SECTION 1. NUTRITIONAL IMPROVEMENT FOR CHILDREN SERVED UNDER CHILD 
              NUTRITION PROGRAMS.

    (a) In General.--Section 18 of the Richard B. Russell National 
School Lunch Act (42 U.S.C. 1769) is amended by adding at the end the 
following:
    ``(h) Healthy School Nutrition Environment Incentive Grants.--
            ``(1) In general.--The Secretary shall establish a program 
        under which the Secretary shall make competitive grants to 
        selected elementary and secondary schools--
                    ``(A) to create healthy school nutrition 
                environments; and
                    ``(B) to assess the impact of the environments on 
                the health and well-being of children enrolled in the 
                schools.
            ``(2) Selection of schools.--In selecting schools to 
        receive incentive grants under this subsection, the Secretary 
        shall--
                    ``(A) ensure that not less than 75 percent of 
                schools selected to participate in the program 
                established under this subsection are schools in which 
                not less than 50 percent of the students enrolled in 
                each school are eligible for free or reduced price 
                meals under this Act;
                    ``(B) ensure that, of the schools selected to 
                participate in the program, there is appropriate 
                representation of rural, urban, and suburban schools, 
                as determined by the Secretary;
                    ``(C) ensure that, of the schools selected to 
                participate in the program, there is appropriate 
                representation of elementary, middle, and secondary 
                schools, as determined by the Secretary;
                    ``(D) ensure that schools selected to receive a 
                grant under this subsection meet the requirements of 
                paragraph (3);
                    ``(E) give priority to schools that develop 
                comprehensive plans that include the involvement of a 
                broad range of community stakeholders in achieving 
                healthy school nutrition environments;
                    ``(F) give priority to schools that develop 
                comprehensive plans that include a strategy for 
                maintaining healthy school nutrition environments in 
                the years following the fiscal years for which the 
                schools receive grants under this subsection;
                    ``(G) select only schools that submit grant 
                applications by May 1, 2004; and
                    ``(H) make grant awards effective not later than 
                July 15, 2004.
            ``(3) Requirements.--
                    ``(A) Input.--Prior to the solicitation of 
                proposals for grants under this subsection, the 
                Secretary shall solicit input from appropriate 
                nutrition, health, and education organizations (such as 
                the American School Food Service Association, the 
                American Dietetic Association, and the National School 
                Boards Association) regarding the appropriate criteria 
                for a healthy school environment.
                    ``(B) Criteria for healthy school environments.--
                The Secretary shall, taking into account input received 
                under subparagraph (A), establish criteria for defining 
                a healthy school environment, including criteria that--
                            ``(i) provide program meals that meet 
                        nutritional standards for breakfasts and 
                        lunches established by the Secretary;
                            ``(ii) ensure that all food served 
                        (including food served in participating schools 
                        and service institutions in competition with 
                        the programs authorized under this Act and the 
                        Child Nutrition Act of 1966 (42 U.S.C. 1771 et 
                        seq.)) on school grounds during regular school 
                        hours is consistent with the nutritional 
                        standards for breakfasts and lunches 
                        established by the Secretary;
                            ``(iii) promote the consumption of fruits 
                        and vegetables;
                            ``(iv) provide nutrition education to 
                        students and staff; and
                            ``(v) meet other criteria established by 
                        the Secretary.
                    ``(C) Plans.--To be eligible to receive a grant 
                under this subsection, a school shall submit to the 
                Secretary a healthy school nutrition environment plan 
                that describes the actions the school will take to meet 
                the criteria established under subparagraph (B).
            ``(4) Grants.--For each of fiscal years 2005 through 2008, 
        the Secretary shall make a grant to each school selected under 
        paragraph (2).
            ``(5) Evaluations.--
                    ``(A) In general.--The Secretary, acting through 
                the Administrator of the Food and Nutrition Service, 
                shall conduct an evaluation of a representative sample 
                of schools that receive grants under this subsection.
                    ``(B) Content.--The evaluation shall measure, at a 
                minimum, the effects of a healthy school nutrition 
                environment on--
                            ``(i) overweight children and obesity;
                            ``(ii) dietary intake;
                            ``(iii) nutrition education and behavior;
                            ``(iv) the adequacy of time to eat;
                            ``(v) physical activities;
                            ``(vi) parental and student attitudes and 
                        participation; and
                            ``(vii) related funding issues, including 
                        the cost of maintaining a healthy school 
                        nutrition environment.
                    ``(C) Reports.--The Secretary shall submit to the 
                Committee on Education and the Workforce of the House 
                of Representatives and the Committee on Agriculture, 
                Nutrition, and Forestry of the Senate--
                            ``(i) not later than December 31, 2005, an 
                        interim report on the activities of schools 
                        evaluated under this subsection; and
                            ``(ii) not later than December 31, 2007, a 
                        final report on the activities of schools 
                        evaluated under this subsection.
            ``(6) Funding.--
                    ``(A) In general.--Out of any funds in the Treasury 
                not otherwise appropriated, the Secretary of the 
                Treasury shall transfer to the Secretary of Agriculture 
                to carry out this subsection--
                            ``(i) on October 1, 2003, $10,000,000
                            ``(ii) on October 1, 2004, and each October 
                        1 thereafter through October 1, 2006, 
                        $35,000,000.
                    ``(B) Receipt and acceptance.--The Secretary shall 
                be entitled to receive, shall accept, and shall use to 
                carry out this section the funds transferred under 
                subparagraph (A), without further appropriation.
                    ``(C) Availability of funds.--Funds transferred 
                under subparagraph (A) shall remain available until 
                expended.
                    ``(D) Evaluations.--Of the funds made available 
                under this paragraph, the Secretary shall use not more 
                than $5,000,000 to conduct evaluations under paragraph 
                (5).''.
    (b) Competitive Foods in Schools.--
            (1) In general.--Section 10 of the Child Nutrition Act of 
        1966 (42 U.S.C. 1779) is amended--
                    (A) in subsection (a), by striking ``, including'' 
                and all that follows through ``Lunch Act''; and
                    (B) by striking subsection (b) and inserting the 
                following:
    ``(b) Competitive Foods in Schools.--
            ``(1) In general.--The regulations under subsection (a) may 
        include provisions that regulate the service of food in 
        participating schools and service institutions in competition 
        with the programs authorized under this Act and the Richard B. 
        Russell National School Lunch Act (42 U.S.C. 1751 et seq.) 
        (referred to in this subsection as `competitive foods').
            ``(2) Regulations.--The regulations promulgated under 
        paragraph (1)--
                    ``(A) shall apply to all school grounds during the 
                duration of the school day;
                    ``(B) shall not supersede or otherwise affect State 
                and local regulations on competitive foods that, as 
                determined by the Secretary, conform to the nutritional 
                goals of the regulations promulgated by the Secretary;
                    ``(C) shall require that the proceeds from the sale 
                of competitive foods in schools be used for the benefit 
                of the schools or of organizations of students approved 
                by the schools, if those sales are allowed by the 
                regulations;
                    ``(D) shall take into account the differing needs 
                of--
                            ``(i) elementary schools;
                            ``(ii) middle schools and junior high 
                        schools; and
                            ``(iii) high schools; and
                    ``(E) shall implement the recommendations of the 
                Institute of Medicine made under paragraph (3).
            ``(3) Institute of medicine recommendations.--
                    ``(A) In general.--The Secretary of Agriculture 
                shall offer to enter into an agreement with the 
                Institute of Medicine of the National Academy of 
                Sciences under which the Institute of Medicine, based 
                on sound nutritional science, shall make 
                recommendations to the Secretary regarding the 
                regulation of competitive foods (as defined in section 
                10(b)(1) of the Child Nutrition Act of 1966 (as amended 
                by paragraph (1)(B))).
                    ``(B) Regulations.--Not later than 1 year after the 
                date of receipt of final recommendations from the 
                Institute of Medicine, the Secretary shall promulgate 
                regulations to carry out section 10(b) of the Child 
                Nutrition Act of 1966 (as amended by paragraph (1)(B)) 
                in accordance with the recommendations of the Institute 
                of Medicine.
                    ``(C) Report.--Not later than 1 year after the date 
                of receipt of final recommendations from the Institute 
                of Medicine, the Secretary shall submit to the 
                Committee on Education and the Workforce of the House 
                of Representatives and the Committee on Agriculture, 
                Nutrition, and Forestry of the Senate a report that 
                describes the actions of the Secretary under 
                subparagraph (B).''.
Amends the Richard B. Russell National School Lunch Act (NSLA) to direct the Secretary of Agriculture (Secretary) to establish a program of competitive incentive grants to selected elementary and secondary schools to create healthy school nutrition environments and assess the impact of such environments on the health and well-being of children enrolled in the schools.

Amends the Child Nutrition Act of 1966 (CNA) to revise requirements relating to the Secretary's CNA and NSLA regulation of competitive foods in schools. Eliminates a provision which barred such regulations from prohibiting the sale of competitive foods approved by the Secretary in food service facilities or areas during the time of service of food under CNA or NSLA, if the proceeds from the sales of such foods would inure to the benefit of the schools or of organizations of students approved by the schools. Allows such regulations to include provisions that regulate the service of competitive foods. Requires regulations regarding competitive foods to: (1) apply to all school grounds during the duration of the school day; (2) not supersede or otherwise affect State and local regulations on competitive foods that the Secretary determines conform to CNA and NSLA nutritional goals; (3) if such sales are allowed, require proceeds to be used for the benefit of schools or school-approved student organizations; (4) take into account differing needs of elementary, middle and junior high, and high schools; and (5) implement recommendations the Institute of Medicine will make to the Secretary regarding regulation of competitive foods in schools.
A bill to amend the Richard B. Russell National School Lunch Act to improve the nutrition of students served under child nutrition programs.