substitution allowances may be allowed with 
medical documentation of the qualifying condition, up to the maximum 
allowance for fluid milk. A health care professional licensed by the 
State to write prescriptions must make a medical determination and 
provide medical documentation that a woman cannot drink milk and 
requires additional cheese or calcium-set tofu. Such determination can 
be made for situations that include, but are not limited to, milk 
allergy or severe lactose maldigestion. Medical documentation must meet 
the requirements described in paragraph (d) of this section.
    (6) Food Package VI--Postpartum women--(i) Participant category 
served. This food package is designed for issuance to women up to 6 
months postpartum who are not breastfeeding their infants, and to 
breastfeeding women up to 6 months postpartum whose participating 
infant receives more than the maximum amount of formula allowed for 
partially breastfed infants as described in Table 1 of paragraph (e)(9) 
of this section.
    (ii) Authorized categories of supplemental foods. Milk, breakfast 
cereal, juice, fruits and vegetables, eggs, and legumes or peanut 
butter are the categories of supplemental foods authorized in this food 
package. Cheese or calcium-set tofu may be substituted for milk in 
amounts described in Table 2 of paragraph (e)(10) of this section. 
Amounts of cheese or calcium-set tofu exceeding the maximum 
substitution allowances may be allowed with medical documentation of 
the qualifying condition, up to the maximum allowance for fluid milk. A 
health care professional licensed by the State to write prescriptions 
must make a medical determination and provide medical documentation 
that a woman cannot drink milk and requires additional cheese or 
calcium-set tofu. Such determination can be made for situations that 
include, but are not limited to, milk allergy or severe lactose 
maldigestion. Medical documentation must meet the requirements 
described in paragraph (d) of this section.
    (7) Food Package VII--Fully breastfeeding--(i) Participant category 
served. This food package is designed for issuance to breastfeeding 
women up to 1 year postpartum whose infants do not receive infant 
formula from WIC (these breastfeeding women are assumed to be fully 
breastfeeding their infants). This food package is also designed for 
issuance to women participants pregnant with two or more fetuses, and 
women participants partially breastfeeding multiple infants. Women 
participants fully breastfeeding multiple infants receive 1.5 times the 
supplemental foods provided in Food Package VII.
    (ii) Authorized categories of supplemental foods. Milk, cheese, 
breakfast cereal, juice, fruits and vegetables, whole wheat bread or 
other whole grains, eggs, legumes, peanut butter, and canned fish are 
the categories of supplemental foods authorized in this food package. 
Cheese or calcium-set tofu may be substituted for milk in amounts 
described in Table 2 of paragraph (e)(10) of this section. Amounts of 
cheese or calcium-set tofu exceeding the maximum substitution 
allowances may be allowed with medical documentation of the qualifying 
condition, up to the maximum allowance for fluid milk. A health care 
professional licensed by the State to write prescriptions must make a 
medical determination and provide medical documentation that a woman 
cannot drink milk and requires additional cheese or calcium-set tofu. 
Such determination can be made for situations that include, but are not 
limited to, milk allergy or severe lactose maldigestion. Medical 
documentation must meet the requirements described in paragraph (d) of 
this section.
    (8) Supplemental Foods--Maximum monthly allowances, options and 
substitution rates, and minimum requirements. Tables 1 through 3 of 
paragraphs (e)(9) through (e)(11) of this section specify the maximum 
monthly allowances of foods in WIC food packages and identify WIC food 
options and substitution rates. Table 4 of paragraph (e)(12) of this 
section describes the minimum requirements and specifications of 
supplemental foods in the WIC food packages.
    (9) Maximum monthly allowances of supplemental foods for infants. 
The maximum monthly allowances, options and substitution rates of 
supplemental foods for infants in Food Packages I, II and III are 
stated in Table 1 as follows:

[[Page 68989]]



                          Table 1.--Maximum Monthly Allowances of Supplemental Foods for Infants in Food Packages I, II and III
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                       Fully formula fed (FF)              Partially breastfed (BF/FF)                  Fully breastfed (BF)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                       Food packages I-
                                Food packages  I-                     BF/FF & III BF/FF  Food packages II-
                                FF & III-FF  A: 0  Food packages  II-  A: 0 to 1 month    BF/FF &  III BF/   Food package I-BF 0    Food package II-BF 6
           Foods \1\             through 3 months    FF & III-FF  6    \2\ B: 1 through   FF  6 through 11     through 5 months      through 11 months
                                  B: 4 through 5   through 11 months  3 months \2\ C: 4        months
                                      months                           through 5 months
--------------------------------------------------------------------------------------------------------------------------------------------------------
WIC Formula 4 5 6 7...........  A: 806 fl oz       624 fl oz          A: 104 fl oz       312 fl oz
                                 reconstituted      reconstituted      reconstituted      reconstituted
                                 liquid             liquid             powder \3\         liquid
                                 concentrate or     concentrate or    B: 364 fl oz        concentrate or
                                 832 fl oz RTF or   640 fl oz RTF or   reconstituted      320 fl oz RTF or
                                 870 fl oz         696 fl oz           liquid            384 fl oz
                                 reconstituted      reconstituted      concentrate or     reconstituted
                                 powder.            powder.            384 fl oz RTF or   powder.
                                B: 884 fl oz                           435 fl oz
                                 reconstituted                         reconstituted
                                 liquid                                powder.
                                 concentrate or                       C: 442 fl oz
                                 896 fl oz RTF or                      reconstituted
                                 960 fl oz                             liquid
                                 reconstituted                         concentrate or
                                 powder.                               448 fl oz RTF or
                                                                       522 fl oz
                                                                       reconstituted
                                                                       powder.
Infant cereal \8\.............  .................  24 oz............  .................  24 oz............  .....................  24 oz.
Infant food fruits and          .................  128 oz...........  .................  128 oz...........  .....................  256 oz.
 vegetables 8 9 10.
Infant food--meat 8 10........  .................  .................  .................  .................  .....................  77.5 oz.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Table 1 Footnotes: (abbreviations in order of appearance in table): FF = fully formula fed; BF/FF = partially breastfed (i.e., the infant is breastfed
  but also receives formula from the WIC Program); BF = fully breastfed (i.e., the infant receives no formula through the WIC program).
\1\ Table 4 of paragraph (e)(12) of this section describes the minimum requirements and specifications for the supplemental foods.
\2\ The powder form is the form recommended for partially breastfed infants ages 0 through 3 months in Food Package I.
\3\ Liquid concentrate and ready-to-feed (RTF) may be substituted at rates that provide comparable nutritive value.
\4\ WIC formula means infant formula, exempt infant formula, or WIC-eligible medical food. Only infant formula may be issued for infants in Food
  Packages I and II. Exempt infant formula may only be issued for infants in Food Package III.
\5\ The maximum monthly allowance is specified in reconstituted fluid ounces for liquid concentrate, RTF liquid, and powder forms of infant formula and
  exempt infant formula. Reconstituted fluid ounce is the form prepared for consumption as directed on the container.
\6\ If powder infant formula is provided, State agencies must provide at least the number of reconstituted fluid ounces as the maximum allowance for the
  liquid concentrate form of the same product in the same Food Package up to the maximum monthly allowance for powder. State agencies must issue whole
  containers that are all the same size.
\7\ State agencies may round up and disperse whole containers of infant formula over the food package timeframe to allow participants to receive the
  full authorized nutritional benefit (FNB). State agencies must use the methodology described in accordance with paragraph (h)(1) of this section.
\8\ State agencies may round up and disperse whole containers of infant foods (infant cereal, fruits and vegetables, and meat) over the Food Package
  timeframe. State agencies must use the methodology described in accordance with paragraph (h)(2) of this section.
\9\ Fresh banana may replace up to 16 ounces of infant food fruit at a rate of 1 pound of bananas per 8 ounces of infant food fruit.
\10\ In lieu of infant foods (cereal, fruit and vegetables, and meat), infants greater than 6 months of age in Food Package III may receive exempt
  infant formula or WIC-eligible medical foods at the same maximum monthly allowance as infants ages 4 through 5 months of age of the same feeding
  option.

    (10) Maximum monthly allowances of supplemental foods in Food 
Packages IV through VII. The maximum monthly allowances, options and 
substitution rates of supplemental foods for children and women in Food 
Package IV through VII are stated in Table 2 as follows:

Table 2.--Maximum Monthly Allowances of Supplemental Foods for Children and Women in Food Packages IV, V, VI and
                                                       VII
----------------------------------------------------------------------------------------------------------------
                                       Children                                  Women
                                 -------------------------------------------------------------------------------
                                                        Food package V:
                                                         Pregnant and      Food package VI:    Food package VII:
            Foods \1\              Food package IV 1       partially       Postpartum (up to         Fully
                                    through 4 years    breastfeeding (up       6 months        breastfeeding (up
                                                           to 1 year        postpartum) \3\     to 1 year post-
                                                        postpartum) \2\                         partum) \4\ \5\
----------------------------------------------------------------------------------------------------------------
Juice, single strength \6\......  128 fl oz.........  144 fl oz.........  96 fl oz..........  144 fl oz.
Milk, fluid.....................  16 qt 7 8 9 10....  22 qt. 7 8 11 12..  16 qt. 7 8 11 12..  24 qt. 7 8 11 12
Breakfast cereal \13\...........  36 oz.............  36 oz.............  36 oz.............  36 oz.
Cheese..........................  N/A...............  N/A...............  N/A...............  1 lb.
Eggs............................  1 dozen...........  1 dozen...........  1 dozen...........  2 dozen.
Fruits and vegetables 14 15.....  $6.00 in cash       $8.00 in cash-      $8.00 in cash-      $10.00 in cash-
                                   value vouchers.     value vouchers.     value vouchers.     value vouchers.
Whole wheat bread or other whole  2 lb..............  1 lb..............  N/A...............  1 lb.
 grains \16\.
Fish (canned)...................  N/A...............  N/A...............  N/A...............  30 oz.

[[Page 68990]]


Legumes, dry \17\...............  1 lb..............  1 lb..............  1 lb..............  1 lb.
And/or peanut butter............  Or 18 oz..........  And 18 oz.........  Or 18 oz..........  And 18 oz.
----------------------------------------------------------------------------------------------------------------
Table 2 Footnotes: N/A = the supplemental food is not authorized in the corresponding food package.
\1\ Table 4 of paragraph (e)(12) of this section describes the minimum requirements and specifications for the
  supplemental foods.
\2\ Food Package V is issued to two categories of WIC participants: Women participants with singleton
  pregnancies and breastfeeding women whose partially breastfed infants receive formula from the WIC Program in
  amounts that do not exceed the maximum formula allowances for Food Packages I-BF/FF-A, I-BF/FF-B, I-BF/FF-C,
  or II-BF/FF, as appropriate for the age of the infant as described in Table 1 of paragraph (e)(9) of this
  section.
\3\ Food Package VI is issued to two categories of WIC participants: Non-breastfeeding postpartum women and
  breastfeeding postpartum women whose partially breastfed infants receive more than the maximum infant formula
  allowances for Food Packages I-BF/FF-A, I-BF/FF-B, I-BF/FF-C or II-BF/FF, as appropriate for the age of the
  infant as described in Table 1 of paragraph (e)(9) of this section.
\4\ Food Package VII is issued to three categories of WIC participants: Fully breastfeeding women whose infants
  do not receive formula from the WIC Program; women pregnant with two or more fetuses; and women fully or
  partially breastfeeding multiple infants.
\5\ Women fully breastfeeding multiple infants are prescribed 1.5 times the maximum allowances.
\6\ Combinations of single-strength and concentrated juices may be issued provided that the total volume does
  not exceed the maximum monthly allowance for single-strength juice.
\7\ Whole milk, as specified in FDA standards, is the only type of milk allowed for 1-year-old children (12
  through 23 months). Reduced fat milks, as specified in FDA standards, i.e., 2% milk fat, are the only types of
  milk allowed for children >= 24 months of age and women.
\8\ Evaporated milk may be substituted at the rate of 16 fluid ounces of evaporated milk per 32 fluid ounces of
  fluid milk or a 1:2 fluid ounce substitution ratio. Dry milk may be substituted at an equal reconstituted rate
  to fluid milk. When a combination of different milk forms is provided, the full maximum monthly fluid milk
  allowance must be provided.
\9\ For children, cheese may be substituted for milk at the rate of 1 pound of cheese per 3 quarts of milk. No
  more than 1 lb. of cheese may be substituted for milk. With medical documentation, additional amounts of
  cheese may be substituted in cases of lactose intolerance or other qualifying conditions, up to the maximum
  allowance for fluid milk.
\10\ For children, soy-based beverage and calcium-set tofu may be substituted for milk only with medical
  documentation for qualifying conditions. Soy-based beverage may be substituted for milk, with medical
  documentation, for children in Food Package IV on a quart for quart basis up to the total maximum allowance of
  milk. Tofu may be substituted for milk, with medical documentation, for children in Food Package IV at the
  rate of 1 pound of tofu per 1 quart of milk up to the total maximum allowance of milk.
\11\ For women, cheese or calcium-set tofu may be substituted for milk at the rate of 1 pound of cheese per 3
  quarts of milk or 1 pound of tofu per 1 quart of milk. A maximum of 4 quarts of milk can be substituted in
  this manner in Food Packages V and VI; however, no more than 1 pound of cheese may be substituted for milk. A
  maximum of 6 quarts of milk can be substituted in this manner in Food Package VII; therefore, no more than 2
  lbs. of cheese may be substituted for milk. With medical documentation, additional amounts of cheese or tofu
  may be substituted, up to the maximum allowances for fluid milk, in cases of lactose intolerance or other
  qualifying conditions.
\12\ For women, soy-based beverage may be substituted for milk at the rate of 1 quart of soy-based beverage for
  1 quart of milk up to the total maximum monthly allowance of milk.
\13\ At least one-half of the total number of breakfast cereals on the State agency's authorized food list must
  have whole grain as the primary ingredient and meet labeling requirements for making a health claim as a
  ``whole grain food with moderate fat content'' as defined in Table 4 of paragraph (e)(12) of this section.
\14\ Processed (canned, frozen, dried) fruits and vegetables may be substituted for fresh fruits and vegetables.
  Dried fruit and dried vegetables are not authorized for children in Food Package IV.
\15\ The monthly value of the fruit/vegetable cash-value vouchers will be adjusted annually for inflation as
  described in Sec.   246.16(j).
\16\ Brown rice, bulgur (cracked wheat), oatmeal, whole-grain barley, soft corn or whole wheat tortillas may be
  substituted for whole wheat bread on an equal weight basis.
\17\ Canned legumes may be substituted for dried legumes at the rate of 64 oz. of canned beans for 1 lb. dried
  beans. Under Food Packages V and VII, two additional combinations of dry or canned beans/peas are authorized:
  1 lb. Dry and 64 oz. Canned beans/peas (and no peanut butter); or 2 lb. Dry or 128 oz. Canned beans/peas (and
  no peanut butter) or 36 oz. peanut butter (and no beans).

    (11) Maximum monthly allowances of supplemental foods for children 
and women with qualifying conditions in Food Package III. The maximum 
monthly allowances, options and substitution rates of supplemental 
foods for participants with qualifying conditions in Food Package III 
are stated in Table 3 as follows:

      Table 3.--Maximum Monthly Allowances of Supplemental Foods for Children and Women in Food Package III
----------------------------------------------------------------------------------------------------------------
                                       Children                                  Women
                                 -------------------------------------------------------------------------------
                                                         Pregnant and
            Foods\1\                                       partially       Postpartum (up to         Fully
                                   1 through 4 years   breastfeeding (up       6 months       breastfeeding, (up
                                                           to 1 year        postpartum) \3\     to 1 year post-
                                                        postpartum) \2\                         partum) \4\ \5\
----------------------------------------------------------------------------------------------------------------
Juice, single strength \6\......  128 fl oz.........  144 fl oz.........  96 fl oz..........  144 fl oz.
WIC Formula \7\ \8\.............  455 fl oz liquid    455 fl oz liquid    455 fl oz liquid    455 fl oz. liquid
                                   concentrate.        concentrate.        concentrate.        concentrate.
Milk............................  16 qt \9\ \10\      22 qt \9\ \10\      16 qt \9\ \10\      24 qt. \9\ \10\
                                   \11\ \12\.          \13\ \14\.          \13\ \14\.          \13\ \14\
Breakfast cereal \15\ \16\......  36 oz.............  36 oz.............  36 oz.............  36 oz.
Cheese..........................  N/A...............  N/A...............  N/A...............  1 lb.
Eggs............................  1 dozen...........  1 dozen...........  1 dozen...........  2 dozen.

[[Page 68991]]


Fruits and vegetables \17 18\...  $6.00 in cash       $8.00 in cash       $8.00 in cash       $10.00 in cash
                                   value vouchers.     value vouchers.     value vouchers.     value vouchers.
Whole wheat bread \19\..........  2 lb..............  1 lb..............  N/A...............  1 lb.
Fish (canned)...................  N/A...............  N/A...............  N/A...............  30 oz.
Legumes, dry \20\...............  1 lb..............  1 lb..............  1 lb..............  1 lb.
and/or Peanut butter............  Or 18 oz..........  And 18 oz.........  Or 18 oz..........  And 18 oz.
----------------------------------------------------------------------------------------------------------------
Table 3 Footnotes: N/A=the supplemental food is not authorized in the corresponding food package.
\1\ Table 4 of paragraph (e)(12) of this section describes the minimum requirements and specifications for the
  supplemental foods.
\2\ Food Package V is issued to two categories of WIC participants--women participants with singleton
  pregnancies and breastfeeding women whose partially breastfed infants receive formula from the WIC Program in
  amounts that do not exceed the maximum formula allowances for Food Packages I-BF/FF-A, I-BF/FF-B, I-BF/FF-C,
  or II-BF/FF, as appropriate for the age of the infant as described in Table 1 of paragraph (e)(9) of this
  section.
\3\ Food Package VI is issued to two categories of WIC participants--non-breastfeeding postpartum women and
  breastfeeding postpartum women whose partially breastfed infants receive more than the maximum formula
  allowances for Food Packages I-BF/FF-A, I-BF/FF-B, I-BF/FF-C or II-BF/FF, as appropriate for the age of the
  infant as described in Table 1 of paragraph (e)(9) of this section.
\4\ Food Package VII is issued to three categories of WIC participants--fully breastfeeding women whose infants
  do not receive formula from the WIC Program; women pregnant with two or more fetuses; and women fully or
  partially breastfeeding multiple infants.
\5\ Women fully breastfeeding multiple infants are prescribed 1.5 times the maximum allowances.
\6\ Combinations of single-strength and concentrated juices may be issued provided that the total volume does
  not exceed the maximum monthly allowance for single-strength juice.
\7\ WIC formula means infant formula, exempt infant formula, or WIC-eligible medical food.
\8\ Powder and Ready-to-Feed may be substituted at rates that provide comparable nutritive value.
\9\ Whole milk, as specified in FDA standards, is the only type of milk allowed for 1-year-old children (12
  through 23 months). Reduced fat milks, as specified in FDA standards, i.e., 2% milk fat, are the only types of
  milk allowed for children > 24 months of age and women. With medical documentation, whole milk may be
  substituted for reduced fat milk for children > 24 months of age and women.
\10\ Evaporated milk may be substituted at the rate of 16 fluid ounces of evaporated milk per 32 fluid ounces of
  fluid milk or a 1:2 fluid ounce substitution ratio. Dry milk may be substituted at an equal reconstituted rate
  to fluid milk. When a combination of different milk forms is provided, the full maximum monthly fluid milk
  allowance must be provided.
\11\ For children, cheese may be substituted for milk at the rate of 1 pound of cheese per 3 quarts of milk. No
  more than 1 lb. of cheese may be substituted for milk. With medical documentation, additional amounts of
  cheese may be substituted in cases of lactose intolerance or other qualifying conditions, up to the maximum
  allowance for fluid milk.
\12\ For children, soy-based beverage and tofu may be substituted for milk only with medical documentation for
  qualifying conditions. Soy-based beverage may be substituted for milk, with medical documentation, for
  children in Food Package IV on a quart for quart basis up to the total maximum allowance of milk. Tofu may be
  substituted for milk, with medical documentation, for children in Food Package IV at the rate of 1 pound of
  tofu per 1 quart of milk up to the total maximum allowance of milk.
\13\ For women, cheese or calcium-set tofu may be substituted for milk at the rate of l pound of cheese per 3
  quarts of milk or 1 pound of tofu per 1 quart of milk. A maximum of 4 quarts of milk can be substituted in
  this manner in Food Packages V and VI; however, no more than 1 pound of cheese may be substituted for milk. A
  maximum of 6 quarts of milk can be substituted in this manner in Food Package VII; therefore, no more than 2
  lbs. of cheese may be substituted for milk. With medical documentation, additional amounts of cheese or tofu
  may be substituted, up to the maximum allowances for fluid milk, in cases of lactose intolerance or other
  qualifying conditions.
\14\ For women, soy-based beverage may be substituted for milk at the rate of 1 quart of soy-based beverage for
  1 quart of milk up to the total maximum monthly allowance of milk.
\15\ 32 dry ounces of infant cereal may be substituted for 36 ounces of breakfast cereal.
\16\ At least one half of the total number of breakfast cereals on the State agency's authorized food list must
  have whole grain as the primary ingredient and meet labeling requirements for making a health claim as a
  ``whole grain food with moderate fat content'' as defined in Table 4 of paragraph (e)(12) of this section.
\17\ Processed (canned, frozen, dried) fruits and vegetables may be substituted for fresh fruits and vegetables.
  Dried fruit and dried vegetables are not authorized for children.
\18\ The monthly value of the fruit/vegetable cash-value vouchers will be adjusted annually for inflation as
  described in Sec.   246.16(j).
\19\ Brown rice, bulgur (cracked wheat), oatmeal, whole-grain barley, soft corn or whole wheat tortillas may be
  substituted for whole wheat bread on an equal weight basis.
\20\ Canned legumes may be substituted for dried legumes at the rate of 64 oz of canned beans for 1 lb dried
  beans. Issuance of two additional combinations of dry or canned beans/peas is authorized for the Pregnant and
  Partially Breastfeeding (up to 1 year postpartum) category and Fully Breastfeeding (Enhanced) (up to 1 year
  postpartum) category: 1 lb. Dry and 64 oz. Canned beans/peas (and no peanut butter); or 2 lb. Dry or 128 oz.
  Canned beans/peas (and no peanut butter) or 36 oz. Peanut butter (and no beans).

    (12) Minimum requirements and specifications for supplemental 
foods. Table 4 describes the minimum requirements and specifications 
for supplemental foods in all food packages:

Table 4.--Minimum Requirements and Specifications for Supplemental Foods
------------------------------------------------------------------------
       Categories/foods         Minimum requirements and specifications
------------------------------------------------------------------------
WIC formula:
    Infant formula...........  All authorized infant formulas must (1)
                                meet the definition for an infant
                                formula in section 201(z) of the Federal
                                Food, Drug, and Cosmetic Act (21 U.S.C.
                                321(z)) and meet the requirements for an
                                infant formula under section 412 of the
                                Federal Food, Drug and Cosmetic Act, as
                                amended (21 U.S.C. 350a) and the
                                regulations at 21 CFR parts 106 and 107;

[[Page 68992]]


                               (2) Be designed for enteral digestion via
                                an oral or tube feeding;
                               (3) Provide at least 10 mg iron per liter
                                (at least 1.8 mg iron/100 kilocalories)
                                at standard dilution;
                               (4) Provide at least 67 kilocalories per
                                100 milliliters (approximately 20
                                kilocalories per fluid ounce) at
                                standard dilution.
                               (5) Not require the addition of any
                                ingredients other than water prior to
                                being served in a liquid state.
    Exempt infant formula....  All authorized exempt infant formula must
                                (1) meet the definition and requirements
                                for an exempt infant formula under
                                section 412(h) of the Federal Food,
                                Drug, and Cosmetic Act as amended (21
                                U.S.C. 350a(h)) and the regulations at
                                21 CFR Parts 106 and 107; and
                               2) Be designed for enteral digestion via
                                an oral or tube feeding.
    WIC-eligible medical       Certain enteral products that are
     foods.\1\                  specifically formulated to provide
                                nutritional support for individuals with
                                a qualifying condition, when the use of
                                conventional foods is precluded,
                                restricted, or inadequate. Such WIC-
                                eligible medical foods must serve the
                                purpose of a food, meal or diet (may be
                                nutritionally complete or incomplete)
                                and provide a source of calories and one
                                or more nutrients; be designed for
                                enteral digestion via an oral or tube
                                feeding; and may not be a conventional
                                food, drug, flavoring, or enzyme.
                               WIC-eligible medical foods include many,
                                but not all, products that meet the
                                definition of medical food in Section
                                5(b)(3) of the Orphan Drug Act (21
                                U.S.C. 360ee(b)(3)).
Milk and milk alternatives:
    Cow's milk...............  Must conform to FDA standard of identity
                                for whole, reduced fat, low-fat, or non-
                                fat milks (21 CFR 131.110). Must be
                                pasteurized and contain at least 400 IU
                                of vitamin D per quart (100 IU per cup)
                                and 2000 IU of vitamin A per quart (500
                                IU per cup).
                               May be flavored or unflavored. May be
                                fluid, shelf-stable, evaporated (21 CFR
                                131.130), or dried (i.e., powder) (21
                                CFR 131.147).\2\
                               Cultured Milks. Must conform to FDA
                                standard of identity for cultured milk
                                (21 CFR 131.112--cultured buttermilk,
                                kefir cultured milk, acidophilus
                                cultured milk).
    Goat milk................  Must conform to FDA standard of identity
                                for whole, reduced fat, low-fat, or non-
                                fat milks (21 CFR part 131). Must be
                                pasteurized and contain at least 400 IU
                                of vitamin D per quart (100 IU per cup)
                                and 2000 IU of vitamin A per quart (500
                                IU per cup) following FDA fortification
                                standards (21 CFR part 131). May be
                                flavored or unflavored. May be fluid,
                                shelf-stable, evaporated (21 CFR
                                131.130), or dried (i.e., powdered) (21
                                CFR 131.147).\2\
    Cheese...................  Domestic cheese made from 100 percent
                                pasteurized milk. Must conform to FDA
                                standard of identity (21 CFR Part 133);
                                Monterey Jack, Colby, natural Cheddar,
                                Swiss, Brick, Muenster, Provolone, part-
                                skim or whole Mozzarella, pasteurized
                                processed American, or blends of any of
                                these cheeses are authorized.
                               Cheeses that are labeled low, free,
                                reduced, less or light in the nutrients
                                of sodium, fat or cholesterol are WIC-
                                eligible.\3\
    Tofu.....................  Calcium-set tofu prepared with only
                                calcium salts (e.g., calcium sulfate).
                                May not contain added fats, sugars,
                                oils, or sodium.
    Soy-based beverage.......  Must be fortified to meet the following
                                nutrient levels: 276 mg calcium per cup,
                                8 g protein per cup, 500 IU vitamin A
                                per cup, 100 IU vitamin D per cup, 24 mg
                                magnesium per cup, 222 mg phosphorus per
                                cup, 349 mg potassium per cup, 0.44 mg
                                riboflavin per cup, and 1.1 mcg vitamin
                                B12 per cup, in accordance with
                                fortification guidelines issued by FDA.
Juice........................  Must be pasteurized 100% unsweetened
                                fruit juice. Must conform to FDA
                                standard of identity (21 CFR part 146)
                                or vegetable juice must conform to FDA
                                standard of identity (21 CFR part 156)
                                and contain at least 30 mg of vitamin C
                                per 100 mL of juice. With the exception
                                of 100 percent citrus juices, State
                                agencies must verify the vitamin C
                                content of all State-approved juices.
                                Juices that are fortified with other
                                nutrients may be allowed at the State
                                agency's option. Juice may be fresh,
                                from concentrate, frozen, canned, or
                                shelf-stable.
                               Vegetable juice may be regular or lower
                                in sodium.\3\
Eggs.........................  Fresh shell domestic hens' eggs or dried
                                eggs mix (must conform to FDA standard
                                of identity in 21 CFR 160.105) or
                                pasteurized liquid whole eggs (must
                                conform to FDA standard of identity in
                                21 CFR 160.115).
                               Hard boiled eggs, where readily available
                                for purchase in small quantities, may be
                                provided for homeless participants.
Breakfast cereal.............  Breakfast cereals as defined by FDA in 21
                                CFR 170.3(n)(4) for ready-to-eat and
                                instant and regular hot cereals.
                               Must contain a minimum of 28 mg iron per
                                100 g dry cereal.
                               Must contain < = 21.2 g sucrose and other
                                sugars per 100 g dry cereal (< = 6 g per
                                dry oz).
                               At least half of the cereals authorized
                                on a State agency's food list must have
                                whole grain as the primary ingredient by
                                weight AND meet labeling requirements
                                for making a health claim as a ``whole
                                grain food with moderate fat content'':
                                \4\
                               (1) Contain a minimum of 51% whole grains
                                (using dietary fiber as the indicator);
                               (2) Meet the regulatory definitions for
                                ``low saturated fat'' at 21 CFR 101.62
                                (< = 1 g saturated fat per RACC) and
                                ``low cholesterol'' (< = 20 mg
                                cholesterol per RACC);
                               (3) Bear quantitative trans fat labeling;
                                and
                               (4) Contain < = 6.5 g total fat per RACC
                                and < = 0.5 g trans fat per RACC.
Fruits and Vegetables (fresh   Any variety of fresh whole or cut fruit
 and processed).                without added sugars.\5\
                               Any variety of fresh whole or cut
                                vegetable, except white potatoes,
                                without added sugars, fats, or oils
                                (orange yams and sweet potatoes are
                                allowed).\5\

[[Page 68993]]


                               Any variety of canned \6\ fruits (must
                                conform to FDA standard of identity (21
                                CFR part 145); including applesauce,
                                juice pack or water pack without added
                                sugars, fats, oils, or salt (i.e.
                                sodium). Any variety of frozen fruits
                                without added sugars.\7\
                               Any variety of canned \6\ or frozen
                                vegetables (must conform to FDA standard
                                of identity (21 CFR part 155)) except
                                white potatoes (orange yams and sweet
                                potatoes are allowed); without added
                                sugars, fats, or oils. May be regular or
                                lower in sodium.\3 7\
                               Any type of dried fruits or dried
                                vegetable without added sugars, fats,
                                oils, or salt (i.e., sodium).\5\
Whole wheat bread/Whole grain                    Bread
 bread/Other whole             Whole wheat bread must conform to FDA
 unprocessed grains.            standard of identity (21 CFR 136.180).
                                (Includes whole wheat buns and rolls.)
                               AND
                               Whole wheat must be the primary
                                ingredient by weight in all whole wheat
                                bread products.
                               Whole grain bread must meet labeling
                                requirements for making a health claim
                                as a ``whole grain food with moderate
                                fat content'':\4\
                               (1) Contain a minimum of 51% whole grains
                                (using dietary fiber as the indicator);
                               (2) Meet the regulatory definitions for
                                ``low saturated fat'' at 21 CFR 101.62
                                (< = 1 g saturated fat per RACC) and
                                ``low cholesterol'' (< = 20 mg
                                cholesterol per RACC);
                               (3) Bear quantitative trans fat labeling;
                                and
                               (4) Contain < = 6.5 g total fat per RACC
                                and < = 0.5 g trans fat per RACC.
                               AND
                               Whole grain must be the primary
                                ingredient by weight in all whole grain
                                bread products.
                                     Other Whole Unprocessed Grains
                               Brown rice, bulgur (cracked wheat),
                                oatmeal, and whole-grain barley without
                                added sugars, fats, oils, or salt (i.e.,
                                sodium). May be instant-, quick-, or
                                regular-cooking.
                               Soft corn or whole wheat tortillas may be
                                allowed at the State agency's option.
                                Whole grain must be the primary
                                ingredient by weight.
Canned fish \6\..............  Canned only:
                               Light tuna (must conform to FDA standard
                                of identity (21 CFR 161.190));
                               Salmon (must conform to FDA standard of
                                identity (21 CFR 161.170));
                               Sardines;
                               Mackerel (N. Atlantic Scomber scombrus,
                                or Chub Pacific Scomber japonicus);
                               May be packed in water or oil. Pack may
                                include bones or skin. May be regular or
                                lower in sodium content.\3\
Mature legumes (dry beans and  Any type of mature dry beans, peas, or
 peas).                         lentils in dry-packaged or canned \6\
                                forms. Examples include but are not
                                limited to black beans (``turtle
                                beans''), blackeye peas (cowpeas of the
                                blackeye variety, ``cow beans''),
                                garbanzo beans (chickpeas), great
                                northern beans, kidney beans, lima beans
                                (``butter beans''), navy beans, pinto
                                beans, soybeans, split peas, and
                                lentils. All categories exclude soups.
                                May not contain added sugars, fats, oils
                                or meat as purchased. Canned legumes may
                                be regular or lower in sodium content.\3
                                8\
                               Baked beans may be provided for
                                participants with limited cooking
                                facilities.\8\
Peanut butter................  Peanut butter and reduced fat peanut
                                butter (must conform to FDA Standard of
                                Identity (21 CFR 164.150)); creamy or
                                chunky, regular or reduced fat, salted
                                or unsalted \3\ forms are allowed.
Infant Foods:
    Infant cereal............  Infant cereal must contain a minimum of
                                45 mg of iron per 100 g of dry
                                cereal.\9\
    Infant fruits............  Any variety of single ingredient
                                commercial infant food fruit without
                                added sugars, starches, or salt (i.e.,
                                sodium). Texture may range from strained
                                through diced.\10\
    Infant vegetables........  Any variety of single ingredient
                                commercial infant food vegetables
                                without added sugars, starches, or salt
                                (i.e., sodium). Texture may range from
                                strained through diced.\11\
    Infant meat..............  Any variety of commercial infant food
                                meat or poultry, as a single major
                                ingredient, with added broth or gravy.
                                Added sugars or salt (i.e. sodium) are
                                not allowed. Texture may range from
                                pureed through diced.\12\
------------------------------------------------------------------------
Table 4 Footnotes: FDA = Food and Drug Administration of the U.S.
  Department of Health and Human Services; RACC = reference amount
  customarily consumed.
\1\ The following are not considered a WIC eligible medical food:
  Formulas used solely for the purpose of enhancing nutrient intake,
  managing body weight, addressing picky eaters or used for a condition
  other than a qualifying condition (e.g., vitamin pills, weight control
  products, etc.); medicines or drugs, as defined by the Food, Drug and
  Cosmetic Act (21 U.S.C. 350a) as amended; enzymes, herbs, or
  botanicals; oral rehydration fluids or electrolyte solutions;
  flavoring or thickening agents; and feeding utensils or devices (e.g.,
  feeding tubes, bags, pumps) designed to administer a WIC-eligible
  formula.
\2\ All authorized milks must confirm to FDA, DHHS standards of identity
  for milks as defined by 21 CFR part 131 and meet WIC's requirements
  for vitamin fortification as stated above. Additional authorized milks
  include, but are not limited to: calcium-fortified, lactose-reduced
  and lactose-free, acidified, and UHT pasteurized milks. Other milks
  are permitted at the State agency's discretion provided that the State
  agency determines that the milk meets the minimum requirements for
  authorized milk.
\3\ Any of the folowing lower sodium forms are allowable:
Sodium-free--less than 5 mg sodium per serving;
Very low sodium--35 mg sodium or less per serving or, if the serving is
  30 g or less or 2 tablespoons or less, 35 mg sodium or less per 50 g
  of the food;
Low-sodium--140 mg sodium or less per serving or, if the serving is 30 g
  or less or 2 tablespoons or less, 140 mg sodium or less per 50 g of
  the food;
Light in sodium--at least 50 percent less sodium per serving than
  average reference amount for same food with no sodium reduction;
Lightly salted--at least 50 percent less sodium per serving than
  reference amount (If the food is not ``low in sodium,'' the statement
  ``not a low-sodium food'' must appear on the same panel as the
  Nutrition Facts panel.); and

[[Page 68994]]


Reduced or less sodium--at least 25 percent less sodium per serving than
  reference food.
\4\ Food and Drug Administration (FDA), Health Claim Notification for
  Whole Grain Foods with Moderate Fat Content at http://www.cfsan.fda.gov/~dms/flgrain2.html
\ Herbs or spices; edible blossoms and flowers, e.g., squash blossoms

  (broccoli, cauliflower and artichokes are allowed); creamed or sauced
  vegetables; vegetable-grain (pasta or rice) mixtures; fruit-nut
  mixtures; breaded vegetables; fruits and vegetables for purchase on
  salad bars; peanuts; ornamental and decorative fruits and vegetables
  such as chili peppers on a string; garlic on a string; gourds; painted
  pumpkins; fruit baskets and party vegetable trays; and items such as
  blueberry muffins and other baked goods are not authorized. Mature
  legumes (dry beans and peas) and juices are provided as separate food
  WIC categories and are not authorized under the fruit and vegetable
  category.
\6\ ``Canned'' refers to processed food items in cans or other shelf-
  stable containers, e.g., jars, pouches.
\7\ Excludes white potatoes; catsup or other condiments; pickled
  vegetables, olives; soups; juices; and fruit leathers and fruit roll-
  ups.
\8\ The following canned mature legumes are not authorized: soups;
  immature varieties of legumes, such as those used in canned green
  peas, green beans, snap beans, orange beans, and wax beans; baked
  beans with meat; e.g., beans and franks; and beans containing added
  sugars (with the exception of baked beans), fats, meat, or oils.
\9\ Infant cereals containing infant formula, milk, fruit, or other non-
  cereal ingredients are not allowed.
\10\ Mixtures with cereal or infant food desserts (e.g., peach cobbler)
  are not authorized; however, combinations of single ingredients (e.g.,
  apple-banana) are allowed.
\11\ Combinations of single ingredients (e.g., peas and carrots) are
  allowed.
\12\ No infant food combinations (e.g., meat and vegetables) or dinners
  (e.g., spaghetti and meatballs) are allowed.

    (f) USDA purchase of commodity foods. (1) At the request of a State 
agency, FNS may purchase commodity foods for the State agency using 
funds allocated to the State agency. The commodity foods purchased and 
made available to the State agency must be equivalent to the foods 
specified in Table 4 of paragraph (e)(12) of this section.
    (2) The State agency must:
    (i) Distribute the commodity foods to its local agencies or 
participants; and
    (ii) Ensure satisfactory storage facilities and conditions for the 
commodity foods, including documentation of proper insurance.
    (g) Infant formula manufacturer registration. Infant formula 
manufacturers supplying formula to the WIC Program must be registered 
with the Secretary of Health and Human Services under the Federal Food, 
Drug, and Cosmetic Act (21 U.S.C. 301 et seq.). Such manufacturers 
wishing to bid for a State contract to supply infant formula to the 
program must certify with the State health department that their 
formulas comply with the Federal Food, Drug, and Cosmetic Act and 
regulations issued pursuant to the Act.
    (h) Rounding up. State agencies may round up to the next whole 
container for either infant formula or infant foods (infant cereal, 
fruits, vegetables and meat). State agencies that use the rounding up 
option must calculate the amount of infant formula or infant foods 
provided according to the requirements and methodology as described in 
this section.
    (1) Infant Formula. State agencies must use the maximum monthly 
allowance of reconstituted fluid ounces of liquid concentrate infant 
formula as specified in Table 1 of paragraph (e)(9) of this section as 
the full nutritional benefit (FNB) provided by infant formula for each 
food package category and infant feeding option (e.g., Food Package I A 
fully formula fed, IA-FF).
    (i) For State agencies that use rounding up of infant formula, the 
FNB is determined over the timeframe (the number of months) that the 
participant receives the food package. In any given month of the 
timeframe, the monthly issuance of reconstituted fluid ounces of infant 
formula may exceed the maximum monthly allowance or fall below the FNB; 
however, the cumulative average over the timeframe may not fall below 
the FNB. In addition, the State agency must:
    (A) Use the methodology described in paragraph (h)(1)(ii) of this 
section for calculating and dispersing the rounding up option;
    (B) Issue infant formula in whole containers that are all the same 
size; and
    (C) Disperse the number of whole containers as evenly as possible 
over the timeframe with the largest monthly issuances given in the 
beginning of the timeframe.
    (ii) The methodology to calculate rounding up and dispersing infant 
formula to the next whole container over the food package timeframe is 
as follows:
    (A) Multiply the FNB amount for the appropriate food package and 
feeding option (e.g. Food Package I A fully formula fed, IA-FF) by the 
timeframe the participant will receive the food package to determine 
the total amount of infant formula to be provided.
    (B) Divide the total amount of infant formula to be provided by the 
yield of the container (in reconstituted fluid ounces) issued by the 
State agency to determine the total number of containers to be issued 
during the timeframe that the food package is prescribed.
    (C) If the number of containers to be issued does not result in a 
whole number of containers, the State agency must round up to the next 
whole container in order to issue whole containers.
    (2) Infant foods. (i) State agencies may use the rounding up option 
to the next whole container of infant food (infant cereal, fruits, 
vegetables and meats) when the maximum monthly allowance cannot be 
issued due to varying container sizes of authorized infant foods.
    (ii) State agencies that use the rounding up option for infant 
foods must:
    (A) Use the methodology described in paragraph (h)(2)(iii) of this 
section for calculating and dispersing the rounding up option;
    (B) Issue infant foods in whole containers; and
    (C) Disperse the number of whole containers as evenly as possible 
over the timeframe (the number of months the participant will receive 
the food package).
    (iii) The methodology to round up and disperse infant food is as 
follows:
    (A) Multiply the maximum monthly allowance for the infant food by 
the timeframe the participant will receive the food package to 
determine the total amount of food to be provided.
    (B) Divide the total amount of food provided by the container size 
issued by the State agency (e.g., ounces) to determine the total number 
of food containers to be issued during the timeframe that the food 
package is prescribed.
    (C) If the number of containers to be issued does not result in a 
whole number of containers, the State agency must round up to the next 
whole container in order to issue whole containers.
    (i) Plans for substitutions. (1) The State agency may submit to FNS 
a plan for substitution of food(s) acceptable for use in the Program to 
allow for different cultural eating patterns. The plan shall provide 
the State agency's justification, including a specific explanation of 
the cultural eating pattern and other information necessary for FNS to 
evaluate the plan as specified in paragraph (i)(2) of this section.
    (2) FNS will evaluate a State agency's plan for substitution of 
foods for different cultural eating patterns based on the following 
criteria:

[[Page 68995]]

    (i) Any proposed substitute food must be nutritionally equivalent 
or superior to the food it is intended to replace.
    (ii) The proposed substitute food must be widely available to 
participants in the areas where the substitute is intended to be used.
    (iii) The cost of the substitute food must be equivalent to or less 
than the cost of the food it is intended to replace.
    (3) FNS will make a determination on the proposed plan based on the 
evaluation criteria specified in paragraph (i)(2) of this section, as 
appropriate. The State agency shall substitute foods only after 
receiving the written approval of FNS.

0
6. In Sec.  246.12:
0
a. Revise the second sentence of paragraph (a)(1).
0
b. Amend paragraphs (e), (f)(2)(i), (f)(2)(ii), (f)(2)(iv), (h)(3)(ix), 
(k)(2), and (k)(3), by removing the words ``food instrument'' wherever 
they appear and adding in their place the words ``food instrument or 
cash-value voucher'';
0
c. Amend paragraphs (h)(3)(i), (h)(3)(xv), and (i)(2), by removing the 
words ``food instruments'' wherever they appear and adding in their 
place the words ``food instruments and cash-value vouchers'';
0
d. Amend paragraphs (l)(1)(i), (l)(1)(ii)(B), (l)(1)(iii)(A), 
(l)(1)(iii)(D), and (l)(1)(iii)(F), by removing the words ``food 
instruments'' wherever they appear and adding in their place the words 
``food instruments or cash-value vouchers'';
0
e. Revise the heading of paragraph (f), paragraph (f)(1), paragraph 
(f)(2) introductory text, paragraphs (f)(2)(iii), (f)(3), (g)(3)(i), 
(h)(3)(ii), and (h)(3)(iv) through (h)(3)(vi), (h)(3)(x), and 
paragraphs (k)(1), (k)(5), and (o) through (s);
0
f. Amend paragraph (t) by removing the word ``vendor'' and adding in 
its place the words ``vendor, farmer''; and
0
g. Add a new paragraph (v).
    The addition and revisions read as follows:


Sec.  246.12  Food delivery systems.

    (a) * * *
    (1) * * * The State agency may permit only authorized vendors and 
farmers, home food delivery contractors, and direct distribution sites 
to accept food instruments and cash-value vouchers.
* * * * *
    (f) Retail food delivery systems: Food instrument and cash-value 
voucher requirements--(1) General. State agencies using retail food 
delivery systems must use food instruments and cash-value vouchers that 
comply with the requirements of paragraph (f)(2) of this section.
    (2) Printed food instruments and cash-value vouchers. Each printed 
food instrument and cash-value voucher must clearly bear on its face 
the following information:
* * * * *
    (iii) Last date of use. The last date on which the food instrument 
or cash-value vouchers may be used to obtain authorized supplemental 
foods. This date must be a minimum of 30 days from the first date on 
which it may be used, except for the participant's first month of 
issuance, when it may be the end of the month or cycle for which the 
food instrument or cash-value voucher is valid. Rather than entering a 
specific last date of use on each instrument or cash-value voucher, all 
instruments or cash-value vouchers may be printed with a notice that 
the participant must transact them within a specified number of days 
after the first date on which the food instrument or cash-value voucher 
may be used;
* * * * *
    (3) Vendor identification. The State agency must implement 
procedures to ensure each food instrument and cash-value voucher 
submitted for redemption can be identified by the vendor or farmer that 
submitted the food instrument or cash-value voucher. Each vendor 
operated by a single business entity must be identified separately. The 
State agency may identify vendors by requiring that all authorized 
vendors stamp their names and/or enter a vendor identification number 
on all food instruments or cash-value vouchers prior to submitting them 
for redemption.
    (g) * * *
    (3) * * *
    (i) Minimum variety and quantity of supplemental foods. The State 
agency must establish minimum requirements for the variety and quantity 
of supplemental foods that a vendor applicant must stock to be 
authorized. These requirements include that the vendor stock at least 
two varieties of fruits, two varieties of vegetables, and at least one 
whole grain cereal authorized by the State agency. The State agency may 
not authorize a vendor applicant unless it determines that the vendor 
applicant meets these minimums. The State agency may establish 
different minimums for different vendor peer groups.
* * * * *
    (h) * * *
    (3) * * *
    (ii) No substitutions, cash, credit, refunds, or exchanges. The 
vendor may provide only the authorized supplemental foods listed on the 
food instrument and cash-value voucher. The vendor may not provide 
unauthorized food items, non-food items, cash, or credit (including 
rainchecks) in exchange for food instruments or cash-value vouchers. 
The vendor may not provide refunds or permit exchanges for authorized 
supplemental foods obtained with food instruments or cash-value 
vouchers, except for exchanges of an identical authorized supplemental 
food item when the original authorized supplemental food item is 
defective, spoiled, or has exceeded its ``sell by,'' ``best if used 
by,'' or other date limiting the sale or use of the food item. An 
identical authorized supplemental food item means the exact brand and 
size as the original authorized supplemental food item obtained and 
returned by the participant.
* * * * *
    (iv) Time periods for transacting food instruments and cash-value 
vouchers. The vendor may accept a food instrument or cash-value voucher 
only within the specified time period.
    (v) Purchase price on food instruments and cash-value vouchers. The 
vendor must ensure that the purchase price is entered on food 
instruments and cash-value vouchers in accordance with the procedures 
described in the vendor agreement. The State agency has the discretion 
to determine whether the vendor or the participant enters the purchase 
price. The purchase price must include only the authorized supplemental 
food items actually provided and must be entered on the food instrument 
or cash-value voucher before it is signed.
    (vi) Signature on food instruments and cash-value vouchers. For 
printed food instruments and cash-value vouchers, the vendor must 
ensure the participant, parent or caretaker of an infant or child 
participant, or proxy signs the food instrument or cash-value voucher 
in the presence of the cashier. In EBT systems, a Personal 
Identification Number (PIN) may be used in lieu of a signature.
* * * * *
    (x) No charge for authorized supplemental foods or restitution from 
participants. The vendor may not charge participants, parents or 
caretakers of infant and child participants, or proxies for authorized 
supplemental foods obtained with food instruments or cash-value 
vouchers. In addition, the vendor may not seek restitution from these 
individuals for food instruments or cash-value vouchers not paid or 
partially paid by the State agency. The

[[Page 68996]]

State agency may, however, allow participants, parents or caretakers of 
child participants to pay the difference when the purchase of 
authorized fruits and vegetables exceeds the value of the cash-value 
voucher.
* * * * *
    (k) * * *
    (1) System to review food instruments and cash-value vouchers for 
vendor claims. The State agency must design and implement a system to 
review food instruments and cash-value vouchers submitted by vendors 
for redemption to ensure compliance with the applicable price 
limitations and to detect questionable food instruments or cash-value 
vouchers, suspected vendor overcharges, and other errors. This review 
must examine either all or a representative sample of the food 
instruments and cash-value vouchers and may be done either before or 
after the State agency makes payments on the food instruments or cash-
value vouchers. The review of food instruments must include a price 
comparison or other edit designed to ensure compliance with the 
applicable price limitations and to assist in detecting vendor 
overcharges. For printed food instruments and cash-value vouchers the 
system also must detect the following errors--purchase price missing; 
participant, parent/caretaker, or proxy signature missing; vendor 
identification missing; food instruments or cash-value vouchers 
transacted or redeemed after the specified time periods; and, as 
appropriate, altered purchase price. The State agency must take follow-
up action within 120 days of detecting any questionable food 
instruments or cash-value vouchers, suspected vendor overcharges, and 
other errors and must implement procedures to reduce the number of 
errors when possible.
* * * * *
    (5) Food instruments and cash-value vouchers redeemed after the 
specified period. With justification and documentation, the State 
agency may pay vendors for food instruments and cash-value vouchers 
submitted for redemption after the specified period for redemption. If 
the total value of such food instruments or cash-value vouchers 
submitted at one time exceeds $500.00, the State agency must obtain the 
approval of the FNS Regional Office before payment.
* * * * *
    (o) Participant, parent/caretaker, proxy, vendor, farmer and home 
food delivery contractor complaints. The State agency must have 
procedures to document the handling of complaints by participants, 
parents or caretakers of infant or child participants, proxies, 
vendors, farmers, home food delivery contractors, and direct 
distribution contractors. Complaints of civil rights discrimination 
must be handled in accordance with Sec.  246.8(b).
    (p) Food instrument and cash-value voucher security. The State 
agency must develop standards for ensuring the security of food 
instruments and cash-value vouchers from the time the food instruments 
and cash-value vouchers are created to the time they are issued to 
participants, parents/caretakers, or proxies. For pre-printed food 
instruments or cash-value vouchers, these standards must include 
maintenance of perpetual inventory records of food instruments or cash-
value vouchers throughout the State agency's jurisdiction; monthly 
physical inventory of food instruments or cash-value vouchers on hand 
throughout the State agency's jurisdiction; reconciliation of perpetual 
and physical inventories of food instruments and cash-value vouchers; 
and maintenance of all food instruments and cash-value vouchers under 
lock and key, except for supplies needed for immediate use. For EBT and 
print-on-demand food instruments and cash-value vouchers, the standards 
must provide for the accountability and security of the means to 
manufacture and issue such food instruments and cash-value vouchers.
    (q) Food instrument and cash-value voucher disposition. The State 
agency must account for the disposition of all food instruments and 
cash-value vouchers as either issued or voided, and as either redeemed 
or unredeemed. Redeemed food instruments and cash-value vouchers must 
be identified as validly issued, lost, stolen, expired, duplicate, or 
not matching valid enrollment and issuance records. In an EBT system, 
evidence of matching redeemed food instruments to valid enrollment and 
issuance records may be satisfied through the linking of the Primary 
Account Number (PAN) associated with the electronic transaction to 
valid enrollment and issuance records. This process must be performed 
within 120 days of the first valid date for participant use of the food 
instruments and must be conducted in accordance with the financial 
management requirements of Sec.  246.13. The State agency will be 
subject to claims as outlined in Sec.  246.23(a)(4) for redeemed food 
instruments or cash-value vouchers that do not meet the conditions 
established in paragraph (q) of this section.
    (r) Issuance of food instruments, cash-value vouchers and 
authorized supplemental foods. The State agency must:
    (1) Parents/caretakers and proxies. Establish uniform procedures 
that allow parents and caretakers of infant and child participants and 
proxies to obtain and transact food instruments and cash-value vouchers 
or obtain authorized supplemental foods on behalf of a participant. In 
determining whether a particular participant or parent/caretaker should 
be allowed to designate a proxy or proxies, the State agency must 
require the local agency or clinic to consider whether adequate 
measures can be implemented to provide nutrition education and health 
care referrals to that participant or, in the case of an infant or 
child participant, to the participant's parent or caretaker;
    (2) Signature requirement. Ensure that the participant, parent or 
caretaker of an infant or child participant, or proxy signs for receipt 
of food instruments, cash-value vouchers or authorized supplemental 
foods, except as provided in paragraph (r)(4) of this section;
    (3) Instructions. Ensure that participants, parents or caretakers 
of infant and child participants, and proxies receive instructions on 
the proper use of food instruments and cash-value vouchers, or on the 
procedures for obtaining authorized supplemental foods when food 
instruments or cash-value vouchers are not used. The State agency must 
also ensure that participants, parents or caretakers of infant and 
child participants, and proxies are notified that they have the right 
to complain about improper vendor, farmer and home food delivery 
contractor practices with regard to program responsibilities;
    (4) Food instrument and cash-value voucher pick up. Require 
participants, parents and caretakers of infant and child participants, 
and proxies to pick up food instruments and cash-value vouchers in 
person when scheduled for nutrition education or for an appointment to 
determine whether participants are eligible for a second or subsequent 
certification period. However, in all other circumstances the State 
agency may provide for issuance through an alternative means such as 
EBT or mailing, unless FNS determines that such actions would 
jeopardize the integrity of program services or program accountability. 
If a State agency opts to mail food instruments and cash-value 
vouchers, it must provide justification, as part of its alternative 
issuance system in its State Plan, as required in Sec.  246.4(a)(21), 
for mailing food instruments and cash-value voucher to areas where food 
stamps are not mailed. State agencies that opt to mail food

[[Page 68997]]

instruments and cash-value vouchers must establish and implement a 
system that ensures the return of food instruments and cash-value 
vouchers to the State or local agency if a participant no longer 
resides or receives mail at the address to which the food instruments 
and cash-value vouchers were mailed; and
    (5) Maximum issuance of food instruments and cash-value voucher. 
Ensure that no more than a three-month supply of food instruments and 
cash-value vouchers or a one-month supply of authorized supplemental 
foods is issued at any one time to any participant, parent or caretaker 
of an infant or child participant, or proxy.
    (s) Payment to vendors, farmers and home food delivery contractors. 
The State agency must ensure that vendors, farmers and home food 
delivery contractors are paid promptly. Payment must be made within 60 
days after valid food instruments or cash-value vouchers are submitted 
for redemption. Actual payment to vendors, farmers and home food 
delivery contractors may be made by local agencies.
* * * * *
    (v) Farmers. The State agency may authorize farmers at farmers 
markets (or roadside stands) to accept the cash-value voucher for 
eligible fruits and vegetables. The State agency must enter into 
written agreements with all authorized farmers. The agreement must be 
signed by a representative who has legal authority to obligate the 
farmer and a representative of the State agency. The agreement must be 
for a period not to exceed three years. Only farmers authorized by the 
State agency may redeem the fruit and vegetable cash-value voucher. The 
State agency must require farmers to reapply at the expiration of their 
agreements and must provide farmers with not less than 15 days advance 
written notice of the expiration of the agreement.
    (1) The agreement must include the following provisions, although 
the State agency may determine the exact wording. The farmer must:
    (i) Assure that the cash-value voucher is redeemed only for 
eligible fruits and vegetables as defined by the State agency;
    (ii) Provide eligible fruits and vegetables at the current price or 
less than the current price charged to other customers;
    (iii) Accept the cash-value voucher within the dates of their 
validity and submit such vouchers for payment within the allowable time 
period established by the State agency;
    (iv) Redeem the cash-value voucher in accordance with a procedure 
established by the State agency,
    (v) Accept training on cash-value voucher procedures and provide 
training to any employees with cash-value voucher responsibilities on 
such procedures;
    (vi) Agree to be monitored for compliance with program 
requirements, including both overt and covert monitoring;
    (vii) Be accountable for actions of employees in the provision of 
authorized foods and related activities;
    (viii) Pay the State agency for any cash-value vouchers transacted 
in violation of this agreement;
    (ix) Offer WIC participants, parent or caretakers of child 
participants or proxies the same courtesies as other customers;
    (x) Comply with the nondiscrimination provisions of USDA 
regulations as provided in Sec.  248.7; and
    (xi) Notify the State agency if any farmers' market ceases 
operation prior to the end of the authorization period.
    (2) The farmer must not:
    (i) Collect sales tax on cash-value voucher purchases;
    (ii) Seek restitution from WIC participants, parent or caretakers 
of child participants or proxies for cash-value vouchers not paid or 
partially paid by the State agency;
    (iii) Issue cash change for purchases that are in an amount less 
than the value of the cash-value voucher;
    (3) Neither the State agency nor the farmer has an obligation to 
renew the agreement. Either the State agency or the farmer may 
terminate the agreement for cause after providing advance written 
notification.
    (4) The State agency may deny payment to the farmer for improperly 
redeemed cash-value vouchers and may demand refunds for payments 
already made on improperly redeemed vouchers.
    (5) The State agency may disqualify a farmer for WIC Program abuse. 
The farmer has the right to appeal a denial of an application to 
participate, a disqualification, or a program sanction by the State 
agency. Expiration of an agreement with a farmer and claims actions 
under Sec.  246.23, are not appealable.
    (6) A farmer which commits fraud or engages in other illegal 
activity is liable to prosecution under applicable Federal, State or 
local laws.

0
7. In Sec.  246.16, add a new paragraph (j) to read as follows:


Sec.  246.16  Distribution of funds.

* * * * *
    (j) Inflation adjustment of the fruit and vegetable voucher. The 
monthly cash value of the fruit and vegetable voucher shall be adjusted 
annually for inflation. Adjustments are effective the first day of each 
fiscal year beginning on or after October 1, 2008. The inflation-
adjusted value of the voucher shall be equal to a base value increased 
by a factor based on the Consumer Price Index for fresh fruits and 
vegetables, as provided in this section.
    (1) Adjustment year. The adjustment year is the fiscal year that 
begins October 1 of the current calendar year.
    (2) Base value of the fruit and vegetable voucher. The base value 
of the fruit and vegetable voucher is the monthly cash value of the 
voucher for fiscal year 2008. The base value equals:
    (i) $6 for children;
    (ii) $8 for pregnant and postpartum women; and
    (iii) $10 for breastfeeding women.
    (3) Adjusted value of the fruit and vegetable voucher. The adjusted 
value of the fruit and vegetable voucher is the cash value of the 
voucher for adjustment years beginning on or after October 1, 2008. The 
adjusted value is the base value increased by an amount equal to the 
base value of the fruit and vegetable voucher:
    (i) Multiplied by the inflation adjustment described in paragraph 
(j)(4) of this section; and
    (ii) Subject to rounding as described in paragraph (j)(5) of this 
section.
    (4) Inflation adjustment. The inflation adjustment of the fruit and 
vegetable voucher shall equal the percentage (if any) by which the 
annual average value of the Consumer Price Index for fresh fruits and 
vegetables, computed from monthly values published by the Bureau of 
Labor Statistics, for the twelve months ending on March 31 of the 
fiscal year immediately prior to the adjustment year, exceeds the 
average of the monthly values of that index for the twelve months 
ending on March 31, 2007.
    (5) Rounding. If any increase in the cash value of the voucher 
determined under paragraph (j)(3) of this section is not a multiple of 
$1, such increase shall be rounded to the next lowest multiple of $1. 
However, if the adjusted value of the voucher for the adjustment year, 
as determined under paragraph (j)(3) of this section, is lower than the 
adjusted value for the fiscal year immediately prior to the adjustment 
year, then the adjusted value of the voucher will remain unchanged from 
that immediate prior fiscal year.

0
8. In Sec.  246.18:
0
a. Amend paragraph (a)(1)(iii)(G) by removing the words ``food 
instrument''

[[Page 68998]]

and adding in their place the words ``food instrument or cash-value 
voucher'';
0
b. Add a new paragraph (a)(4);
0
c. Revise the introductory text of paragraph (b);
0
d. Amend paragraph (d) by removing the words ``local agency or a 
vendor'' and adding in their place the words ``local agency, farmer or 
vendor'';
0
e. Amend paragraph (e) by removing the words ``vendor or the local 
agency'' and adding in their place the words ``vendor, farmer or local 
agency''; and
0
f. Amend paragraph (f) by removing the words ``vendor or local agency'' 
wherever they appear and adding in their place the words ``vendor, 
farmer or local agency''.
    The addition and revision read as follows:


Sec.  246.18  Administrative review of State agency actions.

    (a) * * *
    (4) Farmer appeals--(i) Adverse Actions. The State agency shall 
provide a hearing procedure whereby farmers adversely affected by 
certain actions of the State agency may appeal those actions. A farmer 
may appeal an action of the State agency denying its application to 
participate, imposing a sanction, or disqualifying it from 
participation in the program. Expiration of an agreement is not subject 
to appeal.
    (ii) Effective date of adverse actions against farmers. The State 
agency must make denials of authorization and disqualifications 
effective on the date of receipt of the notice of adverse action. The 
State agency must make all other adverse actions effective no earlier 
than 15 days after the date of the notice of the adverse action and no 
later than 90 days after the date of the notice of adverse action or, 
in the case of an adverse action that is subject to administrative 
review, no later than the date the farmer receives the review decision.
    (b) Full administrative review procedures. The State agency must 
develop procedures for a full administrative review of the adverse 
actions listed in paragraphs (a)(1)(i), (a)(3) and (a)(4) of this 
section. At a minimum, these procedures must provide the vendor, farmer 
or local agency with the following:
* * * * *

0
9. In Sec.  246.23, revise paragraph (a)(4) to read as follows:


Sec.  246.23  Claims and penalties.

    (a) * * *
    (4) FNS will establish a claim against any State agency that has 
not accounted for the disposition of all redeemed food instruments and 
cash-value vouchers and taken appropriate follow-up action on all 
redeemed food instruments and cash-value vouchers that cannot be 
matched against valid enrollment and issuance records, including cases 
that may involve fraud, unless the State agency has demonstrated to the 
satisfaction of FNS that it has:
    (i) Made every reasonable effort to comply with this requirement;
    (ii) Identified the reasons for its inability to account for the 
disposition of each redeemed food instrument or cash-value voucher; and
    (iii) Provided assurances that, to the extent considered necessary 
by FNS, it will take appropriate actions to improve its procedures.
* * * * *

    Dated: November 21, 2007.
Nancy Montanez Johner,
Under Secretary for Food, Nutrition and Consumer Services.

Appendix

    Note: This appendix will not be published in the Code of Federal 
Regulations.

Regulatory Impact Analysis

7 CFR Part 246: Special Supplemental Nutrition Program for Women, 
Infants, and Children (WIC): Revisions in the WIC Food Packages

Interim Rule

Executive Summary

    The WIC program addresses the supplemental nutritional needs of 
at-risk groups through the distribution of supplemental food 
packages, and a program of nutrition education that includes 
counseling, health and social service referrals, and breastfeeding 
promotion and support. WIC nutrition education provisions are 
governed by broad regulatory language that allows nutrition 
education provided to participants to respond to the supplemental 
nutrition needs of participants in light of changes in dietary and 
health research. In contrast, WIC supplemental food packages are 
defined very specifically in regulatory language. Consequently, as 
the population served by WIC has grown and become more diverse over 
the last 27 years and as food consumption habits have changed, the 
nutritional risks faced by participants have changed. Also, though 
nutrition science has advanced, the WIC supplemental food packages 
have remained largely unchanged.
    The interim rule modifies regulations governing the WIC food 
packages to implement recommended changes based on the current 
supplemental nutritional needs of WIC participants and advances in 
nutrition science. Specifically, the interim rule: revises the 
maximum monthly allowances and minimum requirements for certain 
supplemental foods; revises the substitution rates for certain 
supplemental foods and allows additional foods as alternatives; 
revises age specifications for assignment to infant food packages; 
modifies food packages to promote breastfeeding; adds foods to 
children and women food packages; and, addresses general provisions 
that apply to all food packages. The revisions reflect 
recommendations made by the Institute of Medicine of the National 
Academies in its Report WIC Food Packages: Time for a Change, 
comments received on the Proposed Rule published in the Federal 
Register on August 7, 2006 (71 FR 44784), and certain administrative 
revisions found necessary by the Department.
    The revisions also bring the WIC food packages in line with the 
2005 Dietary Guidelines for Americans and current infant feeding 
practice guidelines of the American Academy of Pediatrics to: better 
promote and support the establishment of successful long-term 
breastfeeding; provide WIC participants with a wider variety of 
food; provide WIC State agencies with greater flexibility in 
prescribing food packages to accommodate participants with cultural 
food preferences; and, serve all participants with certain medical 
provisions under one food package to facilitate efficient management 
of participants with special dietary needs.
    This impact analysis specifically addresses significant or 
substantial public comments and Department modifications from the 
provisions as initially proposed in the Proposed Rule. Unless 
otherwise stated, the provisions stated in the impact analysis for 
the Proposed Rule should be regarded as the basis for the impact 
analysis of the interim rule. Under the interim rule, revisions to 
the WIC food packages are cost-neutral to the Federal Government. 
Specifically, FNS estimates that the changes will decrease costs by 
$29.7 million over five years, a negligible amount relative to the 
program's annual cost of more than $5 billion.
    While the additional program costs from the rule change are 
negligible, the changes in food packages that will result represent 
important improvements in the program's alignment with current 
dietary guidance, increase the variety and appropriateness of foods 
provided to clients, and better promote healthy eating behaviors. 
These benefits will improve the program relative to current rules 
for years to come.

Table of Contents

Action
    Nature
    Need
    Affected Parties
Effects
    Background
    Summary of Rule and Benefits
    Food Package I
    Food Package II
    Food Package III
    Food Package IV
    Food Package V
    Food Package VI
    Food Package VII
    Other Provisions
Summary of Key Provisions
Costs
    Interim Rule
    Major Cost Drivers
    Fruit and Vegetables Option
    Cost Estimate Methodology
    Overview

[[Page 68999]]

    Food Package Costs
    Prescriptions
    Infant Formula and Rounding
    Redemption Rates
    Food Prices
    Participant Projections
    Phased Implementation
    State Cost Variation
    Administrative Costs
Uncertainties
    Price Volatility in the Dairy Market
    Assumed Preference for Soy Beverage
    State Option to Provide Formula for Infants 0-0.9 Months of Age
    Prescription Assumptions for Whole Grain Bread and Bread 
substitutes
    Prescription Assumptions for Infant Food Fruits, Vegetables, and 
Meat
    Changes in Current Food Package Sizes
    Uncertainties Summary
Alternatives
    Include Yogurt as a Milk Substitute for Food Packages IV-VII
    Increase the Whole Grain Maximum Allowance
    Fresh Fruit and Vegetables for Infants
    Soy Beverage Substitution for Children without Medical 
Documentation
Market Share Analysis
Appendix A: Additional Cost Estimate Assumptions

    Date: November 5, 2007.
    Agency: USDA, Food and Nutrition Service.
    Contact: Ed Herzog.
    Phone: (703) 305-2340.
    Fax: (703) 305-2576.
    E-mail: edward.herzog@fns.usda.gov.
    Title: 7 CFR Part 246: Special Supplemental Nutrition Program 
for Women, Infants, and Children (WIC): Revisions in the WIC Food 
Packages.

Action

    A. Nature: Interim Rule.
    B. Need: The WIC program addresses the supplemental nutritional 
needs of at-risk groups through the distribution of age and 
condition specific food packages, and a program of nutrition 
education that includes counseling, health and social service 
referrals, and breastfeeding promotion and support. WIC nutrition 
education provisions are governed by broad regulatory language that 
allows nutrition education provided to participants to respond to 
changes in dietary and health research. In contrast, WIC 
supplemental food packages are defined very specifically in the 
regulatory language. Consequently, as the population served by WIC 
has grown and become more diverse over the last 27 years, the 
nutritional risks faced by participants have changed, and though 
nutrition science has advanced, the WIC supplemental food packages 
have remained largely unchanged. This rule is needed to implement 
recommended changes to the WIC food packages based on the current 
supplemental nutritional needs of WIC participants and advances in 
nutrition science.
    C. Affected Parties: The program affected by this rule is the 
Special Supplemental Nutrition Program for Women, Infants, and 
Children (WIC). The parties affected by this regulation are the 
USDA's Food and Nutrition Service (FNS), State and local agencies 
that administer the WIC Program, retail vendors, food producers and 
manufacturers, and WIC participants.

Effects

    The following analysis describes the potential economic impact 
of the interim rule. This rule is needed due to changes in the 
population served by WIC, and advances in nutrition and knowledge 
about the supplemental nutritional needs of those served by WIC. The 
changes in this rule are significant to the costs or overall 
operations to the program. The potential effects of these changes 
are highlighted below.

A. Background

    The WIC program was established in the 1970s to address the 
special supplemental nutritional needs of low-income pregnant and 
postpartum women, infants, and children up to age five who are 
determined to be at nutritional risk. Regulations governing the WIC 
program recognize a broad range of nutritionally related medical 
conditions for purposes of establishing program eligibility. These 
include anemia, low birth weight, chronic infections, overweight, 
underweight, and similar manifestations of poor nutrition suitable 
for direct measurement or diagnosis.\1\ WIC regulations also 
recognize that personal medical histories, dietary patterns, and 
economic circumstances may put otherwise healthy women or children 
at nutritional risk. Certification may therefore be extended to 
women facing high-risk pregnancies, pregnant women or mothers who 
abuse alcohol or drugs, homeless women and children, and infants and 
children with congenital malformations or other medical conditions 
that may interfere with adequate nutrient intake or absorption.
---------------------------------------------------------------------------

    \1\ 7 CFR 246.7(e).
---------------------------------------------------------------------------

    WIC addresses the supplemental nutritional needs of at-risk 
groups through the distribution of age- and condition-specific food 
packages, and a program of nutrition education that includes 
counseling, health and social service referrals, and breastfeeding 
promotion and support. Supplemental foods are currently offered to 
WIC participants in one of seven packages designed for the special 
supplemental nutritional needs of the following sub-populations:

I. Infants under four months old
II. Infants from four to twelve months old
III. Children and women with special dietary needs
IV. Children from one to five years old
V. Pregnant and breastfeeding women
VI. Non-breastfeeding postpartum women
VII. Exclusively breastfeeding women

    Inadequate nutrition was the prime motivating factor behind the 
enactment of the WIC program.\2\ Nutrition research in the 1970s 
pointed to calcium, iron, high quality protein, and vitamins A and C 
as nutrients most likely to be lacking in the diets of low-income 
women, infants, and children. Current WIC food packages reflect that 
early research. Today's packages include some combination of: iron-
fortified infant formulas, iron-fortified cereals, vitamin C rich 
juice, vitamin A and D fortified milk, eggs, cheese, dried beans or 
peas, peanut butter, tuna, and carrots. Other factors that 
contributed to the selection of these foods are their nutrient 
density, modest cost, wide availability, and broad acceptance by the 
WIC-eligible population.
---------------------------------------------------------------------------

    \2\ See 42 U.S.C. 1786(a).
---------------------------------------------------------------------------

    WIC's nutrition education provisions are governed by broad 
regulatory language that seeks to promote ``proper nutrition,'' 
``optimal use'' of WIC's supplemental foods, and appropriate advice 
concerning non-WIC foods.\3\ Compliance with this regulatory mandate 
presumes that nutrition education will respond to the supplemental 
nutrition needs of participants based on advances in dietary and 
health research. The U.S. Department of Agriculture's (USDA) Food 
and Nutrition Service (FNS) provides for provision of nutrition 
education to WIC participants that is consistent with the Dietary 
Guidelines for Americans.
---------------------------------------------------------------------------

    \3\ 7 CFR 246.11.
---------------------------------------------------------------------------

    The statute governing WIC directs the Secretary of Agriculture 
to prescribe supplemental food packages for the program.\4\ As a 
result, the content of WIC food packages is defined with specificity 
in program regulations; the regulatory flexibility that 
characterizes WIC nutrition education does not extend to the 
prescription of individual food packages. The list of WIC-approved 
foods provides select, nutrient-rich foods; allowed substitutions 
provide only limited room for participant-specific food package 
tailoring.
---------------------------------------------------------------------------

    \4\ 42 U.S.C. 1786(b)(14).
---------------------------------------------------------------------------

    The population served by the WIC program has grown in size and 
diversity over time and the frequency of nutritional risks faced by 
WIC participants have changed. White and Black participants 
represented 72% of the WIC population in 1992; by 2004, just 56% of 
WIC participants fell into one of those two racial/ethnic groups.\5\ 
WIC's Hispanic population, itself a diverse group, has grown from 
the third largest to the largest over the same period. Greater 
ethnic diversity increases the demand for additional food options 
consistent with cultural preferences.
---------------------------------------------------------------------------

    \5\ U.S. Department of Agriculture, Food and Nutrition Service, 
Office of Analysis, Nutrition and Evaluation, WIC Participant and 
Program Characteristics 1992, Abt Associates. Alexandria, VA: 1994. 
U.S. Department of Agriculture, Food and Nutrition Service, Office 
of Analysis, Nutrition and Evaluation, WIC Participant and Program 
Characteristics 2004, Abt. Associates. Alexandria, VA: 2005. The 
program characteristics studies performed prior to 1992 did not 
include participant data from Alaska, Hawaii, Puerto Rico, or U.S. 
territories. The racial/ethnic breakdowns from those earlier reports 
should not be directly compared to the ones contained in reports 
from 1992 forward.
---------------------------------------------------------------------------

    In addition, the nutritional risks faced by the low-income 
population of the 1970s have changed. Although inadequate intake of 
some nutrients remains a concern,\6\ improved diets have reduced the 
prevalence of once relatively common deficiency diseases and

[[Page 69000]]

underweight in at-risk groups. A WIC program that now assists nearly 
eight million individuals monthly, including about half of the 
nation's infants,\7\ supplements the diets of an at-risk population 
with the very types of iron-fortified, nutrient-dense foods 
associated with this changed health picture. WIC's current food 
packages, little modified since the 1970s, were appropriately 
designed to address the recognized nutritional priorities of that 
time. But today's WIC population, like the U.S. population as a 
whole, faces a reordered set of priorities. Excessive intakes of 
some nutrients, including saturated fat, and of food energy have 
taken a place among the nation's top public health concerns.\8\ 
Other nutrients, including vitamin E, and fiber, have since been 
identified as lacking in the diets of WIC-eligible sub-
populations.\9\ While current WIC food packages continue to address 
important health risks of undernutrition, they do not target all 
identified inadequacies, and they may contribute to the risks 
associated with excessive intake of some nutrients.
---------------------------------------------------------------------------

    \6\ National Academies, Institute of Medicine (IOM). WIC Food 
Packages: Time for a Change, Washington, DC: The National Academies 
Press, 2005. pp. 31, 64.
    \7\ U.S. Department of Agriculture, Food and Nutrition Web site, 
July 2005. http://www.fns.usda.gov/wic/FAQs/FAQ.HTM.

    \8\ See U.S. Department of Health and Human Services and U.S. 
Department of Agriculture, Dietary Guidelines for Americans, 2005, 
6th edition, Washington DC: U.S. Government Printing Office, January 
2005. (USDHHS/USDA, 2005)
    \9\ IOM, p.59. Note, however, that these conclusions are based 
on self-reported food consumption data from the Continuing Survey of 
Food Intakes by Individuals (1994-1996 and 1998.) Underreporting of 
food intakes is suspected by women involved in the survey. And, the 
data do not include nutrients consumed in the form of dietary 
supplements. These factors may overstate the problem of nutrient 
inadequacies, and may understate the problem of excessive intakes.
---------------------------------------------------------------------------

    Medical consequences of improper diets include fetal or infant 
lead toxicity tied to low calcium intake by pregnant and 
breastfeeding women, birth defects caused by inadequate folate 
consumption early in pregnancy, iron-deficiency anemia, and heart 
disease, diabetes, stroke, and cancer, all linked to obesity and 
excessive intake of saturated fat.\10\ Adjustments to the WIC food 
packages that move individual consumption of these priority 
nutrients closer to Recommended Dietary Allowances (RDAs) and 
Adequate Intake (AIs) levels of the Institute of Medicine's Dietary 
Reference Intakes may reduce the nutrition-related medical health 
risks of WIC participants.
---------------------------------------------------------------------------

    \10\ See IOM, p. 63; see also ``High Costs of Poor Eating 
Patterns in the United States,'' Elizabeth Fraz[atilde]o, in 
America's Eating Habits: Changes and Consequences, Elizabeth 
Fraz[atilde]o, ed., Economic Research Service, U.S. Department of 
Agriculture, Washington, DC, 1999.
---------------------------------------------------------------------------

B. Summary of Rule and Benefits

    FNS contracted with the National Academies' Institute of 
Medicine (IOM) in 2003 to assess the nutritional health profile of 
the current WIC population, and to recommend changes in the content 
of the program's food packages. The Proposed Rule largely reflected 
recommendations made by the National Academies' Institute of 
Medicine (IOM) in its Report WIC Food Packages: Time for a Change, 
with certain cost containment and administrative modification found 
necessary by the Department to ensure cost neutrality.
    The Proposed Rule detailed the first comprehensive revisions to 
the WIC food packages since 1980. The revised food packages were 
developed to better reflect current nutrition science and dietary 
recommendations than do current food packages, without impacting 
overall program costs. Compared to current WIC packages, the 
proposal:
    Provides greater consistency with the Dietary Guidelines for 
Americans. The interim rule adds fruits and vegetables, and whole 
grains to the packages for the first time. The revised packages 
include foods from each food group except oils and allow variety and 
choice within the groups. Reductions are made to the amounts 
provided for certain foods in the current packages in order to be 
more consistent with the amounts of these foods recommended in the 
2005 Dietary Guidelines for Americans and WIC's role as a 
supplemental nutrition program.
    Supports improved nutrient intakes. The interim rule adds 
additional foods and modifies amounts of current foods support 
overall improvement in nutrient consumption and reduction in the 
prevalence of inadequate or excessive nutrient intakes. Compared 
with the current food packages, the revised packages are estimated 
to provide greater amounts of nearly all the nutrients identified by 
the IOM as often lacking in the diets of the WIC-eligible 
population, such as iron, fiber, and vitamin E. The revised food 
packages for women and children also provide less saturated fat, 
cholesterol, total fat and sodium than the current packages.
    Provides greater consistency with established dietary 
recommendations for infants and children under 2, including 
encouragement and support for breastfeeding. The revised infant food 
packages improve overall nutrient density compared to current 
packages while keeping caloric content the same or slightly lower. 
The revised packages change age specification for assignment as well 
as establish three feeding categories to better address current 
dietary recommendations of the American Academy of Pediatrics (AAP) 
and promote breastfeeding. The packages for breastfeeding infant-
mother pairs are revised to provide stronger incentives for 
continued breastfeeding, including providing less formula to 
partially breastfed infants than current packages, and providing 
additional quantities/types of food for breastfeeding mothers. For 
older infants, the proposal delays the introduction of complementary 
foods, consistent with AAP, from four to six months of age and 
modifies formula amounts. Infant foods are added and juice 
eliminated in the packages for older infants in order to promote 
healthy dietary patterns.
    Addresses Emerging Public Health Nutrition-Related Issues. The 
prevalence of overweight and obesity in adults, adolescents, and 
children have increased dramatically, with direct implications for 
WIC participants. For example, childhood overweight has been linked 
to adverse health outcomes including elevated blood pressure, 
hyperinsulinemia, glucose intolerance, type 2 diabetes, 
dyslipidemia, and other early risks for chronic disease. The 
addition of fruits and vegetables and the emphasis on whole grains 
are consistent with recommendations for food patterns that may 
contribute to a healthy body weight. Compared to the current food 
packages, the revised food packages provide less saturated fat and 
cholesterol than the current packages for women and children. In 
addition, the revised food packages are designed to encourage 
breastfeeding and thus may contribute to a reduced risk of 
overweight in children.
    Provides Wide Appeal to Diverse Populations. The proposed 
additional foods are the foods most often requested over the years 
by a variety of stakeholders such as the National WIC Association, 
WIC participants, WIC State and local agencies, industry and health 
professionals, and would provide more participant choice and a wider 
variety of foods than the current food packages. The increased 
variety and choice will provide State agencies increased flexibility 
in prescribing culturally appropriate food packages.
    The Proposed Rule was published in the Federal Register on 
August 7, 2006 (71 FR 44784), with a 90-day comment period. A total 
of 46,502 comment letters were received on the Proposed Rule; of 
those, 23,908 were form letters. Comments were submitted by a 
variety of stakeholders, including program participants, WIC State 
and local agencies and Indian Tribal Organizations, the National WIC 
Association, professional organizations and associations, advocacy 
groups, healthcare professionals (including universities), members 
of Congress, the food industry, vendors, farmers, and private 
citizens.
    With few changes, the provisions in the Proposed Rule have been 
adopted as this interim rule. This impact analysis specifically 
addresses significant or substantial public comments and Department 
modifications from the provisions as initially proposed. Unless 
otherwise stated, the provisions stated in the impact analysis for 
the Proposed Rule \11\ should be regarded as the basis for the 
impact analysis of the interim rule. The provisions of the rule and 
the related changes are summarized below.
---------------------------------------------------------------------------

    \11\ 71 FR 44784: Special Supplemental Nutrition Program for 
Women, Infants and Children (WIC): Revisions in the WIC Food 
Packages: Proposed Rule, August 7, 2006, p. 44825.
---------------------------------------------------------------------------

1. Food Package I--Infants Under Six Months

    Proposed rule: Tie maximum infant formula prescriptions to 
breastfeeding practice
     Establish fully breastfed, partially breastfed, and 
fully formula-fed categories, and set maximum formula allowances for 
each. Food Package I currently specifies a single maximum formula 
amount for all Package I recipients; local WIC staff may tailor the 
amount of formula to reflect individual participant needs, based on 
frequency of breastfeeding. The new rule sets a maximum formula 
amount for partially breastfed infants age one month and older that 
is roughly half the maximum provided to fully formula fed infants.

[[Page 69001]]

     Powder formula alone is recommended for partially 
breastfed infants. Powder and non-powder options remain available 
for fully formula fed infants.
    Interim rule: No change from Proposed Rule.
    Proposed rule: Delay introduction of complementary foods. Extend 
the age range of infants covered by Food Package I by two months. 
Currently, Food Package I supplements the diets of infants from 
birth through three months. Under the proposed rule, Food Package I 
would be provided to infants through five months of age. Under both 
the current and proposed rules, Food Package I contains no 
complementary foods. Extending the age range of infants served by 
Food Package I removes complementary foods (juice and infant cereal) 
from the food packages for four and five-month-old infants, which is 
consistent with current infant feeding practice guidelines.
    Interim rule: No change from Proposed Rule.
    Proposed rule: Increase maximum formula prescription at four 
months. Increase the maximum amount of formula allowed for four and 
five-month-old infants (relative to the amount allowed under current 
rules.)
    Interim rule: No change from Proposed Rule.
    Proposed rule: No partially breastfed category for infants under 
one month. Do not provide formula to breastfed infants under one 
month old. Infants under one month will be recognized as either 
fully breastfed or fully formula-fed. No infant will be prescribed 
formula in the amount specified by Food Package I for partially 
breastfed infants until he or she reaches one month.
    Interim rule: Provide formula to partially breastfed infants 
under one month. Partially breastfed infants ages 0 through 1 month 
may receive the equivalent of not more than 104 fluid ounces of 
reconstituted infant formula, approximately one can of powder infant 
formula.
    Rationale: The interim rule intends to encourage mothers to 
continue a practice of breastfeeding that may have begun at the 
hospital. However, FNS recognizes the need for States to have the 
flexibility to provide a small amount of formula in the first month 
of life, if necessary, to assist breastfeeding mothers who may 
otherwise choose to formula feed. Powder infant formula is 
recommended due to its longer shelf life and to minimize waste. 
Individual amounts may be tailored by a Competent Professional 
Authority based on the assessed needs of the breastfeeding infant.
    Proposed rule: No low iron formula. Discontinue the prescription 
of low iron infant formula for infants of all ages.
    Interim rule: No change from Proposed Rule.
    Proposed rule: Reclassify prescriptions of exempt infant formula 
under Package III. Administer exempt formulas, other than those 
prescribed for common food allergies, under Food Package III. 
Currently, all infants are classified as recipients of Food Packages 
I or II. This proposal would simply reclassify certain Package I 
(and II) recipients as Package III recipients; it is not intended to 
alter the types of foods prescribed to infants with qualifying 
conditions.
    Interim rule: No change from Proposed Rule.

2. Food Package II--Infants 6 Through 11 Months

    Proposed rule: Delay introduction of complementary foods. Delay 
the age at which infants become eligible for Food Package II. 
Infants are currently made eligible for Food Package II and its 
complementary foods at four months of age. The proposed rule would 
make infants age one month or older eligible for Package II foods at 
six months of age.
    Interim rule: No change from Proposed Rule.
    Proposed rule: Tie maximum formula prescription to breastfeeding 
practice. Establish fully breastfed, partially breastfed, and fully 
formula-fed categories, and set maximum formula allowances for each. 
The new rule sets a maximum formula amount for partially breastfed 
infants that is roughly half the maximum provided to fully formula-
fed infants.
    Interim rule: No change from Proposed Rule.
    Proposed rule: Reduce maximum formula prescription amounts. 
Reduce the amount of formula, relative to current rules, for 
partially breastfed and fully formula-fed infants.
    Interim rule: No change from Proposed Rule.
    Proposed rule: Replace infant's juice with fruits and vegetables
     Eliminate juice from Food Package II. Add infant food 
fruits and vegetables to the package. Allow fresh bananas as a 
substitute for a portion of the infant food fruits and vegetables.
     Provide more infant food fruits and vegetables to fully 
breastfed infants than to partially breastfed or fully formula-fed 
infants.
    Interim rule: No change from Proposed Rule.
    Proposed rule: Provide infant food meat to fully breastfed 
infants. Add infant food meat to Package II for fully breastfed 
infants.
    Interim rule: No change from Proposed Rule.
    Proposed rule: No low iron formula. Discontinue the prescription 
of low iron infant formula.
    Interim rule: No change from Proposed Rule.
    Proposed rule: Reclassify prescriptions of exempt infant formula 
under Package III. Administer exempt formulas to infants under Food 
Package III.
    Interim rule: No change from Proposed Rule.
    Proposed rule: Disallow prescription of infant cereal with added 
ingredients. Infant cereal with added fruit, milk, formula, or other 
non-grain foods may not be prescribed under Food Package II.
    Interim rule: No change from Proposed Rule.

3. Food Package III--Medically Fragile Participants

    Proposed rule: Administer exempt formulas to infants with 
qualifying conditions under Package III
    Infants with a qualifying condition (see below) who currently 
receive exempt infant formulas would be moved from Package I or 
Package II to Package III.
    Interim rule: In addition to the provisions of the Proposed 
Rule, the interim rule will allow medically fragile infants 6 months 
of age or greater whose medical condition prevents them from 
consuming complementary infant foods (cereal, fruit and vegetables, 
and meat) to receive exempt infant formula or WIC-eligible medical 
foods at the same maximum monthly allowance as infants ages 4 
through 5 months of the same feeding option.
    Rationale: Comments expressed concern about medically fragile 
infants 6 months of age or greater whose medical condition prevents 
them from consuming complementary infant foods. The allowance of 
exempt infant formula or WIC-eligible medical foods will replace 
nutrition that would result from the addition of complementary 
foods.
    Proposal Rule: Clarify language governing Package III's purpose 
and scope
     The proposed rule would provide additional guidance to 
States on the nature of medical conditions that qualify a WIC 
participant for Package III medical foods.
     Prescription of a medical food would also require 
additional justification and instructions by a licensed health care 
professional.
    Interim rule: No change from Proposed Rule.
    Proposed rule: Make non-Package III foods available to Package 
III recipients. In addition to the medical foods and exempt formulas 
currently prescribed to Package III recipients, the proposed rule 
would offer these individuals all of the foods in the packages to 
which they would have been eligible in the absence of their special 
medical needs.
    Interim rule: No change from Proposed Rule, with the exception 
of whole milk. Whole milk will be authorized for children 1 through 
4 years of age and women receiving Food Package III, with medical 
documentation.

4. Food Package IV--Children From Age One up to Age Five

    Proposed rule: Reduce the prescribed amount of milk; modify 
substitution options
     The maximum amount of milk that may be prescribed to 
children would be reduced from 24 quarts to 16 quarts per month.
     Under current rules, cheese may be prescribed as a 
substitute for up to 12 quarts of milk. The proposed rule would 
allow cheese to replace up to three quarts of milk. The substitution 
rate of one pound of cheese for three quarts of milk would remain 
unchanged.
     Soy products will be allowed as a milk substitute on a 
restricted basis; soy may only be prescribed to children with a 
documented medical need.
    Interim rule: In addition to the provisions of the Proposed 
Rule, the interim rule clarifies the authorization of lactose-
reduced and lactose-free milk, and that these products should be 
offered before other authorized milk substitutes to those 
participants who cannot drink milk due to lactose intolerance. The 
interim rule also clarifies that medical documentation is not 
required for participants to receive lactose-reduced and lactose-
free milk.

[[Page 69002]]

    Rationale: The IOM emphasized the importance of milk in the 
diets of WIC participants, and approached the issue of milk 
substitutes with caution. The IOM considered and rejected the 
substitution of soy products for milk in the revised childrens' food 
package without documented medical need.
    Proposed rule: Provide only fat-reduced milk to older children. 
Prescribe only fat-reduced milk to children age two and above. 
Prescribe only whole milk to children under age two.
    Interim rule: No change from Proposed Rule.
    Proposed rule: Modify/clarify reconstitution rates for dry and 
evaporated milk. The reconstitution rate for evaporated milk is 
changed from 13 to 16 ounces of evaporated milk per reconstituted 
quart. The reconstitution rate for powdered milk is restated in 
terms of fluid ounces rather than quarts; this change does not alter 
the reconstitution rate itself.
    Interim rule: No change from Proposed Rule.
    Proposed rule: Reduce juice prescriptions; add fruits and 
vegetables.
     Reduce monthly maximum juice prescription from 288 
fluid ounces to 128. Clarify that juice must be 100% unsweetened 
fruit or vegetable juice, that it contain a minimum of 30 milligrams 
of vitamin C per 100 milliliters, and that it be pasteurized.
     Add a $6 monthly voucher to the package for the 
purchase of any combination of fresh or processed fruits and 
vegetables other than white potatoes.
    Interim rule: No change from Proposed Rule.
    Proposed rule: Add whole grain breads; add whole grain 
requirement to cereal.
     Add two pounds of whole grain bread to the food 
package. Only bread meeting U.S. Food and Drug Administration (FDA) 
standards for whole grain labeling would be allowed.\12\
---------------------------------------------------------------------------

    \12\ See 21 CFR Part 136, Section 136.180, and FDA's Health 
Claim Notification for Whole Grain Foods with Moderate Fat Content 
at http://www.cfsan.fda.gov/dms/flgrain2.html.

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

     Several whole grain products would be allowed as 
substitutions for bread. These include brown rice, bulgur, and whole 
grain barley without added sugar, fat, oil, or sodium. Soft corn or 
whole wheat tortillas would be allowed as an additional substitute 
at the option of State agencies. States may limit or completely 
eliminate substitutes if needed to control food costs.
     Require that WIC authorized breakfast cereals \13\ meet 
the same whole grain requirements as bread.
---------------------------------------------------------------------------

    \13\ The proposed rule would also replace the existing terms 
``cereal (hot or cold)'' and ``adult cereal (hot or cold)'' with 
``breakfast cereal'' in 7 CFR 246.10(c).
---------------------------------------------------------------------------

    Interim rule: Revise proposed whole grain requirements.
     The cereal whole grain requirement in the Proposed Rule 
will be modified to require that at least one half of the total 
number of breakfast cereals on a State's authorized food list meet 
the whole grain requirement as defined in the interim rule, and that 
vendors be required to stock at least one whole grain cereal. The 
remaining authorized breakfast cereals are required to meet only the 
iron and sugar requirements.
     To assist in the identification of whole grain bread, 
cereal, and whole grain foods, the interim rule adds the requirement 
that a whole grain must be the primary ingredient by weight in all 
bread, cereal and whole grain products.
    Rationale:
     Comments expressed concern that the proposed 
nutritional requirement for whole grain breakfast cereal (using 
FDA's Health Claim \14\) is too restrictive and would eliminate corn 
and rice-based cereals that are necessary for those participants 
with wheat allergies or strong preferences for corn and rice-based 
cereals. In addition, commenters stated that whole grain cereals are 
less palatable to young children.
---------------------------------------------------------------------------

    \14\ See 21 CFR Part 136, Section 136.180, and FDA's Health 
Claim Notification for Whole Grain Foods with Moderate Fat Content 
at http://www.cfsan.fda.gov/dms/flgrain2.html.

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

     Comments expressed concern about administrative 
difficulties in the identification of whole wheat bread and whole 
grain foods. To ensure State agencies determine the correct foods to 
authorize for State food lists, the Department has determined that 
whole-grain foods must have a whole-grain as the primary ingredient. 
This will allow products that are 100 percent whole grain, or are 
primarily whole wheat or multi-grain, to be WIC-eligible as well as 
provide an easy way for participants and vendors to identify most 
whole grain bread products by using the food ingredient label.\15\
---------------------------------------------------------------------------

    \15\ Baked in-store breads generally have no label.
---------------------------------------------------------------------------

    Proposed rule: Reduce maximum egg prescription.
    Reduce the maximum egg prescription from two and one-half dozen 
per month \16\ to one dozen.
---------------------------------------------------------------------------

    \16\ Some states currently allow just two dozen as the monthly 
maximum.
---------------------------------------------------------------------------

    Interim rule: No change from Proposed Rule.
    Proposed rule: Allow canned beans as a substitute for dry beans.
    Allow canned beans as a substitute for dry at the rate of sixty-
four ounces per pound.
    Interim rule: No change from Proposed Rule.

5. Food Package V--Pregnant and Partially Breastfeeding Women Up to One 
Year Postpartum

    Proposed rule: Condition eligibility for Package V on 
breastfeeding practice.
    Mothers who request, and are prescribed, more than the maximum 
amount of formula allowed for partially breastfed infants will no 
longer be eligible for Food Package V. Currently, women who 
breastfeed at least once per day are eligible for this package. 
Reclassified as non-breastfeeding for purposes of WIC food package 
issuance, these women will be assigned Food Package VI up to six 
months postpartum; they will receive no food package after six 
months.
    Interim rule: No change from Proposed Rule.
    Proposed rule: Reduce the prescribed amount of milk; introduce 
new substitution options.
     The maximum amount of milk that may be prescribed to 
Package V recipients would be reduced from 28 quarts to 22 quarts 
per month.
     Under current rules, cheese may be prescribed as a 
substitute for up to 12 quarts of milk. The proposed rule would 
allow cheese to replace just three quarts of milk. The substitution 
rate of one pound of cheese for three quarts of milk would remain 
unchanged.
     Calcium-set tofu \17\, and calcium and vitamin D 
fortified soy beverage would be introduced as new milk substitutes. 
Each pound of tofu would replace one quart of milk. For most women, 
cheese and tofu, combined, could replace no more than four quarts of 
milk; women with documented medical needs may be prescribed these 
substitutes in amounts that exceed the four quart maximum. No more 
than one pound of cheese may be substituted for milk.
---------------------------------------------------------------------------

    \17\ Tofu prepared with only calcium salts.
---------------------------------------------------------------------------

     Soy beverage would be allowed as a substitute for 
Package V's entire milk allowance.
     IOM recommended yogurt as an alternative to fluid milk. 
To ensure cost neutrality yogurt was omitted as a fluid milk 
substitution. (See discussion of yogurt as a milk substitute in 
Section F, Item 1.)
    Interim rule: In addition to the provisions of the Proposed 
Rule, the interim rule clarifies the authorization of lactose-
reduced and lactose-free milk, and that these products should be 
offered before other authorized milk substitutes to those 
participants who can not drink milk due to lactose intolerance. The 
interim rule also clarifies that medical documentation is not 
required for participants to receive lactose-reduced and lactose-
free milk.
    Rationale: Lactose-reduced and lactose-free milks conform to the 
FDA standard of identity. The authorization of these milks was not 
specified in the Proposed Rule.
    Proposed rule: Reduce maximum juice prescription; add fruits and 
vegetables.
     Reduce monthly maximum juice prescription from 288 
fluid ounces to 144. Clarify that juice must be 100% unsweetened 
fruit or vegetable juice, that it contain a minimum of 30 milligrams 
of vitamin C per 100 milliliters, and that it be pasteurized.
     Add an $8 monthly voucher to the package for the 
purchase of any combination of fresh or processed fruits and 
vegetables other than white potatoes.
    Interim rule: No change from Proposed Rule.
    Proposed rule: Add whole grain breads; add whole grain 
requirement to cereal.
     Add one pound of whole grain bread to the food package. 
Only bread meeting U.S. Food and Drug Administration (FDA) standards 
for whole grain labeling would be allowed.\18\
---------------------------------------------------------------------------

    \18\ See 21 CFR Part 136, Section 136.180, and FDA's Health 
Claim Notification for Whole Grain Foods with Moderate Fat Content 
at http://www.cfsan.fda.gov/dms/flgrain2.html.

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

     Several whole grain products would be allowed as 
substitutions for bread. These include brown rice, bulgur, and whole 
grain barley without added sugar, fat, oil, or

[[Page 69003]]

sodium. Soft corn or whole wheat tortillas would be allowed as an 
additional substitute at the option of State agencies. States may 
limit or completely eliminate substitutes if needed to control food 
costs.
     Require that WIC authorized breakfast cereals meet the 
same whole grain requirements as bread.
    Interim rule: Revise proposed whole grain requirements.
     The cereal whole grain requirement in the Proposed Rule 
will be modified to require that at least one half of the total 
number of breakfast cereals on a State's authorized food list meet 
the whole grain requirement as defined in the interim rule, and that 
vendors be required to stock at least one whole grain cereal. The 
remaining authorized breakfast cereals are required to meet only the 
iron and sugar requirements.
     To assist in the identification of whole grain bread 
and whole grain foods, the interim rule adds the requirement that a 
whole grain must be the primary ingredient by weight in all bread 
products.
    Rationale:
     Comments expressed concern that the proposed 
nutritional requirement for whole grain breakfast cereal (using 
FDA's Health Claim \19\) is too restrictive and would eliminate corn 
and rice-based cereals that are necessary for those participants 
with wheat allergies or strong preferences for corn and rice-based 
cereals.
---------------------------------------------------------------------------

    \19\ See 21 CFR Part 136, Section 136.180, and FDA's Health 
Claim Notification for Whole Grain Foods with Moderate Fat Content 
at http://www.cfsan.fda.gov/dms/flgrain2.html.

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

     Comments expressed concern about administrative 
difficulties in the identification of whole wheat bread and whole 
grain foods. To ensure State agencies determine the correct foods to 
authorize for State food lists, the Department has determined that 
whole-grain foods must have a whole-grain as the primary ingredient. 
This will allow products that are 100 percent whole grain, or are 
primarily whole wheat or multi-grain, to be WIC-eligible as well as 
provide an easy way for participants and vendors to identify whole 
grain bread products by using the food label.
    Proposed rule: Reduce maximum egg prescription.
    Reduce the maximum egg prescription from two and one-half dozen 
per month to one dozen.
    Interim rule: No change from Proposed Rule.
    Proposed rule: Allow canned beans as a substitute for dry beans.
    Allow canned beans as a substitute for dry at the rate of sixty-
four ounces per pound.
    Interim rule: No change from Proposed Rule.
    Proposed rule: Increase total amount of peanut butter and beans.
    Peanut butter is currently offered as a substitute for dry 
beans. The proposal would provide both one pound of dry beans and 18 
ounces of peanut butter to Package V recipients. The rule also 
clarifies that Package V recipients may replace both dry beans and 
peanut butter with canned beans.
    Interim rule: No change from Proposed Rule.

6. Food Package VI--Postpartum Women (Up to Six Months Postpartum)

    Proposed rule: Reduce the prescribed amount of milk; introduce 
new substitution options.
     The maximum amount of milk that may be prescribed to 
Package VI recipients would be reduced from 24 quarts to 16 quarts 
per month.
     Under current rules, cheese may be prescribed as a 
substitute for up to 12 quarts of milk. The proposed rule would 
allow cheese to replace just three quarts of milk. The substitution 
rate of one pound of cheese for three quarts of milk would remain 
unchanged. Calcium-set tofu, and calcium and vitamin D fortified soy 
beverage would be introduced as new milk substitutes. Each pound of 
tofu would replace one quart of milk. For most women, cheese and 
tofu, combined, could replace no more than four quarts of milk; 
women with documented medical needs may be prescribed these 
substitutes in amounts that exceed the four quart maximum. No more 
than one pound of cheese may be substituted for milk.
     Soy beverage would be allowed as a substitute for 
Package VI's entire milk allowance.
     IOM recommended yogurt as an alternative to fluid milk. 
To ensure cost neutrality yogurt was omitted as a fluid milk 
substitution. (See discussion of yogurt as a milk substitute in 
Section F, Item 1.)
    Interim rule: In addition to the provisions of the Proposed 
Rule, the interim rule clarifies the authorization of lactose-
reduced and lactose-free milk, and that these products should be 
offered before other authorized milk substitutes to those 
participants who can not drink milk due to lactose intolerance. The 
interim rule also clarifies that medical documentation is not 
required for participants to receive lactose-reduced and lactose-
free milk.
    Rationale: Lactose-reduced and lactose-free milks conform to the 
FDA standard of identity. The authorization of these milks was not 
specified in the Proposed Rule.
    Proposed rule: Reduce maximum juice prescription; add fruits and 
vegetables.
     Reduce monthly maximum juice prescription from 192 
fluid ounces to 96. Clarify that juice must be 100% unsweetened 
fruit or vegetable juice, that it contain a minimum of 30 milligrams 
of vitamin C per 100 milliliters, and that it be pasteurized.
     Add an $8 monthly voucher to the package for the 
purchase of any combination of fresh or processed fruits and 
vegetables other than white potatoes.
    Interim rule: No change from Proposed Rule.
    Proposed rule: Add whole grain requirement to cereal.
     Require that WIC authorized breakfast cereals meet the 
same whole grain requirements as bread.
    Interim rule: Add whole grain requirement to cereal.
    The cereal whole grain requirement in the Proposed Rule will be 
modified to require that at least one half of the total number of 
breakfast cereals on the State's authorized food list meet the whole 
grain requirement as defined in the interim rule, and that vendors 
be required to stock at least one whole grain cereal. The remaining 
authorized breakfast cereals are required to meet only the iron and 
sugar requirements. To assist in the identification of whole grain 
cereal, the interim rule adds the requirement that a whole grain 
must be the primary ingredient by weight.
    Rationale:
    Comments expressed concern that the proposed nutritional 
requirement for whole grain breakfast cereal (using FDA's Health 
Claim \20\) is too restrictive and would eliminate corn and rice-
based cereals that are necessary for those participants with wheat 
allergies or strong preferences for corn and rice-based cereals. 
Comments also expressed concern about administrative difficulties in 
the identification of whole wheat bread and whole grain foods. To 
ensure State agencies determine the correct foods to authorize for 
State food lists, the Department has determined that whole-grain 
foods must have a whole-grain as the primary ingredient.
---------------------------------------------------------------------------

    \20\ See 21 CFR Part 136, Section 136.180, and FDA's Health 
Claim Notification for Whole Grain Foods with Moderate Fat Content 
at http://www.cfsan.fda.gov/dms/flgrain2.html.

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

    Proposed rule: Reduce maximum egg prescription.
    Reduce the maximum egg prescription from two and one-half dozen 
per month to one dozen.
    Interim rule: No change from Proposed Rule.
    Proposed rule: Add beans and peanut butter to the food package.
    One pound of dry beans or 18 ounces of peanut butter would be 
added to Package VI. The same canned bean substitution option added 
to Packages IV, V, and VII would be extended to Package VI 
recipients as well.
    Interim rule: No change from Proposed Rule.

7. Food Package VII--Exclusively Breastfeeding Women

    Proposed rule: Reduce the prescribed amount of milk; introduce 
new substitution options.
     The maximum amount of milk that may be prescribed to 
Package VII recipients would be reduced from 28 quarts to 24 quarts 
per month.
     Under current rules, cheese may be prescribed as a 
substitute for up to 12 quarts of milk. The proposed rule would 
allow cheese to replace just six quarts of milk. The substitution 
rate of one pound of cheese for three quarts of milk would remain 
unchanged.
     Calcium-set tofu, and calcium and vitamin D fortified 
soy beverage would be introduced as new milk substitutes. Each pound 
of tofu would replace one quart of milk. For most women, cheese and 
tofu, combined, could replace no more than six quarts of milk; women 
with documented medical needs may be prescribed these substitutes in 
amounts that exceed the six quart maximum. No more than two pounds 
of cheese may be substituted for milk.
     Soy beverage would be allowed as a substitute for 
Package VII's entire milk allowance.
     IOM recommended yogurt as an alternative to fluid milk. 
To ensure cost

[[Page 69004]]

neutrality yogurt was omitted as a fluid milk substitution. (See 
discussion of yogurt as a milk substitute in Section F, Item 1.)
    Interim rule: In addition to the provisions of the Proposed 
Rule, the interim rule clarifies the authorization of lactose-
reduced and lactose-free milk, and that these products should be 
offered before other authorized milk substitutes to those 
participants who can not drink milk due to lactose intolerance. The 
interim rule also clarifies that medical documentation is not 
required for participants to receive lactose-reduced and lactose-
free milk.
    Rationale: Lactose-reduced and lactose-free milks conform to the 
FDA standard of identity. The authorization of these milks was not 
specified in the Proposed Rule.
    Proposed rule: Reduce maximum juice prescription; add fruits and 
vegetables.
     Reduce monthly maximum juice prescription from 336 
fluid ounces to 144. Clarify that juice must be 100% unsweetened 
fruit or vegetable juice, that it contain a minimum of 30 milligrams 
of vitamin C per 100 milliliters, and that it be pasteurized.
     Add an $8 monthly voucher to the package for the 
purchase of any combination of fresh or processed fruits and 
vegetables other than white potatoes.
     Eliminate the separate prescription of carrots.
    Interim rule: The provision of an $8 monthly voucher has been 
revised to reflect a $10 monthly voucher.
    Rationale: IOM recommended cash-value food instruments for 
fruits and vegetables at the level of $10 per month for women. To 
ensure cost neutrality, cash-value food instruments for fruits and 
vegetable was decreased to $8 per month for women. However, FNS has 
considered the benefits of increasing the value of the vouchers for 
fully breastfeeding women and has determined that a $2 increase can 
be accomplished while maintaining cost neutrality. In addition, the 
increase further enhances the attractiveness of the fully 
breastfeeding package and provides an additional incentive for women 
to breastfed.
    Proposed rule: Add whole grain breads; add whole grain 
requirement to cereal.
     Add one pound of whole grain bread to the food package. 
Only bread meeting U.S. Food and Drug Administration (FDA) standards 
for whole grain labeling would be allowed.\21\
---------------------------------------------------------------------------

    \21\ See 21 CFR Part 136, Section 136.180, and FDA's Health 
Claim Notification for Whole Grain Foods with Moderate Fat Content 
at http://www.cfsan.fda.gov/~dms/flgrain2.html.

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

     Several whole grain products would be allowed as 
substitutions for bread. These include brown rice, bulgur, and whole 
grain barley without added sugar, fat, oil, or sodium. Soft corn or 
whole wheat tortillas would be allowed as an additional substitute 
at the option of State agencies. States may limit substitutes if 
needed to control food costs.
    Interim rule: Revise proposed whole grain requirements.
     The cereal whole grain requirement in the Proposed Rule 
will be modified to require that at least one half of the total 
number of breakfast cereals on the State's authorized food list meet 
the whole grain requirement as defined in the interim rule, and that 
vendors be required to stock at least one whole grain cereal. The 
remaining authorized breakfast cereals are required to meet only the 
iron and sugar requirements.
     To assist in the identification of whole grain bread 
and whole grain foods, the interim rule adds the requirement that a 
whole grain must be the primary ingredient by weight in all bread 
products.
    Rationale:
     Comments expressed concern that the proposed 
nutritional requirement for whole grain breakfast cereal (using 
FDA's Health Claim \22\) is too restrictive and would eliminate corn 
and rice-based cereals that are necessary for those participants 
with wheat allergies or strong preferences for corn and rice-based 
cereals.
---------------------------------------------------------------------------

    \22\ See 21 CFR Part 136, Section 136.180, and FDA's Health 
Claim Notification for Whole Grain Foods with Moderate Fat Content 
at http://www.cfsan.fda.gov/~dms/flgrain2.html.

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

     Comments expressed concern about administrative 
difficulties in the identification of whole wheat bread and whole 
grain foods. To ensure State agencies determine the correct foods to 
authorize for State food lists, the Department has determined that 
whole-grain foods must have a whole-grain as the primary ingredient. 
This will allow products that are 100% whole grain, or are primarily 
whole wheat or multi-grain, to be WIC-eligible as well as provide an 
easy way for participants and vendors to identify whole grain bread 
products by using the food label.
    Proposed rule: Reduce maximum egg prescription.
    Reduce the maximum egg prescription from two and one-half dozen 
per month to one dozen.
    Interim rule: No change from Proposed Rule.
    Proposed rule: Allow canned beans as a substitute for dry beans.
    Allow canned beans as a substitute for dry at the rate of sixty-
four ounces per pound. Also clarifies that Package VII recipients 
may replace both dry beans and peanut butter with canned beans.
    Interim rule: No change from Proposed Rule.
    Proposed rule: Modify Package VII's canned fish provision.
     Increase the maximum canned fish prescription to 30 
ounces. Clarify that fish packaged in foil pouches meets WIC 
requirements.
     Allow three varieties of canned fish (light tuna, 
salmon and sardines) that are cost-effective and do not pose a 
mercury hazard as identified by federal advisories of the Food and 
Drug Administration and the U.S. Environmental Protection Agency for 
breastfeeding women.
    Interim rule: The interim rule allows canned mackerel in 
addition to canned salmon and sardines, and light tuna.
    Rationale: In response to comment requests, the interim rule 
also allows canned mackerel. The rule specifies two species of 
mackerel, both of which are also cost-effective and identified by 
the EPA and FDA as having ``lower levels of mercury.''

8. Other Provisions (Non Food-Package Specific)

    Proposed rule: Clarifies the right of States to impose 
restrictions on WIC foods.
    States retain the right to exclude particular products, by brand 
or variety, from the food packages distributed to their residents. 
States are authorized to set standards for WIC foods that are more 
restrictive than those set by the federal government; however, they 
may not authorize the prescription of foods that do not meet minimum 
WIC-eligibility requirements set forth in regulations. The States 
may take into account issues of cost, nutrition, statewide 
availability, and participant appeal in setting these restrictions.
    Interim rule: No change from Proposed Rule.
    Proposed rule: Ends the state practice of categorical 
nutritional tailoring.
    States will no longer be permitted to construct their own 
standardized set of food packages for WIC subpopulations with common 
supplemental nutritional needs. The full maximum monthly allowances 
of all foods in all packages must be made available to participants 
if medically or nutritionally warranted. However, State agencies 
have the authority to make adjustments to WIC foods for 
administrative convenience and to control costs. Such adjustments 
may involve packaging methods, container sizes, brands, types and 
physical forms of WIC foods.
    Interim rule: No change from Proposed Rule.
    Proposed rule: Prohibit States from proposing new food package 
substitutions.
    The increased variety and choice in the supplemental foods in 
the Proposed Rule is based on IOM recommendations and the 
consideration of cultural appropriate packages for diverse groups. 
Therefore, WIC State agency proposal for cultural food substitutions 
will no longer be considered. Future reviews of the WIC food 
packages by FNS will be used to determine the need for additional 
cultural accommodations.
    Interim rule: State agencies may submit to FNS a plan for 
substitution of foods to allow for different cultural eating 
patterns. The plan shall provide the State agency's justification, 
including a specific explanation of the cultural eating pattern and 
other information necessary for FNS to evaluate the plan. FNS will 
evaluate a State agency's plan for substitution of foods for 
different cultural eating patterns based on the following criteria: 
(1) Any proposed substitute food must be nutritionally equivalent or 
superior to the food it is intended to replace; (2) The proposed 
substitute must be widely available to participants in the areas 
where the substitute is intended to be used; and (3) The cost of the 
substitute must be equivalent to or less than the cost of the food 
it is intended to replace. These criteria are the same as those 
under current WIC regulations at 7 CFR 246.10(e).
    Rationale: Comments requested that the interim rule allow States 
the flexibility to meet unanticipated cultural needs of 
participants.

[[Page 69005]]

    Proposed rule: Rounding up for infant food and infant cereal
    A state agency may round up to the next whole container for 
either infant formula or infant foods (infant cereal, fruits and 
meats) if needed to provide at least the maximum authorized amount 
of these foods. For infant formula, state agencies must issue the 
whole containers that provide at the least the full nutritional 
benefit (the maximum allowance of reconstituted fluid ounces of 
liquid concentrate) but not more than the maximum allowance of 
infant formula for each food package category and infant feeding 
option.
    Interim rule: No change from Proposed Rule.

C. Summary of Key Provisions

    The expected impact of the interim rules on the federal 
government, state and local WIC agencies, vendors, manufacturers, 
and program participants is summarized in Table 1. Overall economic 
effects are noted with a ``+$'' for cost increases, and a ``-$'' for 
cost savings. A more detailed examination of strictly economic 
effects follows Table 1.

                                       Table 1.--Summary of Key Provisions
----------------------------------------------------------------------------------------------------------------
                                                              Effect of interim rule on:
                                    ----------------------------------------------------------------------------
     Current and interim rules:                             State/local
                                     USDA/Federal gov't       agencies       Vendors/industry   WIC participants
----------------------------------------------------------------------------------------------------------------
 Current rule:
    1. Food Package I serves         Reduces cost of     Changes to         May increase the   Provides a food
     infants from birth through       infant food         current rules      sale of infant     package that
     three months. Formula is the     packages. Interim   will require the   formula at the     conforms more
     only food prescribed under       packages for four   implementation     expense of juice   closely to the
     Package I.                       and five month      of new state and   and infant         diet recommended
                                      old infants         local              cereal.            by health
                                      (which reduce       administrative                        professionals
                                      calories            procedures.                           for four and
                                      slightly) are                                             five month old
                                      less expensive                                            infants.
                                      than current Food
                                      Package II.
    2. Infants from four through
     eleven months are eligible for
     juice and infant cereal, in
     addition to formula, under
     Package II. The maximum
     formula prescription in
     packages I and II are the
     same.
 Interim rule:
    1. Expand Food Package I to
     serve infants up to six
     months. Delay the introduction
     of complementary foods by two
     months.
    2. Increase formula
     prescriptions at four months
     to offset lost food energy.


[[Page 69006]]


                 -$

 Current rule:
    Under Food Package I, an infant  If breastfeeding    State and local    Negligible effect  Although some
     can receive up to the maximum    increases enough    agencies must      on the sale of     participants may
     infant formula for the           to keep an infant   develop new        infant formula     receive less
     package. Since the rule does     classified as       guidelines to      for newborn        food or formula
     not separate partially and       partially           implement and      infants. But,      under the
     fully formula fed infants, a     breastfed who       communicate this   the rule           interim
     single package maximum applies   would have been     policy.            provides an        packages, in
     to all partially and fully       classified as                          incentive to       general, WIC
     formula-fed infants from birth   fully formula fed                      breastfeed,        infants and
     through three months. Food       otherwise, then                        which may          mothers will
     Package V is provided to         formula costs are                      ultimately         benefit from the
     pregnant women and to all new    reduced and there                      reduce formula     enhanced
     mothers, up to one year          is no change in                        sales beyond the   packages and
     postpartum, if they breastfeed   the mother's                           infants' first     package
     at least once per day. Food      status. For                            month. Moving      assignment
     Package VII is provided to       partially                              mothers from the   method.
     fully breastfeeding mothers.     breastfed infants                      fully formula      Breastfeeding
     Interim rule:                    under one month                        fed package to     education and
    Infants and mothers will be       of age, the low                        the partially or   limited formula
     assigned food packages based     formula limit                          exclusively        provided to new
     on the mother's reported         provided during                        breastfeeding      mothers by WIC
     breastfeeding practice. The      that first month,                      packages, may      staff may
     corresponding amount of          paired with the                        slightly           successfully
     formula prescribed will          net effect of                          increase food      increase
     distinguish infants less than    mothers and                            sales to           breastfeeding
     4 months of age as partially     infants switching                      breastfeeding      rates. This is
     breastfed or fully formula-      from fully-                            mothers.           consistent with
     fed. The rule would provide a    formula feeding                                           the
     full formula-feeding package     or fully                                                  recommendations
     to some infants currently        breastfeeding to                                          of nutrition
     considered partially             partially                                                 experts.
     breastfed; it would move some    breastfeeding                                             However, it is
     mothers from Package V to        during the first                                          uncertain
     Package VI. Partially            month may reduce                                          whether this
     breastfed infants under one      costs during the                                          will have a
     month of age would be allowed    infant's first                                            significant
     to receive limited infant        month. However, a                                         impact on the
     formula; this would move some    sustained                                                 number of WIC
     mothers from Package VI or VII   increase in                                               women who
     to Package V.                    breastfeeding                                             breastfeed.
    -$                                during an
                                      infant's first
                                      year will affect
                                      the food package
                                      eligibility of
                                      both the mother
                                      and the infant.
                                      Although the
                                      economic effect
                                      of such a
                                      sustained
                                      increase is
                                      dependent on both
                                      breastfeeding
                                      duration and on
                                      the relative
                                      rates of partial
                                      and exclusive
                                      breastfeeding,
                                      the net economic
                                      effect is likely
                                      to be a reduction
                                      in cost.
 Current rule:

[[Page 69007]]


    The current infant food          If the interim      State and local    Negligible effect  Although the WIC
     packages do not distinguish      rule has no         agencies must      in the absence     food benefit
     between fully and partially      direct effect on    conform to a new   of changes in      received by
     formula-fed infants. Infants     the initiation      definition of      breastfeeding      women who do not
     receive infant formula based     and duration of     breastfeeding      behavior.          fully breastfeed
     on an assessment of their        breastfeeding,      for WIC food       Increased          may be reduced,
     supplemental nutritional         the cost of         package            breastfeeding      in general, WIC
     needs, subject to a single       providing food      purposes. Will     would reduce       infants and
     package maximum. Food Package    packages to women   also encourage     formula sales      mothers will
     V is provided to pregnant        will drop; the      changes in the     but might          benefit from the
     women and to all new mothers,    cost of providing   approach to        modestly           enhanced
     up to one year postpartum, if    infant formula      nutrition          increase the       packages and
     they breastfeed at least once    will remain         education;         sale of infant     package
     per day and their infant         unchanged. If       places greater     food fruits,       assignment
     receives some formula.           breastfeeding       emphasis on        vegetables and     method. The
                                      increases enough    breastfeeding      meat to WIC's      interim packages
                                      to keep an infant   promotion.         fully breastfed    encourage
                                      classified as       Implementing new   population.        breastfeeding
                                      partially           procedures will                       consistent with
                                      breastfed who       initially                             the best advice
                                      would have been     increase                              of nutrition
                                      classified as       administrative                        science.
                                      fully formula fed   burden.                               However,
                                      otherwise, then                                           breastfeeding is
                                      formula costs are                                         a behavior with
                                      reduced and there                                         many complex
                                      is no change in                                           determinants,
                                      the mother's                                              and it is
                                      status. Both                                              unlikely that
                                      result in cost                                            the food package
                                      reductions.                                               changes alone
                                                                                                will alter
                                                                                                breastfeeding
                                                                                                practices.
 Interim rule:
    Infants and mothers will be
     assigned food packages based
     on the mother's reported
     breastfeeding practice. The
     corresponding amount of
     formula prescribed will
     distinguish infants between
     partially breastfed and fully
     formula-fed. The rule would
     provide a full formula-feeding
     package to some infants
     currently considered partially
     breastfed; it would move some
     mothers from Package V to
     Package VI, or after six
     months of participation, to no
     package at all, depending on
     the amount of formula
     requested.

                 -$

 Current rule:
    Currently, the definition of     These women are     State agencies     Negligible effect  Encourages more
     breastfeeding in WIC             already counted     will be provided   because it         intensive
     regulations allows women who     as participants     NSA funds for a    applies only to    breastfeeding
     breastfeed once a day to be      when they receive   very small         the few women      for WIC women
     eligible for the WIC program     food benefits as    number of women    who breastfeed     after six months
     and receive supplemental         breastfeeding       who are            for longer than    of
     foods.                           women, so the net   receiving WIC      six months but     participation.
                                      effect of the       benefits           request the full
                                      change in the       (nutrition         formula fed
                                      definition of       education/         amount of infant
                                      participation is    breastfeeding      formula for
                                      minimal. These      support and        their infant.
                                      women will          referrals to       These mothers
                                      continue to be      health and         once received
                                      included in         social             supplemental
                                      participation       services), but     foods but will
                                      numbers and State   not receiving      no longer be
                                      agencies will be    supplemental       eligible for
                                      provided NSA        foods.             these foods.
                                      funds.                                 They will still
                                                                             be visiting WIC
                                                                             approved vendors
                                                                             to obtain infant
                                                                             formula.
 Interim rule:

[[Page 69008]]


    Revise the definition for WIC
     participation to include the
     number of breastfeeding women
     who receive no supplemental
     foods or food instruments but
     whose breastfed infant(s)
     receives supplemental foods or
     food instruments.

                 -$

 Current rule:
    Infants from 4-11 months are     The net effect of   Implementing new   May increase       Restructures the
     eligible for Food Package II.    these changes       procedures, such   sales of infant    infant package
     That food package includes       increases the       as setting state   food and           according to the
     juice and infant cereal, as      cost of Food        policy on          decrease sales     recommendations
     well as formula.                 Package II.         allowed            of juice and       of current
                                                          varieties of       formula if         nutrition
                                                          infant food,       participants       science.
                                                          will increase      were not already   Increases
                                                          short-term         using the          benefits by
                                                          administrative     quantities in      adding fruits
                                                          burden. MIS        the interim        and vegetables,
                                                          systems will       rule. Some         but decreases
                                                          need to be         vendors may need   maximum
                                                          revised for new    to stock           allowance of
                                                          foods (infant      additional         infant formula
                                                          fruits and         infant food        and eliminates
                                                          vegetables),       varieties that     juice.
                                                          quantities, and    meet the           Encourages good
                                                          the new age        specific           infant feeding
                                                          range. Need to     specifications     practices and
                                                          train WIC staff,   set by the         the consumption
                                                          vendors and        states. Vendors    of fruits and
                                                          participants on    will need to       vegetables.
                                                          new foods.         train personnel
                                                                             to identify the
                                                                             newly WIC-
                                                                             eligible infant
                                                                             foods.
 Interim rule:
 The following changes are made to
 Food Package II:
    1. Change age eligibility to 6-
     11 months.
    2. Eliminate juice.
    3. Add infant food fruits and
     vegetables.
    4. Reduce maximum formula
     amount.

                 +$

 Current rule:
    All infants are eligible for     The cost of the     Implementing new   Increase in sales  Provides added
     the same amounts of formula,     fully breastfed     procedures, such   of infant food     iron and zinc to
     juice, and infant cereal under   package for         as setting state   meat is likely     the diet of
     Food Package II.                 infants age six     rules on           to be              fully breastfed
                                      months and older    permissible        negligible. The    infants age six
                                      is increased        varieties of       number of fully    months and
                                      significantly.      infant food        breastfed WIC      older. Also
                                                          meat, will         infants age six    encourages
                                                          increase short-    months and over    breastfeeding by
                                                          term               is small.          increasing
                                                          administrative     Vendors will       benefits. Both
                                                          burden. Need to    need to train      are consistent
                                                          train WIC staff,   personnel to       with the
                                                          vendors and        identify the       recommendations
                                                          participants on    newly WIC-         of current
                                                          new foods. MIS     eligible infant    nutrition
                                                          systems will       foods and          science.
                                                          need to be         distinguish them
                                                          revised.           from similarly
                                                                             packaged
                                                                             ineligible
                                                                             items.
 Interim rule:
    Provide relatively more infant
     food fruit and vegetables to
     fully breastfed infants at six
     months than to partially
     breastfed or fully formula-fed
     infants. Also provide infant
     food meat to this group.

                 +$

 Current rule:

[[Page 69009]]


    1. Low iron infant formula may   These changes are   The states will    Sales of low iron  The very few WIC
     be prescribed with medical       expected to have    incur minimal      formula and        participants who
     documentation.                   little effect on    short-term         certain infant     have been
    2. Infant cereal must be iron-    the foods           administrative     cereal varieties   receiving low
     fortified; WIC regulations       actually            burden as they     will be reduced    iron formula
     contain no other                 prescribed to WIC   implement these    slightly, if at    from WIC will
     specifications.                  infants. The        minor rule         all, by these      either need to
                                      infant cereal       changes. Local     rules.             purchase the
                                      rule simply         WIC agencies                          product or work
                                      formalizes what     will need to                          with their
                                      has been federal    communicate the                       medical provider
                                      policy since        ``no low iron                         to change to an
                                      1980.               infant formula                        iron fortified
                                                          from WIC''                            infant formula
                                                          concept to the                        authorized by
                                                          local medical                         WIC.
                                                          community and
                                                          some
                                                          participants.
                                                          MIS systems will
                                                          need to be
                                                          revised.
 Interim rule:
    1. Disallow the prescription of
     low iron infant formula.
    2. Disallow the prescription of
     infant cereal with added
     ingredients.

     (minimal economic effect)

 Current rule:
    Children and women with special  The rule is         The rule is        No impact.         No direct impact.
     dietary needs are prescribed     intended to         intended to                           Improved service
     WIC-eligible medical foods       reduce              facilitate                            at the state and
     under Food Package III.          administrative      program                               local level may
     Infants with special dietary     costs and           management. It                        result, to the
     needs are provided exempt        facilitate          may also allow                        benefit of WIC
     infant formula under Food        program             improved service                      participants.
     Packages I or II.                management.         to WIC
                                                          beneficiaries.
                                                          MIS systems will
                                                          need to be
                                                          revised.
 Interim rule:
    Serve infants with special
     dietary needs who receive
     exempt infant formulas under
     Food Package III.

                 -$

 Current rule:
    Current practice allows some     Clarifies who is    The rule may       Possible minimal   Some current
     women and children with          eligible for Food   reduce             reduction in the   participants
     certain dietary restrictions,    Package III and     administrative     sale of medical    receiving
     but without serious medical      what foods may be   burden by          foods due to       Package III may
     conditions, to be prescribed     distributed as      eliminating        eligibility        be served under
     medical foods under Food         part of that        Package III        requirements.      food packages
     Package III.                     package. These      eligibility                           more appropriate
                                      clarifications      issues. But, it                       to their needs.
                                      are generally       may require
                                      aimed at            state efforts to
                                      tightening these    educate local
                                      criteria. Will,     WIC officials,
                                      if anything,        WIC
                                      reduce Package      participants,
                                      III costs by        and health care
                                      moving some         professionals on
                                      participants to     the eligibility
                                      food packages       criteria.
                                      more appropriate
                                      for their needs.
                                      But, given the
                                      size of the
                                      current Package
                                      III population
                                      (roughly 1% of
                                      all WIC
                                      participants)
                                      these savings
                                      will be small.
 Interim rule:
    Clarify language governing the
     purpose and scope of Package
     III eligibility.

                 -$

 Current rule:

[[Page 69010]]


    Package III recipients are       This rule will      Administrative     May have a small   For those Package
     prescribed medical foods only;   increase costs in   burden of          positive effect    III recipients
     they do not receive any of the   those cases where   implementing the   on the sale of     able to consume
     standard food package foods.     Food Package III    new rule will be   some secondary     at least some
                                      recipients are      incurred in the    WIC foods. Will    non-Package III
                                      able to consume     short run. Local   not affect sales   WIC foods, this
                                      the foods           agencies will      of infant          rule will
                                      contained in the    need to            formula.           provide them
                                      regular WIC food    determine which                       with additional
                                      packages to which   WIC foods can be                      food.
                                      they would          purchased to
                                      otherwise be        each Food
                                      eligible. But,      Package III
                                      the Package III     recipient. MIS
                                      population is       systems will
                                      small. The costs    need to be
                                      will be modest.     revised.
 Interim rule:
    Make other WIC foods available
     to Package III recipients.

                 +$

 Current rule:
    Food Packages IV through VII     The net effect of   The states will    The rule may       Reduces dairy
     provide WIC beneficiaries with   this provision      need to            result in          component of WIC
     24 to 28 quarts of milk per      will be a           establish new      reduced milk and   benefit. WIC
     month. Cheese may be             reduction in        specifications     cheese sales to    participants who
     substituted for milk at a rate   overall cost, due   and restrictions   WIC                are unable to
     of one pound per three quarts;   to the reduction    for the new milk   participants. It   drink milk may
     cheese may replace a total of    in quantities       substitutes.       may lead to        benefit most by
     12 quarts of milk.               allowed and         They will also     increased sales    the addition of
                                      reduced             incur              of tofu and soy    these new
                                      substitution        administrative     beverage.          substitutes.
                                      amounts.            burden in          Vendors may need   Others with
                                                          implementing       to stock new       individual or
                                                          changes to         items that match   cultural
                                                          reflect reduced    the specific       preferences will
                                                          milk               product            also benefit by
                                                          prescription       requirements set   the added
                                                          maximums and       by the states.     choices. All WIC
                                                          substitution       Rule proposes      participants
                                                          limits. Local      nutritional        will benefit
                                                          agencies will      standards for      from a package
                                                          need to educate    soy milk that      lower in
                                                          WIC vendors and    are currently      saturated and
                                                          participants on    not met by many    total fat,
                                                          new food items.    products on the    consistent with
                                                          MIS systems will   market. Because    the
                                                          need to be         these standards    recommendations
                                                          revised.           will also apply    of current
                                                                             to the school      nutrition
                                                                             meals programs,    science.
                                                                             vendors are
                                                                             likely to change
                                                                             fortification so
                                                                             that the variety
                                                                             of available soy
                                                                             beverages that
                                                                             can be
                                                                             authorized
                                                                             improves over
                                                                             time.
 Interim rule:
    Reduce maximum milk
     prescription amounts to WIC
     children and women. Add new
     milk substitution options
     (tofu, cheese and soy
     beverage), but reduce the
     maximum amount of cheese
     substitution allowed.

                 -$

 Current rule:

[[Page 69011]]


    Juice may be prescribed under    The fixed dollar    States will need   Juice sales to     Expands WIC
     Food Packages IV through VII     values of the       to authorize and   WIC participants   benefits by
     at maximum levels that range     fruit and           develop a          may decline.       adding fruits
     from 192 to 336 fl. oz. per      vegetable           structure to       Sales of fruits    and vegetables,
     month.                           vouchers in the     distribute and     and vegetables     while reducing
                                      interim rule are    redeem fruit and   may increase.      juice amounts.
                                      greater than the    vegetable          Costs will be      The addition of
                                      offsetting          vouchers, which    incurred by        fruits and
                                      savings that will   will be a new      vendors as they    vegetables to
                                      be realized         component of the   learn to           the WIC food
                                      through reduced     programs. This     accommodate the    packages
                                      juice amounts.      administrative     new WIC            responds to the
                                                          burden will be     vouchers. Some     recommendations
                                                          on-going but       WIC authorized     of nutrition
                                                          part of the        vendors may need   science. And the
                                                          current banking    to add fruits      flexibility of a
                                                          and MIS systems.   and vegetables     voucher will
                                                          State and local    to their stocks    provide access
                                                          agencies will      in fresh,          to a variety of
                                                          incur              frozen, or         fruits and
                                                          administrative     canned form.       vegetables, in
                                                          burden in          Emphasis on        some form, year
                                                          developing         fresh fruits and   round, in all
                                                          educational        vegetables may     markets.
                                                          messages for WIC   encourage states
                                                          participants       to authorize and
                                                          concerning the     participants to
                                                          selection of       shop at farmers
                                                          nutritious         markets more
                                                          fruits and         often. (See
                                                          vegetables. Need   Market Analysis
                                                          to train WIC       discussion in
                                                          staff, vendors     Section G).
                                                          and participants
                                                          on new food
                                                          amounts. MIS
                                                          systems will
                                                          need to be
                                                          revised.
 Interim rule:
    Reduce maximum juice
     prescription amounts in food
     packages for children and
     women. Add a voucher for
     fruits and vegetables (other
     than white potatoes) to those
     packages.

                 +$

 Current rule:
    Eggs are provided under Food     Reducing the        State and local    Sales of eggs to   This change
     Packages IV through VII.         maximum egg         administrative     WIC participants   reduces food
     States may set their monthly     prescription will   burden will be     will decline.      energy,
     maximums at either 2 or 2\1/2\   produce a modest    incurred in the    Market effects     cholesterol, and
     dozen per month.                 reduction in food   short term as      will be minimal.   fat content of
                                      package costs.      new procedures                        the WIC food
                                      That reduction is   are put in                            packages. The
                                      used to help        place. Local                          changes are
                                      offset costs of     agencies will                         consistent with
                                      new foods and       need to educate                       the advice of
                                      substitution        WIC vendors and                       current
                                      options.            participants on                       nutrition
                                                          new food                              science. The
                                                          amounts. MIS                          reduction in
                                                          systems will                          food energy also
                                                          need to be                            makes room for
                                                          revised.                              the introduction
                                                                                                of new foods
                                                                                                that address
                                                                                                priority
                                                                                                nutrient needs.
 Interim rule:
    1. Reduce maximum egg
     prescription in all food
     packages for women and
     children.

                 -$

 Current rule:

[[Page 69012]]


    There are no restrictions on     Prescribing only    State and local    Market effects     This proposal
     the fat content allowed in       fat reduced milk    administrative     will be minimal.   reduces total
     milk.                            to women and        burden will be     Vendors will       fat and
                                      children age two    incurred in the    need to train      saturated fat
                                      and older will      short term as      personnel to       content of the
                                      have a negligible   new procedures     allow the type     WIC food
                                      effect on cost.     are put in         of milk            packages. The
                                                          place. Local       specified on the   change is
                                                          agencies will      food               consistent with
                                                          need to educate    instruments.       the advice of
                                                          WIC vendors and                       current
                                                          participants on                       nutrition
                                                          new food                              science.
                                                          amounts. MIS
                                                          systems will
                                                          need to be
                                                          revised.
 Interim rule:
    1. Provide only fat reduced
     milk to women as well as
     children age two and older.
    2. Provide only whole milk to
     children one year of age.

                 -$

 Current rule:
    Grains are included in the       The addition of     State and local    Manufacturers may  WIC participants
     current food packages for        whole grain bread   agencies will      respond by         will benefit
     women and children in the form   to Packages IV,     incur              reformulating      from food
     of breakfast cereal. Current     V, and VII          administrative     popular WIC-       packaged
     regulations do not specify a     increases the       burden to          approved cereals   enhanced with
     minimum whole grain content      cost of those       implement the      in whole grain     whole grain
     for that product.                packages. The       new rules.         form. Smaller      cereals and food
                                      requirement for     States will        vendors may need   products. The
                                      50 percent of       incur              to modify stocks   addition of
                                      available cereals   administrative     to include whole   whole grains to
                                      for children and    burden in          grain bread        the WIC packages
                                      women to be         establishing       varieties and at   is consistent
                                      classified as       specifications     least one whole    with 2005
                                      whole grain will    and restrictions   grain cereal.      Dietary
                                      have a minor        for the new        All vendors will   Guidelines for
                                      effect on cost.     foods and          need to train      Americans that
                                                          substitution       personnel to       encourage
                                                          options and        readily identify   increased
                                                          local clinics      WIC-eligible       consumption of
                                                          will incur         breads and         these foods.
                                                          additional         grains.
                                                          administrative
                                                          burden to
                                                          explain food
                                                          options to
                                                          participants.
                                                          Local agencies
                                                          will need to
                                                          educate WIC
                                                          vendors and
                                                          participants on
                                                          new food amounts
                                                          and how to
                                                          distinguish them
                                                          from similarly
                                                          packaged
                                                          ineligible
                                                          items. MIS
                                                          systems will
                                                          need to be
                                                          revised.
 Interim rule:
    1. Add whole grain bread to
     Food Packages IV, V, and VII.
     Allow substitutions of other
     whole grain foods for bread.
    2. Require that at least 50
     percent of breakfast cereals
     on State agency food lists
     must have whole grain as the
     primary ingredient and meet
     FDA labeling requirements for
     making a health claim as whole
     grain food of moderate fat
     content.\23\ State agencies
     must require vendors to stock
     at least one whole grain
     cereal.

                 +$

 Current rule:

[[Page 69013]]


    Dry beans are included in Food   The rate of         The option in the  Market effects     By adding variety
     Packages IV, V, and VII.         substitution        interim rule       will be minimal.   and convenience,
     Canned beans may be              between canned      will prompt        But, as with the   the canned bean
     prescribed, instead of dry, to   and dry beans in    states to set      addition of any    option should
     WIC participants who lack        the interim rule    specifications     WIC substitution   increase the
     cooking facilities.              will increase       and                option, small      appeal of that
                                      costs. However,     restrictions.      vendors may need   food. It may
                                      the cost of beans   Other short-term   to add new items   also encourage
                                      in the food         administrative     to their stocks,   greater
                                      packages is         burden will be     and all vendors    consumption,
                                      relatively small    incurred as the    will need to       replacing less
                                      and this change     new rule is put    train personnel    healthy foods in
                                      will have a         in place. Local    to identify the    the diets of WIC
                                      relatively modest   agencies will      newly-eligible     participants.
                                      effect on overall   need to educate    WIC foods.
                                      program cost.       WIC vendors and
                                                          participants on
                                                          new food
                                                          amounts. MIS
                                                          systems will
                                                          need to be
                                                          revised.
 Interim rule:
    1. Allow canned beans as a
     substitute for dry in all food
     packages for children and
     women.
    2. Allow both Package V and
     Package VII recipients to
     replace both their dry bean
     and peanut butter allocations
     with canned beans.

                 +$

 Current rule:
    Beans and peanut butter are not  The costs of food   Neither of these   Minimal market     The addition of
     included in Food Package VI.     packages V and VI   changes            impact.            beans and peanut
     Package V currently provides a   are increased.      introduces foods                      butter increases
     pound of dry beans; those can                        not already                           benefits to WIC
     be replaced with 18oz of                             included in                           participants.
     peanut butter.                                       other WIC                             These changes
                                                          packages. Local                       supplement the
                                                          agencies will                         diets of
                                                          need to educate                       breastfeeding
                                                          WIC vendors and                       and postpartum
                                                          participants on                       women with
                                                          new food                              several of the
                                                          amounts. MIS                          priority
                                                          systems will                          nutrients
                                                          need to be                            identified by
                                                          revised.                              the IOM.
 Interim rule:
    1. Add one pound of beans, with
     an 18oz peanut butter
     substitution option, to Food
     Package VI.
    2. Increase the amount of beans
     and peanut butter allowed
     under Food Package V; allow
     the prescription of both one
     pound of beans and 18oz of
     peanut butter.

                 +$

 Current rule:
    26 oz of tuna is made available  Costs will          States and local   Minimal market     These changes add
     to exclusively breastfeeding     increase            agencies will      impact. But, may   new choices that
     women in Food Package VII.       slightly. While     incur              force small        may encourage
     White, light, or dark tuna,      the new             administrative     vendors to stock   consumption. The
     packed in water or oil, is       substitution        burden in          additional types   rule also
     allowed.                         option may          implementation.    of canned fish     responds to
                                      increase the cost   State agencies     and will require   medical advice
                                      of individual       will adopt         all vendors to     that
                                      prescriptions,      specifications     train personnel    breastfeeding
                                      the number of WIC   and restrictions   to identify        women avoid fish
                                      participants        for the new        newly-eligible     species that are
                                      eligible for Food   substitution       WIC foods.         high in mercury.
                                      Package VII is      option. Local
                                      very small.         agencies will
                                                          need to educate
                                                          WIC vendors and
                                                          participants on
                                                          new food
                                                          amounts. MIS
                                                          systems will
                                                          need to be
                                                          revised.
 Interim rule:

[[Page 69014]]


    Authorize a variety of canned
     fish that do not pose a
     mercury hazard to fully
     breastfeeding women. Slightly
     increase the maximum amount
     allowed to 30 ounces.

                 +$

 Current rule:
    State WIC agencies impose        This simply         States are given   If States adopt    WIC participants
     restrictions on some foods by    clarifies what is   formal approval    restrictions on    may need to
     brand or variety in order to     already accepted    for current        the brands or      switch brands or
     limit cost or ensure statewide   policy. The         practice. States   varieties of       varieties of
     product availability. The        policy is an        should incur       foods newly        foods that they
     practice is accepted but not     effective way to    little or no       added to the WIC   currently
     formally authorized by           control costs.      administrative     food packages,     consume to
     regulation.                      Since the rule      burden in          then               brands and
                                      represents no       implementation.    participants who   varieties
                                      change from                            already purchase   consistent with
                                      current practice,                      those foods may    those added to
                                      it results in no                       switch their       the WIC
                                      economic impact.                       selection of       packages.
                                                                             brands or
                                                                             varieties to the
                                                                             WIC-approved
                                                                             choices. A
                                                                             measurable shift
                                                                             in consumption
                                                                             by brand or
                                                                             variety may
                                                                             result.
 Interim rule:
    Clarifies the right of States
     to restrict WIC foods by
     variety or brand.
     (minimal economic impact)
 Current rule:
    States are permitted to          Assures more        The rule reduces   Minimal effect on  Assures more
     prescribe foods to WIC           consistent WIC      the level of       vendors and        consistent WIC
     participants in quantities       benefits are        work currently     producers.         benefits are
     that are less than the package   delivered across    undertaken by                         delivered across
     maximums when nutritionally      States.             State officials.                      States. IOM has
     warranted. States may also                           Administrative                        based food
     standardize these reductions                         burden will                           prescription
     and apply the reduced amounts                        decrease to the                       quantities on
     consistently to like groups of                       extent that                           current
     WIC participants. Such                               states will not                       nutritional
     categorical food package                             undertake their                       science
     tailoring may be done for                            own review of                         rendering food
     nutritional reasons, but not                         WIC prescription                      package
     to achieve cost reductions.                          maximums in                           tailoring
                                                          response to the                       unnecessary.
                                                          federal
                                                          revisions to the
                                                          WIC food
                                                          packages. In the
                                                          absence of this
                                                          rule, States may
                                                          have incurred
                                                          administrative
                                                          burden.
 Interim rule:
    Ends the practice of
     categorical tailoring of WIC
     food packages by States.

                 -$

 Interim rule:

[[Page 69015]]


    Allow State agencies to round    Minimal cost given  States may incur   Unless             Will ensure WIC
     up to the next whole container   the small           some               manufacturers      participants get
     of infant foods if needed to     container sizes     administrative     change container   the full
     provide the maximum authorized   involved.           burden to          sizes to achieve   nutritional
     amount of these foods.           Rounding up is      implement,         greater product    benefit
                                      likely to require   particularly if    sales, no impact   authorized.
                                      the addition of     manufacturers      is expected.
                                      little jarred       change container
                                      infant food to      sizes in
                                      the food            response to this
                                      packages;           rule. Local
                                      containers are      agencies will
                                      typically just      need to educate
                                      4oz. The current    WIC vendors and
                                      infant cereal       participants on
                                      maximum of 24oz     rounded formula
                                      is a multiple of    amounts. MIS
                                      a commonly          systems will
                                      prescribed          need to be
                                      package size; 8oz   revised.
                                      boxes are among
                                      the standard
                                      package sizes.

                 +$

 Interim rule:
    Allow State agencies to propose  Will increase       Because of the     Minimal since      Minimal since
     plans for additional package     administrative      interim rule's     very few food      very few food
     substitutions to meet            costs of            flexibility in     package            package
     unanticipated cultural needs     considering         food offerings,    substitutions      substitutions
     of participants. State           proposals but       States will no     have ever been     have ever been
     agencies will only substitute    little effect on    longer have as     permitted.         permitted.
     foods after receiving written    program costs       much, if any,
     approval from FNS.               since very few      need to request
                                      package             substitutions to
                                      substitutions       meet cultural
                                      have ever been      preferences.
                                      approved.           Administrative
                                                          savings will
                                                          accrue for those
                                                          States that do
                                                          not pursue
                                                          substitutions.
----------------------------------------------------------------------------------------------------------------

D. Costs

1. Interim Rule

    Under the interim rule, FNS estimates that the revisions to the 
WIC food packages will be cost-neutral. FNS estimates that the 
changes will decrease costs by $29.7 million over five years.
    The economic effects of the interim rule on the federal 
government over a five-year period are summarized in Table 2, which 
presents the impacts of the revisions by food package type. These 
figures are limited to food costs; no additional funds will be 
provided to States or local clinics to implement this rule. The 
costs have been adjusted for the rule's phased-implementation 
schedule. Current and interim food package costs are provided in 
Tables A1-A3 in Appendix A.

                             Table 2.--Projected Cost of WIC Food Package Revisions
                                                  [in millions]
----------------------------------------------------------------------------------------------------------------
                                                                                                      FY 2008-FY
           Food package               FY 2008      FY 2009      FY 2010      FY 2011      FY 2012        2012
----------------------------------------------------------------------------------------------------------------
I--Infants (0-5.9 months).........       -$12.6       -$44.4       -$53.4       -$55.8       -$58.3      -$224.5
II--Infants (6-11.9 months).......         23.9         84.2        101.2        105.8        110.4        425.4
III--Participants with qualifying           3.0         10.6         12.8         13.4         14.0         53.8
 conditions.......................
IV--Children (1-4.9 years)........        -18.4        -71.0        -92.0       -102.7       -113.8       -398.0
V--Pregnant and Partially                   6.5         20.8         22.6         21.2         19.7         90.9
 Breastfeeding Women..............
VI--Postpartum Women..............          0.5          0.4         -0.9         -2.3         -3.8         -6.3
VII--Exclusively Breastfeeding              2.1          6.7          7.2          6.7          6.1         28.9
 Women............................
    Total.........................          5.0          7.3         -2.5        -13.9        -25.6        -29.7
----------------------------------------------------------------------------------------------------------------
Negative values are cost reductions. Column and row totals may not be exact due to rounding. FY08 begins with
  December 2007.

2. Major Cost Drivers

    Table 3 shows the major cost drivers for each food package; 
provisions listed do not reflect total food costs and savings. Total 
costs are for FY08-FY12 and have not been adjusted for the rule's 
phased implementation.

[[Page 69016]]



            Table 3.--Major Cost Drivers of WIC Food Packages
------------------------------------------------------------------------
         Food package                Major cost drivers (2008-2012)
------------------------------------------------------------------------
I.............................   Formula is reduced for
                                 partially breastfed infants and
                                 eliminated for fully breastfed infants
                                 (-$172 million post rebate).
II............................   Formula is reduced for fully
                                 formula and partially breastfed infants
                                 and is eliminated for fully breastfed
                                 infants (-$516 million post rebate).
                                 Juice is eliminated for all
                                 infants (-$163 million).
                                 Infant fruits and vegetables
                                 are added along with infant meats for
                                 fully breastfed infants (+$1,117
                                 million).
III...........................  Package III recipients are eligible for
                                 foods in the other packages. Under the
                                 interim rule, nearly 76% of Package III
                                 recipients are infants, and 24% are
                                 children; fewer than 1% are women.
                                 (+$62 million).
IV............................   Juice is reduced (-$930
                                 million).
                                 Milk is reduced (-$895
                                 million),
                                 Cheese is reduced (-$559
                                 million).
                                 Eggs are reduced (-$215
                                 million).
                                 Whole grains added (+ $703
                                 million).
                                 $6 cash-value instrument for
                                 fruits and vegetables is added (+
                                 $1,314 million).
V.............................   Juice is reduced (-$305
                                 million).
                                 Cheese is reduced (-$219
                                 million).
                                 Milk is reduced (-$219
                                 million).
                                 Beans are increased (+$113
                                 million).
                                 Milk substitutions are added
                                 (soy beverage and tofu) (+$180
                                 million).
                                 $8 cash-value instrument for
                                 fruits and vegetables is added (+$486
                                 million).
VI............................   Milk is reduced (-$166
                                 million).
                                 Juice is reduced (-$124
                                 million).
                                 Cheese is reduced (-$99
                                 million).
                                 $8 cash-value instrument for
                                 fruits and vegetables is added (+$272
                                 million).
VII...........................   Juice is reduced (-$124
                                 million).
                                 Milk is reduced (-$75 million).
                                 $10 cash-value instrument for
                                 fruits and vegetables is added (+$175
                                 million).
------------------------------------------------------------------------
Negative values (-) are cost reductions, positive values (+) are cost
  increases. There are a total of $581 million in increases and $239
  million in decreases that are not reflected in this table.

3. Fruit and Vegetable Option

    Due to the seasonal fluctuation in price and availability of 
fresh fruits and vegetables, and the inability to purchase them in 
uniform weight units, it is difficult to set quantity terms for 
fruits and vegetables and still estimate the cost of the WIC food 
packages. In order to accurately capture the cost of providing fresh 
fruits and vegetables in WIC Food Packages III-VII, the interim rule 
includes fruit and vegetable vouchers. Due to the administrative 
ease of implementation, the IOM recommended cash-value instruments 
be issued.\24\ The IOM also recommended that states provide fruit 
and vegetable vouchers at the level of $10 per month for women and 
$8 per month for children. However, to achieve cost neutrality with 
the changes, FNS set the vouchers at the level of $8 per month for 
pregnant, partially breastfeeding and postpartum women and $6 per 
month for children in the year in which the food package revisions 
take effect. Fully breastfeeding women receive the recommended $10 
voucher as part of WIC's breastfeeding promotion initiatives. 
Vouchers will be adjusted for inflation. The effects of inflation 
will be accrued annually, but not realized until the cumulative 
increase in the CPI is sufficient to raise the voucher's value by a 
dollar. Inflation is measured as the change in the Consumer Price 
Index (CPI) for fresh fruits and vegetables, as detailed in the 
interim rule.
---------------------------------------------------------------------------

    \24\ IOM, p. 172
---------------------------------------------------------------------------

4. Cost Estimate Methodology

Overview

    The impacts of the interim rule on Federal expenditures are 
projected by comparing current policy to the interim rule with 
regard to total food costs. (Administrative funds are excluded; as 
noted above, no increase in funds will be provided to States or 
local clinics to implement this rule.)
    For both current and new rules, food costs are calculated as the 
sum of the aggregate annual expenditures on each available food 
package. These expenditures are calculated separately as the product 
of:
     Participants--the number of women, infants, and 
children who receive each WIC food package;
     Food Prescriptions--the specific types and quantities 
of food contained in each package distributed to WIC participants; 
and
     Food Prices--the cost of the food items contained in 
WIC food packages.
    The data sources and assumptions used in projecting each of 
these elements are summarized briefly here. Greater detail is 
provided on the pages that follow.
    i. Participation--Participation statistics are remitted by State 
WIC agencies to FNS on a monthly basis. These are the product of 
routine recordkeeping by WIC clinics. They include counts of the 
number of women, infants, and children who receive WIC services. FNS 
collects additional program-relevant participant demographic 
characteristics such as age and life stage data through biennial 
data collections from WIC State agencies, as well as supplemental 
data on current breastfeeding practice. Participants are distributed 
as recipients of specific food packages under the current and new 
rules. Growth in program participation is based on projection of 
historical participation figures alone.
    ii. Prescriptions--FNS gathers detailed information on the 
amount of food prescribed to individual WIC participants through the 
same survey of WIC providers that serves as FNS's source for 
participant demographics. FNS uses these current prescription 
records, plus a set of explicit assumptions about participant 
preferences, to generate prescription totals for each of the foods 
in the interim rule's revised packages.
    iii. Prices--FNS tabulated average prices for each of the foods 
contained in the current and revised food packages from AC Nielsen's 
calendar year 2005 Homescan dataset. The final prices used in the 
cost estimate are these tabulated figures, adjusted for inflation 
and for rebates negotiated with infant formula manufacturers.
    FNS has posted these participation, prescription, and price 
figures on its Web site (http://www.fns.usda.gov), in Microsoft 

Excel format. Separate figures are given for each of the current and 
proposed food packages, and for each of the five fiscal years 2008 
through 2012.
    The posted data will permit interested parties to reproduce the 
results of the cost estimate presented here. FNS encourages 
interested parties to examine the spreadsheet after reading the more 
detailed methodology that follows.\25\
---------------------------------------------------------------------------

    \25\ Additional information on the posted data, or on any other 
aspect of this cost estimate, is available from FNS on request.
---------------------------------------------------------------------------

a. Food Package Costs

i. Prescriptions

    FNS's primary data source for participant prescription data is 
its 2002 WIC Participant and Program Characteristics (``PC2002'') 
dataset. PC2002 is the eighth in a series of biennial reports and 
datasets on WIC

[[Page 69017]]

participant and program characteristics. PC2002 employs the 
reporting system developed by FNS in 1992, which compiles key 
features of WIC participant information from State WIC agencies. The 
current system for reporting participant data is based on the 
automated transfer of an agreed upon set of data elements held in 
State management information systems. As part of the documentation 
needed to process the WIC PC participant data, each State also 
provides a food package code list which shows types and amounts of 
WIC food prescribed along with the State coding scheme.
    PC2002 summarizes demographic characteristics of WIC 
participants nationwide as of April 2002, along with information on 
participant income and nutrition risk characteristics. PC2002 
contains information on a near-census of WIC enrollees for whom food 
benefits were made available in WIC management information systems 
in April 2002.\26\ The dataset and the report's tabulations are 
based on over 8 million records.\27\
---------------------------------------------------------------------------

    \26\ For the month of April 2002, each State WIC agency was 
required to submit MDS data on a census of its WIC participants. All 
but 4 of the eighty-eight State WIC agencies (Mississippi, Choctaw 
Nation (OK), Eastern Shoshone and Rosebud Sioux) were able to 
provide sufficient data for tabulation in PC2002.
    \27\ Fewer participants--approximately 7.5 million--actually 
picked up their vouchers in April 2002 and were counted according to 
WIC regulations as participants for WIC administrative funding 
purposes.
---------------------------------------------------------------------------

    FNS used prescription data from the PC2002 dataset to establish 
a baseline food cost and to estimate the costs of the package 
revisions. Actual participant-level prescriptions provide a useful 
starting point for this analysis. Data at the participant level 
captures the preferences and dietary restrictions of the current WIC 
population. Assuming little change in the distribution of the WIC 
population by life stage, food preference, or supplemental dietary 
need over the short term, the 2002 prescription data offers the best 
opportunity for estimating likely prescription amounts under the 
interim food package rule.\28\ FNS estimated participant-specific 
prescription amounts for each of the foods in the packages other 
than infant formula. In an effort to reflect the interim rule's 
requirements that (1) participants be issued prescriptions at the 
maximum level per package, unless that level for one or more items 
is medically contraindicated, or the participant declines to accept 
the item; and (2) States may no longer adjust or ``tailor'' packages 
categorically, but that WIC professionals may do so, the following 
assumptions guided this analysis: \29\
---------------------------------------------------------------------------

    \28\ Due to insignificant differences in the PC2002 and PC2004 
data, this analysis was not updated with the PC2004 dataset.
    \29\ The description that follows is a simplification of the 
process used to develop the estimated prescriptions.
---------------------------------------------------------------------------

     For foods that are part of both the current WIC 
packages and the revised packages:
     WIC participants currently prescribed none of that food 
will continue to be prescribed none (presumed medically 
contraindicated).
     If the participant's current prescription exceeds the 
interim rule's maximum for the item, then the participant will be 
prescribed the new maximum amount.
     If the participant's current prescription is less than 
the maximum amount allowed by the state under current rules, and 
less than the interim rule's amount, then the participant's 
prescription will remain unchanged.
     For foods newly added to the WIC packages by the 
interim rule:
     Generally, prescription rates are set to observed rates 
for comparable foods already contained in the WIC packages.\30\
---------------------------------------------------------------------------

    \30\ For example, the prescription rates for whole grain bread 
and bread substitutes are set to the observed prescription rates for 
cereal. The April 2002 Food Package IV cereal prescription rate was 
applied to Package IV bread prescriptions; the average Package V and 
Package VII cereal prescription rate was used to estimate Package V 
and Package VII bread prescriptions.
---------------------------------------------------------------------------

     Foods newly added to the WIC packages as substitutes 
for standard WIC foods were prescribed to a subset of the WIC 
population equal to the percent of all low income U.S. households 
that currently purchase those items.\31\ For example, market 
consumption data indicates that about 3% of U.S. households with 
WIC-eligible incomes purchased tofu, so 3% of WIC participants are 
assumed to be prescribed tofu.\32\ Participants prescribed one of 
the new substitutes will be provided with the maximum required under 
the interim rule given any other substitutions allowed.
---------------------------------------------------------------------------

    \31\ Market consumption data is based on 2003 AC Nielsen 
Homescan survey data.
    \32\ This method of identifying general consumer preferences for 
particular items cannot be used to estimate the share of the infant 
population that consumes fresh bananas. It is assumed, then, that 
infants will be prescribed bananas as a substitute for jarred infant 
food fruits and vegetables at the average prescription rate for all 
foods across all food packages.
---------------------------------------------------------------------------

     Fruit and vegetable vouchers are assumed to be 
prescribed to all participants at the full amount.
    This methodology tends to produce prescription estimates that 
are at or near the maximum quantities specified in the revised 
packages. (See Table 4.)

ii. Infant Formula and Rounding

    In this analysis, infant formula and infant foods were treated 
slightly differently than the other foods. Using a micro-simulation 
program with PC2002 data to model prescription amounts for infant 
formula and foods would not account for ``rounding up''. Rounding up 
refers to the ability of state agencies to round up to the next 
whole container to provide the maximum infant formula allowance. 
State agencies may only include an option to round-up in infant 
formula contracts renewed on or after October 1, 2004. The interim 
rule extends this rounding option to infant foods (cereal, fruit and 
vegetables, and meat).
    Since the PC2002 data do not reflect the costs of states 
rounding up, the cost estimates of the current and interim rule 
packages use a different approach to factor in the cost of states 
rounding up. Given current container sizes, rounding up is only 
required when issuing powder infant formula and infant fruit and 
vegetables. The maximum allowances for liquid concentrate infant 
formula, ready-to-feed infant formula, infant cereal and infant meat 
are evenly divisible by whole containers. To capture the effect of 
rounding, the following assumptions have been made:
     Current Food Packages I and II
     Estimated infant formula prescription amounts for 
Packages I and II incorporate rounding because the estimated 
reconstituted amounts fall below the package maximum. Estimated 
prescribed amounts for Packages I and II are set at the maximum 
amounts of 806 reconstituted liquid ounces for liquid concentrate 
and ready to feed infant formulas; for powder infant formula the 
current 8 pound limit is used.
     The reconstituted fluid ounces from powder infant 
formula is a weighted average of the powder container yield for the 
three infant formula brands with which state agencies have rebate 
contracts: Mead Johnson, Ross and Nestle (as determined by State 
agency contracts as of February 2007.) \33\
---------------------------------------------------------------------------

    \33\ The primary DHA/ARA enhanced powder formulas prescribed by 
WIC clinics for each of the manufacturers was used in computing the 
weighted average.
---------------------------------------------------------------------------

     Total infant formula allowance for each package is 
weighted by the percentage of infants receiving each of the three 
forms (liquid concentrate, ready to feed, and powder) as distributed 
in the WIC participant characteristic data set.
     Interim Food Packages I and II
     Infant Formula:
     All packages are set at the maximum monthly allowance 
for liquid concentrate, ready to feed and powder infant formulas as 
detailed in the interim rule.
     Powder infant formula is rounded up to meet the Full 
Nutritional Benefit (the maximum monthly allowance of reconstituted 
liquid concentrate), but to not exceed the maximum monthly powder 
infant formula limit.
     The reconstituted fluid ounces from powder infant 
formula is a weighted average of the powder container yield for the 
three formula brands with which state agencies have rebate 
contracts: Mead Johnson, Ross and Nestle (as determined by state 
agency contracts as of February 2007). \34\
---------------------------------------------------------------------------

    \34\ The primary DHA/ARA enhanced powder formulas prescribed by 
WIC clinics for each of the manufacturers was used in computing the 
weighted average.
---------------------------------------------------------------------------

     Interim Food Package I BF/FF-A assumes 100 percent 
powder infant formula. This is consistent with IOM recommendations.
     Total infant formula allowance for each package is 
weighted by the percentage of infants receiving each of the three 
forms (liquid concentrate, ready to feed, and powder) as distributed 
in the WIC participant characteristic data set.
     Infant Foods:
     Only Package II has infant foods. Container sizes are 
based on IOM assumptions: infant fruits and vegetables amounts are 
determined using Gerber

[[Page 69018]]

container sizes weighted over the 6 month package period.\35\
---------------------------------------------------------------------------

    \35\ The prescription rates for infant cereal, fruit and 
vegetables, and meat are set to the average prescription rate of 
juice across all of the women's food packages. The estimate assumes 
that no state will authorize rounding of infant foods.
---------------------------------------------------------------------------

     Bananas are allowed to be substituted for infant fruit 
at the rate of 2 pounds per 16 ounces of fruit. The interim package 
cost estimate assumes 1.8 pounds of bananas as substitution.
    The interim rule requires State agencies to issue at least the 
full nutritional benefit of infant formula but not more than the 
maximum monthly allowance for the food package category and infant 
feeding option. However, rounding up to the whole container to meet 
the full nutritional benefit under the interim rule, when compared 
to the maximum monthly allowance under the current rule, provides 
more containers per month, which in turn results in higher costs. In 
addition, under both the current and interim packages, the round up 
provision is assumed to apply in all States at full implementation 
beginning in FY08. Therefore, this analysis provides the most 
conservative estimate of the additional cost due to rounding 
(assuming container sizes do not change), as there is no way to 
accurately determine which States will elect to include a round up 
provision in their infant formula rebate contract and opt to round 
up going forward.

iii. Redemption rates

    Tables 4 and 5 show the maximum amount per food category and 
estimated average prescribed amounts used to calculate costs for the 
food packages under the interim rule and under the current rule, 
respectively. Each table includes the individual food package 
component and its corresponding unit of measurement.
    WIC foods are provided by quantity, except for the fruit and 
vegetable voucher. As stated in the interim rule, participants will 
be given a fruit and vegetable voucher with a fixed dollar value 
which can be used to purchase fruit and vegetables. Because the 
fruit and vegetable voucher provides WIC benefits in a different 
form than is currently used, different redemption behavior is to be 
expected. Therefore, in developing a cost estimate for the rule, it 
is assumed that these vouchers will be redeemed at a rate of 87.5 
percent, which is consistent with an evaluation of a WIC fruit and 
vegetable intervention in Los Angeles in 2004.\36\ Per participant, 
a redemption value of $5.25 for children, $7.00 for pregnant, 
partially breastfeeding and postpartum women, and $8.75 for fully 
breastfeeding women was included in the cost of the respective food 
package.
---------------------------------------------------------------------------

    \36\ Herman, Dena and Harrison, Gail, ``Are Economic Incentives 
Useful for Improving Dietary Quality among WIC participants and 
their Families?'' ERS, USDA, 2004.
---------------------------------------------------------------------------

    All other WIC foods are assumed to be redeemed at a 100% rate. 
The assumption of 100% redemption rates for other WIC foods reflects 
research findings which indicate that redemption rates for current 
WIC foods are high and vary little by food item (ranging from 94-99 
percent).\37\ Variation in the quantity of foods purchased by 
participants is reflected in the prescription rates. Thus a 
simplifying assumption of 100 percent redemption rates was used for 
WIC foods prescribed by quantity.
---------------------------------------------------------------------------

    \37\ Food and Nutrition Service, U.S. Department of Agriculture, 
``National Survey of WIC Participants'', October 2001.

                            Table 4.--Prescription Estimates Under Interim Rule \38\
----------------------------------------------------------------------------------------------------------------
                                                                                                     Estimated
                                                                                  Maximum amount      average
                Food package                              Units \39\                 per food       prescribed
                                                                                   category \40\      amount
----------------------------------------------------------------------------------------------------------------
                                             Infants: Food Package I
----------------------------------------------------------------------------------------------------------------
I-FF-A (0-3.9 mo):
    Formula (post-rebate)..................  reconstituted fluid oz.............          806             842.65
I-FF-B (4-5.9 mo):
    Formula (post-rebate)..................  reconstituted fluid oz.............          884             931.37
I-BF/FF-A (0-0.9 mo):
    Formula (post-rebate)\41\..............  reconstituted fluid oz.............          104               0.00
I-BF/FF-B (1-3.9 mo):
    Formula (post-rebate)..................  reconstituted fluid oz.............          364             390.14
I-BF/FF-C (4-5.9 mo):
    Formula (post-rebate)..................  reconstituted fluid oz.............          442             470.66
I-BF-A (0-3.9 mo):
    Formula (post-rebate)..................  reconstituted fluid oz.............            0               0.00
I-BF-B (4-5.9 mo):
    Formula (post-rebate)..................  reconstituted fluid oz.............            0               0.00
----------------------------------------------------------------------------------------------------------------
                                            Infants: Food Package II
----------------------------------------------------------------------------------------------------------------
II-FF (6-11.9 mo):
    Formula (post-rebate)..................  reconstituted fluid oz.............          624             656.66
    Cereal.................................  oz.................................           24              20.10
    Baby fruits & vegetables...............  oz.................................          128             105.37
        Bananas............................  lb.................................  ..............            1.80
II-BF/FF (6-11.9 mo):
    Formula (post-rebate)..................  reconstituted fluid oz.............          312             355.32
    Cereal.................................  oz.................................           24              20.93
    Baby fruits & vegetables...............  oz.................................          128             105.37
        Bananas............................  lb.................................  ..............            1.80
II-BF (6-11.9 mo):
    Cereal.................................  oz.................................           24              22.27
    Baby fruits & vegetables...............  oz.................................          256             225.03
        Bananas............................  lb.................................  ..............            1.80
    Infant food meat.......................  oz.................................           77.5            73.06
----------------------------------------------------------------------------------------------------------------
                                            Children: Food Package IV
----------------------------------------------------------------------------------------------------------------
IV-A (1-1.9 yrs):
    Juice..................................  oz.................................          128             127.59

[[Page 69019]]


    Milk (whole)...........................  qt.................................           16              13.01
        Cheese.............................  lb.................................  ..............            0.96
    Cereal.................................  oz.................................           36              34.39
    Eggs...................................  doz................................            1               1.00
    Whole grain bread......................  lb.................................            2               1.22
        Other grains.......................  lb.................................  ..............            0.69
    Beans, dried \42\......................  lb.................................            1               0.30
        Beans, canned......................  oz.................................  ..............           19.54
        Peanut butter......................  oz.................................  ..............            6.27
    Fruit and vegetable voucher.\43\.......  voucher ($)........................            6.00            5.25
IV-B (2-4.9 yrs):
    Juice..................................  oz.................................          128             127.59
    Milk, fat-reduced......................  qt.................................           16              13.01
        Cheese.............................  lb.................................  ..............            0.96
    Cereal.................................  oz.................................           36              34.39
    Eggs...................................  doz................................            1               1.00
    Whole grain bread......................  lb.................................            2               1.22
        Other grains.......................  lb.................................  ..............            0.69
    Beans, dried...........................  lb.................................            1               0.30
        Beans, canned......................  oz.................................  ..............           19.54
        Peanut butter......................  oz.................................  ..............            6.27
    Fruit and vegetable voucher.\43\.......  voucher ($)........................            6.00            5.25
----------------------------------------------------------------------------------------------------------------
                                              Women: Food Package V
----------------------------------------------------------------------------------------------------------------
V:
    Juice..................................  oz.................................          144             143.40
    Milk, fat-reduced......................  qt.................................           22              16.90
        Soy beverage.......................  qt.................................  ..............            1.66
        Tofu...............................  lb.................................  ..............            0.05
        Cheese.............................  lb.................................  ..............            0.97
    Cereal.................................  oz.................................           36              35.09
    Eggs...................................  doz................................            1               1.00
    Whole grain bread......................  lb.................................            1               0.63
        Other grains.......................  lb.................................  ..............            0.35
    Beans, dried \44\......................  lb.................................            1               0.60
        Beans, canned......................  oz.................................  ..............           38.63
        Peanut butter......................  oz.................................           18              13.41
    Fruit and vegetable voucher.\43\.......  voucher ($)........................            8.00            7.00
----------------------------------------------------------------------------------------------------------------
                                             Women: Food Package VI
----------------------------------------------------------------------------------------------------------------
VI:
    Juice..................................  oz.................................           96              95.54
    Milk, fat-reduced......................  qt.................................           16              11.68
        Soy beverage.......................  qt.................................  ..............            1.29
        Tofu...............................  lb.................................  ..............            0.02
        Cheese.............................  lb.................................  ..............            0.95
    Cereal.................................  oz.................................           36              34.70
    Eggs...................................  doz................................            1               0.95
    Beans, dried \44\......................  lb.................................            1               0.23
        Beans, canned......................  oz.................................  ..............           14.69
        Peanut butter......................  oz.................................  ..............            9.06
    Fruit and vegetable voucher.\43\.......  voucher ($)........................            8.00            7.00
----------------------------------------------------------------------------------------------------------------
                                             Women: Food Package VII
----------------------------------------------------------------------------------------------------------------
VII:
    Juice..................................  oz.................................          144             143.64
    Milk, fat-reduced......................  qt.................................           24              17.51
        Soy beverage.......................  qt.................................  ..............            1.46
        Tofu...............................  lb.................................  ..............            0.01
        Cheese.............................  lb.................................  ..............            1.60
    Cheese.................................  lb.................................            1               1.00
    Cereal.................................  oz.................................           36              35.87
    Eggs...................................  doz................................            2               1.98
    Whole grain bread......................  lb.................................            1               0.63
        Other grains.......................  lb.................................  ..............            0.35
    Canned fish............................  oz.................................           30     ..............
        Tuna...............................  oz.................................  ..............           22.44

[[Page 69020]]


        Salmon, sardines, mackerel.........  oz.................................  ..............            6.11
    Beans, dried \44\......................  lb.................................            1               0.60
        Beans, canned......................  oz.................................  ..............           38.63
    Peanut butter..........................  oz.................................           18              13.41
    Fruit and vegetable voucher.\43\.......  voucher ($)........................           10.00            8.75
----------------------------------------------------------------------------------------------------------------

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

    \38\ The only significant change to Food Package III in the 
interim rule is the proposed addition of foods to these recipients' 
packages when their medical circumstances allow it. The PC2002 data 
set indicates that about 1 percent of WIC participants receive Food 
Package III. FNS assumes that half of them will be able to and will 
choose to receive all of the other foods available to them under the 
proposed rule. Therefore, we do not calculate prescription rates for 
Food Package III.
---------------------------------------------------------------------------

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

    \39\ Units are expressed in: fluid ounces (fluid oz); ounces 
(oz); pounds (lb); quarts (qt); and, dozens (doz).
---------------------------------------------------------------------------

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

    \40\ Infant formula amounts are expressed in the full 
nutritional benefit amount of reconstituted liquid concentrate 
required for that age group. The interim rule details the maximum 
formula amounts allowed for each form of infant formula.
---------------------------------------------------------------------------

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

    \41\ Although partially breastfed infants will be allowed up to 
104 reconstituted fluid ounces in the first month following birth in 
the interim rule, this analysis does not estimate a prescribed 
amount. For more discussion, see Section E, Item 3.
---------------------------------------------------------------------------

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

    \42\ Total ounces for dried beans, canned beans and peanut 
butter exceed 1lb because participants can substitute 64 ounces of 
canned beans or 18 ounces of peanut butter for 1lb of dried beans.
---------------------------------------------------------------------------

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

    \43\ Prescribed amount for fruit and vegetable vouchers is the 
redemption rate as discussed in 3a (iii) within this section.
---------------------------------------------------------------------------

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

    \44\ Total ounces for dried and canned beans exceed 1lb because 
participants can substitute 64 ounces of canned beans for 1lb of 
dried beans.

                           Table 5.--Prescription Estimates for Current Food Packages
----------------------------------------------------------------------------------------------------------------
                                                                                                     Estimated
                                                                                 Maximum  amount      average
                Food package                             Units \45\                 per  food       prescribed
                                                                                     category         amount
----------------------------------------------------------------------------------------------------------------
                                             Infants: Food Package I
----------------------------------------------------------------------------------------------------------------
I--Fully breast-fed:
    Formula................................  reconstituted fluid oz............            806             79.58
I--Partially breast-fed:
    Formula................................  reconstituted fluid oz............            806            546.55
I--Fully formula-fed:
    Formula................................  reconstituted fluid oz............            806            906.33
----------------------------------------------------------------------------------------------------------------
                                            Infants: Food Package II
----------------------------------------------------------------------------------------------------------------
II--Fully breast-fed 4-6.9 mo:
    Formula................................  reconstituted fluid oz............            806             77.38
    Juice..................................  oz................................             96             34.09
    Cereal.................................  oz................................             24             20.63
II--Partially breast-fed 4-6.9 mo:
    Formula................................  reconstituted fluid oz............            806            613.76
    Juice..................................  oz................................             96             53.80
    Cereal.................................  oz................................             24             16.60
II--Fully formula-fed 4-6.9 mo:
    Formula................................  reconstituted fluid oz............            806            906.33
    Juice..................................  oz................................             96             41.93
    Cereal.................................  oz................................             24             16.99
II--Fully breast-fed 7-11.9 mo:
    Formula................................  reconstituted fluid oz............            806             77.12
    Juice..................................  oz................................             96             81.15
    Cereal.................................  oz................................             24             22.28
II--Partially breast-fed 7-11.9 mo:
    Formula................................  reconstituted fluid oz............            806            637.89
    Juice..................................  oz................................             96             69.30
    Cereal.................................  oz................................             24             21.08
II--Fully formula-fed 7-11.9 mo:
    Formula................................  reconstituted fluid oz............            806            906.33
    Juice..................................  oz................................             96             76.42
    Cereal.................................  oz................................             24             20.27
----------------------------------------------------------------------------------------------------------------

[[Page 69021]]


                                            Children: Food Package IV
----------------------------------------------------------------------------------------------------------------
IV:
    Juice..................................  oz................................            288            232.77
    Milk...................................  qt................................             24             16.58
    Cheese.................................  lb................................  ...............            1.57
    Cereal.................................  oz................................             36             34.39
    Eggs...................................  doz...............................              2.5            1.83
    Beans, dried...........................  lb................................              1              0.61
    Peanut butter..........................  oz................................  ...............            6.27
----------------------------------------------------------------------------------------------------------------
                                                Women: Package V
----------------------------------------------------------------------------------------------------------------
V:
    Juice..................................  oz................................            288            267.83
    Milk...................................  qt................................             28             20.94
    Cheese.................................  lb................................  ...............            1.84
    Cereal.................................  oz................................             36             35.09
    Eggs...................................  doz...............................              2.5            1.99
    Beans, dried...........................  lb................................              1              0.55
    Peanut butter..........................  oz................................  ...............            7.29
----------------------------------------------------------------------------------------------------------------
                                                Women: Package VI
----------------------------------------------------------------------------------------------------------------
VI:
    Juice..................................  oz................................            192            185.54
    Milk...................................  qt................................             24             17.15
    Cheese.................................  lb................................  ...............            1.65
    Cereal.................................  oz................................             36             34.70
    Eggs...................................  doz...............................              2.5            1.78
----------------------------------------------------------------------------------------------------------------
                                               Women: Package VII
----------------------------------------------------------------------------------------------------------------
VII:
    Juice..................................  oz................................            336            319.32
    Milk...................................  qt................................             28             22.28
    Cheese as milk substitute..............  lb................................  ...............            1.65
    Cheese.................................  lb................................              1              1.00
    Cereal.................................  oz................................             36             35.87
    Eggs...................................  doz...............................              2.5            2.00
    Beans, dried...........................  lb................................              1              1.20
    Peanut butter..........................  oz................................             18             13.41
    Tuna...................................  oz................................             26             24.75
    Carrots................................  lb................................              2              1.99
----------------------------------------------------------------------------------------------------------------

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

    \45\ Units are expressed in fluid ounces (fluid oz), ounces 
(oz), pounds (lb), quarts (qt), and dozens (doz).
---------------------------------------------------------------------------

iv. Food Prices

    The price data used in this analysis is based primarily on 
tabulations from the calendar year 2005 AC Nielsen Homescan 
dataset.\46\ Homescan data is captured by AC Nielsen panel members 
who record their purchases at home with handheld scanners. This type 
of panel data is well-suited to the WIC food package analysis. 
Unlike data gathered from point of sale scanners, panel data is 
potentially more comprehensive; it is able to capture purchases from 
retailers of every size and type, including supermarkets, 
convenience stores, drug stores, and vendors who lack checkout 
scanning equipment.\47\ In addition, demographic information 
collected from Homescan panelists allows FNS to distinguish shoppers 
with WIC-eligible incomes from the rest of the population.
---------------------------------------------------------------------------

    \46\ Prices displayed in Table 6 are inflated to FY 2006 levels 
using Bureau of Labor Statistics CPI estimates.
    \47\ Homescan data also captures purchases of non-UPC coded 
(non-scannable) random weight items such as fresh produce.
---------------------------------------------------------------------------

    Homescan panels are geographically and demographically 
stratified random samples of individuals weighted to represent all 
U.S. households. A few of the demographic strata used by Nielsen are 
household size, household income, household race, and several 
characteristics of the head of household. Nielsen monitors and 
evaluates the performance of panelists, and data collected by 
panelists undergo various internal consistency checks. (No 
commenters on the proposed rule raised questions or identified 
potential limitations with regard to AC Nielsen Homescan data.)
    FNS had access to two Homescan panel samples. The 39,000 
panelists in the first sample record calendar year 2005 purchases of 
all scannable products. A smaller subsample of 8,200 panelists 
record purchases of all items, including random weight, non-UPC-
coded items. Most of the foods in the current and interim rule food 
packages are UPC-coded, standard-weight, pre-packaged (i.e., 
scannable) items. For that reason, most of the prices computed by 
FNS are taken from purchases recorded by the larger Homescan panel.
    FNS focused its analysis on purchases by individuals with WIC-
level incomes. FNS generated its own subsamples of panelists whose 
reported household size and annual income indicate that they are WIC 
income-eligible. The income-eligible working dataset drawn from the 
larger of the two Homescan panels (used for most of FNS's price 
computations) contains 8,400 panelists. The working dataset drawn 
from the smaller

[[Page 69022]]

panel (used in few of FNS's price computations) contains 1,600 
panelists.

a. Computation of Average Prices

    For each of the food items in the current or interim packages, 
FNS computed the average price paid by households with WIC-eligible 
incomes. All prices are weighted by the aggregate volumes purchased 
by WIC-eligible product variety, container size, flavor, brand, etc.
    Product descriptions captured by Nielsen sometimes lack the 
detail necessary to separate WIC-eligible items from non-eligible 
items. For this reason, the selection of products from the Nielsen 
datasets necessitates some compromise. The average prices computed 
by FNS and a brief description of FNS's product selection criteria 
are shown in Table 6.
    Food prices obtained from AC Nielsen Homescan data are inflated 
to FY 2006 levels with CPI estimates published by Bureau of Labor 
Statistics. Food items or category-specific inflation estimates were 
used, when available. For years after FY 2006, food costs are 
inflated by the Office of Management and Budget's November, 2006 
Thrifty Food Plan (TFP) index except for the fruit and vegetable 
vouchers which are inflated by the USDA's agricultural baseline 
projections for retail fruit and vegetable prices. (See Tables B and 
C in Appendix A for more detail.)
    In each case, prices are computed only for products in container 
sizes consistent with current WIC regulations, typical state agency 
requirements, or the interim rule. Products identified as organic 
were excluded; states typically disallow organic varieties for cost 
reasons. FNS also adjusted infant formula prices to account for 
State agencies prescribing infant formulas enhanced with DHA/ARA, 
which tend to cost WIC more than non-enhanced infant formulas. This 
analysis provides a conservative estimate that assumes all states 
will issue enhanced infant formulas exclusively during the five-year 
period.\48\
---------------------------------------------------------------------------

    \48\ This assumption is based on the percentage of States 
exclusively issuing enhanced formula as of the February 2007 rebate 
contract summary of 94%. Based on current trends, FNS believes the 
percentage of States exclusively issuing enhanced formula will be 
100% at the time of implementation.

                 Table 6.--WIC Foods: Food Item, Selection Criteria, Units, and Prices Per Unit
----------------------------------------------------------------------------------------------------------------
                                                                                                  Price per unit
               Food item                     Retail sales database                Units            (inflated to
                                              selection criteria                                       FY06)
----------------------------------------------------------------------------------------------------------------
Infant formula (post rebate):\49\
    Powdered..........................  Enhanced formulas \50\ in       oz......................         $0.0312
                                         powdered, liquid concentrate,
                                         and ready-to-feed forms.
    Weighted average of all forms.\51\  ..............................  oz......................          0.0331
Infant cereal (post rebate)...........  Dry grains without added fruit  oz......................          0.125
                                         or other flavors.
Infant food:
    Infant fruit and vegetables.......  Any texture; plain fruits or    oz......................          0.122
                                         vegetables.
    Infant food meat..................  All plain meat varieties......  oz......................          0.346
    Bananas...........................  Fresh.........................  lb......................          0.456
Milk:
    Whole.............................  Fresh dairy milk only, \1/2\    qt......................          0.767
                                         gallon or gallon containers.
                                         Reduced fat includes skim
                                         milk and milk identified as
                                         2% or lower milk fat.
    Reduced fat.......................  ..............................  qt......................          0.708
Cheese................................  Processed American and          lb......................          3.292
                                         domestic natural cheddar,
                                         Colby, mozzarella, brick,
                                         Monterey jack. Sliced or un-
                                         sliced varieties.
Yogurt................................  Quart sized containers and      qt......................          2.068
                                         larger. Plain, vanilla, and
                                         fruit flavors.
Tofu..................................  Plain varieties...............  lb......................          1.467
Soy beverage..........................  Half gallon or larger sizes.    qt......................          1.370
                                         Plain varieties.\52\.
Juice.................................  Apple, grape, orange,           oz......................          0.032
                                         grapefruit, tomato.
                                         Unsweetened 100% juice.
Adult cereal..........................  Weighted average of cereals     oz......................          0.159
                                         commonly prescribed by state
                                         WIC agencies and whole-grain
                                         varieties. Hot or ready-to-
                                         eat.
Eggs..................................  Large or medium, white. One-    doz.....................          0.931
                                         dozen containers only.
Beans:
    Dry...............................  Most varieties, excluding       lb......................          0.805
                                         string beans and immature
                                         peas. Not mixed with other
                                         foods.
    Canned............................  ..............................  oz......................          0.037
Peanut butter.........................  All forms and varieties. Not    oz......................          0.094
                                         mixed with jelly.
Whole-grain bread.....................  Wheat or grain bread..........  lb......................          1.422
Brown rice............................  Instant or regular............  lb......................          1.178
Tuna..................................  Chunk light, canned...........  oz......................          0.101
Other canned fish.....................  Salmon, sardines and mackerel,  oz......................          0.114
                                         canned.
Carrots...............................  Fresh, frozen, canned.........  lb......................          0.953
----------------------------------------------------------------------------------------------------------------


[[Page 69023]]

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

    \49\ The average prices computed for infant formula are based on 
a range of container sizes commonly prescribed by WIC clinics. 
Formula prices, unlike the prices computed for other products in 
this analysis, are based on purchases by all individuals, not just 
those with WIC-eligible incomes. This has little consequence on the 
average price since more than half of the infant formula purchased 
in the U.S. is purchased by WIC participants.
    \50\ The term ``enhanced formulas'' means formulas that have 
been enhanced with two fatty acids, DHA and ARA.
    \51\ The weighted average price is used throughout this analysis 
except when pricing the value of formula prescriptions, under the 
interim rule, for partially breastfeeding infants age 0-3 months. 
For that one group, the interim rule recommends the prescription of 
powder alone.
    \52\ The price reflects purchases by individuals at all income 
levels. The dataset contained too few sample records when limited to 
purchases by individuals with WIC-eligible incomes.
---------------------------------------------------------------------------

v. Participant Projections

    For this analysis, FNS makes the straightforward assumption that 
overall WIC participation will grow at a fixed 2.08% annual rate 
from February 2007 through the end of fiscal year 2012. 2.08% is a 
simple average of the annual observed rates of growth for each of 
the seven years that ended in January 2007. The participant data 
used to generate this growth rate is remitted by the States to FNS 
on a monthly basis. Participant data are reviewed for possible 
collection, transmission, or keying errors, but are otherwise 
unadjusted by FNS. The participant growth assumption used in this 
analysis is intended to illustrate the potential cost impacts of the 
revised food package over time and should not be construed as 
reflecting any policy or projection of future WIC participation.
    Consistent with the IOM assumptions, we do not assume any 
changes in participation under the interim rule due to potential 
participants finding the revised package more or less attractive. 
(For more detail on participation levels by food package see Tables 
D and E in Appendix A.)
    Many of the package changes were intended to encourage 
breastfeeding. However, it is important to note that this analysis 
does not provide an estimate of the increase in the number of 
breastfed infants or the additional length of time that infants will 
be breastfed. Due to the complex set of factors (demographic, 
social, environment, clinical, etc.) that influence breastfeeding 
duration, we are unable to estimate the number of infant/mother 
pairs that will switch food packages as their feeding practices 
change. This is consistent with the analysis provided by IOM.
    The assumption of no change in breastfeeding patterns yields the 
most conservative cost estimate, as the net impact of increases in 
breastfed infants and breastfeeding women participants reduces the 
costs of this proposal. IOM conducted a sensitivity analysis by 
simulating possible shifts in participation rates. Shifting infant/
mother pairs from the fully formula-fed package to the breastfeeding 
packages has the effect of moving infant/mother pairs from the most 
expensive set of packages to less expensive ones. A constant shift 
of 30 percent for one to 11 months of age from partial to full 
breastfeeding and a smaller range of shifts from full formula 
feeding to full breastfeeding (with an appropriate shift in the 
mother's classification) decreased the average package cost by 
nearly two percent.\53\
---------------------------------------------------------------------------

    \53\ See IOM, p. 140.
---------------------------------------------------------------------------

vi. Phased Implementation

    The analysis assumes the rule takes effect in December 2007 
(FY08). During the phase-in period, State agencies will be required 
to issue food benefits based on either the new food packages or 
current food packages but cannot combine the two. State agencies may 
also phase-in new food packages on a participant category basis.
    Based on comments from State and local agencies, the interim 
rule's phased-in period has been revised to reflect an 18-month 
period, six months longer than the implementation period in the 
proposed rule. In the interim rule, the elimination of juice from 
the infant food packages is phased-in over 18 months, rather than 
six months as stated in the proposed rule, from publication of the 
rule.
    All phase-in effects are reflected in the cost estimates 
contained in Table 2. This analysis assumes that the remaining 
provisions of the rule will be phased-in over the course of 18 
months beginning December 2007. It is assumed, as above, that States 
will implement the provisions of the rule throughout the phase-in 
period; the effective rate of implementation is averaged over the 
course of 18 months.\54\ The rule's phase-in schedule reduces total 
costs in FY 2008 by $11.1 million. FY 2009 costs are reduced by an 
estimated $1.1 million.
---------------------------------------------------------------------------

    \54\ If the phase-in rate increases linearly, the rule would not 
be fully effective until July 2009. As a rough approximation, it is 
assumed that the effective rate of implementation of all provisions 
throughout FY 2008 averages 31 percent, with the remainder realized 
in the first eight months of FY 2009.
---------------------------------------------------------------------------

vii. State Cost Variation

    This analysis is based on national average prescription and 
price data, which indicates that program-wide, the changes are cost 
neutral. States may vary somewhat in their implementation 
experiences, depending on how closely their prescription practices 
and prices correspond to the national averages. WIC funding rules 
help address these implementation issues. The food funding formula 
provides mechanisms for transferring funds from States which are not 
fully utilizing their grants to those with need for additional 
funding, and these mechanisms have been successfully used in the 
past to address variations in States' funding needs.

b. Administrative Costs

    State agencies and local WIC providers will incur some new costs 
to implement the rule. A total of six State agencies provided 
comments on the proposed rule that specifically addressed costs 
associated with implementation. In general, these States believed 
that additional nutrition services and administration (NSA) funds 
would be needed to update and enhance MIS systems, train staff, 
participants and vendors, and update food lists. However, none of 
these commenters attempted to quantify their expected costs.
    Many of the costs of implementation are similar in type to the 
routine recurring costs of operating a WIC program. These include 
training WIC clinic and administrative staff, and the periodic 
review and updating of WIC-approved food lists to assist vendors 
with their own staff training. Much of the training-related cost 
that State and local agencies will incur as a result of the rule 
will therefore displace similar recurring expenses during the phase-
in period.
    Other costs, such as modifying MIS systems, are non-routine 
expenses tied exclusively to the transition to a new set of food 
packages. However, MIS systems vary greatly across the States, and 
the effort needed to modify these systems will vary as well. FNS is 
not in a position to assess the level of work faced by State and 
local agencies. As a result, the cost of modifying State MIS systems 
cannot be estimated.
    Despite their concerns, States were overwhelmingly supportive of 
the proposed changes; one State comment stated directly the judgment 
that the benefits from implementing the new packages will outweigh 
the effort needed to implement the changes.
    FNS believes that State agencies and local WIC providers will be 
able to absorb the burden associated with implementing this rule 
within current NSA funds. State and local agencies have substantial 
flexibility in how they spend their NSA funds and may need to 
reprioritize or postpone some initiatives to undertake the 
implementation activities associated with this rule. Given the 
extremely positive response that this rule has received within the 
WIC community at both the State and local levels, we fully expect 
that implementation will be a priority.

E. Uncertainties

    The estimate developed above is sensitive to changes in several 
key assumptions. A few of the most significant are discussed here.

1. Price Volatility in the Dairy Market

    Instability in dairy prices over the last several years presents 
a major element of uncertainty in the cost estimate. However, the 
maximum amount of milk available in each of the food packages is 
reduced. The total amount of milk that can be replaced with more 
expensive substitutes has been reduced as well. These factors make 
the revised food packages less sensitive to dairy price fluctuations 
than the current WIC packages. FNS examined the impact of a 10% 
increase and a 10% decrease in the price of milk and cheese. Since 
the amount of milk and cheese is being reduced in the interim 
packages, higher dairy prices would produce a net savings. That is, 
while higher dairy prices would increase the absolute cost of the 
interim rule's food packages, an equivalent dairy price increase 
would increase the absolute cost of the current rule's packages by 
an even greater amount. Because the increased cost is relatively 
smaller under the interim rule, a dairy price increase will reduce 
the cost of adopting the rule; the $29.7 million savings under our 
baseline

[[Page 69024]]

assumptions would become a $222.5 million savings. Similarly, lower 
dairy prices would increase the cost of adopting the interim rule. 
The impact of these price changes is summarized in the following 
table:

   Table 7.--Projected Cost of WIC Food Package Revisions, Assuming a 10% Increase or a 10% Decrease in Dairy
                                                     Prices
                                                 [In $ millions]
----------------------------------------------------------------------------------------------------------------
                                                 FY 2008    FY 2009    FY 2010    FY 2011    FY 2012     Total
----------------------------------------------------------------------------------------------------------------
Cost/Savings of Rule with 10% Increase in           -$5.8     -$30.8     -$48.4     -$61.8     -$75.7    -$222.5
 Dairy Prices.................................
Cost/Savings of Interim Rule..................        5.0        7.3       -2.5      -13.9      -25.6      -29.7
Difference Between Base Assumption and 10%           10.8       38.2       45.9       47.9       50.0      192.8
 Price Increase...............................
Cost/Savings of Rule with 10% Decrease in            15.8       45.5       43.3       34.0       24.4      163.1
 Dairy Prices.................................
Cost/Savings of Interim Rule..................        5.0        7.3       -2.5      -13.9      -25.6      -29.7
Difference Between Base Assumption and 10%          -10.8      -38.2      -45.9      -47.9      -50.0    -192.8
 Price Decrease...............................
----------------------------------------------------------------------------------------------------------------
Negative values are cost reductions. Differences may not be exact due to rounding.

2. Assumed Preference for Soy Beverage

    FNS estimates that as many as 10% of women will request soy 
beverage in place of liquid milk, if provided the choice.\55\ The 
IOM cites high rates of lactose maldigestion and low rates of 
cultural acceptability of milk among African American and Asian 
women as important factors in its decision to introduce substitutes 
for milk.\56\ African American women are represented in the WIC 
population at a level disproportionate to their share of the general 
population. In part for that reason, it is appropriate to assume a 
WIC participant preference for soy beverage at or near the upper 
range of estimates of soy beverage consumption in the U.S. as a 
whole. And because WIC participants may choose freely between milk 
and the more expensive soy substitute, without regard to cost, a 
natural response is consumption at a rate above the rate of those 
whose choice between the two products has personal cost impact.
---------------------------------------------------------------------------

    \55\ AC Nielsen Homescan data indicate that approximately 10% of 
households with WIC-eligible incomes purchased some type of soy 
beverage during FY 2003. Soy beverage cannot be identified precisely 
in the AC Nielsen dataset. The 10% consumption figure is based on a 
broad product definition that includes soy beverage varieties that 
are not WIC-eligible under the interim rule. FNS sought to identify 
women who might request plain soy beverage if it is offered, cost-
free, as a milk substitute. The estimate developed here assumes that 
this group will include some women who are current consumers of more 
popular soy beverage varieties.
    \56\ IOM, p. 119.
---------------------------------------------------------------------------

    FNS determined which women in the 2002 WIC prescription dataset 
were provided neither milk nor cheese. Those individuals, as a 
group, are assumed to be the WIC participants most inclined to 
request a prescription of soy beverage in place of milk. FNS' 
simulation model prescribes an amount of soy beverage to those 
individuals equal to the maximum allowed under their respective food 
packages. The program then substitutes soy beverage for the existing 
milk prescriptions of other WIC participants to the extent necessary 
to reach the 10% participant target. The program prescribes cheese 
and tofu before soy beverage; it does not replace the prescription 
of those milk substitutes with soy beverage. IOM took a similar 
approach in developing its cost estimate; it assumed that soy 
beverage would replace 10% of liquid milk prescriptions. In IOM's 
analysis, 8.7% of all milk and milk substitutes prescribed to women 
is in the form of soy beverage. FNS' methodology, which incorporates 
the more detailed data available from PC2002, results in a somewhat 
lower 7.6% substitution rate for soy beverage.
    Precise data on which to base a soy beverage consumption rate 
for adult women is not available; it is not known whether 
consumption is appreciably higher or lower among women than among 
the population generally. For these reasons, the cost of the interim 
rule has been re-estimated using two alternate assumptions. If soy 
beverage is prescribed to only 5% of women, the average Package V, 
VI, and VII soy beverage substitution rate is 3.8%. Conversely if 
soy beverage is prescribed to approximately 15% of women, the 
average Package V, VI, and VII soy beverage substitution rate is 
11.4%. Given the high cost of soy beverage relative to milk, this 
uncertainty would have cost implications.

 Table 8.--Projected Cost of WIC Food Package Revisions, Assuming 5% or 15% of Women Are Prescribed Soy Beverage
                                                 [in $ millions]
----------------------------------------------------------------------------------------------------------------
                                                 FY 2008    FY 2009    FY 2010    FY 2011    FY 2012     Total
----------------------------------------------------------------------------------------------------------------
Cost/Savings of Rule with alternate 5%               $1.5      -$4.9     -$17.2     -$29.2     -$41.6     -$91.4
 prescription rate............................
Cost/Savings of Interim Rule..................        5.0        7.3       -2.5      -13.9      -25.6      -29.7
    Difference Between Base Assumption and 5%         3.5       12.2       14.7       15.3       16.0       61.6
     Prescription Rate........................
Cost/Savings of Rule with alternate 15%               8.4       19.5       12.1        1.4       -9.6       31.9
 prescription rate............................
Cost/Savings of Interim Rule..................        5.0        7.3       -2.5      -13.9      -25.6      -29.7
    Difference Between Base Assumption and 15%       -3.5      -12.2      -14.7      -15.3      -16.0     -61.6
     Prescription Rate........................
----------------------------------------------------------------------------------------------------------------
Negative values are cost reductions. Differences may not be exact due to rounding.

3. State option to provide formula for infants 0-0.9 months of age

    The proposed rule put forth three options for infant feeding 
within the first month of birth: (1) Fully formula feeding; (2) 
fully breastfeeding; or (3) partially breastfeeding. The Proposed 
Rule did not allow formula to be provided for partially breasted 
infants under one month of age. This interim rule will allow 
partially breastfed infants in the first month of life to receive no 
more than 104 reconstituted fluid ounces of infant formula. Food 
Package V will be provided to mothers of these partially 
breastfeeding infants.
    As shown in Table 9, the low amount of formula provided to 
partially breastfeeding infants under one month of age and the 
difference in the women's packages provides a cost savings when 
infant/mother pairs move to the partially breastfeeding packages 
during the first month after birth. FNS does not know how many fully 
formula feeding and fully breastfeeding mothers would opt to 
partially breastfeed during the infant's first month. However, given 
that the monthly cost of the food packages for a partially 
breastfeeding pair is less than the cost of the packages for either 
a fully breastfeeding or fully formula feeding pair, even a 
relatively

[[Page 69025]]

large shift to the partially breastfeeding packages does not 
threaten the overall cost neutrality of the interim rule.

 Table 9.--Combined Monthly Food Package Costs for Infant/Mother Pairs of Infants 0-0.9 Months, Assuming One Can
                          of Formula for Partially Breastfeeding Infants in First Month
----------------------------------------------------------------------------------------------------------------
                                                                       Monthly food package costs (FY 2006)
                                                                 -----------------------------------------------
                                                                      Mother          Infant           Pair
----------------------------------------------------------------------------------------------------------------
Fully Formula Fed Feeding Pair..................................          $31.23          $27.90          $59.14
Partially Breast Fed Feeding Pair...............................           40.09            3.25           43.34
    Cost/Savings of Moving to Partially Breast Fed Packages.....           $8.86         -$24.66         -$15.80
Fully Breast Fed Feeding Pair...................................           51.30            0.00           51.30
Partially Breast Fed Feeding Pair...............................           40.09            3.25           43.34
    Cost/Savings of Moving to Partially Breast Fed Packages.....         -$11.21           $3.25          -$7.96
----------------------------------------------------------------------------------------------------------------

4. Prescription Assumptions for Whole Grain Bread and Bread Substitutes

    Because whole grain bread and bread substitutes are new 
additions to the WIC food packages, FNS had to develop prescription 
assumptions for these foods without the benefit of historic 
prescription data. For purposes of this cost estimate FNS assumed 
that whole grain bread and bread substitutes would be prescribed to 
WIC participants at rates comparable to the observed prescription 
rates for breakfast cereal, the most closely related food in the 
current WIC packages.\57\ For children's Package IV, FNS applied an 
observed cereal prescription rate of 95.4%. For packages V and VII, 
FNS applied an observed average rate of 97.7%.
---------------------------------------------------------------------------

    \57\ Observed rates were taken from PC2002.
---------------------------------------------------------------------------

    Table 10 recomputes the cost effect of the interim rule under 
the alternate assumptions that the actual whole grain bread 
prescription rates for food packages IV, V, and VII will be as low 
as 90%, or as high as 100%.

  Table 10.--Projected Cost of WIC Food Package Revisions Assuming 90% and 100% Whole Grain Prescription Rates
----------------------------------------------------------------------------------------------------------------
                                                 FY 2008    FY 2009    FY 2010    FY 2011    FY 2012     Total
----------------------------------------------------------------------------------------------------------------
Cost/Savings of Rule with 90% Whole Grain            $2.6       $1.2     -$12.8     -$24.6     -$36.8     -$72.9
 Prescription Rate............................
Cost/Savings of Interim Rule..................        5.0        7.3       -2.5      -13.9      -25.6      -29.7
    Difference Between Base Assumption and 90%       $2.4       $8.5      $10.3      $10.7      $11.2      $43.1
     Prescription Rate........................
Cost/Savings of Rule with 100% Whole Grain            6.8       13.7        5.1       -5.9      -17.3        2.5
 Prescription Rate............................
Cost/Savings of Interim Rule..................        5.0        7.3       -2.5      -13.9      -25.6      -29.7
    Difference Between Base Assumption and          -$1.8      -$6.4      -$7.7      -$8.0      -$8.4     -$32.3
     100% Prescription Rate...................
----------------------------------------------------------------------------------------------------------------

5. Prescription Assumptions for Infant Food Fruits and Vegetables, and 
Infant Food Meat

    Jarred infant foods, like whole grain breads, are new additions 
to the WIC food packages. Without the benefit of historic 
prescription rates for these foods, FNS had to look elsewhere for a 
prescription assumption to use in its cost estimate. FNS considered 
and rejected infant fruit juice prescriptions as a proxy, despite 
the fact that the jarred food benefit is comprised primarily of 
fruits and vegetables. Infant juice prescriptions fall well below 
100%, largely because states recognize that the current package 
maximums exceed amounts recommended by current nutrition science. 
FNS believes that the interim rule's infant foods will be prescribed 
at a much higher rate. For this reason, FNS assumes that the jarred 
infant food prescription rate will match the observed 94.3% 
prescription rate for fruit juice across WIC's women's food 
packages.\58\
---------------------------------------------------------------------------

    \58\ Because the estimate assumes no rounding up of jarred 
infant foods, the net average prescription rate is slightly less 
than 94.3% for baby food fruits and vegetables. The average 
prescription for baby food meat is a full 94.3%, however, because 
the maximum monthly allowance of 77.5 oz is evenly divisible by the 
most commonly marketed jar size.
---------------------------------------------------------------------------

    Table 11 recomputes the cost effect of the interim rule under 
the alternate assumptions that jarred infant food prescriptions will 
be as low as 90%, or as high as 100%.

 Table 11.--Projected Cost of WIC Food Package Revisions Assuming 90% and 100% Jarred Infant Food Prescriptions
----------------------------------------------------------------------------------------------------------------
                                      FY 2008      FY 2009      FY 2010      FY 2011      FY 2012       Total
----------------------------------------------------------------------------------------------------------------
Cost/Savings of Rule with 90%              $2.1        -$2.7       -$14.6       -$26.5       -$38.8       -$80.4
 Infant Food Prescription Rate....
Cost/Savings of Interim Rule......          5.0          7.3         -2.5        -13.9        -25.6        -29.7
                                   -----------------------------------------------------------------------------
    Difference Between Base                 2.8         10.0         12.0         12.6         13.1         50.6
     Assumption and 90%
     Prescription Rate............
----------------------------------------------------------------------------------------------------------------
Cost/Savings of Rule with 100%              8.7         20.4         13.1          2.5         -8.6         36.0
 Infant Food Prescription Rate....
Cost/Savings of Interim Rule......          5.0          7.3         -2.5        -13.9        -25.6        -29.7
                                   -----------------------------------------------------------------------------
    Difference Between Base                -3.7        -13.0        -15.6        -16.3        -17.1        -65.8
     Assumption and 100%
     Prescription Rate............
----------------------------------------------------------------------------------------------------------------


[[Page 69026]]

6. Changes in Current Food Package Sizes

    The current and interim rules specify maximum food allowances in 
units of weight or volume. Several comments on the Proposed Rule 
asked that food allowances be expressed in package units, such as 
number of jars or containers, or that maximum weights and volumes 
match package sizes currently available. Specifically, issues were 
raised regarding current package sizes of juice, jarred infant foods 
and whole grain bread (further discussed in Section F, Item 2).
    FNS recognizes that package sizes of WIC-eligible foods vary 
among manufacturers as well as regions. FNS also recognizes that 
manufacturers may change package sizes at any time. However, basing 
the maximum allowances in the interim rule on package sizes does not 
reduce the possibility of future changes in package sizes. This cost 
estimate does not incorporate any potential changes in package sizes 
but assumes that the maximum monthly allowance will be able to 
accommodate future changes to food packages sizes.

7. Uncertainties Summary

    Table 12 presents two additional cost estimates that reflect the 
potential aggregated effect of these alternative assumptions. The 
first assumes that all of the cost increasing alternate assumptions 
discussed above are realized. The second assumes that all of the 
cost decreasing alternate assumptions are realized.
    Scenario 1:
    a. Jarred infant foods will be prescribed at a 100% rate to 
eligible infants
    b. Whole grain bread and bread substitutes will be prescribed at 
a 100% rate
    c. 15% of women will be prescribed some soy beverage as a milk 
substitute
    d. Dairy prices will decrease by 10%
    Scenario 2:
    a. Jarred infant foods will be prescribed at a 90% rate to 
eligible infants
    b. Whole grain bread and bread substitutes will be prescribed at 
a 90% rate
    c. 5% of women will be prescribed some soy beverage as a milk 
substitute
    d. Dairy prices will increase by 10%
    The resulting combined range of uncertainty based on these 
assumptions is from a savings of $342 million to a cost of $359 
million over five years, or -1.1% to +1.2% of total projected WIC 
program costs during that period, relative to the base assumptions.

           Table 12.--Projected Cost of WIC Food Package Revisions Under Alternate Extreme Assumptions
----------------------------------------------------------------------------------------------------------------
                                      FY 2008      FY 2009      FY 2010      FY 2011      FY 2012       Total
----------------------------------------------------------------------------------------------------------------
Cost of Rule Under Scenario 1.....        $25.1        $78.4        $82.9        $75.4        $67.6       $329.3
Cost/Savings of Interim Rule......          5.0          7.3         -2.5        -13.9        -25.6        -29.7
                                   -----------------------------------------------------------------------------
    Difference Between Base               -20.1        -71.0        -85.4        -89.3        -93.2       -359.1
     Assumption and Scenario 1....
----------------------------------------------------------------------------------------------------------------
Savings of Rule Under Scenario 2..        -14.2        -60.3        -83.8        -98.8       -114.3       -371.4
Cost/Savings of Interim Rule......          5.0          7.3         -2.5        -13.9        -25.6        -29.7
                                   -----------------------------------------------------------------------------
    Difference Between Base                19.2         67.6         81.3         84.9         88.7        341.6
     Assumption and Scenario 2....
----------------------------------------------------------------------------------------------------------------

F. Alternatives

    Based on comments received, FNS considered several alternatives 
to the Proposed Rule. Some of these alternatives are discussed 
below. Each of these alternatives was ultimately rejected because 
FNS believes that a food package which reflects the IOM 
recommendations as closely as possible within the constraint of cost 
neutrality best reflects current scientific consensus on how to meet 
the dietary needs of WIC participants.

1. Include Yogurt as a Milk Substitute for Food Packages IV-VII

    For Food Packages IV-VII, the IOM identified yogurt, tofu, and 
soy beverage as new milk substitutes to help ensure adequate calcium 
intake by those who cannot consume milk and to accommodate cultural 
preferences. Under the current rule cheese is also available as a 
milk substitute for up to three quarts of milk. IOM's recommendation 
specifically called for substituting one quart of yogurt or tofu for 
one quart of milk, and for limiting substitutions of cheese, yogurt, 
and tofu to four quarts of milk for Food Packages IV, V and VI, and 
six quarts of milk for Food Package VII. Soy beverage would be 
allowed for the entire milk allowance for Food Packages V, VI, and 
VII.
    In order to maintain cost-neutrality, the Proposed Rule 
eliminated yogurt as a milk substitute, but allows the substitution 
of tofu, cheese and soy beverages up to the IOM maximum substitution 
level. As shown in Table 13, the price of yogurt, $2.07 per quart, 
as compared to $.71 per quart for reduced-fat milk, considerably 
increases the monthly cost of Food Packages IV-VII. Soy beverage and 
tofu also have higher per unit costs than milk; however, the 
estimated amount of tofu purchased by WIC participants is 
substantially lower than that of yogurt, and soy beverage is priced 
lower than yogurt ($.70 less per quart) making it a more cost-
efficient substitute.

        Table 13.--Projected Cost of Yogurt as a Milk Substitute
------------------------------------------------------------------------
                                    Estimated
                                     average     Price per     Cost per
           Food package             prescribed      unit         food
                                      amount     (inflated     package
                                      (qt.)       to FY06)
------------------------------------------------------------------------
IV...............................         0.86        $2.07        $1.78
V................................         0.84         2.07         1.74
VI...............................         0.66         2.07         1.37
VII..............................         0.83         2.07         1.72
------------------------------------------------------------------------

    The economic impact of including yogurt as a milk substitute is 
shown in Table 14. The five year cost of the rule, as modified by 
this alternative, is $384.0 million. The cost of the interim rule 
without yogurt is -$29.7 million (see Table 2). Therefore, the 
elimination of yogurt is retained in this interim rule.

[[Page 69027]]



         Table 14.--Projected Cost of WIC Food Package Revisions, Including Yogurt as a Milk Substitute
                                                 [In $ millions]
----------------------------------------------------------------------------------------------------------------
                                      FY 2008      FY 2009      FY 2010      FY 2011      FY 2012       Total
----------------------------------------------------------------------------------------------------------------
Total Cost of Rule with Alternate         $28.2        $89.2        $95.9        $88.9        $81.8       $384.0
 Assumption.......................
Total Cost of Interim Rule........          5.0          7.3         -2.5        -13.9        -25.6        -29.7
                                   -----------------------------------------------------------------------------
    Difference....................        -23.2        -81.9        -98.4       -102.8       -107.4      -413.7
----------------------------------------------------------------------------------------------------------------
Negative values are cost reductions. Differences may not be exact due to rounding.

2. Increase the Whole Grain Maximum Allowance for Women to 24 Ounce 
Increments

    The Proposed Rule established a maximum of whole wheat bread or 
other whole grain--rice, barley (whole-grain), bulgur (cracked 
wheat), oatmeal and soft corn tortillas--monthly allowance of two 
pounds for children in Food Package IV and one pound for women in 
Food Packages V and VII. As recommended by the IOM, this is an 
enhancement to the current food packages which do not provide whole 
grains (except in breakfast cereals).
    Some comments on the Proposed Rule stated that most bread loaves 
are not sold in one or two pound packages and participants would 
have difficulty purchasing the maximum monthly allowance. In order 
to accommodate current bread package sizes the maximum allowance for 
whole grains would need to be increased to 48 ounces for children 
and 24 ounces for women. Not only would changing the whole grain 
maximum allowance to accommodate package sizes currently available 
in the market significantly increase the overall cost of the interim 
rule (as shown in Table 15), it is not administratively practical 
for FNS to change maximum allowances based on current manufacturer 
packaging as they may vary by region and may change in future years. 
Therefore, whole grain maximum allowances set in the Proposed Rule 
are retained in this interim rule.

  Table 15.--Projected Cost (+) / Savings (-) Associated With Increasing the Whole Grain Maximum Allowance for
                                               Women and Children
                                                 [In $ millions]
----------------------------------------------------------------------------------------------------------------
                                FY 2008      FY 2009      FY 2010      FY 2011      FY 2012          Total
----------------------------------------------------------------------------------------------------------------
Total Cost of Rule with             $25.2        $78.7        $83.3        $75.8        $68.0             $331.1
 Alternative................
Total Cost of Interim Rule..          5.0          7.3         -2.5        -13.9        -25.6              -29.7
                             -----------------------------------------------------------------------------------
    Difference..............       -$20.2       -$71.4       -$85.8       -$89.7       -$93.7           -$360.8
----------------------------------------------------------------------------------------------------------------
Negative values are cost reductions. Differences may not be exact due to rounding.

3. Fresh Fruits and Vegetables for Infants

    The Proposed Rule added jarred infant fruits and vegetables to 
Food Package II and jarred infant meats to Food Package II for fully 
breast fed infants. Food Package II also provides a maximum 
allowance of two pounds of fresh bananas. Comments on the Proposed 
Rule asked that fresh, canned or frozen fruits and vegetables be 
allowed in Food Package II instead of or as an option to jarred 
infant fruits and vegetables.
    The estimate shown below assumes that cash value vouchers 
replace the interim rule's current infant fruit and vegetable 
provision. The initial value of the vouchers are set to the nearest 
whole dollar equivalent of the interim rule's recommended quantity 
of infant fruits and vegetables. It is assumed that the vouchers are 
redeemed and inflated in the same manner as the fruit and vegetable 
vouchers for women and children. In place of the interim rule's 
current provision, a fruit and vegetable voucher for infants would 
reduce the overall cost of the rule by $133.2 million over five 
years.\59\
---------------------------------------------------------------------------

    \59\ The savings is a consequence of two factors. The first is 
the assumption that fruit and vegetable vouchers for infants will be 
issued at their full values, but redeemed at a rate of just 87.5% 
(the same assumption that applies to fruit and vegetable vouchers 
for women and children in the baseline estimate.) The jarred fruit 
and vegetable benefit, by contrast, is assumed to be prescribed at 
an average rate equal to 94.3% of the package maximum (95.8% after 
rounding up to an even number of jars) and redeemed by beneficiaries 
at 100%. The second factor which makes the voucher option relatively 
less expensive is the voucher inflation and rounding rule which 
limits future increases to whole dollar increments. The effects of 
inflation are accrued annually, but not realized until the 
cumulative increase in the CPI is sufficient to raise the voucher's 
value by a dollar. See interim rule section 246.16(j).

    Table 16.--Projected Cost (+) / Savings (-) Associated With Issuing Fresh Fruit and Vegetable Vouchers to
                                          Infants 6-11.9 Months of Age
                                                 [In $ millions]
----------------------------------------------------------------------------------------------------------------
                                      FY 2008      FY 2009      FY 2010      FY 2011      FY 2012       Total
----------------------------------------------------------------------------------------------------------------
Total Cost of Rule with                    $1.0       -$11.0       -$27.6       -$44.6       -$50.9      -$133.2
 Alternative......................
Total Cost of Interim Rule........          5.0          7.3         -2.5        -13.9        -25.6        -29.7
                                   -----------------------------------------------------------------------------
    Difference....................          4.0         18.3         25.0         30.8         25.3       103.5
----------------------------------------------------------------------------------------------------------------
Negative values are cost reductions. Differences may not be exact due to rounding.

    The IOM recommended that commercial baby food fruits and 
vegetables and fresh bananas replace juice in the current package. 
The IOM encourages the continuation of full breastfeeding past 6 
months, and recommended that higher amounts of baby food fruits and 
vegetables and baby food meats be provided to fully breastfeeding 
infants. Commercial baby foods were recommended due to nutrient 
content, availability in developmentally appropriate textures, and 
food safety.\60\ In addition, the

[[Page 69028]]

provision of commercial baby food fruits and vegetables helps ensure 
that these items are consumed by infants and not other household 
members. FNS believes that nutrition education provided by WIC staff 
related to appropriate food choices and home preparation of foods 
for infants is compatible with provision of jarred infant foods. 
Therefore, this alternative was rejected.
---------------------------------------------------------------------------

    \60\ IOM, p. 103.
---------------------------------------------------------------------------

4. Soy Beverage Substitution for Children Without Medical Documentation

    The Proposed Rule allowed State agencies to authorize, with 
medical documentation, soy-based beverages and tofu substitutions 
for milk for children in Food Package IV. Some comments received on 
the Proposed Rule expressed opposition to the medical documentation 
requirement citing that it creates barriers for children to obtain 
foods that meet cultural needs.
    Requiring medical documentation for dairy alternatives ensures 
that a health care provider is aware that children may be at 
nutritional risk when milk is replaced by other foods. The IOM 
recommended that soy beverage not be made available to children to 
satisfy participant preference in the absence of medical need.
    Research suggests that up to 4% of children consume some sort of 
soy beverage and that percentage increases as they get older.\61\ 
FNS does not collect data on the percentage of WIC children who 
request milk alternatives, and the percentage of children that would 
request soy beverage in place of milk is difficult to estimate. 
However, given the price differential between reduced fat milk ($.71 
per quart) and soy beverage ($1.37 per quart), and the number of 
WIC-eligible children, substitution of soy beverage for milk without 
medical documentation could result in a significant increase to the 
overall cost of the rule.
---------------------------------------------------------------------------

    \61\ United Soybean Board, Current Knowledge on Soy and 
Children's Diets, August 2004, prepared by N. Chapman and 
Associates. http://www.soyfoods.org/wp-content/uploads/2006/11/soy_and_child_diet.pdf
.

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

    On both economic grounds and on the expert recommendation of the 
IOM, FNS retains the medical documentation requirement for soy 
beverage in the children's food package.

G. Market Share Analysis

    The changes in the quantities and types of foods provided by the 
WIC program should result in changes in the quantities and types of 
foods that WIC participants buy with their WIC vouchers. The 
complete market impact of this rule is difficult to accurately 
quantify because we do not know the extent to which WIC foods 
substitute for purchases WIC participants would have otherwise made 
with their own funds. Empirical research on this issue is 
inconclusive.\62\ Because of this uncertainty, we present two 
scenarios. In the first (Table 17), we assume full substitution--
that is, all foods purchased with WIC vouchers under the current 
packages would otherwise be purchased with the participants' own 
funds under the interim rule. In the second (Table 18), we assume 
the alternate--that none of the foods purchased with WIC vouchers 
would otherwise be purchased with the participants' own funds. In 
both scenarios, the potential impact of the interim rule on the 
total market size for most foods is relatively modest, as is the 
impact on WIC's share of the total market.
---------------------------------------------------------------------------

    \62\ Mary Kay Fox, William Hamilton, Biing-Hwan Lin, Effects of 
Food Assistance and Nutrition Programs on Nutrition and Health, 
Volume 3, Literature Review, Economic Research Service, U.S. 
Department of Agriculture, Food Assistance and Nutrition Research 
Report Number 19-3. October 2004.
---------------------------------------------------------------------------

    We estimated the total value of WIC sales\63\ for each food item 
and the total annual U.S. retail sales for each WIC food item. To 
estimate WIC sales, we multiplied the average unit price per food 
item by an estimate of the quantity of food purchased by WIC 
participants (the average estimated participation multiplied by the 
amount of food prescribed to a participant throughout the course of 
a year).\64\ To estimate total annual sales, 2005 AC Nielsen 
Productscan data was used to calculate total volume and annual 
grocery store sales of the different categories of food 
products.\65\ We used calendar year (CY) 2005 participation, cost 
and sales estimates for our market share analysis. Although the rule 
does not take effect until FY2008, we cannot reliably make 
projections about the overall sales of WIC food items for the next 
two years; we believe the CY2005 data provides a good indication of 
the relative impact of the rule's changes on each food item.
---------------------------------------------------------------------------

    \63\ WIC sales refer only to sales produced by the use of WIC 
vouchers, not the total sales from all purchases made by WIC 
participants.
    \64\ Prescription amounts used in this market share analysis are 
the same as those used in the cost analysis.
    \65\ Total annual sales include foods that fit in the category 
of food product, but may not be WIC eligible (i.e., within cereal, 
total sales include cereals of any sugar content and cereals without 
whole grains). This was done to accurately portray the impact of the 
proposed food package on the whole market and not just the narrow 
sub-market of ``WIC eligible'' food. Because AC Nielsen Productscan 
data covers approximately 70% of the total grocery market, total 
annual sales were adjusted by dividing by 70%.
---------------------------------------------------------------------------

    It is important to note that this approach understates the size 
of the total markets for WIC food items (and thus overstates both 
WIC's market share and the potential impact of the changes on WIC 
food markets), because the data used to estimate total market size 
is limited to grocery store sales. Data on sales through other 
outlets was not available, but would likely significantly increase 
the estimated size of the total market for WIC foods.

     Table 17.--Estimated Total Annual Sales, WIC Sales, and WIC Percent of Market for Current Food Package and Interim Food Package, Assuming Full
                                                 Substitution of WIC Foods in Total Annual Sales, CY2005
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                Current food package                                 Interim food package
                                               ---------------------------------------------------------------------------------------------------------
                 WIC food item                                                             WIC % of                                             WIC % of
                                                  Estimated total    Estimated total WIC    market     Estimated total    Estimated total WIC    market
                                                  annual sales ($)      sales ($) \66\       \67\      annual sales ($)        sales ($)          \67\
--------------------------------------------------------------------------------------------------------------------------------------------------------
Formula.......................................        3,600,257,587        2,533,590,541       70.4        3,600,257,587        2,025,525,861       56.3
Beans.........................................          874,176,643           32,179,354        3.7          874,176,643           82,632,904        9.5
Peanut butter.................................        1,133,273,041           40,935,940        3.6        1,133,273,041           54,492,515        4.8
Milk..........................................       16,043,036,006          975,287,323        6.1       16,043,036,006          712,840,678        4.4
Adult cereal..................................        9,697,058,781          399,336,655        4.1        9,697,058,781          399,336,655        4.1
Juice.........................................       14,203,760,671          556,756,383        3.9       14,203,760,671          281,143,313        2.0
Rice..........................................          737,198,377                    0  .........          737,198,377           43,442,898        5.9
Fruit and vegetables..........................       15,761,934,300            7,512,820        0.0       15,761,934,300          431,691,818        2.7
Eggs..........................................        2,959,401,900          120,241,255        4.1        2,959,401,900           67,192,054        2.3
Cheese........................................       12,329,016,799          386,210,204        3.1       12,329,016,799          247,273,210        2.0
Bread.........................................       17,028,860,749                    0  .........       17,028,860,749           93,740,564        0.6
Canned fish...................................        1,917,928,393            9,191,549        0.5        1,917,928,393           10,885,456        0.6
Infant cereal \68\............................  ...................           56,640,143  .........  ...................           42,641,463  .........
Baby food \68\................................  ...................                    0  .........  ...................          185,899,515  .........
Tofu \68\.....................................  ...................                    0  .........  ...................            1,088,288  .........
Soy beverage \68\.............................  ...................                    0  .........  ...................           49,561,168  .........
                                               ---------------------------------------------------------------------------------------------------------

[[Page 69029]]


    Total.....................................       96,285,903,247        5,117,882,167        6.4       96,285,903,247        4,729,388,359        4.6
--------------------------------------------------------------------------------------------------------------------------------------------------------

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

    \66\ Total WIC sales reported here are less than the $5.3 
billion (pre-rebate) reported in WIC 2005 food costs. The estimates 
of total WIC food sales for the current and proposed packages are 
likely to be lower than actual WIC food expenditures because the AC 
Nielsen Productscan and Homescan data used to estimate food prices 
may not fully capture the higher prices charged by WIC vendors such 
as small, non-chain, convenience and ``WIC-Only'' stores.
    \67\ ``WIC % of Market'' estimates are calculated only for items 
for which we have both a numerator and denominator.
    \68\ We were unable to assess the market impact of infant 
cereal, baby food, tofu and soy beverage items in the WIC food 
package. These items are not included in the Productscan data; 
however, we are able to estimate WIC sales because these items are 
part of the Homescan data, which is our source for item price data.

      Table 18.--Estimated Total Annual Sales, WIC Sales, and WIC Percent of Market for Current Food Package and Interim Food Package, Assuming No
                                                 Substitution of WIC Foods in Total Annual Sales, CY2005
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                Current Food Package                                 Interim food package
                                               ---------------------------------------------------------------------------------------------------------
                 WIC food item                                                             WIC % of                                             WIC % of
                                                  Estimated total    Estimated total WIC    market     Estimated total    Estimated total WIC    market
                                                  annual sales ($)      sales ($) \69\       \70\      annual sales ($)        sales ($)          \70\
--------------------------------------------------------------------------------------------------------------------------------------------------------
Formula.......................................        3,600,257,587        2,533,590,541       70.4        3,092,192,907        2,025,525,861       65.5
Beans.........................................          874,176,643           32,179,354        3.7          924,630,192           82,632,904        8.9
Peanut butter.................................        1,133,273,041           40,935,940        3.6        1,146,829,616           54,492,515        4.8
Milk..........................................       16,043,036,006          975,287,323        6.1       15,780,589,361          712,840,678        4.5
Adult cereal..................................        9,697,058,781          399,336,655        4.1        9,697,058,781          399,336,655        4.1
Juice.........................................       14,203,760,671          556,756,383        3.9       13,928,147,601          281,143,313        2.0
Rice..........................................          737,198,377                    0                     780,641,275           43,442,898        5.6
Fruit and vegetables..........................       15,761,934,300            7,512,820        0.0       16,186,113,298          431,691,818        2.7
Eggs..........................................        2,959,401,900          120,241,255        4.1        2,906,352,699           67,192,054        2.3
Cheese........................................       12,329,016,799          386,210,204        3.1       12,190,079,804          247,273,210        2.0
Bread.........................................       17,028,860,749                    0  .........       17,122,601,313           93,740,564        0.5
Canned fish...................................        1,917,928,393            9,191,549        0.5        1,919,622,300           10,885,456        0.6
Infant cereal \71\............................  ...................           56,640,143  .........  ...................           42,641,463
Baby food \71\................................  ...................                    0  .........  ...................          185,899,515
Tofu \71\.....................................  ...................                    0  .........  ...................            1,088,288
Soy beverage) \71\............................  ...................                    0  .........  ...................           49,561,168
--------------------------------------------------------------------------------------------------------------------------------------------------------
    Total.....................................       96,285,903,247        5,117,882,167        6.4       95,674,859,149        4,729,388,359        4.7
--------------------------------------------------------------------------------------------------------------------------------------------------------

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

    \69\ Total WIC sales reported here are less than the $5.3 
billion dollars (pre-rebate) reported in WIC 2005 food costs. The 
estimates of total WIC food sales for the current and proposed 
packages are likely to be lower than actual WIC food expenditures 
because the AC Nielsen Productscan and Homescan data used to 
estimate food prices may not fully capture the higher prices charged 
by WIC vendors such as small, non-chain, convenience and ``WIC-
Only'' stores.
    \70\ ``WIC% of Market'' estimates are calculated only for items 
for which we have both a numerator and denominator.
    \71\ We were unable to assess the market impact of infant 
cereal, baby food, tofu and soy beverage items in the WIC food 
package. These items are not included in the Productscan data; 
however, we are able to estimate WIC sales because these items are 
part of the Homescan data, which is our source for item price data.
---------------------------------------------------------------------------

    It is important to note that the numbers in Tables 17 and 18 
differ from the costs reported in Table 3 mainly because the market 
analysis uses pre-rebate formula and cereal costs as compared to the 
cost estimate which factors in the post-rebate savings. In addition, 
the data in the market impact analysis is based on 2005 
participation, whereas the cost estimate uses the projected 
participation estimates for 2008 and beyond. Finally, the market 
analysis does not take into account any phase-in period.
    Overall, the changes in the WIC food package will have a modest 
impact on WIC sales as a percentage of total annual sales of these 
food item categories. Market shares are slightly higher under the no 
substitution scenario. (See Table 17.) For the foods that are 
currently part of the food package, the interim food package has the 
largest dollar impact on the infant formula and beans markets. Under 
the interim food package, the market share of WIC sales for infant 
formula is less than with the current food package. The decline is 
mostly due to a reduction in the maximum allowance of infant formula 
for partially breastfed and fully formula-fed infants 6 through 11 
months of age (Food Package II FF). The market share of beans will 
increase from 3.7% to 8.9%-9.5%. The majority of this impact stems 
from the fact that participants can now substitute canned beans, 
which are more expensive, for dried beans.
    The other markets that will be impacted and are currently part 
of the food package are the milk, juice, eggs, cheese, peanut 
butter, and fruit and vegetable markets. The market share of these 
items will change slightly. The items that will have decreases are 
milk, juice, eggs, and cheese, while the items that will have 
increases are peanut butter, and fruits and vegetables. The WIC 
market share of milk will change from 6.1% to 4.4%-4.5% due to lower 
prescription amounts and the ability of participants to substitute 
tofu, and soy beverage for fluid milk. The decline in cheese is also 
due to these reasons. The share of the juice market shifts from 3.9% 
to 2.0%,

[[Page 69030]]

while the share of the egg market shifts from 4.1% to 2.3%. Both of 
these declines stem from changes in the package that are designed to 
improve the overall nutritional benefit of the package. Participants 
will be receiving less juice, but more fruits and vegetables. The 
amount of eggs will be lowered consistent with recommendations of 
the IOM on cholesterol intake and to permit a wider variety of foods 
to be included in the WIC food packages. The market share of peanut 
butter will increase from 3.6% to 4.8%. Lastly, the WIC percent of 
the fruit and vegetable market will increase from 0% to 2.7%. This 
is due to the fact that the only fruit or vegetable that WIC 
participants currently receive are carrots and only exclusively 
breastfeeding mothers receive them. Under the new rule, the fruit 
and vegetable vouchers will encourage WIC's women and children 
participants to consume these foods.
    For the foods being added to the WIC food package, the WIC 
market share percentages are, for the most part, small, 0.5%-0.6% 
and 5.6%-5.9%, for bread and rice, respectively. We were unable to 
assess the market impact of baby food, infant cereal, tofu and soy 
beverage. These items are not included in the Productscan data; 
however, we are able to estimate WIC sales because these items are 
part of the Homescan data, which is our source for item price data.
    Given the changes in market share and potential changes in total 
market demand, changes in the purchases of WIC-provided foods could 
theoretically have an impact on prices for WIC foods. However, 
because the demand impacts for most foods are small and impossible 
to estimate precisely, we are unable to determine the potential 
price effects.
    WIC purchases of infant formula represent a larger share of the 
total market of WIC-provided foods than do WIC purchases of the 
other WIC foods. The Economic Research Service (ERS) recently 
studied the relationship between retail prices of infant formula and 
demand for WIC-provided formula. ERS findings suggest that the 
amount of WIC-provided formula purchased has an effect on retail 
prices; specifically, larger WIC demand leads to higher retail 
prices for non-WIC consumers who purchase the state's contract brand 
of formula.\72\ ERS estimates, for example, that a non-WIC family in 
a State whose WIC program serves two-thirds of all formula fed 
infants would spend roughly $3 to $5 more, per month, on contract 
brand powder formula for their child than a family in a State whose 
WIC program serves just half of formula-fed infants. However, it is 
difficult to project the exact impact of the reduction in WIC demand 
for infant formula under the interim rule based on this study. The 
ERS analysis was limited to formulas sold in supermarkets, whereas 
projecting the impact of the rule on overall demand would require an 
analysis of the behavior of non-WIC consumers, which have more 
diverse purchasing habits. For instance, many non-WIC formula 
purchases are at prices below that of supermarkets from mass 
merchandisers that do not participate in the WIC Program. In 
addition, the change in WIC formula sales as a percentage of retail 
grocery sales due to this interim rule (from 70.4% to 56.3%-65.5%) 
is smaller than the changes in WIC sales examined in the ERS report 
(from 50% to 66%).
---------------------------------------------------------------------------

    \72\ Victor Oliveira, Mark Prell, David Smallwood, Elizabeth 
Fraz[atilde]o, WIC and the Retail Price of Infant Formula, Economic 
Research Service, U.S. Department of Agriculture, May 2004, p. 60.
---------------------------------------------------------------------------

Appendix A: Additional Cost Estimate Assumptions

                   Table A1.--FY 08 Food Package Costs
                      [Monthly costs, post-rebate]
------------------------------------------------------------------------
                   Food package                      Current    Interim
------------------------------------------------------------------------
I--0 to 5.9 month infants \73\....................     $24.49     $20.84
II--6 to 11.9 month infants.......................      33.32      41.06
III--Participants with qualifying conditions \74\.       0.00      21.07
IV--Children 1 to 4.9 years.......................      35.18      34.49
V--Women: Pregnant and partially breastfeeding....      39.82      42.66
VI--Women: Postpartum.............................      32.15      33.38
VII--Women: Fully breastfeeding...................      51.23      54.56
------------------------------------------------------------------------

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

    \73\ To permit a direct comparison against the current rule, 
average food package costs under the current rule are weighted by 
the number of children who fall into the age categories that 
correspond to the interim rule food packages. Although the current 
cost figures for infants do not correspond to the food package 
definitions under the interim rule, the average costs of foods 
prescribed to infants within the stated age categories are correct. 
That is, the cost of monthly food prescriptions to infants up to 5 
months old is lower under the interim rule by approximately $3.60.
    [Current Food Package I is for infants 0-3.9 months of age; 
interim Food Package I is for infants 0-5.9 months of age. Current 
Food Package II is for infants 4-11.9 months of age; interim Food 
Package II is for infants 6-11.9 months of age. Food package costs 
are weighted by the respective age groups as shown in Tables D and E 
in Appendix A.]

                      Table A2.--Annual Current Food Package Costs (Post-Rebate) FY08-FY12
                                                 [In $ millions]
----------------------------------------------------------------------------------------------------------------
                  Food package                    FY08 \75\       FY09         FY10         FY11         FY12
----------------------------------------------------------------------------------------------------------------
I..............................................      $272.18      $342.02      $357.69      $373.79      $390.35
II.............................................       331.53       416.59       435.68       455.29       475.46
III \74\.......................................         0.00         0.00         0.00         0.00         0.00
IV.............................................     1,454.11     1,827.21     1,910.94     1,996.95     2,085.41
V..............................................       456.17       573.22       599.49       626.47       654.22
VI.............................................       206.42       259.39       271.27       283.48       296.04
VII............................................       169.47       212.95       222.71       232.74       243.05
----------------------------------------------------------------------------------------------------------------

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

    \74\ Current Food Package III is $0 because the analysis only 
considers the incremental costs associated with the proposal. 
Interim Food Package III represents the incremental costs as a 
result of the changes in the proposed rule. FNS does not have 
comprehensive data on the current cost of medical foods provided in 
Food Package III. However, the medical foods associated with this 
package are assumed to stay the same under the current and interim 
rules. The incremental cost is extending foods from other packages 
to Food Package III recipients.

[[Page 69031]]



                      Table A3.--Annual Interim Food Package Costs (Post-Rebate) FY08-FY12
                                                 [In $ millions]
----------------------------------------------------------------------------------------------------------------
                  Food package                    FY08 \75\       FY09         FY10         FY11         FY12
----------------------------------------------------------------------------------------------------------------
I..............................................      $259.58      $297.59      $304.29      $317.98      $332.07
II.............................................       355.40       500.78       536.88       561.05       585.90
III \74\.......................................         3.02        10.64        12.79        13.36        13.95
IV.............................................     1,435.66     1,756.20     1,818.93     1,894.24     1,971.64
V..............................................       462.71       594.06       622.09       647.66       673.95
VI.............................................       206.88       259.75       270.33       281.14       292.25
VII............................................       171.61       219.70       229.93       239.41       249.14
----------------------------------------------------------------------------------------------------------------

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

    \75\ For both the current and interim rules, FY 08 figures 
represent just 10 months (the interim rule will be effective for 
just 10 months of the year.) The interim rule figures are not fully 
phased-in until FY 2010.

 Table B.--CY05 to FY06 Price Inflation Assumptions--Food Specific CPIs
------------------------------------------------------------------------
                                                              Inflation
                         Food item                               rate
                                                              (percent)
------------------------------------------------------------------------
Infant Formula.............................................          1.3
Infant cereal..............................................         -1.7
Infant food fruit and vegetables...........................          2.5
Infant food meat...........................................          2.5
Bananas....................................................          4.2
Milk:
  Whole....................................................         -0.7
  Reduced fat..............................................         -0.5
Cheese.....................................................         -0.9
Yogurt.....................................................         -0.3
Tofu.......................................................          1.3
Soy beverage...............................................          1.3
Juice......................................................          3.9
Adult cereal:
  Whole grain..............................................         -1.7
  Current WIC cereals......................................         -1.7
Eggs.......................................................          2.9
Beans:
  Dry......................................................          1.0
  Canned...................................................          1.0
Peanut butter..............................................          0.9
Whole grain bread..........................................          3.2
Brown rice.................................................          3.7
Tuna.......................................................          2.5
Canned Fish................................................          2.5
Carrots....................................................          3.4
------------------------------------------------------------------------


               Table C.--Inflation Assumptions, FY05-FY12
------------------------------------------------------------------------
                                                              CPI: fruit
                                                  Thrifty        and
                     Year                        food plan    vegetables
                                                 (% change)   (% change)
------------------------------------------------------------------------
FY05 *........................................        -0.32         3.74
FY06 *........................................        -0.75         4.76
FY07 *........................................         2.05         1.03
FY08..........................................         2.62         1.96
FY09..........................................         2.58         1.88
FY10..........................................         2.45         1.92
FY11..........................................         2.37         1.92
FY12..........................................         2.30        1.92
------------------------------------------------------------------------
*Actual WIC Food Package Inflation as of January 2007.


          Table D.--Projected Participation in the WIC Program, by Food Package Type: Current Packages
----------------------------------------------------------------------------------------------------------------
          Food package                 FY08            FY09            FY10            FY11            FY12
----------------------------------------------------------------------------------------------------------------
                I

0-3.9 month Infants:
    Fully formula-fed...........         426,994         435,882         444,956         454,218         463,674
    Partially breast-fed........         112,821         115,169         117,567         120,014         122,513
    Fully breast-fed............         199,996         204,159         208,409         212,747         217,176
                                 -------------------------------------------------------------------------------
        Subtotal................         739,810         755,211         770,932         786,980         803,362

               II

4-5.9 month Infants:
    Fully formula-fed...........         283,539         289,441         295,466         301,617         307,895
    Partially breast-fed........          31,566          32,223          32,894          33,579          34,278
    Fully breast-fed............          56,262          57,433          58,628          59,849          61,095
6-11.9 month Infants:
    Fully formula-fed...........         840,456         857,952         875,811         894,043         912,654
    Partially breast-fed........          56,380          57,554          58,752          59,975          61,224
    Fully breast-fed............          98,114         100,156         102,241         104,369         106,542
                                 -------------------------------------------------------------------------------
        Subtotal................       1,366,316       1,394,759       1,423,793       1,453,432       1,483,687

               III

Participants with qualifying              92,470          94,395          96,360          98,366         100,414
 conditions \76\................

               IV

Children: 1-4.9 years...........       4,133,746       4,219,798       4,307,640       4,397,311       4,488,849

                V

Women:
    Pregnant....................         958,254         978,202         998,564       1,019,351       1,040,571
    Partially breastfeeding.....         187,421         191,323         195,305         199,371         203,521
                                 -------------------------------------------------------------------------------
        Subtotal................       1,145,675       1,169,524       1,193,870       1,218,722       1,244,092


[[Page 69032]]


               VI

Women: Postpartum...............         642,045         655,410         669,054         682,981         697,198

               VII

Women: Fully breastfeeding......         330,813         337,700         344,730         351,906         359,231
                                 -------------------------------------------------------------------------------
        Total...................       8,450,876       8,626,796       8,806,378       8,989,698       9,176,834
----------------------------------------------------------------------------------------------------------------

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

    \76\ The interim rule moves infants with qualifying medical 
conditions from Food Packages I and II to a revised Food Package 
III. The number of Package III beneficiaries shown here includes 
those who are reassigned to Package III as a result of the interim 
rule. Individuals who are currently Package III recipients, and 
those who are newly moved to Package III by the interim rule, are 
affected differently by the interim rule than are other 
participants. The current and newly assigned Package III recipients 
are also handled differently than other participants throughout this 
cost analysis. For purposes of clarity and consistency, all of these 
individuals are shown as Package III recipients from the first 
through the final steps of the analysis.

            Table E.--Projected Participation in the WIC Program, by Food Package Type: Interim Rule
----------------------------------------------------------------------------------------------------------------
          Food package                 FY08            FY09            FY10            FY11            FY12
----------------------------------------------------------------------------------------------------------------
                I                 ..............  ..............  ..............  ..............  ..............

0-3.9 month Infants:
    Fully formula-fed...........         426,994         435,882         444,956         454,218         463,674
    Partially breast-fed........         112,821         115,169         117,567         120,014         122,513
    Fully breast-fed............         199,996         204,159         208,409         212,747         217,176
4-5.9 month Infants:
    Fully formula-fed...........         283,539         289,441         295,466         301,617         307,895
    Partially breast-fed........          31,566          32,223          32,894          33,579          34,278
    Fully breast-fed............          56,262          57,433          58,628          59,849          61,095

                                 -------------------------------------------------------------------------------
        Subtotal................       1,111,176       1,134,307       1,157,920       1,182,024       1,206,630

               II

6-11.9 month Infants:
    Fully formula-fed...........         840,456         857,952         875,811         894,043         912,654
    Partially breast-fed........          56,380          57,554          58,752          59,975          61,224
    Fully breast-fed............          98,114         100,156         102,241         104,369         106,542
                                 -------------------------------------------------------------------------------
        Subtotal................         994,950       1,015,662       1,036,805       1,058,387     1,080,420 *

               III
Participants with qualifying              92,470          94,395          96,360          98,366         100,414
 conditions \76\

               IV

Children:
    1-1.9 years.................       1,364,955       1,393,369       1,422,374       1,451,984       1,482,209
    2-4.9 years.................       2,768,791       2,826,428       2,885,265       2,945,327       3,006,639
                                 -------------------------------------------------------------------------------
        Subtotal................       4,133,746       4,219,798       4,307,640       4,397,311       4,488,849

                V

Women:
    Pregnant....................         958,254         978,202         998,564       1,019,351       1,040,571
    Partially breastfeeding.....         187,421         191,323         195,305         199,371         203,521
                                 -------------------------------------------------------------------------------
        Subtotal................       1,145,675       1,169,524       1,193,870       1,218,722       1,244,092

               VI

Women: Postpartum                        642,045         655,410         669,054         682,981         697,198

               VII

                                 -------------------------------------------------------------------------------
Women: Fully breastfeeding               330,813         337,700         344,730         351,906         359,231
        Total...................       8,450,876       8,626,796       8,806,378       8,989,698       9,176,834
----------------------------------------------------------------------------------------------------------------

 [FR Doc. E7-23033 Filed 12-5-07; 8:45 am]

BILLING CODE 3410-30-P