[Federal Register Volume 76, Number 9 (Thursday, January 13, 2011)]
[Proposed Rules]
[Pages 2494-2570]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-485]



[[Page 2493]]

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Part III





Department of Agriculture





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7 CFR Parts 210 and 220



Nutrition Standards in the National School Lunch and School Breakfast 
Programs; Proposed Rule

Federal Register / Vol. 76, No. 9 / Thursday, January 13, 2011 / 
Proposed Rules

[[Page 2494]]


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DEPARTMENT OF AGRICULTURE

Food and Nutrition Service

7 CFR Parts 210 and 220

[FNS-2007-0038]
RIN 0584-AD59


Nutrition Standards in the National School Lunch and School 
Breakfast Programs

AGENCY: Food and Nutrition Service, USDA.

ACTION: Proposed rule.

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SUMMARY: This rule proposes to revise the meal patterns and nutrition 
requirements for the National School Lunch Program and the School 
Breakfast Program to align them with the 2005 ``Dietary Guidelines for 
Americans,'' as required by the Richard B. Russell National School 
Lunch Act. The proposed changes are based on recommendations from the 
National Academies' Institute of Medicine set forth in the report 
``School Meals: Building Blocks for Healthy Children.'' This proposed 
rule would increase the availability of fruits, vegetables, whole 
grains, and fat-free and low-fat fluid milk in school meals; reduce the 
levels of sodium and saturated fat in meals; and help meet the 
nutrition needs of school children within their calorie requirements. 
Implementation of this proposed rule would result in more nutritious 
school meals that improve the dietary habits of school children and 
protect their health.

DATES: To be assured of consideration, written comments must be 
postmarked on or before April 13, 2011.

ADDRESSES: The Food and Nutrition Service, USDA, invites interested 
persons to submit comments on this proposed rule. Comments may be 
submitted through one of the following methods:
    <bullet> Preferred method: Federal eRulemaking Portal at http://www.regulations.gov. Follow the online instructions for submitting 
comments.
    <bullet> Mail: Comments should be addressed to Julie Brewer, Chief, 
Policy and Program Development Branch, Child Nutrition Division, Food 
and Nutrition Service, Department of Agriculture, 3101 Park Center 
Drive, Room 640, Alexandria, Virginia 22302-1594.
    <bullet> Hand Delivery or Courier: Deliver comments to the Food and 
Nutrition Service, Child Nutrition Division, 3101 Park Center Drive, 
Room 640, Alexandria, Virginia 22302-1594, during normal business hours 
of 8:30 a.m.-5 p.m.

All comments submitted in response to this proposed rule will be 
included in the record and will be made available to the public. Since 
USDA is anticipating a large volume of comments, we request that 
commenters submit comments through only one of the methods listed 
above. Please be advised that the substance of the comments and the 
identity of the individuals or entities submitting the comments will be 
subject to public disclosure. FNS will make the comments publicly 
available on the Internet via http://www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: William Wagoner or Marisol Benesch, 
Policy and Program Development Branch, Child Nutrition Division, Food 
and Nutrition Service at (703) 305-2590.

SUPPLEMENTARY INFORMATION:

I. Overview

    The 2005 ``Dietary Guidelines for Americans'' (referred to as the 
Dietary Guidelines from here on) recommend that a person's diet supply 
all of the nutrients needed for growth and development, and emphasize 
the consumption of a variety of nutrient-dense foods. To align the 
meals served under the National School Lunch Program (NSLP) and the 
School Breakfast Program (SBP) with the 2005 Dietary Guidelines, this 
proposed rule would require schools to offer more fruits, vegetables 
and whole grains; offer only fat-free or low-fat fluid milk; reduce the 
sodium content of school meals substantially over time; control 
saturated fat and calorie levels; and minimize trans fat. These 
proposed changes, based on the 2009 Institute of Medicine (IOM) report 
``School Meals: Building Blocks for Healthy Children,'' are intended to 
result in school meals that are nutrient-rich and supply appropriate 
calorie levels. This proposed rule is expected to bring about several 
positive outcomes:
    <bullet> Update the NSLP and SBP meal requirements according to the 
latest nutrition science;
    <bullet> Increase the availability of key food groups (fruits, 
vegetables, whole grains, and fat-free and low-fat fluid milk and milk 
products) in school menus;
    <bullet> Allow the NSLP and SBP to better meet the nutritional 
needs of children, improve their eating habits, and safeguard their 
health;
    <bullet> Simplify the administration and operation of the NSLP and 
SBP; and
    <bullet> Reinforce the nutrition education messages provided by 
schools.
    This proposed rule also alerts the public about possible additional 
changes to the school meal requirements based on the upcoming 2010 
Dietary Guidelines, and invites public comments on how to incorporate 
those possible changes into the NSLP and SBP. Three areas addressed by 
the advisory committee for the 2010 Dietary Guidelines that may have 
significant impact on the meal requirements are sodium, saturated fat, 
and vegetable subgroups. The ``Report of the Dietary Guidelines 
Advisory Committee on the Dietary Guidelines for Americans, 2010'' 
(which precedes the release of the Dietary Guidelines' policy) 
recommends:
    <bullet> Lower saturated fat consumption (<7% of total calories),
    <bullet> Lower sodium consumption (<1500 mg per day), and
    <bullet> A new red/orange vegetable subgroup.
    Because the 2010 Dietary Guidelines policy was not available to IOM 
for consideration, USDA has decided to issue this proposed rule and 
seek public comments on ways to incorporate the above possible 
recommendations (without including them in the proposed regulatory 
text). Delaying the many critical updates necessary to align school 
meals with the 2005 Dietary Guidelines would undermine nationwide 
efforts to improve the health of school children. Public comments on 
the areas identified above are requested as part of this proposed 
rulemaking. USDA will also publish a notice in the Federal Register 
when the 2010 Dietary Guidelines official policy is issued to 
facilitate comment on how it may impact this proposal.

II. Background

    The NSLP was established in 1946 upon enactment of the National 
School Lunch Act (NSLA), now the Richard B. Russell National School 
Lunch Act, to safeguard the health and well-being of the nation's 
children. At that time, nutritional concerns in the United States 
(U.S.) centered on nutrient deficiencies and issues of under 
consumption. To facilitate the planning of well-balanced meals in 
schools across the nation, the U.S. Department of Agriculture (USDA) 
established meal patterns with minimum food component requirements 
based on nutrition science at that time. The Type A lunch, designed to 
provide one-third to one-half of the daily food requirements of a 10- 
to 12-year-old child, was the primary meal pattern for all children for 
the first three decades of the lunch program. This meal pattern allowed 
school foodservice managers to choose from a wide variety of foods, and

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served as a tool for teaching children about nutrition and good eating 
habits.
    Over time, the NSLP changed to ensure that children receive 
adequate nutrition for proper growth and development. The Type A lunch 
was updated to reflect new knowledge about the nutritional needs of 
children and their consumption habits. In 1975, the SBP was established 
as a permanent program. By 1980, USDA phased out the Type A lunch and 
specified different portion sizes for different age/grade groups of 
children.
    In the late 1980s, scientific evidence showed that diets high in 
fat, saturated fat, and cholesterol have adverse health consequences. 
USDA's ``School Nutrition Dietary Assessment'' (SNDA-I), published in 
1993, indicated that the meals served under the NSLP and SBP were 
effective in delivering micronutrients but exceeded recommended intakes 
of total fat, saturated fat, cholesterol and sodium. (See the SNDA-I 
report at http://www.fns.usda.gov/oane/menu/Published/CNP/cnp-archive.htm.) Consequently, Section 106(b) of the Healthy Meals for 
Healthy Americans Act of 1994, Public Law 103-448, added section 
9(f)(1) to the NSLA, 42 U.S.C. 1758(f)(1), to require that school meals 
not only provide a percentage of the Recommended Dietary Allowances 
(RDAs) \1\ but are also consistent with the goals of the most recent 
Dietary Guidelines. In 2004, the NSLA was again amended by Section 103 
of the Child Nutrition and WIC Reauthorization Act of 2004, Public Law 
108-265, which added Section 9(a)(4), 42 U.S.C. 1758(a)(4), requiring 
the Secretary to promulgate rules revising nutrition standards, based 
on the most recent Dietary Guidelines, that reflect specific 
recommendations, expressed in serving recommendations, for increased 
consumption of foods and food ingredients offered in school nutrition. 
The Dietary Guidelines reflect the current science-based consensus on 
proper nutrition, a vital element in promoting health and preventing 
chronic disease, and provide the nutritional basis for Federal domestic 
nutrition assistance programs such as the NSLP and SBP.
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    \1\ The RDAs, developed by the Food and Nutrition Board of the 
Institute of Medicine, reflect the average daily dietary nutrient 
intake levels sufficient for meeting the nutrient requirements of 
nearly all (97 to 98 percent) healthy individuals in particular age 
and sex groups.
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    In response to section 9(f)(1) of the NSLA, USDA adopted the School 
Meals Initiative for Healthy Children (SMI), a comprehensive plan to 
promote the health of school children. On June 13, 1995, USDA issued 
program regulations (60 FR 31188) that required school meals to reflect 
the 1990 Dietary Guidelines and established three menu planning options 
that schools may choose from, including two methods based on 
computerized nutrient analysis (Nutrient Standard Menu Planning and 
Assisted Nutrient Standard Menu Planning) and a food-based menu 
planning system. On May 9, 2000, USDA issued program regulations (65 FR 
26904) that further expanded the existing menu planning approaches to 
the five current options. At present, the five menu planning approaches 
are:
    <bullet> The traditional and the enhanced food-based menu planning 
(FBMP) approaches, which follow specific meal patterns;
    <bullet> The nutrient standard menu planning and the assisted 
nutrient standard menu planning (NSMP) \2\ approaches, which are based 
primarily on a computer analysis of the nutrient and energy 
contributions of planned meals; and
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    \2\ The NSMP approach requires a School Food Authority to 
conduct a weighted analysis to assess the nutrient profile of the 
meals selected by students. Weighted analysis gives more weight to 
nutrients supplied by more frequently selected food items and 
correspondingly less weight to nutrients supplied by items less 
frequently selected. This requirement is currently waived until 
September 30, 2010.
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    <bullet> One alternate menu planning approach that is an 
individualized modification of either FBMP or NSMP.
    Currently, schools using any of the five menu planning approaches 
must offer lunches and breakfasts that provide one-third and one-
fourth, respectively, of the 1989 RDAs. Program regulations require 
that school meals provide at least minimum calorie and nutrient levels 
for protein, calcium, iron, vitamin A, and vitamin C. These are key 
nutrients that promote growth and development and are readily 
identifiable on the nutrition labels of all food products. In addition, 
schools must decrease the levels of sodium and cholesterol, increase 
the amount of dietary fiber, and limit meals to not more than 30 
percent of total calories from fat and less than 10 percent of total 
calories from saturated fat consistent with the 1995 Dietary 
Guidelines. Compliance with these nutrition standards is determined by 
averaging nutrients in meals offered over a school week. This allows 
menu planners flexibility to plan nutritious and appealing meals that 
vary from day to day, but that provide appropriate levels of nutrients 
and calories over a five-day school week.
    School lunches and breakfasts were not updated when the 2000 
Dietary Guidelines were issued because those recommendations did not 
require significant changes to the school meal patterns.

III. Need To Revise the Nutrition and Meal Requirements

    The current nutrition standards and meal requirements for the NSLP 
and SBP are inconsistent with the 2005 Dietary Guidelines. Further, as 
noted, section 9(a)(4) of the NSLA was amended in 2004 requiring that 
meals be consistent with the most recent Dietary Guidelines, so 
modifications are needed to align school meal patterns with the Dietary 
Guidelines. The 2005 Dietary Guidelines call for significant changes in 
dietary habits for persons ages 2 years and older, and emphasize the 
importance of a nutritious diet to maintain health and reduce the risk 
of chronic diseases, such as overweight and obesity. New dietary 
concerns have emerged since the establishment of the NSLP. The overt 
nutritional deficiencies in children's diets that led to the NSLP's 
inception have largely been eliminated. In turn, overweight and obesity 
are now major health concerns affecting children and adolescents. 
Studies indicate that excess food consumption, poor food choices, and 
decreased physical activity are contributing to childhood overweight 
and obesity, and related chronic health conditions. According to 
Centers for Disease Control and Prevention's 2003-2006 National Health 
and Nutrition Examination Survey (NHANES) data, almost 32 percent of 
children 6 to 19 years of age are overweight or obese. NHANES data 
indicate that 17 percent of children age 6-11 are obese, while 17.6 
percent of adolescents age 12-19 are obese. Obese children and 
adolescents are at risk for health problems during their youth and as 
adults. They are more likely to have risk factors associated with 
cardiovascular disease (such as high blood pressure, high cholesterol, 
and Type 2 diabetes) than other children and adolescents.
    A basic premise of the 2005 Dietary Guidelines is that nutrient 
needs should be met primarily by consuming a variety of nutrient-dense 
foods from the basic food groups. In comparison with the 2005 Dietary 
Guidelines, current school menus are not required to offer the 
recommended quantities of fruits, vegetables (including vegetable 
subgroups), and whole grains. These foods, along with low-fat fluid 
milk and milk products, supply many of the key nutrients of concern for 
children: Calcium, fiber, potassium, magnesium and vitamin E.

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    Current regulations also allow schools to offer whole and reduced-
fat (2 percent milk fat) fluid milk as part of a reimbursable school 
lunch or breakfast. Those types of milk may contribute to high 
saturated fat in school meals. The SNDA-III report issued by USDA in 
2007 indicates that less than one-third of school lunches offered in 
school year 2004-2005 under the current menu planning approaches met 
the requirement of less than 10 percent of total calories from 
saturated fat.
    SNDA-III also shows that school lunches are high in sodium. This is 
consistent with IOM's findings. With regard to fiber intake, the IOM 
report indicates that children's consumption of whole grains is 
extremely low in comparison with the Dietary Guidelines recommendation 
that half of all grains consumed are whole grains, which are excellent 
sources of fiber.
    Another reason for updating the school meals is that new 
applications for dietary planning are available. RDAs, which are 
currently used as the basis for requirements in the School Meal 
Programs, are no longer a primary value for planning the diets of 
groups and individuals. Beginning in 2000, IOM issued the Dietary 
Reference Intake (DRI) reports providing new guidance for planning 
dietary intakes for individuals and groups. The DRI reports for 
vitamins, minerals, energy, and macronutrients provide recommended 
intake levels aimed at improving long-term health by preventing typical 
nutritional deficiencies and reducing the risk of chronic disease 
through nutrition. The DRIs represent a more comprehensive 
recommendation for appropriate nutrient levels than the former RDAs and 
are the recommended tool for dietary planning.\3\
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    \3\ The DRIs for vitamins and minerals consist of four reference 
standards that include the RDAs as well as Estimated Average 
Requirements (EAR), Adequate Intake levels (AI), and the Tolerable 
Upper Intake Level (UL). For energy and macronutrients, the DRIs are 
expressed as Estimated Energy Requirements (EERs) and Acceptable 
Macronutrient Distribution Ranges (AMDRs), respectively.
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    In light of the changes in nutrition science and current dietary 
concerns, USDA is seeking significant improvements in the NSLP and SBP 
to ensure that these programs continue to meet their goal to safeguard 
the health of school children. The changes proposed in this rule are 
necessary to align school lunches and breakfasts with the 2005 Dietary 
Guidelines and be consistent with the DRIs. Implementation of the 
proposed changes would amend program regulations in 7 CFR 210 for the 
NSLP and 7 CFR 220 for the SBP as stated in the regulatory text.
    The 2009 IOM report that serves as the basis for the nutritional 
provisions of this proposed rule provides recommendations for the meals 
planned for school-aged children only (grades K and above). This rule 
addresses the proposed meal requirements for school-aged children in 
Sec.  210.10 and Sec.  220.8 of the regulatory text. However, this 
proposed rule would retain the current meal requirements for children 
in preschool (ages 1-2 and 3-4) and infants pending changes to the 
Child and Adult Care Food Program (CACFP). Consistent with the IOM's 
selection of a food-based meal pattern for Kindergarten and above, this 
rule would allow only the traditional FBMP approach to plan meals for 
preschoolers. This rule allows a school serving meals to school-aged 
children and preschoolers to use a single menu planning approach to 
plan meals for all children. The meal requirements for preschoolers are 
addressed separately in Sec.  210.10(p) and Sec.  220.8(n) of the 
proposed regulatory text.

IV. IOM Recommendations for Implementing the 2005 Dietary Guidelines

    This proposed rule seeks to update the school meals for school-aged 
children to align them with the 2005 Dietary Guidelines and make them 
consistent with the DRIs, as described in the IOM final report ``School 
Meals: Building Blocks for Healthy Children,'' which was published 
October 20, 2009 (see the report at http://www.nap.edu). As recommended 
by IOM, this proposed rule focuses on revising the meal requirements 
for the NSLP and SBP. The new meal requirements seek to ensure that the 
meals planned by school foodservice providers and selected by students 
reflect the food groups emphasized by the 2005 Dietary Guidelines and 
meet the nutrient targets identified by IOM.
    The IOM final report on school meals was issued in response to 
USDA's request for recommendations to align lunches and breakfasts with 
the 2005 Dietary Guidelines. Prior to the IOM study, USDA had explored 
a range of alternatives to implement the 2005 Dietary Guidelines in the 
School Meal Programs in a scientifically sound and practical manner. 
Due to the complexity of this task, USDA decided to seek help from IOM. 
USDA had previously sought IOM's expertise to update the food package 
for the Special Supplemental Nutrition Program for Women, Infants and 
Children and that expertise proved extremely valuable.
    To conduct a review of the School Meals Programs, IOM assembled a 
committee of scientists in various disciplines and school foodservice 
professionals. The committee conducted an independent review and 
assessment of the nutritional needs of school-aged children in the U.S. 
using the 2005 Dietary Guidelines and the DRIs. The committee used that 
scientific review as the basis for recommending revisions to the NSLP 
and SBP meal requirements.
    In the course of the study, IOM analyzed scientific evidence, 
deliberated in closed sessions, and held open meetings (July 8, 2009 
and January 28, 2009) to obtain stakeholders' input. Representatives 
from many entities provided oral testimony, including nutrition 
advocates, health professionals, and many others listed in the final 
IOM report. In addition to the oral testimony, the committee received 
written comments from numerous stakeholders.
    IOM issued two reports during the study. ``Nutrition Standards and 
Meal Requirements for National School Lunch and Breakfast Programs: 
Phase I, Proposed Approach for Recommending Revisions'' was issued 
December 17, 2008. The Phase I report describes the approach used by 
the IOM committee to make recommendations for revising the School Meal 
Programs. The final report ``School Meals: Building Blocks for Healthy 
Children,'' dated October 20, 2009, provides the scientific basis for 
this proposed rule. It contains recommendations for meal requirements, 
nutrient targets, and implementation and monitoring. In addition, the 
report explains the rationale for each of the committee's 
recommendations and includes several appendices that provide technical 
justification. Appendix D of the final report provides a summary of the 
public comments received in response to the Phase I report.

V. Proposed Meal Requirements for NSLP and SBP

    The IOM final report recommends that emphasis be placed on revising 
the NSLP and SBP meal requirements to align school lunches and 
breakfasts with the 2005 Dietary Guidelines. The IOM report addresses 
standards for menu planning and standards for meals as selected by the 
student.

Standards for Menu Planning

    The proposed standards for menu planning improve the school meals' 
alignment with the 2005 Dietary Guidelines by offering more fruits at 
breakfast; increasing the amount and variety of vegetables at lunch; 
offering

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more whole-grain rich foods; limiting fluid milk choices to fat-free 
(unflavored or flavored) and unflavored fluid low-fat milk; 
establishing minimum and maximum calorie levels for each age/grade 
group; increasing the emphasis on limiting saturated fat; seeking 
gradual but major reductions in the sodium content; and minimizing 
trans fat. The intent of these proposed changes is to offer school 
meals that are nutrient-rich and calorie-appropriate.
    In developing its recommendations, IOM set targets for 24 nutrients 
and other dietary components that serve as a scientific basis for the 
proposed standards for menu planning. To align the school meals with 
the Dietary Guidelines, the IOM committee found it necessary to 
consider a large number of nutrients and replace the concept of 
nutrition standards with a new concept of ``nutrient targets.'' IOM 
established nutrient targets for the school meals based on the DRIs.
    Compared to the current nutrition standards, the nutrient targets 
identified by IOM are higher for protein, and selected vitamins and 
minerals. The recommended nutrient targets were set at 32 percent of 
the School Meal-Target Median Intake for lunches and at 21.5 percent of 
the School Meal-Target Median Intake for breakfasts. (These percentages 
correspond to the means of the values used by IOM for the minimum and 
maximum calorie levels.) The Target Median Intake method combines 
information about a population group's nutrient requirements (Estimated 
Average Requirements or Adequate Intakes) and Tolerable Upper Intake 
Levels. The selected Target Median Intake distribution aims to minimize 
predicted prevalence of nutrient inadequacy and excessive intakes. (See 
chapter 4 of the IOM final report for additional information on the 
development of the nutrient targets.)
    Schools would not use these 24 nutrient targets for planning or 
monitoring menus. Instead, they would follow the food-based meal 
patterns developed by IOM, as set forth in the following table. Meals 
that meet the proposed meal patterns and other meal requirements are 
expected to supply most of the nutrient targets set by IOM.
    The proposed meal patterns designed by IOM and set forth in this 
proposed rule offer more fruits, vegetables, and whole grains 
consistent with the recommendations of the Dietary Guidelines. As the 
following table indicates, the proposed meal pattern for breakfast 
would consist of fruits, grains, meats/meat alternates, and fluid milk. 
The proposed meal pattern for lunch would consist of fruits, 
vegetables, grains, meats/meat alternates, and fluid milk.
BILLING CODE 3410-30-P

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[GRAPHIC] [TIFF OMITTED] TP13JA11.001

BILLING CODE 3410-30-C
    The greatest change in breakfast foods is the increase in fruits, 
which doubles from the current requirement. In addition, grains 
increase by nearly 80 percent over current levels, with a shift to 
whole grains. For lunch, the greatest change is the increase in fruits 
and vegetables, an increase of nearly four half-cup servings a week. 
The following tables compare the types and amounts of foods required 
under the current and the proposed meal patterns for breakfast and 
lunch.

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         Changes in Minimum Amounts and Types of Food: Breakfast
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                                        Current            Proposed
                                      requirement         requirement
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Fruit...........................  \1/2\ cup per day.  1 cup per day.
Grains and Meat/Meat Alternate..  2 grains or 2 meat/ 1.4-2 grains per
                                   meat alternates     day plus:
                                   or 1 of each per
                                   day.
                                                      ..................
                                                      1-2 meat/meat
                                                       alternates per
                                                       day.
                                                      ..................
                                                      (Range reflects
                                                       difference by
                                                       grade group.)
Whole Grains....................  Encouraged........  At least half of
                                                       the grains to be
                                                       whole grain-rich.
Milk............................  1 cup.............  1 cup, fat content
                                                       of milk to be 1%
                                                       or less.
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           Changes in Minimum Amounts and Types of Food: Lunch
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                                        Current            Proposed
                                      requirement         requirement
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Fruit and Vegetables............  \1/2\-1 cup of      \3/4\-1 cup of
                                   fruit and           vegetables plus
                                   vegetables          \1/2\-1 cup of
                                   combined per day.   fruit per day.
Vegetables......................  No specifications   Weekly requirement
                                   as to type of       for dark green
                                   vegetable.          and orange
                                                       vegetables and
                                                       legumes and
                                                       limits on starchy
                                                       vegetables.
Meat/Meat Alternate.............  1.5-3 oz            1.6-2.4 oz
                                   equivalents         equivalents
                                   (daily average      (daily average
                                   over 5-day week).   over 5-day week).
Grains..........................  1.8-3 oz            1.8-2.6 oz
                                   equivalents         equivalents
                                   (daily average      (daily average
                                   over 5-day week).   over 5-day week).
Whole Grains....................  Encouraged........  At least half of
                                                       the grains to be
                                                       whole grain-rich.
Milk............................  1 cup.............  1 cup, fat content
                                                       of milk to be 1%
                                                       or less.
------------------------------------------------------------------------

USDA recognizes that these proposed changes are significant and may 
pose a particular challenge to implement. We solicit comments on how 
these changes may affect take-up and participation rates.

Menu Planning Approach and Age/Grade Groups

    The 2005 Dietary Guidelines stress the importance of increasing the 
consumption of key food groups: Fruits, vegetables, whole grains, and 
fat-free/low-fat fluid milk or milk products. Consistent with the 
Dietary Guidelines' emphasis on food groups, IOM developed a food-based 
meal pattern for each of the School Meal Programs. This proposed rule 
would require that all schools follow a food-based menu planning 
approach to plan school lunches and breakfasts for all children. No 
alternate menu planning approaches would be allowed.
    Currently, approximately 70 percent of schools use the FBMP 
approach. Using a single FBMP approach would simplify program 
management, training, and monitoring by State agencies (SAs). It would 
also give schools a practical and easy tool to plan well-balanced and 
nutritious meals. More importantly, this change would ensure that all 
school children participating in the NSLP and SBP nationwide have 
access to more healthy foods in key food groups that contribute to a 
nutritious diet and protect health.
    Another change proposed in this rule involves the age/grade groups 
used for menu planning. Today, childhood overweight and obesity are 
major public health concerns. To avoid excessive calories and provide 
age-appropriate meals, new age/grade groups recommended by IOM would be 
established. All schools would be required to use the following age/
grade groups to plan lunches and breakfasts:

<bullet> Grades K-5 (ages 5-10 years)
<bullet> Grades 6-8 (ages 11-13 years)
<bullet> Grades 9-12 (ages 14-18 years)

    These age/grade groups are consistent with the current age-gender 
categories used in the DRIs and with widely used school grade 
configurations. Use of these age/grade groups would enable schools 
operating under a food-based menu planning system to provide meals that 
meet the nutrition needs of school children in various grade groups and 
are conducive to healthy weight.
    IOM recognizes that some schools have different grade 
configurations and numerous logistical problems that may interfere with 
the reasonable use of the proposed age/grade groups. Those schools 
would be allowed to use the same breakfast and lunch meal patterns for 
students in grades K through 8 as food quantity requirements for the 
proposed age/grade group K-5 and 6-8 are comparable. However, schools 
choosing to use one meal pattern for students in these two age/grade 
groups would continue to be responsible for meeting the calorie, 
saturated fat, and sodium standards for each of the proposed age/grade 
groups. This would mean meals would have to meet very precise targets 
for calories and sodium.
    For example, a school could offer all students in grade groups K-5 
and 6-8 the same breakfast choices for the fruit, meat/meat alternate, 
and milk components because the quantity requirements are the same. The 
requirements for the grains component are not the same but they overlap 
(for grades K-5 is 7-10 oz eq per week, and for grades 6-8 is 8-10 oz 
eq per week). A school could offer 8-10 oz eq per week to meet the 
requirements for both grade groups. Similarly, the calorie requirements 
for grades K-5 (350-500 average calories per week) and grades 6-8 (400-
550 average calories per week) overlap. Therefore, a school could offer 
both grade groups a range of 400-500 average calories to meet the 
requirement for each grade group. While the saturated fat and trans fat 
requirement are the same for both grade groups, the school must 
carefully consider the sodium requirements. The school would have to 
comply with a standard of <430 mg, which was developed for grades K-5, 
but would also meet the requirement for students in grades 6-8.
    USDA acknowledges that schools offering the SBP may face barriers 
when grouping students by age/grade group for breakfast service. 
Children typically participate in the breakfast service as they arrive 
at school, rather than by grade level. In addition, some schools

[[Page 2500]]

provide breakfasts by methods such as ``grab-and-go breakfasts'' from 
kiosks. In instances where schools serve K-12 students on the same 
line, the IOM committee suggests that the SFA work with the SA to find 
a solution that ensures that basic elements of the meal requirements 
are maintained: Inclusion of required food components and food 
subgroups, moderate calorie levels, and an emphasis on reducing 
saturated fat and sodium. USDA will provide technical assistance to the 
SAs to assist them with this issue. Schools in these situations have 
the option to serve breakfast in the classroom to each grade group, use 
one meal pattern for grades K to 8 that meets the standards for each 
age/grade group, or work with the SA to find a feasible solution that 
meets the meal requirements.

Fruits and Vegetables

    The proposed food-based meal patterns for the NSLP and SBP were 
designed by IOM to improve the nutrient density of school meals and the 
nutrient intake by students, especially with regard to nutrients of 
concern. The proposed meal patterns offer fruits and vegetables as 
separate components and increase the quantities of these key food 
groups to promote children's intake of fiber and other important 
nutrients such as potassium and magnesium.
    To facilitate school's compliance with the fruits requirement, 
schools would be allowed to offer fruit that is fresh, frozen without 
sugar, dried, or canned in fruit juice, water, or light syrup. To 
confer fiber benefits, it is important to meet the fruits component 
with whole fruit whenever possible. However, schools would be able to 
offer pasteurized, full-strength (100 percent) fruit juice, as 
currently defined, to meet up to one-half of the fruits requirement. 
Products that contain less than 100 percent juice would not be allowed. 
The volume of products that would be necessary to meet the fruits 
requirement may be relatively large for consumption by children and can 
displace the intake of nutrient-rich foods in the meal. Requiring 100 
percent fruit juice in the NSLP would be consistent with the current 
requirements in the SBP and the Child and Adult Care Food Program.
    For breakfast, schools would have the option to offer non-starchy 
vegetables in place of fruits. For some schools, vegetables may be more 
affordable than whole fruit. For example, schools may add tomatoes and 
green peppers to a breakfast omelet or a breakfast burrito.
    In addition to establishing fruits and vegetables as separate food 
components in the NSLP, this proposed rule would require that schools 
offer specific vegetable subgroups at lunch over the school week to 
encourage variety in children's diets. Schools would be required to 
offer weekly at lunch at least \1/2\ cup equivalent of each of the 
following vegetable subgroups: Dark green, orange, and legumes (dry 
beans). As recommended by IOM, starchy vegetables (e.g., white 
potatoes, corn, lima beans, and green peas) would be limited to 1 cup 
per week to encourage students to try new vegetables in place of the 
familiar starchy ones. In addition, schools would be allowed to offer 
other vegetables (as defined in Appendix A-2 of the 2005 Dietary 
Guidelines) over the course of the week as specified in the proposed 
meal pattern. Schools using canned vegetables would have to select 
products with low sodium to stay within the proposed sodium limits.

Whole Grains

    The Dietary Guidelines recommend that all age groups consume at 
least half their grains as whole grains.\4\ In light of concerns such 
as whole grain product availability, product labeling, and student 
acceptability, IOM recommends the following staged approach to align 
school meals with the Dietary Guidelines' whole grains recommendation:
---------------------------------------------------------------------------

    \4\ Whole grains are (1) grain foods whose grain ingredients are 
whole grains only (100 percent whole grains), or (2) whole grain 
ingredients, such as rye flour, and whole wheat flour. (Virginia A. 
Stallings, Carol West Suitor, and Christine L. Taylor, Editors; 
Committee on Nutrition Standards for National School Lunch and 
Breakfast Programs; Institute of Medicine. School Meals: Building 
Blocks for Healthy Children.)
---------------------------------------------------------------------------

    <bullet> Upon implementation of the proposed rule, at least half of 
the grains servings offered in the NSLP and SBP should be whole grain-
rich.\5\
---------------------------------------------------------------------------

    \5\ Whole grain-rich foods may contain less than 100 percent 
whole grains but, generally, contain at least 51 percent whole 
grains. IOM's recommended criterion requires that whole grain-rich 
foods meet serving size requirements defined in the Grains/Breads 
Instruction for Child Nutrition Programs, and can be easily 
identified as containing at least 51 percent whole grains. Please 
see Box 7-1 in the IOM report for details on the recommended 
temporary criterion for whole grain-rich foods (available at: http://books.nap.edu/openbook.php?record_id=12751&page=124).
---------------------------------------------------------------------------

    <bullet> Within three years post-implementation, menu planning 
standards should be revised so that the proportion of whole grains to 
refined grains will exceed 50 percent.
    This proposed rule is consistent with IOM's recommended temporary 
criterion for whole grain-rich foods, which encompasses the HealthierUS 
School Challenge criteria. However, this rule slightly modifies IOM's 
suggested timeline to minimize the frequency of changes to menus and 
vendor requirements. This proposed rule would align the whole grains 
implementation timeline with the phased-in sodium reductions. 
Therefore, this proposed rule would implement the IOM whole grains 
recommendation as follows:
    <bullet> Upon implementation of the final rule, half of the grains 
offered during the school week must be whole grain-rich.
    <bullet> Two years post-implementation of the final rule, all 
grains offered during the school week must be whole grain-rich.
    The IOM report also recommends that the FDA take action to require 
labeling for the whole grain content of food products. USDA will 
provide support to FDA to help implement the labeling recommendation. 
In the interim, the criteria used to identify whole grain-rich foods 
served in school meals would be established in FNS guidance, and could 
be revised in policy as more information becomes available on the food 
label by the voluntary addition of whole grain information by industry 
or by FDA action to require labeling for the whole grain content of 
food products. USDA will also work with industry and other stakeholders 
to ensure that program operators can identify and purchase whole 
grains.
    IOM expects that the availability of whole grain-rich products will 
increase over time nationwide. At the Federal level, USDA commodity 
foods (now known as USDA Foods) will continue to expand the list of 
whole grain products available to schools. USDA Foods now include brown 
rice, and whole grain tortillas, pancakes, and pasta. In addition, USDA 
will issue an updated Grains/Breads Instruction and develop practical 
guidance to help schools incorporate more whole grain-rich products 
into school menus.
    This proposed rule would continue to allow schools the option to 
meet part of the weekly grains requirement with a grain-based dessert. 
Up to one serving per day of a grains-based dessert would be allowed as 
part of the grains component. When offered in moderation, grain-based 
desserts may present an opportunity to add variety to the grains 
component, incorporate more whole grains into the menu, and encourage 
student participation. Schools would need to refer to the Grains/Breads 
Instruction to identify creditable grain-based desserts.
    To accommodate cultural food preferences and due to product 
availability concerns, current regulations allow schools in outlying 
areas (American Samoa, Puerto Rico, and the Virgin Islands) to serve a 
vegetable such as yams, plantains, or sweet potatoes to meet the grains 
requirement. This proposed rule would

[[Page 2501]]

continue to permit this meal pattern exception.

Meats/Meat Alternates

    The Dietary Guidelines recommend selecting and preparing lean meat 
and poultry, or low-fat and fat-free meat alternates, and limiting the 
intake of saturated fats, trans fat, and cholesterol. The meal pattern 
designed by IOM includes meats and meat alternates (such as beans, 
cheese, whole eggs, nuts, seeds, peanut butter, other nut or seed 
butters, and yogurt) and the recommendation to control saturated fat 
and trans fat. To meet this food component as well as the dietary 
specifications for saturated fat and trans fat, schools would have to 
offer lean meats/meat alternates. The use of processed meats would be 
discouraged because those available at this time are usually high in 
sodium. If offered, processed meats would have to be low in fat. USDA 
guidance and technical assistance materials will emphasize strategies 
for purchasing, planning, and preparing lean meats/meat alternates.
    As currently done, the quantity of meats/meat alternates offered 
daily could vary if at least a minimum amount (1 ounce) is provided 
daily and the total offered over the school week meets the weekly 
component requirement. This proposed rule would also retain the current 
requirement that all creditable meats/meat alternates be offered in the 
main dish or as part of the main dish and up to one other food item 
other than a dessert.
    USDA is aware of a growing interest to expand the list of allowable 
meat alternates to include tofu, a whole soybean food. We recognize 
that soybean foods are increasingly being incorporated in the American 
diet as nutrient-dense meat alternatives. This rule is not proposing to 
credit commercially prepared tofu as an allowable meat alternate at 
this time. However, USDA is interested in receiving comments from the 
child nutrition community proposing a methodology that could be used 
for crediting commercially prepared tofu.
    A longstanding concern regarding tofu is the lack of an FDA 
standard of identity. An FDA standard of identity defines what a given 
food product is, its name, and the ingredients that must be used or may 
be used in the manufacture of the food product. Without a standard of 
identity, USDA cannot assure nutritional consistency across brands and 
types of tofu in a food-based menu planning approach. Although tofu 
does not have a standard of identity, the USDA National Nutrient 
Database for Standard Reference, Release 22 (2009) provides nutrient 
profiles for different types of tofu.
    Other soy-based products are currently allowed as alternate protein 
products (APP) if they meet the requirements in Appendix A to 7 CFR 
part 210, and Appendix A to 7 CFR part 220. Examples of allowable APPs 
include products that are formulated with ingredients such as soy 
concentrates, soy isolates, soy flours, whey protein concentrate, or 
casein. Tofu is not an allowable APP because it does not meet the 
established minimum requirement to consist of at least 18 percent 
protein by weight when fully hydrated or formulated.

Fluid Milk

    As recommended by IOM, only fat-free fluid milk (unflavored or 
flavored) and unflavored low-fat fluid milk (1 percent milk fat or 
less) would be allowed in the School Meal Programs in order to reduce 
the saturated fat and calorie content of school meals. Flavored low-fat 
fluid milk would not be allowed because it increases both saturated fat 
and calories. However, flavored fat-free fluid milk would be allowed 
because calcium is a nutrient of concern for children and the use of 
flavors to encourage children to drink more fluid milk could help 
mitigate this problem. USDA anticipates that the proposed calorie 
maximum would drive schools to select flavored fat-free fluid milk with 
the lowest sugar content.
    This proposed rule would no longer allow schools to offer whole 
milk or reduced-fat (2 percent milk fat) fluid milk as part of the 
reimbursable meal. This rule would also remove the existing regulatory 
requirement that schools offer milk in a variety of fat content. 
Section 203 of the Healthy, Hunger-Free Act of 2010, which amended the 
NSLA, requires that schools offer a variety of milk consistent with the 
Dietary Guidelines recommendations.

Calories, Saturated Fat, Sodium, and Trans Fat

    Because the proposed meal pattern alone cannot ensure appropriate 
amounts of calories, saturated fat, sodium and trans fat, IOM 
recommended specific standards for these dietary components. This 
proposed rule would implement the IOM-recommended standards for 
calories, saturated fat, sodium, and trans fat as follows:

Calories

    When recommending the calorie levels that should be provided by 
school meals, the IOM committee was mindful of the childhood obesity 
trend and the food choices available to school children outside of the 
NSLP and SBP. The committee recommended minimum and maximum calories 
for lunches and breakfasts based on evidence about children's intakes 
at meals and snacks. The proposed minimum and maximum calorie levels to 
be required for each age grade group on average over the course of the 
week are:

           Lunch--Proposed Minimum and Maximum Calorie Levels
------------------------------------------------------------------------
       Grades K-5               Grades 6-8              Grades 9-12
------------------------------------------------------------------------
          550-650                  600-700                750-850
------------------------------------------------------------------------
\a\ The average daily amount for a 5-day school week is not to be less
  than the minimum or exceed the maximum.
\b\ Discretionary sources of calories (solid fats and added sugars) may
  be added to the meal pattern if within the specifications for
  calories, saturated fat, trans fat, and sodium.


         Breakfast--Proposed Minimum and Maximum Calorie Levels
------------------------------------------------------------------------
       Grades K-5               Grades 6-8              Grades 9-12
------------------------------------------------------------------------
          350-500                  400-550                450-600
------------------------------------------------------------------------
\a\ The average daily amount for a 5-day school week is not to be less
  than the minimum or exceed the maximum.
\b\ Discretionary sources of calories (solid fats and added sugars) may
  be added to the meal pattern if within the specifications for
  calories, saturated fat, trans fat, and sodium.

    The intent of this proposed change is not to reduce children's 
intake of food, but to avoid excessive calories. The meal patterns 
proposed in this rulemaking would require increased amounts of fruits, 
vegetables, and whole grains. Combined with calorie maximums, USDA 
believes that these increased food requirements leave relatively few 
discretionary calories for fats and added sugars. Therefore, to stay 
within the calorie ranges specified in this proposed rule, schools 
would have to offer lean meats/meat alternates, fat-free or low-fat 
fluid milk, and other nutrient-dense foods, as recommended by the 2005 
Dietary Guidelines.
    While the 2005 Dietary Guidelines do not recommend discrete limits 
on added sugars, they do encourage the consumption of foods and 
beverages low in added sugars.

Saturated Fat

    The 2005 Dietary Guidelines continue to recommend that all 
individuals consume less than 10 percent of total calories from 
saturated fat. This is the current standard in both the NSLP and SBP 
and this proposed rule would retain it as recommended by IOM.

[[Page 2502]]

Schools have made a recognizable effort to reduce the saturated fat 
levels of meals. SNDA-III data indicate that, on average, three-
quarters of schools offered breakfasts that met the requirement to 
provide less than 10 percent of total calories from saturated fat. At 
lunch, however, only one-third of schools offered meals that met this 
required level.
    A variety of food sources contribute to saturated fat levels in 
school meals; however, fluid milk is a primary contributor. As stated 
earlier, this proposed rule would no longer allow schools to offer 
whole fluid milk or reduced-fat fluid milk as part of a reimbursable 
lunch or breakfast for children ages five and older. To meet the new 
statutory requirement that schools offer a variety of milk consistent 
with the Dietary Guidelines (established by the Healthy, Hunger-Free 
Act of 2010), schools would have to offer students at least two fluid 
milk options. For example, schools could offer fat-free milk (both 
unflavored and flavored), or fat-free milk (unflavored and/or flavored) 
along with low-fat milk (unflavored). By limiting the choices to fat-
free and low-fat milk, schools would limit saturated fat in the school 
meals while maintaining key nutrients for growth and development found 
in fluid milk.

Sodium

    Reducing the sodium content of school meals is one of the key 
objectives of this proposed rule. Research suggests that modest 
population-wide reductions in dietary salt could substantially reduce 
cardiovascular events and medical costs (see, for example, Smith-
Spangler, 2010; Bibbins-Domingo, 2010). More specifically, a 
forthcoming study suggests that reducing dietary salt in adolescents 
could yield substantial health benefits by decreasing the number of 
teenagers with hypertension and the rates of cardiovascular disease and 
death as these teenagers reach young and middle age adulthood (Bibbins-
Domingo, 2010b).
    USDA has encouraged schools to reduce sodium since the 
implementation of SMI in 1995. According to the SNDA-III study, the 
average sodium content of school lunches (for all schools) is more than 
1400 mg. IOM recommended a gradual but significant reduction in sodium 
over time and suggested that USDA establish intermediate targets to 
help schools progress to the final sodium standards developed by the 
IOM expert committee for each age/grade group. This proposed rule would 
require that schools meet the final sodium standards established by IOM 
no later than ten years after the final rule is implemented by reaching 
intermediate sodium targets as follows:
[GRAPHIC] [TIFF OMITTED] TP13JA11.002


[[Page 2503]]


    USDA recognizes that there are barriers to reducing the sodium 
content of meals to the levels recommended by IOM without having an 
impact on student acceptance and participation, practicality, and cost. 
The proposed intermediate sodium targets were developed after carefully 
reviewing scientific literature, consulting with U.S. and international 
public health professionals involved in sodium reduction efforts, and 
applying information from expert presentations by industry 
representatives at the IOM Strategies to Reduce Sodium Intake 
information gathering session in March 2009. Findings showed that 
school menu planners can reduce sodium by approximately 10 percent 
through menu modification. Industry can reduce sodium in school food 
products by approximately 20 to 30 percent using current technology. 
The remaining reduction requires innovation.
    Establishing intermediate targets was complicated because two 
intermediate targets set at 10 percent and 20 percent reductions from 
baseline levels yield reductions for school breakfasts beyond IOM 
recommendations (school breakfasts require a sodium reduction of 
approximately 25 percent). If applied to school breakfasts, this 
strategy also places a disproportionate responsibility for reduction on 
school menu planners. Industry reductions and innovation necessary to 
meet school lunch targets will affect all foods served in all school 
meals, and the intermediate targets must account for this and 
distribute reductions required more evenly across the 10-year period. 
Therefore, simply applying 10 percent and 20 percent reductions to 
baseline levels was not an ideal way to establish intermediate targets.
    Instead, USDA applied the same proportional reductions (20 percent 
and 40 percent, respectively, for the first and second intermediate 
targets) to the total amount of sodium reduction required for each age/
grade group. This method distributes reductions more evenly across the 
10-year period and yields reasonable intermediate targets that align 
with feasible reductions for menu planners (approximately 10 percent) 
and industry (approximately 20-30 percent), and sodium reduction 
efforts currently underway.
    Taking baseline measures from SNDA III, intermediate targets were 
established two years and four years post-implementation to initiate 
change using current resources:
    (1) Two years post implementation of the final rule, schools would 
need to reduce sodium in school lunches by approximately 5-10 percent 
from baseline levels (SNDA-III). This is the estimated amount that 
schools can reduce sodium through menu and recipe modification using 
currently available foods and technology.
    (2) Four years post implementation of the final rule, schools would 
need to reduce sodium by approximately 15-30 percent from the baseline. 
This is the estimated amount industry can reduce sodium in foods using 
currently available technology.
    (3) Ten years post implementation of the final rule, school lunches 
would need to meet the final targets recommended by IOM. This would 
require schools to reduce sodium in school meals by approximately 25-50 
percent from the baseline. A significant amount of time is allotted for 
this final reduction, which will likely require innovation, such as new 
technology and/or food products.
    These reductions are consistent with public health initiatives 
aiming to reduce sodium in the nation's food supply over the next 10 
years, or a reduction of approximately 5 percent per year. Such 
reductions are widely supported by the American Public Health 
Association and by efforts such as New York City's National Sodium 
Reduction Initiative.
    Nearly all schools would need to reduce the sodium content of 
school meals to meet the proposed intermediate and final sodium 
targets. The changes necessary will vary by school/district because 
currently there is no sodium limit for school meals and each school/
district will be starting from a different baseline. Schools can use 
SMI data or review their meals to determine changes needed to meet the 
sodium targets.
    It is important to note that approximately 75 percent of the sodium 
in foods consumed in the U.S. comes from salt (sodium chloride) added 
to processed foods. Processed foods and convenience items are often 
used in the school food service operation to save time and labor. 
Gradual implementation of the sodium restriction is intended to give 
schools and industry time to lower the sodium content of the foods used 
in the school meals.
    The availability of high sodium foods in and outside of the School 
Meal Programs has resulted in a preference for salty foods at a young 
age. The proposed intermediate standards should help children reduce 
their salt preference and develop healthier eating habits. However, a 
simultaneous reduction of sodium levels in foods available outside the 
NSLP would be important to foster a change in students' taste 
preference.
    USDA plans to develop practical guidance and technical assistance 
resources to help schools achieve the proposed sodium standards while 
avoiding a negative impact on student participation. USDA resources 
would also emphasize strategies for increasing potassium in schools 
meals. Adequate potassium intake can help offset some of the adverse 
health effects of high sodium levels.
    USDA will continue to make low-sodium USDA Foods available to 
schools. USDA has targeted specific commodities to be made available at 
lower sodium levels, including canned items (beef, pork, poultry, 
salmon, and tuna), chicken fajita strips, and ready-to-eat cereal. Most 
commodity canned vegetables already meet FDA's requirements for use of 
the term ``healthy,'' which means that, in addition to meeting other 
requirements, these foods contain no more than 480 mg sodium per 
labeled serving. USDA plans to gradually phase-in low sodium canned 
vegetables for donation to all of the domestic nutrition assistance 
programs. USDA Foods now offer low sodium canned tomato products and 
canned dry beans. In school year 2010, the sodium levels in all USDA 
canned vegetables are being reduced to 140 mg per serving.
    While the proposed regulatory requirements discussed above are in 
line with the 2005 Dietary Guidelines and the IOM final sodium targets, 
USDA acknowledges further reductions in recommended sodium levels are 
possible in the upcoming 2010 Dietary Guidelines. The 2010 ``Dietary 
Guidelines Advisory Committee Report'' recommends that both children 
and adults should reduce their sodium intake to 1,500 mg per day 
(compared to the 2,300 mg per day recommended in the 2005 Guidelines).
    USDA is seeking public comment on how to address further reductions 
in recommended sodium levels, in the event that the 2010 Dietary 
Guidelines include sodium targets lower than those reflected in this 
proposed rule. USDA invites public comments on how possible further 
reductions could be incorporated into the NSLP and SBP, including the 
timeline for achieving reductions; how intermediate targets, if any, 
should be established; and the impact that further reductions may have 
on participation levels, implementation feasibility, and costs.

Tracking Calories, Saturated Fat, and Sodium

    Under this proposal, all schools would plan lunches and breakfasts 
using the food-based meal patterns

[[Page 2504]]

developed by IOM. Similar to the current FBMP system, schools would be 
responsible for offering meals that meet the meal pattern, as well as 
specific standards for calories, saturated fat, and sodium for each 
age/grade group on average over the school week. However, this rule 
would not require that schools conduct a nutrient analysis to determine 
compliance with the standards for calories, saturated fat, and sodium. 
SAs would be responsible for monitoring compliance with these three 
dietary specifications in schools selected for administrative reviews. 
(Currently, SAs conduct nutrient analysis for FBMP schools to determine 
the levels of eleven dietary specifications (calories, protein, vitamin 
A, vitamin C, iron, calcium, total fat, saturated fat, sodium, 
cholesterol, and dietary fiber). This proposal would support IOM's 
recommendation to limit and monitor calories, saturated fat, and sodium 
in school meals without burdening schools or SAs.
    Although not required, schools that have the resources to conduct a 
nutrient analysis would be able to continue to do so to assess how well 
they are meeting calorie, saturated fat, and sodium standards. SNDA III 
found that, in school year 2004-2005, about two-thirds of schools were 
in districts that conducted ongoing nutrient analysis of their menus. 
This finding suggests that many districts have the capability to 
conduct nutrient analysis.
    USDA intends to develop practical tools to help schools calculate 
the levels of calories, saturated fat, and sodium in school meals. The 
SAs are encouraged to develop practical calculation methods and provide 
technical assistance to schools when they are developing school menus 
to help align the planned meals with these three dietary 
specifications.

Trans fat

    This proposed rule would require schools to minimize trans fat in 
school meals to be consistent with the 2005 Dietary Guidelines. The IOM 
report provides a practical method to minimize the trans fat content of 
school meals. To help schools reach the goal of zero grams of trans fat 
per serving, IOM recommended that schools only be allowed to use food 
products or ingredients that contain zero grams of trans fat per 
serving, as indicated on the nutrition label (FDA defines zero as less 
than 0.5 grams per serving) or manufacturer's specifications. Foods 
that contain minimal amounts of naturally-occurring trans fat (such as 
beef and lamb) would be excluded from this requirement. Schools would 
also be required to add the trans fat specification and request the 
necessary documentation in their procurement contracts.
    If a product or ingredient used to prepare school meals has no 
nutrition labeling (e.g., institutional products) schools would be 
responsible for obtaining information, such as manufacturer or 
nutrition specifications, that confirms that the product contains zero 
grams of trans fat per serving. The trans fat information would be 
examined during an administrative review.

Standards for Meals Selected by the Student (Offer Versus Serve)

    To achieve a reasonable balance between the goals of reducing food 
waste and preserving the nutritional integrity of school meals, the IOM 
committee recommended standards for meals as selected by the student. 
The committee formulated two offer versus serve options: A preferred 
option and a secondary option.
    Under IOM's preferred option, a student may decline 1 food item at 
breakfast but must select 1 fruit or juice. For lunch, the student may 
decline 2 food items but must select 1 fruit or vegetable.
    The secondary option formulated by IOM also requires the student to 
select 1 fruit or juice at breakfast and 1 fruit or vegetable at lunch 
but allows the student to decline more food items. Under the secondary 
option, the student may decline 2 food items at breakfast and 3 food 
items at lunch.
    Although both options formulated by IOM promote the selection of 
fruits and vegetables, the preferred option is more conducive to 
preserving the nutritional integrity of the school meal. We are 
concerned that the secondary option allows the student to decline more 
food items than the current offer versus serve regulations. Therefore, 
this proposed rule would adopt IOM's preferred option for offer versus 
serve with a slight modification that would allow a reimbursable 
breakfast to include a serving of fruit or a vegetable offered in place 
of fruit:
    <bullet> Student may decline 1 food item at breakfast but must 
select 1 fruit or vegetable.
    <bullet> Student may decline 2 food items at lunch but must select 
1 fruit or vegetable.
    This slight modification is consistent with the Dietary Guidelines 
emphasis on increasing the consumption of fruits and vegetables.
    Offer versus serve would be required at the high school level, as 
is currently the case, and it would continue to be available to middle 
and elementary schools at the discretion of the SFA or the SA.

Summary of Proposed Meal Requirements

    Implementation of the proposed meal requirements (standards for 
menu planning and standards for meals selected by the student) would 
affect the following changes in the NSLP and SBP:
    On a daily basis:
    <bullet> Meals offered to each age/grade group would meet the meal 
pattern designed by IOM;
    <bullet> Fluid milk offered would be fat-free (unflavored or 
flavored) or unflavored low-fat (1 percent milk fat or less) and would 
include variety that is consistent with the Dietary Guidelines;
    <bullet> Food products and ingredients used to prepare school meals 
would contain zero grams of trans fat per serving (less than 0.5 grams 
per serving) according to the nutrition labeling or manufacturer's 
specifications; and
    <bullet> Meals selected by the students would include at least a 
fruit or vegetable, and students would not be able to decline more than 
two food items at lunch and one food item at breakfast.
    Over a 5-day school week:
    <bullet> Average calorie content of the meals offered to each age/
grade group would fall within the minimum and maximum calorie levels 
specified by IOM;
    <bullet> Average saturated fat content of the meals offered to each 
age/grade group would be less than 10 percent of total calories; and
    <bullet> Average sodium content of the meals offered to each age/
grade group would meet the intermediate targets established by USDA and 
not exceed the maximum level specified by IOM ten years post 
implementation of the final rule.
    This proposed rule includes several existing meal requirements that 
are restated without change in the proposed regulatory language. Such 
requirements include the provisions on meal choices, lunch periods, 
meal exceptions and variations, and fluid milk substitutes. In 
addition, some requirements for specific food components, such as 
meats/meat alternates, are retained in the proposed regulatory text.
    The meal patterns and nutrition standards for preschoolers and 
infants also remain unchanged; however, only the traditional FBMP 
approach would be allowed to plan meals for preschoolers. The State 
agencies would not be required to analyze the menus for preschoolers 
pending changes to the CACFP regulations.

[[Page 2505]]

Proposed Changes in Monitoring Procedures

    This proposed rule would establish new procedures for monitoring 
implementation of, and compliance with, the new meal requirements and 
the dietary specifications for calories, saturated fat, sodium, and 
trans fat. As recommended by IOM, monitoring would focus on meeting the 
relevant Dietary Guidelines through the proposed meal requirements. The 
new monitoring procedures would also allow the opportunity to provide 
information and technical assistance to school foodservice staff for 
continuous quality improvement.
    Currently, SAs conduct two reviews to ensure compliance with 
program requirements. The SMI nutrition review assesses the nutritional 
quality of school meals. The Coordinated Review Effort (CRE) focuses on 
eligibility certification, meal counting and claiming, and meal 
elements. This proposed rule would discontinue the SMI reviews under 
Sec.  210.19 and strengthen CRE administrative reviews under Sec.  
210.18 to enable SAs to monitor the quality of school meals and assist 
schools in continually improving performance. As part of the CRE 
Performance Standard 2, the SAs would be required to monitor compliance 
with the meal patterns, including ensuring that sufficient quantities 
of each component are offered. The SAs would also be responsible for 
calculating the levels of calories, saturated fat, and sodium for the 
meals offered by the school(s) selected for review and ensuring that 
the food products and ingredients used to prepare school meals contain 
zero grams of trans fats. To accomplish this, the following changes are 
proposed:
    (1) Establish a three-year review cycle--The IOM report recommends 
frequent monitoring to assess how well the new meal requirements are 
being implemented at the local level. This proposed rule would expand 
the ability of the SAs to monitor the quality of the meals offered at 
the local level by changing the review cycle from 5 years to 3 years, 
and by requiring SAs to monitor compliance with the meal pattern and 
the requirements for calories, saturated fat, sodium, and trans fats. 
More frequent monitoring would also expand opportunities to provide 
technical assistance and mentoring to local operators as recommended by 
IOM.
    (2) Establish a two-week review period--In order to give the SAs a 
more complete view of the meals offered at the local level, this 
proposed rule would expand the review period from one to two weeks. SAs 
would review menu and production records for a two-week period to 
assess compliance with the meal pattern; conduct a weighted nutrient 
analysis to determine the average levels of calories, sodium, and 
saturated fat in the planned meals; and confirm that food products and 
ingredients used to prepare school meals contain zero grams of trans 
fat.
    (3) Include breakfasts in the CRE review--This proposed rule would 
require SAs to review the breakfast meal during the 2-week CRE review. 
Due to the many important meal requirements that IOM recommended for 
both the NSLP and the SBP, USDA believes that it is desirable to 
monitor the quality of breakfasts as part of the CRE review.
    In addition, SAs would continue to monitor the serving line and 
lunches counted at point of service to determine if the meals offered 
and selected the day of the onsite review contain the required food 
components and food quantities. If food quantities offered by the 
reviewed school appear to be insufficient or excessive, SAs would 
provide technical assistance and guidance, apply corrective action, and 
follow up to assess improvement in the quality of meals. The on-site 
visit, the nutrient analysis, and other information obtained from 
direct observation during the review period would give the SA a 
comprehensive view of the quality of the school meals and compliance 
with the meal requirements.
    USDA anticipates that the State monitoring activities will focus on 
technical assistance and corrective action following implementation of 
the new meal requirements. As currently done, SAs would be required to 
apply immediate fiscal action if the meals offered are completely 
missing one of the food components established in the new meal pattern. 
In addition, SAs would be required to take fiscal action for repeated 
violations of the vegetable subgroups and milk type requirements when 
(1) technical assistance has been provided and (2) corrective action 
has not resolved these specific violations. These requirements are 
easily understood by school food authorities and can be quickly 
identified by visual inspection without having specialized nutrition 
knowledge or training. However, because not all schools currently have 
knowledge or accurate tools to calculate the average levels of 
calories, saturated fat, sodium and trans fat in the meals offered 
during the week, this proposed rule would give SAs discretion to take 
fiscal action for such violations, as well as for food quantity and 
whole grain violations, provided that technical assistance and 
corrective action have taken place. The SAs would also be required to 
first use technical assistance and corrective action to address these 
deficiencies.
    Since the new requirements for calories, saturated fat, sodium, and 
trans fat would only apply to the meals for school-aged children, the 
SAs would not have to conduct a nutrient analysis of the meals offered 
to preschoolers (ages 1-2 and 3-4) in a school selected for an 
administrative review pending changes to the CACFP regulations. 
Likewise, the proposed whole grains and fluid milk requirements would 
not apply to preschoolers' meals.
Technical Assistance
    IOM recommended technical assistance to help school foodservice 
staff develop and continuously improve menus, order appropriate foods, 
and control costs while maintaining quality. USDA intends to provide 
training and develop technical assistance resources to facilitate the 
transition to the new meal requirements. This would be accomplished by 
updating USDA menu planning resources; guidance materials on fruits, 
vegetables, and whole grain foods; the Child Nutrition Database; and 
requirements for nutrient analysis software. USDA will continue to 
collaborate with the National Food Service Management Institute to 
develop and provide appropriate training. In addition, USDA would 
disseminate information about the new requirements in public forums, 
such as the School Nutrition Association and American Dietetic 
Association meetings, and other national, regional and state 
conferences; and through the USDA Regional nutritionists who work with 
the School Meal Programs.
Miscellaneous Proposed Changes
    USDA is using this opportunity to propose additional program 
changes that would support IOM's recommendations or enhance the overall 
school nutrition program.

Identification of a Reimbursable Meal

    USDA is proposing to require schools to identify the foods 
composing the reimbursable meal(s) for the day at or near the beginning 
of the serving line(s). Students and parents often do not know what 
food or menu items are included in the NSLP or SBP meal. Identifying 
the Program meal may avoid higher costs to the students from their 
unintentional purchase of a la carte foods, rather than the unit-priced 
school meal. This additional information would promote nutrition 
education by teaching students what foods are included in a balanced 
meal. Schools

[[Page 2506]]

would have discretion to identify the best way to provide this 
information on the meal serving line(s).

Crediting

    Foods served as part of the School Meal Programs should be 
wholesome and easily recognized by children as part of a food group 
that contributes to a healthy diet. To support the Dietary Guidelines' 
emphasis on whole fruits and vegetables, this proposal would disallow 
the crediting of any snack-type fruit or vegetable products (such as 
fruit strips and fruit drops), regardless of their nutrient content, 
toward the fruits component or the vegetables component. USDA does not 
currently allow snack-type foods such as potato chips or banana chips 
to be credited toward meeting the fruits/vegetables requirement; 
however, certain snack-type fruit products have been allowed to be 
credited by calculating the whole-fruit equivalency of the processed 
fruit in the product using the FDA's standards of identity for canned 
fruit nectars (21 CFR 146.113). The standard of identity for canned 
fruit nectars, however, has since been removed from the CFR. Therefore, 
this rationale for allowing certain snack-type fruit products to be 
credited in the meal pattern is no longer established in regulation.
    In addition, this proposal would require that all fruits and 
vegetables (and their concentrates, purees, and pastes) be credited 
based on volume as served with two exceptions: (1) Dried whole fruit 
and dried whole fruit pieces would be credited for twice the volume 
served; and (2) leafy salad greens would be credited for half the 
volume served. These exceptions are highlighted in the IOM report and 
the 2005 Dietary Guidelines. This proposal would specifically change 
the current practice of crediting tomato paste and puree. Currently 
tomato paste and puree are credited as a calculated volume based on 
their whole-food equivalency using the percent natural tomato soluble 
solids in paste and puree, while other fruit paste and purees (such as 
blackberries puree) are credited based on actual volume as served. 
Under this proposal, schools would credit tomato paste and puree based 
on actual volume as served. Schools would not be allowed to credit a 
volume of fruit or vegetables that is more than the actual serving 
size.

Fortification

    A basic premise of the Dietary Guidelines is that nutrients should 
come primarily from the consumption of whole foods that are not highly 
processed or heavily fortified. Current nutrition science suggests that 
a variety of factors in whole foods work together to generate health 
benefits. While certain nutrients in foods have been identified as 
being linked to specific health benefits, the effects are not always 
comparable when the nutrient is isolated from the food in which it is 
naturally present.
    This proposed rule seeks to reduce schools' reliance on highly 
fortified foods. To promote consumption of naturally nutrient-dense 
foods, such as whole grains, fruits and vegetables, this proposed rule 
would eliminate the use of formulated grain-fruit products as defined 
in Appendix A to 7 CFR Part 220. Formulated grain-fruit products are 
(1) grain-type products that have grain as the primary ingredient, and 
(2) grain-fruit type products that have fruit as the primary 
ingredient. Both types of products must have at least 25 percent of 
their weight derived from grain. These food products typically contain 
high levels of fortification, rather than naturally occurring 
nutrients, and are high in sugar and fat. Such products do not support 
the Dietary Guidelines' recommendation to consume fruits as a separate 
and important food group. Furthermore, formulated grain-fruit products 
are no longer necessary in the school meal programs. This product 
specification was originally adopted in response to the limited access 
that some schools faced in procuring or storing traditional breakfast 
foods. Today, schools can procure other breakfast options with similar 
shelf-life (e.g., ready-to-eat cereals and whole grain or enriched 
grain products) that would meet the operational needs of the school and 
the nutrient needs of children.
    USDA recognizes that fortification of some foods is an accepted 
practice to enhance or add nutrients. Often in such cases, 
fortification is an effective way to preserve nutrients lost during 
preparation or processing, or to increase the nutrient intake in 
consumer diets that normally may be lacking the added nutrients. 
Examples of such foods are enriched grain products, fortified cereals, 
and fluid milk (with added vitamins A and D). In most other instances, 
however, the use of highly-fortified food products is inconsistent with 
the Dietary Guidelines.
Technical Changes to Appendices A and B
    This proposed rule would update Appendices A and B to 7 CFR Parts 
210 and 220. USDA is proposing to amend Appendix A to Part 220 by 
removing Formulated Grain-Fruit Products in its entirety for the 
reasons previously stated in the discussion of Fortification.
    Appendix B to Part 210 would be amended by removing the statement 
that affirms that Appendix B will be updated to exclude individual 
foods that have been determined to be exempted from the categories of 
Foods of Minimal Nutritional Value. Although USDA has published Notices 
in the past to inform the public of exempted foods, Appendix B has not 
been amended subsequently to reflect these exemptions. A list of these 
exempted foods is maintained and available to all State agencies 
participating in the Programs. There have been no changes to the 
categories of exempted foods and USDA will maintain the requirement to 
publish a Notice and update the regulations to reflect any changes to 
the categories.
Implementation of Proposed Changes
    Until the final rule is implemented, meal reimbursement will be 
based on compliance with current program regulations in 7 CFR Part 210 
and Part 220. However, schools are strongly encouraged to take steps 
within current Program regulations to provide meals that are consistent 
with the 2005 Dietary Guidelines, such as reducing sodium and saturated 
fat, and increasing the availability of fruits, vegetables, whole 
grains, and fat-free and low-fat fluid milk in the menus. Team 
Nutrition has developed practical guidance to help schools provide 
meals that reflect the Dietary Guidelines. (See http://teamnutrition.usda.gov/Resources/dgfactsheet_hsm.html.)
    Since the 2005 Dietary Guidelines were issued, USDA has provided 
technical assistance and guidance to help schools offer meals that 
reflect the recommendations of the Dietary Guidelines. USDA recognizes 
that changing children's dietary habits is indeed a challenge for 
schools. Nutrition education is essential to help children accept new 
foods, change preferences, and make healthy choices. USDA's Team 
Nutrition initiative will continue to assist SAs with their nutrition 
education efforts.
    The HealthierUS School Challenge is a voluntary certification 
initiative that recognizes schools that are providing nutritious food 
and beverage choices and nutrition education, physical education and 
opportunities for physical activity. The Challenge criteria help 
schools move closer to the new meal pattern requirements related to 
whole grains, fruits, vegetables, and low-fat and fat-free fluid milk. 
USDA is working with partner organizations and stakeholders to double 
the number of HealthierUS schools during school year

[[Page 2507]]

2010-2011 and to add 1,000 schools per year for two years thereafter.
    Team Nutrition and the HealthierUS School Challenge, and our joint 
efforts with the National Food Service Management Institute, have 
helped schools move in the right direction. USDA is confident that 
State and local program operators have made and will continue to make 
progress to further improve the quality of school meals and the dietary 
habits of school children.

I. Procedural Matters

 Executive Order 12866

    This proposed 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 proposed rule and is included in the 
preamble. The following summarizes the conclusions of the RIA:
    Need for action: Section 9(a)(4) of the NSLA, 42 U.S.C. 1758(a)(4), 
added to the statute in 2004, requires the Secretary of Agriculture to 
issue regulations that increase the availability of foods recommended 
by the most recent ``Dietary Guidelines for Americans'' in the Federal 
school meals programs. In addition, Section 9(f)(1) of the NSLA, 42 
U.S.C. 1758(f)(1), requires schools that participate in the NSLP or SBP 
to offer lunches and breakfasts that are consistent with the goals of 
the most recent Dietary Guidelines. This proposed rule implements 
recommendations of the National Academy of Science's Institute of 
Medicine (IOM). Under contract to the United States Department of 
Agriculture (USDA), the IOM proposed changes to NSLP and SBP meal 
pattern requirements consistent with the 2005 Dietary Guidelines and 
the IOM's Dietary Reference Intakes.
    Benefits: The proposed rule implements recommendations of the IOM 
that are designed to better align school meal patterns and nutrition 
standards with the IOM's Dietary Reference Intakes and the goals of the 
Dietary Guidelines. In developing its recommendations, the IOM sought 
to address low intakes of fruits, vegetables, and whole grains among 
school-age children, and excessive intakes of sodium and discretionary 
calories from solid fats and added sugar. The proposed rule addresses 
these concerns by increasing the amount of fruit, the amount and the 
variety of vegetables, and the amount of whole grains offered each week 
to students who participate in the school meals programs. The rule 
would also replace higher fat fluid milk with low fat and skim fluid 
milk in school meals. And it would limit the levels of calories, 
sodium, and saturated fat in those meals.
    The linkage between poor diets and health problems such as 
childhood obesity are also a matter of particular policy concern, given 
their significant social costs. One in every three children (31.7%) 
ages 2-19 is overweight or obese.\6\ Along with the effects on our 
children's health, childhood overweight and obesity imposes substantial 
economic costs, and the epidemic is associated with an estimated $3 
billion in direct medical costs.\7\ Perhaps more significantly, obese 
children and adolescents are more likely to become obese as adults.\8\ 
In 2008, medical spending on adults that was attributed to obesity 
increased to an estimated $147 billion.\9\ In addition, a recent study 
suggests reducing dietary salt in adolescents could yield substantial 
health benefits by decreasing the number of teenagers with hypertension 
and the rates of cardiovascular disease and death as these teenagers 
reach young and middle age adulthood. Because of the complexity of 
factors that contribute both to overall food consumption and to 
obesity, we are not able to define a level of disease or cost reduction 
that is attributable to the changes in meals expected to result from 
implementation of the rule.
---------------------------------------------------------------------------

    \6\ Ogden, C.L., Carroll, M., Curtin, L., Lamb, M., Flegal, K. 
(2010). Prevalence of High Body Mass Index in U.S. Children and 
Adolescents 2007-2008. Journal of American Medical Association, 
303(3), 242-249.
    \7\ Trasande, L., Chatterjee, S. (2009). Corrigendum: The Impact 
of Obesity on Health Service Utilization and Costs in Childhood. 
Obesity, 17(9).
    \8\ Whitaker, R.C., Wright, J.A., Pepe, M.S., Seidel, K.D., 
Dietz W.H. Predicting obesity in young adulthood from childhood and 
parental obesity. N Engl J Med 1997; 37(13):869-873; Serdula, M.K., 
Ivery, D., Coates, R.J., Freedman, D.S., Williamson, D.F., Byers, T. 
Do obese children become obese adults? A review of the literature. 
Prev Med 1993;22:167-177.
    \9\ Finkelstein, E., Trogdon, J., Cohen J., Dietz, W. (2009). 
Annual Medical Spending Attributable to Obesity: Payer-And Service-
Specific Estimates. Health Affairs, 28(5).
---------------------------------------------------------------------------

    As the rule is projected to make substantial improvements in meals 
served to more than half of all school-aged children on an average 
school day, we judge that the likelihood is reasonable that the 
benefits of the rule exceed the costs, and that the proposal thus 
represents a cost-effective means of conforming NSLP and SBP 
regulations to the statutory requirements for school meals. Beyond 
these changes a number of qualitative benefits--including alignment 
between Federal program benefits and national nutrition policy, 
improved confidence of parents and families in the nutritional quality 
of school meals, and the contribution that improved school meals can 
make to the overall school nutrition environment, are expected from the 
rule.
    Costs: FNS estimates that the total costs of compliance with this 
rule will reach $6.8 billion over the five years ending in FY 2016. 
Year by year costs in millions, assuming implementation of a final rule 
at the start of SY 2012-2013 are summarized below.

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                 Fiscal year
                 Costs (millions)                  -----------------------------------------------------------------------------------------------------
                                                          2012             2013             2014             2015             2016            Total
--------------------------------------------------------------------------------------------------------------------------------------------------------
Food Costs........................................            $91.8           $626.5           $704.9           $968.9         $1,028.2         $3,420.4
Labor Costs.......................................             89.6            611.4            687.9            945.6          1,003.4          3,337.9
                                                   -----------------------------------------------------------------------------------------------------
    Total.........................................            181.3          1,237.9          1,392.8          1,914.5          2,031.7          6,758.2
--------------------------------------------------------------------------------------------------------------------------------------------------------

The increases reflect increased costs to purchase the types of foods 
required by the proposed rule beyond those required to comply with 
current program rules--primarily increased fruits, vegetables, and 
whole grains--as well as increased labor costs due to more on-site food 
preparation, training for food service professionals, and some 
additional administrative costs.
    Alternatives:

[[Page 2508]]

    In response to NSLA Section 9(a)(4) amended into law in 2004, USDA 
contracted with IOM to assemble an expert panel to undertake a review 
of the nutritional needs of children, the recommendations of the 
Dietary Guidelines, and IOM's Dietary Reference Intakes. USDA asked IOM 
to develop recommendations for updating NSLP and SBP meal patterns and 
nutrition requirements based on that review of need and nutrition 
science, with consideration given to operational feasibility and cost.
    The USDA contract with IOM called for the creation of a panel with 
representatives from the fields of public health, epidemiology, 
pediatrics, child nutrition and child nutrition behavior, statistics, 
and economics. The contract also called for representatives with 
knowledge of cultural differences in food preference and eating habits, 
experience in menu planning, and experience in managing and operating a 
school lunch and breakfast program. IOM held workshops at which the 
panel heard presentations from invited speakers, and solicited public 
input. The panel also accepted public comment on its planned approach 
to the project.
    The process undertaken by IOM was designed to consider different 
perspectives and competing priorities. The panel necessarily weighed 
the merits of alternatives as it developed a preferred option. USDA's 
commitment was to implement IOM's recommendations where feasible. This 
commitment is driven by the statutory requirement that schools serve 
meals that are consistent with the goals of the Dietary Guidelines.
    We did not consider alternatives that depart significantly from 
IOM's recommendations and cannot satisfy our statutory obligation. 
Nevertheless, the proposed rule makes a few small changes to IOM's 
recommendations. In addition, the rule contains a handful of provisions 
that are not addressed by IOM. The RIA provides a discussion of 
alternatives considered, including a Phase-In Implementation of IOM 
Recommendations.

Regulatory Flexibility Act

    This proposed rule has been reviewed with regard to the 
requirements of the Regulatory Flexibility Act of 1980 (5 U.S.C. 601-
612). Pursuant to that review, it has been determined that this 
proposed rule would have a significant impact on a substantial number 
of small entities. The proposed requirements would apply to school 
districts, which meet the definitions of ``small governmental 
jurisdiction'' and ``small entity'' in the Regulatory Flexibility Act. 
A Regulatory Flexibility Act analysis is included in the preamble.

Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public 
Law 104-4, establishes requirements for Federal agencies to assess the 
effects of their regulatory actions on State, local, and Tribal 
governments and the private sector. Under section 202 of the UMRA, USDA 
generally must prepare a written statement, including a cost/benefit 
analysis, for proposed and final rules with Federal mandates that may 
result in expenditures by State, local, or Tribal governments, in the 
aggregate, or 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 USDA 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. The Regulatory Impact Analysis conducted by FNS 
in connection with this proposed rule includes a cost/benefit analysis 
and explains the options considered to implement the 2005 Dietary 
Guidelines in the school meal programs.
    Prior to developing this proposed rule, FNS sought the assistance 
of the Institute of Medicine (IOM) of the National Academies to 
implement the 2005 Dietary Guidelines in the NSLP and SBP in the least 
burdensome and costly manner. However, this proposed rule contains 
Federal mandates (under the regulatory provisions of Title II of the 
UMRA) that could result in costs to State, local, or Tribal governments 
or to the private sector of $100 million or more in any one year if 
State and local operators do not develop strategies to absorb the cost 
increases associated with increasing the availability of fruits, 
vegetables, and whole grains in the school menu. To meet the proposed 
requirements in a cost-effective manner, program operators would need 
to optimize the use of USDA Foods and adopt other cost-savings 
strategies in various areas of the food service operation, including 
procurement, menu planning, and meal production. Program operators have 
flexibility within the Federal requirements to run the School Meal 
Programs in a manner that fits local circumstances.
    Because childhood overweight and obesity are growing public health 
issues in the United States, schools should take a leadership role in 
helping students adopt healthy diets. Many schools are already 
providing more fruits, vegetables and whole grains as part of their 
efforts to enhance the school nutrition environment. Over 840 schools 
nationwide have been recognized by FNS as part of the HealthierUS 
School Challenge (HealthierUS) for improvement in the quality of the 
meals served and the food choices. HealthierUS schools offer fresh 
fruits or raw vegetables, whole grain foods, legumes, and low-fat or 
fat-free fluid milk, and provide students with nutrition education and 
opportunity for physical activity.

Executive Order 12372

    The NSLP is listed in the Catalog of Federal Domestic Assistance 
under No. 10.555 and the SBP is listed under No. 10.553. For the 
reasons set forth in the final rule in 7 CFR part 3015, Subpart V and 
related Notice published at 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.
    Since the NSLP and SBP are State-administered, Federally funded 
programs, FNS headquarters staff and regional offices have formal and 
informal discussions with State and local officials on an ongoing basis 
regarding program requirements and operation. This structure allows FNS 
to receive regular input which contributes to the development of 
meaningful and feasible Program requirements.

 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 State Officials
    Prior to drafting this proposed rule, FNS staff received informal 
input from various stakeholders while participating in various State, 
regional, national, and professional conferences. The School Nutrition 
Association, School Food Industry Roundtable, National Alliance for 
Nutrition and Activity, Association of State and Territorial Public 
Health Nutrition Directors, and the Center for Science in the Public 
Interest shared their views about changes to the school meals in 
writing. Numerous stakeholders also provided input at the public 
meetings held by IOM in connection with its school meals study.

[[Page 2509]]

Based on its independent research and information gathered from 
stakeholders, IOM issued recommendations which are the basis for this 
proposed rule.
Nature of Concerns and the Need To Issue This Rule
    State Agencies and school food authorities want to provide the best 
possible school meals through the NSLP and SBP but are concerned about 
program costs and increasing program requirements. While FNS is aware 
of these concerns, section 9(a)(4) and section 9(f)(1) of the National 
School Lunch Act, 42 U.S.C. 1758(a)(4) and (f)(1), require that school 
meals reflect the most recent ``Dietary Guidelines for Americans'' and 
promote the intake of the food groups recommended by the Dietary 
Guidelines.
Extent To Which We Meet Those Concerns
    FNS sought the assistance of the Institute of Medicine to update 
the school meals in a practical and sound manner. FNS has considered 
the impact of this proposed rule on State and local program operators 
and has attempted to develop a proposal that would implement the 2005 
Dietary Guidelines in the most effective and least burdensome manner. 
This proposed rule would simplify management and operation of the 
School Meal Programs by establishing a single food-based menu planning 
approach and the same age/grade groups in the NSLP and SBP, as 
recommended by the Institute of Medicine. The food-based menu planning 
system is currently used by approximately 70 percent of program 
operators. This proposed rule would retain the requirement that school 
meals meet nutrient requirements on average over the course of the 
week, and the offer versus serve provision, which helps schools control 
food cost and minimize food waste. This rule would also retain other 
existing regulatory provisions to the extent possible.

Executive Order 12988

    This rule has been reviewed under Executive Order 12988, ``Civil 
Justice Reform.'' This rule, when published as a final rule, is 
intended to have preemptive effect with respect to any State or local 
laws, regulations or policies which conflict with its provisions. As 
proposed, the rule would permit State or local agencies operating the 
National School Lunch and School Breakfast Programs to establish more 
rigorous nutrition requirements or additional requirements for school 
meals that are not inconsistent with the nutritional provisions of the 
rule. Such additional requirements would be permissible as part of an 
effort by a State or local agency to enhance the school meals and/or 
the school nutrition environment. To illustrate, State or local 
agencies would be permitted to establish more restrictive saturated fat 
and sodium limits. For these components, quantities are stated as 
maximums (e.g., <=) and could not be exceeded; however, lesser amounts 
than the maximum could be served. Likewise, State or local agencies 
could accelerate implementation of the final sodium targets stated in 
this proposed rule in an effort to reduce sodium levels in school meals 
at an earlier date. However, State or local agencies would not, for 
example, be permitted to decrease the minimum calorie level or increase 
the maximum calorie level established for each grade group in this 
proposed rule as that would be inconsistent with the rule's provisions. 
This rule is not intended to have a retroactive effect. Prior to any 
judicial challenge to the provisions of this rule or the application of 
its provisions, all applicable administrative procedures under Sec.  
210.18(q) or Sec.  235.11(f) must be exhausted.

Civil Rights Impact Analysis

    FNS has reviewed this proposed rule in accordance with USDA 
Regulation 4300-4, ``Civil Rights Impact Analysis,'' to identify any 
major civil rights impacts the rule might have on program participants 
on the basis of age, race, color, national origin, sex or disability. 
After a careful review of the rule's intent and provisions, FNS has 
determined that this proposed rule is not expected to affect the 
participation of protected individuals in the NSLP and SBP. This 
proposed rule is intended to improve the nutritional quality of school 
meals and is not expected to limit program access or otherwise 
adversely impact the protected classes.

Executive Order 13175--Consultation and Coordination With Indian Tribal 
Governments

    USDA will undertake, within 6 months after this rule becomes 
effective, a series of Tribal consultation sessions to gain input by 
elected Tribal officials or their designees concerning the impact of 
this rule on Tribal governments, communities and individuals. These 
sessions will establish a baseline of consultation for future actions, 
should any be necessary, regarding this rule. Reports from these 
sessions for consultation will be made part of the USDA annual 
reporting on Tribal Consultation and Collaboration. USDA will respond 
in a timely and meaningful manner to all Tribal government requests for 
consultation concerning this rule and will provide additional venues, 
such as webinars and teleconferences, to periodically host 
collaborative conversations with Tribal leaders and their 
representatives concerning ways to improve this rule in Indian country.
    We are unaware of any current Tribal laws that could be in conflict 
with the proposed rule. We request that commenters address any concerns 
in this regard in their responses.

Paperwork Reduction Act

    The Paperwork Reduction Act of 1995 (44 U.S.C. Chap. 35; see 5 CFR 
1320), requires that the Office of Management and Budget (OMB) approve 
all collections of information by a Federal agency from the public 
before they can be implemented. Respondents are not required to respond 
to any collection of information unless it displays a current, valid 
OMB control number. This is a new collection. The new provisions in 
this rule, which do increase burden hours, affect the information 
collection requirements that will be merged into the National School 
Lunch Program, OMB Control Number <greek-i>0584-0006, expiration date 
5/31/2012. The current collection burden inventory for the National 
School Lunch Program is 11,806,566 hours. These changes are contingent 
upon OMB approval under the Paperwork Reduction Act of 1995. When the 
information collection requirements have been approved, FNS will 
publish a separate action in the Federal Register announcing OMB's 
approval.
    Comments on the information collection in this proposed rule must 
be received by March 14, 2011.
    Send comments to the Office of Information and Regulatory Affairs, 
OMB, Attention: Desk Officer for FNS, Washington, DC 20503. Please also 
send a copy of your comments to Lynn Rodgers-Kuperman, Program Analysis 
and Monitoring Brach, Child Nutrition Division, 3101 Park Center Drive, 
Alexandria, VA 22302. For further information, or for copies of the 
information collection requirements, please contact Lynn Rodgers-
Kuperman at the address indicated above. Comments are invited on: (1) 
Whether the proposed collection of information is necessary for the 
proper performance of the Agency's functions, including whether the 
information will have practical utility; (2) the accuracy of the 
Agency's estimate of the proposed information collection burden, 
including the validity of the methodology and assumptions used; (3)

[[Page 2510]]

ways to enhance the quality, utility and clarity of the information to 
be collected; and (4) ways to minimize the burden of the collection of 
information on those who are to respond, including use of appropriate 
automated, electronic, mechanical, or other technological collection 
techniques or other forms of information technology.
    All responses to this request for comments will be summarized and 
included in the request for OMB approval. All comments will also become 
a matter of public record.
    Title: Nutrition Standards in the National School Lunch and School 
Breakfast Programs.
    OMB Number: 0584--NEW.
    Expiration Date: Not Yet Determined.
    Type of Request: New Collection.
    Abstract: This proposed rule would implement the recommendations of 
the 2005 ``Dietary Guidelines for Americans'' in the National School 
Lunch Program (NSLP) and School Breakfast Program (SBP), as required by 
section 9(a)(4) and section 9(f)(1) of the Richard B. Russell National 
School Lunch Act, 42 U.S.C. 1758(9)(a) and (f). This rule is based on 
the final report ``School Meals: Building Blocks for Healthy 
Children,'' issued by the Institute of Medicine of the National 
Academies on October 20, 2009 to help FNS implement the 2005 Dietary 
Guidelines in the NSLP and SBP. This proposed rule would revise the 
lunch and breakfast meal patterns to increase the availability of 
fruits, vegetables, whole grains, and fat-free/low-fat fluid milk in 
the school menu. It would also increase the frequency of administrative 
reviews by State agencies from the current five-year cycle to a three-
year cycle, and change the requirements for these reviews. This rule 
would impact the reporting and/or recordkeeping burden on school food 
authorities and State agencies. However, this rule would not increase 
or decrease the existing burden on local schools participating in the 
NSLP because they are already required to maintain menu and production 
records. This proposed rule would require State agencies to examine 
menu and production records during administrative reviews, and to 
maintain documentation related to fiscal action.
    Those respondents participating in the School Breakfast Program 
also participate in the National School Lunch Program, thus the burden 
associated with the School Breakfast Program will be carried in the 
National School Lunch Program. The average burden per response and the 
annual burden hours are explained below and summarized in the charts 
which follow.
    Respondents for this Proposed Rule: State Education Agencies (57) 
and School Food Authorities (6,983).
    Estimated Number of Respondents for this Proposed Rule: 7,040.
    Estimated Number of Responses per Respondent for this Proposed 
Rule: 3.87217.
    Estimated Total Annual Responses: 27,260.
    Estimated Total Annual Burden on Respondents for this Proposed 
Rule: 75,842.
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E-Government Act Compliance

    FNS is committed to complying with the E-Government Act 2002, 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.

Regulatory Impact Analysis

    Agency: Food and Nutrition Service, USDA.

[[Page 2514]]

    Title: Nutrition Standards in the National School Lunch and School 
Breakfast Programs.

Action

    a. Nature: Proposed Rule.
    b. Need: Section 103 of the Child Nutrition and WIC Reauthorization 
Act of 2004 inserted Section 9(a)(4) into the National School Lunch Act 
requiring the Secretary to promulgate rules revising nutrition 
requirements, based on the most recent Dietary Guidelines for 
Americans, that reflect specific recommendations, expressed in serving 
recommendations, for increased consumption of foods and food 
ingredients offered in school nutrition. This proposed rule amends 
Sections 210 and 220 of the regulations that govern the National School 
Lunch Program (NSLP) and the School Breakfast Program (SBP). The 
proposed rule implements recommendations of the National Academies' 
Institute of Medicine (IOM). Under contract to the United States 
Department of Agriculture (USDA), IOM proposed changes to NSLP and SBP 
meal pattern requirements consistent with the 2005 Dietary Guidelines 
and IOM's Dietary Reference Intakes. The proposed rule advances the 
mission of the Food and Nutrition Service (FNS) to provide children 
access to food, a healthful diet, and nutrition education in a manner 
that promotes American agriculture and inspires public confidence.
    c. Affected Parties: The programs affected by this rule are the 
NSLP and the SBP. The parties affected by this regulation are USDA's 
Food and Nutrition Service, State education agencies, local school food 
authorities, schools, students, and the food production, distribution 
and service industry.

Contents

Abbreviations

I. Background
II. Summary of Proposed Meal Requirements
III. Cost/Benefit Assessment
    A. Summary
    1. Costs
    2. Benefits
    B. Food and Labor Costs
    1. Baseline Cost Estimate
    2. Proposed Rule Cost Estimate
    3. Food Cost Drivers
    4. Comparison of FNS and IOM Cost Estimates
    5. Uncertainties
    C. Administrative Impact
    D. Food Service Equipment
    E. Implementation of Proposed Rule--SFA Resources
    F. Impact on Participation
    G. Benefits
IV. Alternatives
V. References
VI. Appendix A

Abbreviations

    The following abbreviations are used throughout this document:

CN Child Nutrition Programs
CPI Consumer Price Index
CRE Coordinated Review Effort
DRI Dietary Reference Intake
FNS Food and Nutrition Service
FY Fiscal Year
IOM Institute of Medicine
NSLA National School Lunch Act
NSLP National School Lunch Program
RDA Recommended Dietary Allowance
SA State Agency
SBP School Breakfast Program
SY School Year
SFA School Food Authority
SLBCS-II School Lunch and Breakfast Cost Study II
SMI USDA School Meals Initiative for Healthy Children
SNDA-III School Nutrition Dietary Assessment III
USDA United States Department of Agriculture

I. Background

    The National School Lunch Program (NSLP) is available to over 50 
million children each school day; an average of 31.6 million children 
per day ate a reimbursable lunch in fiscal year (FY) 2010. The School 
Breakfast Program (SBP) served an average of 11.6 million children 
daily. Schools that participate in the NSLP and SBP receive Federal 
reimbursement and USDA Foods (donated commodities) for lunches and 
breakfasts that meet program requirements. In exchange for this 
assistance schools serve meals at no cost or at reduced price to 
income-eligible children. Federal meal reimbursements and USDA Foods 
totaled $13.3 billion in FY 2010. FNS projections of the number of 
meals served and Federal program costs are summarized in Table 1.\10\
---------------------------------------------------------------------------

    \10\ The figures in Table 1 are USDA projections of the number 
of program meals served and the value of USDA reimbursements for 
those meals. These figures are baseline Federal government costs of 
the NSLP and the SBP estimated for the President's budget proposal 
for FY 2011. Elsewhere in this document, baseline costs refer to the 
cost to schools of serving meals that satisfy current program 
requirements.

                                        Table 1--Projected Number of Meals Served and Total Federal Program Costs
                                                                      [In millions]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                    Fiscal year
                                                         -----------------------------------------------------------------------------------------------
                                                               2011            2012            2013            2014            2015            2016
--------------------------------------------------------------------------------------------------------------------------------------------------------
NSLP:
    Lunches Served......................................         5,409.6         5,477.2         5,532.0         5,581.8         5,626.5         5,671.5
    Program Cost........................................       $12,116.9       $12,513.5       $12,737.0       $12,834.8       $12,851.4       $12,940.2
SBP:
    Breakfasts Served...................................         2,062.4         2,124.3         2,166.7         2,201.4         2,236.6         2,272.4
    Program Cost........................................        $3,117.9        $3,270.0        $3,383.8        $3,460.0        $3,552.2        $3,669.3
--------------------------------------------------------------------------------------------------------------------------------------------------------

    In FY 2010, schools served 2.9 billion free NSLP lunches, 0.5 
billion reduced price lunches, and 1.8 billion full price or ``paid'' 
lunches. Schools served 1.5 billion free breakfasts, 0.2 billion 
reduced price breakfasts, and 0.3 billion paid breakfasts. These 
figures do not include non-Federally reimbursable a la carte meals or 
other non-program foods.\11\
---------------------------------------------------------------------------

    \11\ USDA program data.
---------------------------------------------------------------------------

    Reimbursement rates for meals served under the current meal 
patterns are established by law and are adjusted annually for 
inflation.\12\ In school year (SY) 2010-2011, the Federal reimbursement 
for a free breakfast for schools in the contiguous United States and 
``not in severe need'' was $1.48; the

[[Page 2515]]

Federal reimbursement for a free lunch to schools in SFAs in the 
contiguous United States that served fewer than 60 percent free and 
reduced price lunches was $2.72. Schools that participate in the NSLP 
also receive USDA Foods for each free, reduced price, and paid lunch 
served, as provided by Section 6 of the Richard B. Russell National 
School Lunch Act (NSLA). Table 2 provides a breakdown of breakfast and 
lunch reimbursements in SY 201-2011, including USDA Foods.
---------------------------------------------------------------------------

    \12\ Reimbursement rates and annual inflation adjustments are 
set by statute, not regulation. The proposed rule does not alter 
current reimbursement rates. Reimbursement rates for school lunch 
under current nutrition standards are specified in Sections 4(b)(2) 
and 11(a)(2) of the NSLA (42 USC 1753(b)(2) and 42 USC 1759a(a)(2)). 
Breakfast reimbursement rates are specified in Section 4(b)(1)(B) of 
the Child Nutrition Act (42 USC 1773(b)(1)(B)). Both lunch and 
breakfast reimbursement rates are subject to the annual inflation 
adjustment prescribed by Section 11(a)(3) of the NSLA (42 USC 
1759a(a)(3)).
    \13\ School year 2010- NSLP and SBP reimbursement rates, and the 
minimum value of donated foods, can be found in the July 19, 2010 
Federal Register, Vol. 75, No. 137, pp. 41797 and 41798.
[GRAPHIC] [TIFF OMITTED] TP13JA11.006

    Under Section 9(a)(4) and Section 9(f)(1) of the NSLA, schools that 
participate in the NSLP or SBP must offer lunches and breakfasts that 
are consistent with the goals of the most recent Dietary Guidelines for 
Americans. School lunches must provide one-third of the Recommended 
Dietary Allowances (RDA) for protein, calcium, iron, and vitamins A and 
C, on average over the course of a week; school breakfasts must satisfy 
one-fourth of the RDAs for the same nutrients. Current nutrition 
requirements for school lunches and breakfasts are based on the 1995 
Dietary Guidelines and the 1989 RDAs. (School lunches and breakfasts 
were not updated when the 2000 Dietary Guidelines were issued because 
those recommendations did not require significant changes to the school 
meal patterns.) The 2005 Dietary Guidelines, provide more prescriptive 
and specific nutrition guidance than earlier releases, and require 
significant changes to school meal requirements.
    The United States Department of Agriculture's Food and Nutrition 
Service (FNS) contracted with the National Academies' Institute of 
Medicine (IOM) in 2008 to examine current NSLP and SBP nutrition 
requirements. IOM formed an expert committee tasked with comparing 
current school meal requirements to the 2005 Dietary Guidelines and to 
current Dietary Reference Intakes. The committee released its 
recommendations in late 2009 (IOM 2009). For a summary discussion of 
the scientific standards that guided the committee, and the development 
of recommended targets for micro- and macronutrients, see the preamble 
to the proposed rule.

II. Summary of Proposed Meal Requirements

    The proposed rule adopts the IOM recommendations with only minor 
modifications (see section IV). In general, IOM recommended new 
requirements for menu planning that:
    <bullet> Increase the amount and variety of fruits, vegetables, and 
whole grains;
    <bullet> Set a minimum and maximum level of calories; and
    <bullet> Increase the focus on reducing the amounts of saturated 
fat and sodium provided in school meals.

[[Page 2516]]

[GRAPHIC] [TIFF OMITTED] TP13JA11.007

    Tables 4 and 5 \15\ compare the meal pattern recommendations 
proposed in this rule to current requirements for breakfast and lunch 
respectively.\16\ Key differences include:
---------------------------------------------------------------------------

    \14\ Information in this table is summarized from the preamble 
to the proposed rule.
    \15\ Tables 4 and 5 appear as Tables 8-1 and 8-2 in IOM's report 
on the school meals programs, School Meals: Building Blocks for 
Healthy Children (IOM 2009). The recommendations in these tables are 
adopted by the proposed rule with one small exception: non-starchy 
vegetables may be substituted for fruit at breakfast (see Table 3, 
note c).
    \16\ The food group recommendations presented in Tables 4 and 5 
are based on a set of nutrient targets developed by IOM (see IOM 
2009 for a detailed discussion of that process). Tables 7-2, O-2, 
and O-3 of the IOM report compare IOM's nutrient targets to the RDA 
targets that underlie the current meal patterns. Readers of the IOM 
report may notice that differences in current rule and recommended 
food group quantities (Tables 4 and 5) do not always track 
differences between IOM's nutrient targets and current rule RDA 
targets (IOM report tables 7-2, O-2, and O-3). For instance, IOM's 
nutrient targets for protein are twice as great as the RDA protein 
targets for elementary and high school students; IOM's protein 
targets are close to three times as great as the RDA targets for 
middle school students. By comparison, IOM's recommended number of 
meat servings are little different than the number of servings under 
current program rules. The reason for the discrepancy is that 
student intakes of protein currently exceed RDA targets (see Tables 
VI.2 and VII.2 in FNS 2007). IOM nutrient targets for protein are 
fully satisfied by the meat and legume recommendations in Tables 4 
and 5 (see the discussion on pages 164 and 165 of IOM 2009). Readers 
of the IOM report should compare the IOM's nutrient targets to the 
RDA values in report Tables 7-2, O-3, and O-4, rather than to the 
RDA values in report table E-4. Table E-4 figures are based on the 
1989 RDAs. RDA values in Tables 7-2, O-3, and O-4 are current. Pages 
118-120 of the IOM report (IOM 2009) discuss how the IOM nutrient 
targets compare to the minimum RDA standards for school meals 
specified by Section 9(b)(1) of the NSLA (42 USC 1758(f)(1)).

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

[[Page 2517]]

    <bullet> The number of fruit and vegetable servings offered to 
students over the course of a week would double at breakfast and would 
rise substantially at lunch.
    <bullet> Schools would no longer be permitted to substitute between 
fruits and vegetables; each has its own requirement, ensuring that 
students are offered both fruits and vegetables every day.
    <bullet> A minimum number of vegetable servings would be required 
from each of four vegetable subgroups.
    <bullet> Initially, half of grains offered to students would have 
to be whole grain rich. Two years after implementation, all grain 
products offered would have to be whole grain rich.
    <bullet> Schools would be required to substitute low fat and skim 
milk for higher fat content milk.

[[Page 2518]]

[GRAPHIC] [TIFF OMITTED] TP13JA11.008

    The proposed rule differs slightly from the IOM recommendations in 
that it proposes a quicker transition to a whole grain requirement 
consistent with the Dietary Guidelines. IOM recommended that the 
proportion of whole grains to refined grains on school menus exceed 50 
percent within ``approximately 3 years'' of implementation of revised 
meal patterns.\17\
---------------------------------------------------------------------------

    \17\ ``With regard to increasing whole grains and especially to 
reducing the sodium content of meals, the committee acknowledges the 
need for a gradual phase-in to accustom children to the changes in 
school meals and also to give the market time to respond to changes 
in demands (expressed as purchase specifications) from school food 
service directors.'' (IOM 2009, pp. 172, 199)
---------------------------------------------------------------------------

    In contrast, the proposed rule accelerates the transition to 
Dietary Guidelines recommendations to the second year after 
implementation of the rule. At that time, it requires that schools 
offer only grain products that are whole grain rich, rather than permit 
schools to offer half of all grains in the form of 100 percent whole 
grain foods and the other half as refined grains (one of the options 
suggested by IOM).
    The proposed rule adopts with a slight modification IOM's 
recommendation for ``offer vs. serve''

[[Page 2519]]

requirements as part of a reimbursable meal. Under this requirement, a 
student may decline 1 food item from the meal pattern at breakfast but 
must select 1 fruit or vegetable. For lunch, the student may decline 2 
food items but must select 1 fruit or vegetable. Our estimates of the 
impact of the proposed rule reflect this flexibility in estimating the 
quantities of foods actually served to students.

III. Cost/Benefit Assessment

A. Summary

1. Costs
    The proposed rule will more closely align school meal pattern 
requirements with the science-based recommendations of the 2005 Dietary 
Guidelines. These changes will increase the amount of fruits, 
vegetables, and whole grains offered to participants in the NSLP and 
SBP.\18\ The proposed meal patterns will also limit certain fats and 
reduce calories and sodium in school meals. Because some foods that 
meet these requirements are more expensive than foods served in the 
school meal programs today, the food cost component of preparing and 
serving school meals will increase.
---------------------------------------------------------------------------

    \18\ The proposed rule would make no change to the meal 
requirements for pre-kindergarten (pre-K) children. But, the rule 
would require that schools serving meals to pre-K children adopt 
food-based menu planning (FBMP) for consistency with the rule's FBMP 
requirement for meals served to older children. Because the rule 
proposes no substantive change to the pre-K meal requirements we 
assume that the rule has no impact on the cost of serving meals to 
these children. More than \2/3\ of elementary schools used 
traditional or enhanced FBMP in SY 2004-2005 (USDA 2008, vol. 1, p. 
36) and would need to make no changes at all to comply with the 
rule's pre-K menu planning requirement. For elementary schools that 
serve meals to pre-K children using a nutrient based menu planning 
system, the rule would require a change to FBMP. But that change is 
required for meals served to older children as well, and the 
administrative cost of that change is incorporated into the labor 
cost estimate of this analysis.
---------------------------------------------------------------------------

    The biggest contributors to this increase are the costs of serving 
more vegetables and more fruit, and replacing refined grains with whole 
grains. We estimate that food costs may increase by 3.4 cents per lunch 
served and 18.8 cents per breakfast served on initial implementation of 
the proposed requirements. Two years after implementation, when all 
grains served must be whole grain rich, the food costs may increase to 
7.2 cents per lunch served and 25.3 cents per breakfast.\19\ In 
aggregate, we estimate that the proposed rule may increase SFA food 
costs by $3.4 billion from FY 2012 through FY 2016. The annual increase 
in food costs, once the 100 percent whole grain requirement takes 
effect, may be about $1 billion.
---------------------------------------------------------------------------

    \19\ Some of the difference between the 3.4 cent and 7.2 cent 
lunch figures and the 18.8 cent and 25.3 cent breakfast figures are 
due to food inflation, not to the change in the whole grain 
requirement. The lower numbers are estimates for the end of FY 2012 
(the start of SY 2012-2013). The higher numbers are for FY 2015.
---------------------------------------------------------------------------

    Compliance with this rule is also likely to increase labor costs. 
Serving healthier school meals that are acceptable to students may 
require more on-site preparation, and less reliance on prepared foods. 
IOM did not estimate the overall required increase in labor costs to 
implement its recommended changes in meal requirements, but noted an 
analysis of data from some Minnesota school districts that showed that 
``healthier'' meals had higher labor costs--principally because of 
increased use of on-site preparation.\20\
---------------------------------------------------------------------------

    \20\ IOM 2009, p. 148.
---------------------------------------------------------------------------

    For purposes of this impact analysis, labor costs are assumed to 
grow so as to maintain a constant ratio with food costs, consistent 
with findings from a national study of school lunch and breakfast meal 
costs (USDA 2008). In practice, this suggests that food and labor costs 
may increase by nearly equal amounts relative to current costs. 
Additional costs of compliance with the rule are discussed in 
subsections III C and III D of this analysis.\21\
---------------------------------------------------------------------------

    \21\ The SLBCS-II found that costs other than food and labor 
accounted for 9.9 percent of reported SFA costs. These costs include 
``supplies, contract services, capital expenditures, indirect 
charges by the school district, etc.'' (USDA 2008, pp. 3-5)
---------------------------------------------------------------------------

    The estimated overall costs of compliance are summarized in Table 
6. For purposes of this analysis, the rule is assumed to take effect on 
July 1, 2012, the start of school year (SY) 2012-2013. The additional 
requirement to offer only whole grain rich grain products is assumed to 
begin in SY 2014-2015.
    The analysis estimates that total costs may increase by $6.8 
billion through fiscal year (FY) 2016, or roughly 12 percent when fully 
implemented in FY 2015. The estimated increases in food and labor costs 
are equivalent to about 14 cents for each reimbursable school lunch and 
about 50 cents for each reimbursable breakfast in FY 2015. These costs 
would be incurred by the local and State agencies that control school 
food service accounts.

                                    Table 6--Projected Cost of Proposed Rule
                                              [Dollars in millions]
----------------------------------------------------------------------------------------------------------------
                                                                     Fiscal year
                                   -----------------------------------------------------------------------------
                                        2012         2013         2014         2015         2016        Total
----------------------------------------------------------------------------------------------------------------
Food Costs........................        $91.8       $626.5       $704.9       $968.9     $1,028.2     $3,420.4
Labor Costs.......................         89.6        611.4        687.9        945.6      1,003.4      3,337.9
State Agency Administrative Costs.          0.1          8.9          9.0          9.3          9.6         36.9
                                   -----------------------------------------------------------------------------
    Total.........................        181.5      1,246.8      1,401.9      1,923.8      2,041.3      6,795.2
                                   -----------------------------------------------------------------------------
        Percent Change Over                 8.3          8.5          9.1         12.0         12.2         10.5
         Baseline.................
----------------------------------------------------------------------------------------------------------------

2. Benefits
    The primary benefit of this proposed rule is to align the 
regulations with the requirements placed on schools under NSLA to 
ensure that meals are consistent with the goals of the most recent 
Dietary Guidelines and the Dietary Reference Intakes. In increasing 
access to children for such meals it will address key inconsistencies 
between the diets of school children and Dietary Guidelines by (1) 
increasing servings of fruits and vegetables, (2) replacing refined-
grain foods with whole-grain rich foods, and (3) replacing higher-fat 
dairy products with low-fat varieties. It also results in a number of 
additional benefits, including alignment between Federal program 
benefits and national nutrition policy, improved confidence by parents 
and families in the nutritional quality of school meals, and the 
contribution that improved school

[[Page 2520]]

meals can make to the overall school nutrition environment.

B. Food and Labor Costs

1. Baseline Cost Estimate
    Food Costs: The analysis begins with an assessment of the cost of 
purchasing food to meet the rule's food-based meal requirements. The 
estimated increase in food cost is the difference between the cost of 
serving the quantities and types of foods used to meet current 
requirements and the cost of serving the quantities and types of foods 
outlined in the proposed rule.
[GRAPHIC] [TIFF OMITTED] TP13JA11.009

    The data sources that we use in this analysis, and their 
contribution to our food cost estimate, are summarized in Table 7.

[[Page 2521]]

[GRAPHIC] [TIFF OMITTED] TP13JA11.010


[[Page 2522]]


[GRAPHIC] [TIFF OMITTED] TP13JA11.011

    We first totaled the value of food served by food group, as 
reported by schools in a national school nutrition assessment (SNDA-
III), separately for lunch and breakfast. SNDA-III provides an estimate 
of the amount or quantity (in grams) of foods offered and served in the 
school lunch and breakfast programs for SY 2004-2005, based on a 
nationally representative sample of all participating public 
schools.\22\ SNDA-III provides quantities of both minimally processed 
single foods (such as whole fruit, fruit juice, milk, and vegetables) 
and combination foods or entrees (such as beef stew, macaroni and 
cheese, and breakfast burritos). We summed the quantities of foods 
served to generate total gram weights for each single food and 
combination food category. We then divided these sums by SNDA-III's 
count of total meals served to generate average per-meal gram amounts 
for the same broad food categories.
---------------------------------------------------------------------------

    \22\ If patterns of student selection of foods is different in 
private schools than it is in public schools, then the reliance on 
public school data alone may bias our results. However, enrollment 
in public schools accounts for 97 percent of total enrollment in 
NSLP participating schools. Public schools account for more than 98 
percent of total enrollment in SBP participating schools (USDA 
program data). Because public schools account for such a large share 
of total enrollment by participating schools, we expect that any 
differences in selection patterns between public and private schools 
would have little impact on our analysis.
---------------------------------------------------------------------------

    We estimated the cost per gram within each food category using 
detailed price and quantity information collected as part of another 
nationally representative sample of public schools in SY 2005-2006 
(SLBCS-II). SLBCS-II provides information on the number of servings, 
the average gram weight per serving, total grams served, and the cost 
per serving for a comprehensive list of single foods and combination 
entrees. The SLBCS-II dataset provides sufficient information to 
estimate weighted average prices for the same broad food categories 
identified in SNDA-III.
    We computed preliminary per-meal baseline costs for breakfast and 
lunch as the product of the food quantities reported in SNDA-III and 
the unit prices computed from the SLBCS-II. Because the food prices 
available for this analysis are from SY 2005-2006, we inflated our 
estimates by the actual and projected increase in prices since that 
time. We computed a set of food group inflators weighted by SNDA-III's 
relative mix of foods served by schools in SY 2004-2005. We used the 
Consumer Price Index (CPI-U) for the specific food items in our 
weighted group averages. Because the mix of foods served in school 
breakfasts differs from the mix served at lunch (the grain group, for 
example, is weighted more heavily with bread at lunch, and more heavily 
with cereal at breakfast) we computed two sets of food group inflators. 
For years through 2009, these inflators are constructed with actual CPI 
values. For years after 2009, the food group inflators rely on historic 
5-year averages. Food group inflation factors are summarized in Table 
8.

[[Page 2523]]

[GRAPHIC] [TIFF OMITTED] TP13JA11.012

    The value of USDA Foods and the value of cash in lieu of such food 
donations enters into both our baseline and proposed rule cost 
estimates; we treat them as food ``costs'' in both estimates. This is 
the same approach used in the SLBCS-II to estimate the cost of 
preparing and serving school meals.
---------------------------------------------------------------------------

    \23\ Computed by USDA from CPI figures from the Bureau of Labor 
Statistics. The figures for combination foods are based on the CPI 
values for the Food at Home series.
---------------------------------------------------------------------------

    We assume in the analysis that the types of commodities offered to 
schools in future years may satisfy the food group requirements of the 
proposed rule as effectively as they do now. USDA's annual commodity 
purchase plan, developed by FNS in consultation with the Agricultural 
Marketing Service, Farm Service Agency, and others, is driven by school 
demand for particular products as well as by current prices, available 
funds, and the variable nature of agricultural surpluses.
    In large measure the variety of USDA Foods offered to schools are 
already well positioned to support the proposed requirements. In recent 
years USDA has purchased relatively more canned foods and meats with 
reduced levels of fat, sodium, and sugar for school distribution. As 
products such as butter and shortening have been removed from the USDA 
Foods available to schools, new products such as whole grain pasta have 
been added. The proposed rule is likely to move school demand towards a 
greater emphasis on these new offerings as schools introduce new menus. 
We assume that the contribution of USDA Foods to the cost of preparing 
school meals will not change after implementation of the rule.
    The final step in constructing the baseline cost estimate was to 
multiply the per-meal cost estimates by the projected number of 
breakfasts and lunches served through our 5-year forecast period. 
Projected growth in the number of NSLP and SBP meals served in the 
absence of the proposed rule is shown in Table 9.
---------------------------------------------------------------------------

    \24\ The projected growth above in meals served through FY 2011 
reflects the difference between FNS estimates for FY 2011 prepared 
for the 2011 President's Budget and actual meals served in FY 2010. 
The remaining percentages are FNS projections prepared for the FY 
2011 President's Budget.

                      Table 9--Projected Baseline Growth in Reimbursable Meals Served \24\
----------------------------------------------------------------------------------------------------------------
                                                                           Fiscal year
                                               -----------------------------------------------------------------
                                                   2011       2012       2013       2014       2015       2016
----------------------------------------------------------------------------------------------------------------
    Lunches..................  meals                  5.4        5.5        5.5        5.6        5.6        5.7
                                (billions).
                               percent change.        2.9        1.2        1.0        0.9        0.8        0.8
Breakfasts...................  meals                  2.1        2.1        2.2        2.2        2.2        2.3
                                (billions).
                               percent change.        5.3        3.0        2.0        1.6        1.6        1.6
----------------------------------------------------------------------------------------------------------------

    Appendix A contains a set of tables that detail the calculations 
described above. The appendix tables present baseline and proposed rule 
food prices, food quantities, and meals served for

[[Page 2524]]

each year from FY 2012 through FY 2016.
    Note that our baseline per-meal cost estimates are averages. They 
reflect the variety of meals served across all NSLP and SBP 
participating schools. Some schools may be much closer than others to 
serving meals that meet the requirements of the proposed rule, and the 
costs of compliance with the proposed rule may therefore vary at the 
school level. The use of an average baseline cost estimate is 
appropriate, however, for estimating the aggregate cost of compliance 
across all schools.
2. Proposed Rule Cost Estimate
    Food Costs: Both our baseline and proposed rule food cost estimates 
rely on quantity and price information reported by schools in SNDA-III 
and SLBCS-II. These datasets contain detailed information on the 
quantity, variety, and unit prices of foods offered and served to 
students. Many of the records on these datasets describe single item 
foods that are served alone or are used in school recipes. But other 
records describe prepared or heat-and-serve entrees and other 
``combination foods.'' As described above, we developed our baseline 
cost estimate by multiplying the gram weight of food items served by 
their cost per gram. For both single item foods and combination foods, 
prices and quantities are given in SLBCS-II and SNDA-III; our baseline 
cost estimate required limited processing of these datasets.
    For the proposed rule we continue to rely on prices per gram from 
SLBCS-II. But for quantities served we need to look to the requirements 
of the rule rather than to SNDA-III. We use the midpoints of the rule's 
food group requirements, expressed in servings rather than grams, to 
estimate the quantities of food that schools must purchase.\25\ For 
single foods, the number of program-creditable food group servings per 
gram is a function of the foods themselves (density and fat content, 
for example) and whether the foods (primarily vegetables) are served 
raw or cooked. We relied on several sources for this information, 
including the USDA Food Buying Guide and the National Nutrient Database 
for Standard Reference. For combination foods we relied on the USDA's 
child nutrition food labels and the USDA's recipe database; these 
sources contain the result of analyses performed by food manufacturers 
and USDA. Because the sources for program-creditable servings per gram 
are different for single foods and combination foods, we need to 
separate single foods from combination foods and estimate their costs 
separately.
---------------------------------------------------------------------------

    \25\ The rule's food group requirements are expressed in 
servings per week. Because we are developing an average cost per 
meal we divide these weekly figures by 5. Some of the rule's 
requirements are given in ranges of servings, such as 10-12 meat or 
meat alternate servings (for lunches) per high school child per week 
(see Table 3). FNS's primary cost estimate targets the midpoints of 
the rule's food group requirements where requirements are expressed 
as ranges.
---------------------------------------------------------------------------

BILLING CODE 3410-30-P

[[Page 2525]]

[GRAPHIC] [TIFF OMITTED] TP13JA11.013

BILLING CODE 3410-30-C
    A basic assumption underlying the estimated cost of reimbursable 
meals under the proposed rule is that schools will continue to serve 
entrees that have proven popular with students on current school menus. 
Some of these entrees may be modified to replace a portion of their 
refined grains with whole grains, or starchy vegetables with other 
vegetable varieties. But, because pizza, burritos, and salad bars are 
successful items today, this impact analysis assumes that they will 
remain on school menus under the proposed rule.
    We separated combination foods from single food items in the SNDA-
III and SLBCS-II datasets.\26\ Using USDA food codes and the 
descriptive food labels found on the records of both datasets, we 
divided the combination foods into sub-categories such as chili, beef 
dishes, lasagna, chicken sandwiches, macaroni and cheese, and peanut 
butter and jelly. Recognizing that there is variation within these 
groups, we selected a sample of the most commonly served varieties, and 
retrieved paper food labels with matching USDA food codes from USDA's 
Child Nutrition food label collection (CN labels).
---------------------------------------------------------------------------

    \26\ As with the baseline estimate, we prepared separate 
estimates of meals served under the proposed rule for breakfast and 
lunch.
---------------------------------------------------------------------------

    CN labels are affixed to many of the commercially prepared and 
processed foods purchased by school food authorities. The labels 
provide information on serving size and the

[[Page 2526]]

number of cup and ounce equivalents of meat, meat alternate (such as 
cheese, eggs, legumes, or soy protein), grains, or vegetables that 
schools may credit toward current reimbursable meal pattern 
requirements.\27\ We averaged the crediting information for several 
varieties within each combination food category to generate 
representative food credits for the category.
---------------------------------------------------------------------------

    \27\ Many large commercial food vendors prepare their own CN 
labels to help market their foods to SFAs. Other labels are 
developed by USDA.
---------------------------------------------------------------------------

    CN labels are not available for some combination foods. However, 
foods with similar descriptions are often found in USDA's recipe 
database. The USDA recipe database provides the same type of food 
crediting information found on CN labels. We used the crediting 
information from the recipe database when CN labels were unavailable 
for sampled combination foods. FNS averaged the crediting information 
from labels and recipes when both sources returned data for particular 
combination foods.
    CN labels and USDA recipes do not indicate whether creditable grain 
servings are refined or whole grains, nor do they specify what fraction 
of creditable vegetable servings are satisfied by dark green, deep 
yellow, starchy, or other varieties. But, USDA's MyPyramid database 
breaks down total grain and vegetable content for given foods into 
those subcategories or varieties. We matched USDA food codes for the 
sample of combination foods against the MyPyramid database in order to 
estimate relative shares of whole and refined grains, and vegetable 
varieties for the combination foods served.\28\
---------------------------------------------------------------------------

    \28\ Because CN crediting values and MyPyramid equivalents are 
not the same, information from the MyPyramid database was used only 
to determine relative shares of vegetable or grain subtypes. FNS 
also used the MyPyramid database to determine if particular 
combination foods contained any dark green vegetables, orange 
vegetables, etc.
---------------------------------------------------------------------------

    With these average food credits, and with unit prices from the 
SLBCS-II, we estimated a price per creditable ounce or cup equivalent 
of meat, grain, vegetable, and fruit for each combination food served. 
We then computed a weighted average price per food credit for 
combination foods as a whole, using the SLBCS-II's relative gram weight 
of each item. Finally, we multiplied the average price and food credit 
per gram by SNDA-III's total gram weight of combination foods served 
per reimbursable meal at the elementary, middle, and high school 
levels.
    These steps generate a price, and a set of food group credits, 
contributed by combination foods to the average elementary, middle, and 
high school lunch and breakfast.
    We subtracted the food credits accrued by combination foods from a 
set of school-level food group targets that represent the requirements 
of the proposed rule after adjustment for student selection. Under the 
proposed rule, as under current program rules, students need not take 
all of the food items offered to them in order for their lunch or 
breakfast to qualify for Federal reimbursement. The difference between 
what is offered to students and what they select is the ``take rate.'' 
We computed average take rates by school level for milk, meat/meat 
alternate, fruit, vegetables, and grains from SNDA-III and applied 
those rates, unchanged, to the proposed rule's food group requirements 
from Tables 4 and 5.\29\ These adjusted requirements are estimates of 
what elementary, middle, and high schools are likely to serve to 
students after implementation of the proposed rule. The unadjusted 
requirements are what schools must offer to their students to be in 
compliance.
---------------------------------------------------------------------------

    \29\ Our take rates are weighted averages computed from all 
school level records on SNDA-III. We cap individual school take 
rates for any food group at 100%. We assume that these take rates 
remain unchanged after implementation of the proposed rule for two 
primary reasons: lack of an evidence-based alternative, and to avoid 
understating the costs of the rule. We discuss our assumption of 
constant take rates, and examine the cost implications of altering 
that assumption, in section III.B.5.
---------------------------------------------------------------------------

    The take-rate adjusted requirements not satisfied by combination 
foods must be met with single offerings of meat or meat alternates, 
grains, fruit, vegetables, and milk. We computed weighted average 
prices for these broad food groups, and for dark green, deep yellow and 
other vegetable varieties, from the SLBCS-II dataset. We estimated the 
cost of whole grains relative to all grain and bread products with 
information contained in a food price database developed by USDA's 
Center for Nutrition Policy and Promotion. The prices per unit of these 
foods, multiplied by the balance of the proposed rule's requirements 
that are not met by combination foods, give a total cost per meal for 
single item foods.
    Note that this analytic framework uses an identical set of 
combination foods in the baseline and proposed rule cost estimates; we 
do not attempt to construct a reformulated set of combination foods to 
satisfy the proposed rule's requirements for whole grains or dark 
green, yellow, and other vegetable varieties. The deficits in whole 
grains and in dark green and other vegetable varieties are satisfied 
entirely through increased offerings of single foods.\30\ As a result, 
the cost per unit of combination foods served is unchanged in the 
baseline and under the proposal, and the entire cost of meeting the new 
rule's requirements is reflected in the cost of single foods.
---------------------------------------------------------------------------

    \30\ The amount of refined grains in combination foods in excess 
of proposed rule requirements are offset by subtracting the value of 
an equivalent amount of single food refined grain products from the 
proposed rule's per-meal cost.
---------------------------------------------------------------------------

    In practice, we expect manufacturers may offer reformulated 
versions of popular combination foods, and that schools may incorporate 
more whole grains and vegetable varieties in their entree recipes, so 
that students may not be expected to consume all of their whole grains 
and healthier vegetables as single foods. Implicit in this modeling 
approach is the assumption that the cost of serving more whole grains 
and vegetable varieties is similar, whether those foods are part of 
combination recipes or single items. The reasoning behind this 
assumption is that the likely effect of these reformulations on the 
cost of combination foods is uncertain. While some varieties of 
combination foods may help schools meet the new requirements at lower 
cost than single foods, others may be developed to provide greater 
student acceptance or ease of preparation than single items. These 
products could command higher prices. We thus assume that, on average, 
these two propensities combine to result in no net difference in the 
cost of whole grains and vegetable varieties as combination foods or as 
single items.\31\
---------------------------------------------------------------------------

    \31\ Note that we are only referring to the incremental cost of 
foods above the quantities already purchased by schools (singly or 
in combination items), not the overall cost of all foods in the 
proposed meal patterns.
---------------------------------------------------------------------------

    The proposed rule encourages schools to meet the fruit requirement 
with whole fruit rather than juice ``whenever possible'' in order to 
increase fiber consumption. Schools may therefore find it necessary to 
offer more whole or cut-up fruit relative to fruit juice than they 
offer today. For this reason, this cost estimate assumes that the 
proposed rule's entire increase in the fruit group requirement may be 
satisfied by schools through additional servings of whole or cut-up 
fruit; the estimate assumes that schools may serve no more fruit juice 
to students under the proposed rule than they serve today. As a result, 
there is no added cost for fruit juice in Table 11.
    The methodology outlined above generates a set of per-meal cost 
estimates for breakfast and lunch under the requirements of the 
proposed rule. Like our baseline estimates, these are multiplied by 
weighted food group

[[Page 2527]]

inflation factors, then multiplied by the projected number of meals 
served to generate projected aggregate costs through FY 2016.
    Labor costs: Compliance with this rule is also likely to increase 
labor costs because of the need for more on-site preparation, and less 
reliance on prepared foods, than current requirements. The challenge 
faced by schools in reducing the sodium content of school meals, one 
element of both the IOM recommendations and the proposed rule, 
illustrates the need for additional labor hours by school kitchen 
staff.

    [M]ore local food preparation and the use of a greater 
proportion of fresh foods and frozen vegetables could result in 
acceptable school meals with a lower sodium content. However, many 
food production kitchens are designed to heat and hold food items 
rather than to prepare them.\32\
---------------------------------------------------------------------------

    \32\ IOM 2009, p. 110.
---------------------------------------------------------------------------



    In addition to the implied need for new kitchen equipment, IOM 
notes that ``switching from heat and hold to food production requires 
the addition of staff. Those districts that estimate meals per labor 
hour (MPLH) to monitor productivity may see an unfavorable decrease in 
their numbers.'' \33\
---------------------------------------------------------------------------

    \33\ Ibid.
---------------------------------------------------------------------------

    If schools choose to prepare more meals on-site to meet new 
requirements, IOM sees the need for ``greater managerial skill,'' and 
``more skilled labor and/or training.'' \34\ At the same time, lesser 
reliance on prepared foods offers some opportunity for offsetting 
savings.
---------------------------------------------------------------------------

    \34\ IOM 2009, p. 148.

    An empirical analysis of data from 330 Minnesota school 
districts found that ``healthier'' meals had higher labor costs (for 
on-site preparation) but lower costs for processed foods (Wagner, et 
al., 2007). The authors call for funds to be made available for 
labor training and kitchen upgrades. They suggest that higher 
Federal meal reimbursement rates may be unnecessary (under the 
assumption that the meals do not cost more to produce because lower 
food costs offset higher labor costs).\35\
---------------------------------------------------------------------------

    \35\ Ibid.
---------------------------------------------------------------------------



    The effect of the proposed rule's meal requirements on the mix of 
food and labor costs is unclear. The proposed rule requires schools to 
offer relatively more foods with higher unit costs than schools now 
offer to their students. The rule requires, for example, that schools 
replace many of their refined grain foods with whole grain substitutes. 
Because prices for whole grain products tend to exceed the prices of 
similar products made with refined grains, savings from eliminating a 
particular refined grain product is more than offset by the cost of its 
whole grain counterpart. Where pre-baked whole grain foods are simply 
substituted for pre-baked refined grain products, or whole grain flour 
is substituted for refined flour in existing recipes, the added cost of 
serving these new foods is strictly a food cost; labor costs may not 
increase at all.
    But the rule includes other provisions that are likely to increase 
both food and labor costs. One is the requirement that schools offer 
more vegetables, from a variety of vegetable subgroups, than schools 
tend to offer today. Some schools may choose to meet those targets by 
offering vegetables in school salad bars. It is not difficult to 
imagine that the cost of installing and maintaining a salad bar could 
increase the overall cost of school meal production. Similarly, to meet 
the proposed rule's calorie and fat requirements, schools may find it 
necessary to rely less on pre-purchased entrees, and hire more central 
kitchen or cafeteria workers to prepare healthier meals from scratch.
    SLBCS-II data show that the cost of purchasing food accounted for 
45.6 percent of SFA reported costs, on average. Labor accounted for an 
additional 44.5 percent of reported SFA costs. The remaining 9.9 
percent of reported costs are attributable to ``supplies, contract 
services, capital expenditures, indirect charges by the school 
district, etc.'' \36\ Labor costs are broadly defined in the SLBCS-II 
to include the costs of foodservice administrative tasks such as 
planning, budgeting, and management, and foodservice equipment 
maintenance.\37\ Some of these tasks are detailed in section III.C.1. 
These tasks include training food preparation staff, servers, and 
cashiers. They also include the work of individuals who plan menus and 
prepare recipes.
---------------------------------------------------------------------------

    \36\ USDA 2008, p. 3-5.
    \37\ USDA 2008, p. 3-9.
---------------------------------------------------------------------------

    For purposes of this analysis, we assume that the relative 
contributions of food and labor to the total cost of preparing 
reimbursable school meals will remain fixed at the levels observed in 
the SLBCS-II. As a result, we estimate that labor costs increase on a 
nearly dollar for dollar basis with estimated food costs.\38\ We 
estimate that the proposed rule may increase schools' food costs by 
about 12 percent. Although labor costs relative to food costs have held 
steady over many years,\39\ this approach may overstate labor costs. We 
explore the potential effect of labor costs growing at a somewhat lower 
rate in section III.B.5.
---------------------------------------------------------------------------

    \38\ The estimates contained in this analysis assume labor costs 
equal to food costs multiplied by (44.5/45.6), the ratio of reported 
labor to food costs in the SLBCS-II.
    \39\ Labor costs as a share of the total costs of preparing 
school meals were found to be 43.8 percent in FNS's SY 1992-1993 
School Lunch and Breakfast Cost Study I, and 44.5 percent in the SY 
2005-2006 School Lunch and Breakfast Cost Study II (a statistically 
insignificant difference). Food costs as a percent of total costs 
grew slightly from 45.6 percent in SY 1992-1993 to 48.3 percent in 
SY 2005-2006. But this change, too, is statistically insignificant. 
USDA 2008, p. 9-2.
---------------------------------------------------------------------------

    Food and Labor Cost Summary: Table 10 summarizes the estimated 
increase in food and labor costs associated with the proposed rule 
through FY 2016.\40\ (The final two rows of Table 10 also include the 
estimated administrative costs to State agencies.) Overall, we estimate 
that the proposed rule would increase the total cost of reimbursable 
school meals by $6.8 billion over five years; the cost of food would 
increase by $3.4 billion, and the cost of labor would increase by $3.3 
billion. In the first year of full implementation (FY 2015),\41\ the 
combined cost of food and labor is expected to be about 12 percent 
higher under the proposed rule than under existing requirements. The 
estimated additional cost of food for a reimbursable lunch increases 
from about 3.4 cents in 2012 to 7.7 cents in 2016; the equivalent 
increase in food costs for a reimbursable breakfast grows from 18.8 
cents to 26.1 cents. These rates roughly double--to 15.1 cents and 51.6 
cents--when the estimated cost of labor is included.
---------------------------------------------------------------------------

    \40\ For purposes of this analysis, the new standards are 
assumed to take effect at the start of SY 2012-2013. Because the 
2012-2013 school year begins in July 2012, there is just a small 
cost in Federal FY 2012. Note that these figures assume no effect on 
student participation. We discuss the possible effects of the 
proposed rule on student participation in section III.F. We examine 
the effect of alternate participation assumptions in section 
III.B.5.
    \41\ Two years after implementation of the rule, all grains 
servings offered to meet meal pattern requirements must be whole 
grain rich. If the rule is implemented in SY 2012-2013, then the 100 
percent whole grain requirement takes effect in SY 2014-2015 or FY 
2015.
---------------------------------------------------------------------------

BILLING CODE 3410-30-P

[[Page 2528]]

[GRAPHIC] [TIFF OMITTED] TP13JA11.014

BILLING CODE 3410-30-C
3. Food Cost Drivers
    Table 11 provides a breakdown in the estimated food costs of the 
proposed rule by seven broad food categories. Consistent with the 
Dietary Guidelines, the proposed rule will require schools to offer 
more fruits, vegetables, and whole grains than they currently offer 
today.
    Changes in school demand also impact food producers. The figures in 
Table 11 indicate that the economic costs and benefits of the proposed 
rule may not be shared equally by producer groups.

                                                     Table 11--Estimated Food Costs by Food Category
                                                                  [Dollars in millions]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                 Fiscal year
                    Food group                     -----------------------------------------------------------------------------------------------------
                                                          2012             2013             2014             2015             2016            Total
--------------------------------------------------------------------------------------------------------------------------------------------------------
Milk..............................................            -$4.4           -$29.0           -$29.8           -$30.5           -$31.3          -$125.1
Meat or Meat Alternate............................              3.1             22.5             24.9             27.6             30.5            108.6
Fruit Juice.......................................              0.0              0.0              0.0              0.0              0.0              0.0
Fruit (non-juice).................................             42.3            286.1            301.4            317.1            334.1          1,281.0
Vegetables........................................             75.6            515.2            547.8            581.2            617.5          2,337.3
Refined Grains....................................           -116.0           -787.5           -964.7         -1,766.5         -1,869.1         -5,503.8
Whole Grains......................................             91.2            619.3            825.3          1,840.0          1,946.5          5,322.3
                                                   -----------------------------------------------------------------------------------------------------

[[Page 2529]]

 
    Total Cost of Proposal........................             91.8            626.5            704.9            968.9          1,028.2          3,420.4
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Milk: This impact analysis estimates that the amount of milk served 
to students may not change after implementation of the proposed 
rule.\42\ However, the rule does require schools to serve only low-fat 
or fat-free milk in the school meals programs. Because the per-unit 
cost of low-fat and fat-free milk is less than the average per-unit 
cost of the mix of milk products now served in schools, the cost of 
serving milk under the proposed rule is reduced.
---------------------------------------------------------------------------

    \42\ See section III.B.5. for an examination of the cost 
implications of altering this assumption.
---------------------------------------------------------------------------

    Fruit Juice: The estimate assumes that schools may satisfy the 
rule's increased fruit requirement entirely through additional servings 
of whole or cut-up fruit, not fruit juice. We expect that schools may 
have to encourage consumption of additional whole or cut-up fruit in 
order to satisfy this requirement. The cost estimate assumes that the 
amount of fruit juice served to students may not increase above the 
levels assumed in the baseline estimate. As a result, the relative 
share of whole or cut-up fruit to fruit juice servings offered to (and 
taken by) students may increase after implementation of the rule.
    Grains: The proposed rule initially requires that half of grains 
offered to students be whole grain rich. Beginning in SY 2014-2015, the 
rule requires that all grains served be whole grain rich. This change 
is reflected in the large changes in both the whole and refined grains 
figures between FY 2014 and FY 2016.
    Note that the total amount of grain products served under the 
proposed rule may be less than the amount served in the baseline (the 
per-meal amount taken in SNDA-III). The effect of this net reduction in 
total grains served is reflected in figures for fiscal years 2012 to 
2014, where the cost decrease for refined grains exceeds the cost 
increase for whole grains. Throughout the estimation period, we assume 
that the unit cost of whole grains exceeds the unit cost of comparable 
refined grain products. Despite this, the net reduction in total grain 
products served through FY 2014 more than offsets the increased unit 
cost of whole grains. After FY 2014, when the rule's 100 percent whole 
grain rich requirement takes effect, the higher relative cost of whole 
grains to refined grains exceeds the savings from the net reduction in 
grain products served.
4. Comparison of FNS and IOM Cost Estimates
    IOM prepared its own food cost estimate for its recommended meal 
pattern changes. The methodology behind that estimate is discussed in 
School Meals: Building Blocks for Healthy Children (IOM 2009). While 
IOM relies on SLBCS-II and SNDA-III, the same primary sources used by 
FNS, to estimate unit costs and baseline quantities served, its 
methodology differs from ours in several ways.
    Perhaps the most significant difference is in the establishment of 
baselines. We used all records on the SNDA-III dataset to estimate 
baseline quantities of food served and student take rates. IOM limited 
its analysis to a set of six representative baseline menus selected 
from the SNDA-III dataset. IOM selected one 5-day lunch menu and one 5-
day breakfast menu for each of three age-grade groups (elementary, 
middle, and high school) at random from a subset that excluded 
practices identified as uncommon.\43\ The goal of both methodologies is 
to estimate a baseline food cost representative of all schools that 
participate in the Federal school meals programs. We have not attempted 
to isolate and quantify the effect of this methodological difference on 
our cost estimates.
---------------------------------------------------------------------------

    \43\ IOM excluded menus that did not offer a reduced fat or fat 
free unflavored milk, offered only one entree, offered 15 or more 
entree options, offered juice drinks rather than 100% fruit juice, 
or offered dessert every day. IOM 2009, p. 307
---------------------------------------------------------------------------

    Another important difference between the IOM and FNS estimates is 
our use of different student take rates in preparing food cost 
estimates for the recommended meal patterns. We computed take rates 
from SNDA-III and applied them, largely unchanged, to the food group 
serving requirements of the proposed rule.\44\ We do not increase take 
rates in anticipation of greater demand for better meals, nor reduce 
take rates in anticipation of a decline in student acceptance of new 
vegetable varieties, whole grains, or low fat milk relative to the 
starchy vegetables, refined grains, and higher fat milk on current 
school menus.\45\ IOM modified observed take rates from SNDA-III where 
the expert judgment of committee members and school meal practitioners 
deemed it appropriate.\46\ Additional differences in FNS and IOM take 
rates can be attributed to IOM's use of six representative school menus 
in its analysis; IOM computed its take rates from those schools alone. 
FNS take rates are computed from all schools on the SNDA-III dataset.
---------------------------------------------------------------------------

    \44\ FNS caps individual school take rates at the food group 
category to 100 percent.
    \45\ As discussed elsewhere in this impact analysis, our take 
rate assumptions are intended to avoid understating the cost of the 
proposed rule given the uncertain response of both students and 
school foodservice workers to the new meal pattern requirements. We 
test the cost implications of adopting different take rates in 
section III.B.5.
    \46\ IOM 2009, p. 136.
---------------------------------------------------------------------------

    IOM estimated that food costs would increase by 4 to 9 percent for 
lunch, depending on student take rates for fruits and vegetables. For 
breakfast, IOM estimated an increase in food costs of 18 to 23 percent. 
Both of these ranges are based on unadjusted SY 2005-2006 prices from 
the SLBCS-II. In addition, both are for the requirements recommended 
for the first year of implementation, not including the more stringent 
whole grain requirement recommended for later introduction. The 
comparable FNS figures are 3 percent for lunch and 26 percent for 
breakfast.
5. Uncertainties
    We made several simplifying assumptions in developing this cost 
estimate, reflecting gaps in available data and evidence. The most 
significant simplifications are discussed in Table 12. In most cases, 
our primary estimate reflects conservative assumptions, to avoid 
understating the costs of the proposal. In this section, we describe 
the impact of several alternative assumptions on the estimate. The cost 
impacts of these alternatives are presented in Table 14.

[[Page 2530]]



                    Table 12--Simplifying Assumptions
------------------------------------------------------------------------
                                            Explanation and implications
                   Item                      of simplifying assumptions
------------------------------------------------------------------------
Take Rates................................  For each of several food
                                             groups, we used SNDA-III
                                             data to compute average
                                             ``take rates'' equal to the
                                             percentage of food servings
                                             taken by students for each
                                             serving offered to them.
                                             Take rates under current
                                             program rules vary by
                                             school, grade level, and
                                             menu planning system. They
                                             are, at best, a rough
                                             predictor of student
                                             behavior under the proposed
                                             rule, which imposes a
                                             single food-based meal
                                             planning system across all
                                             schools, and requires
                                             schools to offer a mix of
                                             foods somewhat different
                                             than many students are
                                             accustomed to. We apply
                                             these take rates to
                                             generate a primary cost
                                             estimate. But, recognizing
                                             the uncertainty of these
                                             take rates, the cost
                                             implications of different
                                             take rate assumptions are
                                             examined in the
                                             uncertainties section of
                                             the impact analysis.
Student Participation.....................  The cost estimate assumes no
                                             change in student
                                             participation following
                                             introduction of the rule's
                                             new meal pattern
                                             requirements. However, we
                                             recognize that
                                             participation may increase
                                             due to better meals or
                                             decrease when favorite
                                             school foods are replaced
                                             with unfamiliar or less
                                             appealing options. We chose
                                             not to estimate a
                                             participation effect given
                                             the uncertainty about how
                                             schools may incorporate new
                                             foods into their menus, and
                                             what changes schools may
                                             make to a la carte and
                                             other non-NSLP/SBP
                                             ``competitive'' foods,
                                             factors known to affect
                                             NSLP/SBP participation.
                                             Schools have a financial
                                             interest in preserving the
                                             revenue stream that comes
                                             with serving Federally-
                                             reimbursable school meals.
                                             It is also unclear whether
                                             participation effects, if
                                             any, may prove temporary or
                                             permanent. We estimate the
                                             cost of the rule under an
                                             assumption of increased and
                                             reduced student
                                             participation in the
                                             uncertainties section.
USDA Foods................................  We include USDA Foods
                                             (formerly USDA commodities)
                                             in both the quantity and
                                             value of food served in its
                                             baseline and proposed cost
                                             estimates. This treatment
                                             of USDA Foods is consistent
                                             with the SLBCS-II which
                                             includes the value of USDA
                                             Foods in its computation of
                                             the cost of producing a
                                             school meal. We assume that
                                             USDA Foods will contribute
                                             comparably to the overall
                                             cost of preparing school
                                             meals under current and
                                             proposed program rules. We
                                             believe it is reasonable to
                                             ignore the value of USDA
                                             Foods in computing the
                                             estimated cost increase of
                                             the proposal.
Whole Grains..............................  We apply a single take rate
                                             to both whole grain rich
                                             and refined grain products.
                                             A less conservative
                                             approach would have applied
                                             a lower take rate to whole
                                             grain foods, at least when
                                             offered singly, rather than
                                             as part of a combination
                                             entree. Further, this take
                                             rate is the same take rate
                                             observed in SNDA-III where
                                             the relative share of whole
                                             grain rich products is
                                             lower than the 50 percent
                                             share that schools must
                                             offer in the first two
                                             years of implementation,
                                             and much lower than the 100
                                             percent share that must be
                                             offered thereafter.
                                             Testimony before the IOM
                                             expert committee by
                                             University of Minnesota
                                             Professor Leonard Marquart
                                             documented steps SFAs can
                                             take to phase in whole
                                             grains in a manner that
                                             promotes high take rates.
Labor Rates...............................  We assume that the relative
                                             contributions of food and
                                             labor to the total cost of
                                             preparing reimbursable
                                             school meals will remain
                                             fixed at the levels
                                             observed in the SLBCS-II
                                             study. The study found that
                                             the cost of purchasing food
                                             accounted for 45.6 percent
                                             of SFA reported costs on
                                             average, while labor
                                             accounted for 44.5 percent
                                             of reported costs. We
                                             therefore estimate that
                                             labor costs may increase on
                                             a nearly dollar for dollar
                                             basis with estimated food
                                             costs. Our assumption leads
                                             to a substantial increase
                                             in estimated labor costs,
                                             one that assumes schools
                                             may rely less on prepared
                                             foods and more on on-site
                                             preparation. We re-estimate
                                             the cost of the proposed
                                             rule assuming a smaller
                                             increase in labor costs in
                                             the uncertainties section.
Macronutrient Requirements and Calories...  The cost estimate developed
                                             in this impact analysis is
                                             based entirely on the cost
                                             of adding or deleting foods
                                             from particular food
                                             groups.
                                            The cost estimate accounts
                                             for current price
                                             differences in whole grains
                                             compared to refined grain
                                             products, low fat milk
                                             compared to 2 percent or
                                             whole milk, whole fruit
                                             compared to fruit juice,
                                             and vegetables by
                                             subcategory. But it does
                                             not account directly for
                                             differences in the costs of
                                             comparable combination
                                             entrees with different
                                             levels of sodium, fat, or
                                             calories. SNDA-III found
                                             that school lunches offered
                                             to students in SY 2004-2005
                                             provided, on average, about
                                             11 percent of calories from
                                             saturated fat. The proposed
                                             rule would limit this to 10
                                             percent--a relatively
                                             modest reduction.
                                            Our cost estimate does take
                                             into account the added cost
                                             of more fruits and
                                             vegetables. It also takes
                                             into account the cost of
                                             shifting away from starchy
                                             vegetables, which reduces
                                             the relative share of
                                             french fries in the
                                             proposed rule estimate.
                                            Finally, the estimate
                                             accounts for the
                                             replacement of higher fat
                                             content milk with low fat
                                             and skim milk. All of these
                                             steps implicitly
                                             incorporate the cost of
                                             offering lower calorie and
                                             lower fat content meals
                                             into our estimate. We make
                                             an explicit assumption that
                                             a reduction in sodium can
                                             be achieved at minimal
                                             cost, at least over the
                                             short term, when proposed
                                             sodium requirements are
                                             only partially phased-in.
                                             This is one of the very few
                                             assumptions that, if wrong,
                                             tend to understate the cost
                                             of the proposed rule. But,
                                             given the decision to err
                                             on the side of overstating
                                             costs when making most
                                             other assumptions, we
                                             believe that the upside
                                             risk to an error on this
                                             assumption is small.
------------------------------------------------------------------------

    FNS and IOM Food Group Take Rates: For all food groups, we assume 
that observed (baseline) take rates from SNDA-III will continue to 
characterize student behavior after implementation of the proposed 
rule's meal requirements.\47\ These take rates are weighted averages 
across schools that operated under nutrient-based, traditional food-
based, and enhanced-food based systems in SY 2004-2005, calculated as 
follows:
---------------------------------------------------------------------------

    \47\ We cap individual food group take rates at 100 percent in 
our proposed rule cost estimate.

Take rate = number of servings taken \1\/(Servings offered \2\/meal * 
---------------------------------------------------------------------------
number of meals \3\)

    \1\ Based on SNDA-III analysis of observed meals taken by 
students.
    \2\ Based on SNDA-III analysis of school menus/recipes.
    \3\ Based on SNDA-III observations of daily meal counts.

    Data are not available to assess how student behavior across all 
schools may change in response to menus that simply offer more fruits, 
vegetables, and whole grains. One approach to model that response would 
be to apply take rates from schools that offered higher than average 
amounts of these foods in SY 2004-2005, but this occurred in a 
relatively small subset of schools sampled in SNDA-III; conclusions 
drawn based on their behavior may be

[[Page 2531]]

misleading. In addition, upon implementation of the rule, schools may 
attempt to influence student behavior by developing appealing new menu 
items, or by taking other steps to encourage increased consumption of 
the fruits, vegetables, low-fat milk products, and whole grains 
emphasized by the rule. Because of these unknowns, FNS adopted a static 
take-rate assumption in developing its primary cost estimate.
    IOM departed from observed take rates in developing its assumptions 
for its own cost estimate, drawing on expert opinion from school meal 
practitioners about likely student behavior. IOM's assumed take rates, 
``which are based on data from SNDA-III but are adjusted to consider 
the recommended Meal Requirements, represent estimates that the 
committee considers realistic.'' \48\
---------------------------------------------------------------------------

    \48\ IOM 2009, p. 307
---------------------------------------------------------------------------

    Tables 13a and 13b compare the take rates applied by IOM and by FNS 
in developing their respective cost estimates.\49\
---------------------------------------------------------------------------

    \49\ See IOM 2009, pp. 309-315, for all of IOM's food group take 
rate assumptions. Note that some of IOM's assumed take rates are 
presented as ranges. For the cost estimate in Table 12, FNS uses the 
midpoint of these ranges.

                      Table 13a--IOM and FNS Breakfast Take Rates After Implementation of IOM Recommendations and FNS Proposed Rule
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                      IOM Breakfast take-up rates                                   FNS Breakfast take rates
           Food group           ------------------------------------------------------------------------------------------------------------------------
                                       Elementary                Middle                  High             Elementary         Middle            High
--------------------------------------------------------------------------------------------------------------------------------------------------------
Fluid Milk.....................  98%...................  92%..................  96%..................              90%              81%              81%
Meat/Meat Alternate............  62% or more...........  68% or more..........  62% or more..........              85%              84%              82%
Fruit..........................  70%...................  70%..................  75%..................              84%              82%              77%
Grain..........................  100%..................  100%.................  100%.................              89%              81%              83%
--------------------------------------------------------------------------------------------------------------------------------------------------------


                        Table 13b--IOM and FNS Lunch Take Rates After Implementation of IOM Recommendations and FNS Proposed Rule
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                 IOM Lunch take-up rates                             USDA Lunch take rates
                    Food group                     -----------------------------------------------------------------------------------------------------
                                                       Elementary         Middle            High          Elementary         Middle            High
--------------------------------------------------------------------------------------------------------------------------------------------------------
Fluid Milk........................................              98%              97%              88%              91%              81%              78%
Meat/Meat Alternate...............................             100%             100%             100%              91%              91%              90%
Fruit.............................................              80%              80%              60%              70%              58%              50%
Vegetables........................................              55%              60%              65%              85%              83%              86%
Grain.............................................         65%-100%         65%-100%          70-100%              86%              86%              79%
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Subsections a through c, below, explain three alternative 
applications of IOM take rate assumptions.
a. Fruit and Vegetable Take Rates--Use IOM Estimates
    In Table 14, Section A, we substitute the fruit and vegetable take 
rates used by IOM to model student behavior after implementation of new 
meal patterns for the take rates used in FNS's primary cost estimate 
under the proposed rule.\50\ IOM applied lower take rates than FNS for 
vegetables, but applied higher take rates for fruit. The reduced cost 
estimate presented in Table 14, Section A simply substitutes the post-
implementation fruit and vegetable take rates assumed by IOM for the 
post-implementation take rates assumed by FNS. The net result of using 
IOM's assumptions would reduce the estimated cost of implementing the 
proposed rule by $3.5 billion.
---------------------------------------------------------------------------

    \50\ IOM take rates appear in tables L-1 through L-6 of IOM's 
School Meals report. IOM 2009, pp. 309-315.
---------------------------------------------------------------------------

b. IOM Fruit and Vegetable Take Rates with Labor Cost Adjustment
    The effect of using IOM's vegetable take rates is to reduce the 
change in food cost for lunch in implementing the proposed rule to 
zero. Under our approach, labor costs are assumed to remain fixed, 
relative to food costs, at the ratio estimated in the SLBCS-II. As a 
result, the figures in Table 14, Section A assume no increase in the 
labor costs of preparing lunches under the proposed rule. However, the 
work required to prepare lunches (and breakfasts) that meet the new 
food group, macronutrient, and calorie requirements could increase even 
if the costs of purchasing food for those meals is about equal under 
current and proposed rules.
    Table 14, Section B reflects estimated food costs using IOM's 
estimated fruit and vegetable take rates, and the labor costs estimated 
by FNS for its primary estimate (from Table 6). This revised estimate 
assumes that the relationship between food and labor costs diverges 
from the relationship observed in SLBCS-II and the net effect of this 
assumption would reduce the estimated cost of implementing the proposed 
rule by $1.8 billion.
c. Using All IOM Take Rates
    As described in section III.B.4, IOM and FNS took different 
approaches to anticipating students' response to the proposed meal 
pattern changes. IOM relied on observed take rates from SNDA-III as 
well as the best judgment of school foodservice practitioners. While 
some of IOM's take rates are higher than the ones used in our primary 
estimate, others are lower. The net effect of substituting IOM post-
implementation take rates for FNS post-implementation take rates for 
all food groups (milk, meat, meat alternate, fruit/fruit juice, 
vegetables, and grain products) is displayed in Table 14, Section C. 
The net effect is a cost estimate that differs from our primary 
estimate by about 10 percent, a reduction in our primary cost estimate 
of $676 million.\51\
---------------------------------------------------------------------------

    \51\ It is worth recognizing that the differences between IOM's 
estimate and our primary estimate also reflect differences in 
baseline assumptions. We did not alter our baseline take rates for 
this test.
---------------------------------------------------------------------------

d. Cost of Whole Grains--Reduction over Time
    The proposed rule requires schools to replace refined grains with 
whole grain rich foods. In the first two years of

[[Page 2532]]

implementation, whole grain rich products must make up half of all 
grain products offered to students. By the third year, schools must 
offer only whole grain rich products. At present, whole grain rich 
products cost more than similar refined grain products. The primary 
cost estimate developed above assumes that the relative price of whole 
grain rich to refined grain products will remain constant at FY 2009 
levels throughout the five year forecast period. Part of the price 
difference, however, may be due to low supply of whole grain products 
in the market--in turn influenced by current low demand by schools. As 
IOM explains:
    Of greater concern is the relative lack of available whole 
grain-rich processed products on the market and acceptable in the 
school meals program. Hence some cost increases would be expected 
for the less available processed whole grain-rich products in the 
market. Several new whole grain products are being introduced 
through the USDA Foods program; over time, the availability of whole 
grain-rich products is expected to expand.\52\
---------------------------------------------------------------------------

    \52\ IOM 2009, p. 8-22

    The difference in price between whole grain rich and refined grain 
products may diminish over time. Table 14, Section D provides estimates 
of the cost of the proposed rule under the assumption that the 
difference in price between whole grain rich and refined grain products 
will disappear entirely at a rate of one-third per year from FY 2013 to 
FY 2015. The net result of this assumption would reduce the estimated 
cost of implementing the proposed rule by $2.5 billion.
e. Change in Participation--2 Percent Increase
    As discussed in Table 12 above, we assumed that student 
participation would not change following the introduction of new meal 
requirements. Table 14 Sections E and F model the effects of altering 
that assumption.
    Section E estimates the effect of a two percent increase in student 
participation on the cost of the rule relative to our primary cost 
estimate in Table 6. The dollar figures in Section E are the estimated 
cost to schools of preparing all meals served under our baseline 
assumption plus an additional 2 percent. Per meal costs for all of 
these additional meals are taken from Table 10. The additional meals 
are eligible for USDA reimbursement at the appropriate free, reduced 
price, or paid rates. However, the figures shown in Section E are not 
offset by these increased Federal reimbursements. The net cost to 
schools, after accounting for Federal reimbursements, would be lower. 
Because these costs reflect the provision of improved meals to 
additional children, we would expect a commensurate increase in the 
benefits resulting from addition of more fruits, vegetables, and whole 
grains to the diets of participating children. This participation 
assumption would result in a $1.4 billion increase over the cost of our 
primary estimate.
f. Change in Participation--2 Percent Decrease
    Table 14, Section F models the effect of a two percent decrease in 
participation upon implementation of the new rule. A reduction in 
participation reduces the cost of compliance with the rule, relative to 
the primary cost estimate in Table 6.\53\ Again, because the cost 
reduction reflects the provision of improved meals to fewer children, 
we would expect a proportionate decrease in the rule's benefits for 
participating children. The net effect of this assumption would be to 
decrease the cost of implementing the final rule by $1.4 billion.
---------------------------------------------------------------------------

    \53\ This reduction in cost comes at the expense of reduced 
Federal meal reimbursements.
---------------------------------------------------------------------------

g. Lower Rate of Increase in Labor Costs Than Food Costs
    Our primary cost estimate assumes that the ratio of labor to food 
costs will remain fixed at the ratio observed in the SLBCS-II. Because 
we estimate a substantial increase in school food costs, our fixed 
labor to food cost assumption leads to a substantial increase in labor 
costs.
    Some increase in labor costs is likely. Schools may find it 
necessary to prepare more meals on site to incorporate added vegetables 
and whole grains, and to reduce levels of sodium and fat. In addition, 
schools are likely to incur additional expense to train foodservice 
workers on the new meal requirements. However, commercial suppliers can 
be expected to develop and introduce healthier products for the school 
market ahead of implementation of a final rule; other products may be 
introduced after implementation. Schools may find that new training 
replaces some training planned in existing budgets.
    It is also uncertain that more expensive foods are proportionately 
more expensive to prepare than less expensive foods. Long-term 
stability in the relationship between food and labor costs is 
unremarkable if the primary factor driving both is an increase in the 
number of participants and meals served. Though the limited data 
available shows that this ratio remained stable between SY 1992-1993 
and SY 2005-2006--a period that included program changes under the 
School Meals Initiative--there are reasons to suspect that this 
relationship may not hold in response to a sudden increase in food 
costs unrelated to the number meals served.
    Table 14, Section G models an increase in labor costs that is 75 
percent of the level in our primary estimate, to reflect a shift in the 
balance between food and labor costs under the proposed rule. This 
assumption would result in an $834 million decrease of our primary cost 
estimate of implementing the proposed rule.
h. Extent of School Compliance With New Requirements
    Results from SNDA-III indicate that most schools do not fully 
comply with the current nutrition requirements for meals served and 
reimbursed through the school lunch and breakfast programs. Although a 
large majority of schools (more than 80 percent) served lunches in SY 
2004-2005 that met requirements for protein, calcium, and iron, and 
more than 70 percent served lunches that met requirements for vitamins 
A and C, fewer than half met minimum calorie requirements, just 30 
percent met the standard for saturated fat, and only 21 percent met the 
standard for total fat. Overall, while most schools met most of the 
requirements for a nutritious school meal, just 7 percent of schools 
served reimbursable lunches that met every requirement.\54\
---------------------------------------------------------------------------

    \54\ USDA 2007, vol. I, p169. For breakfast, schools tend to 
perform better, though just 30 percent offered meals that met the 
SMI standard for calories; see p. 204.
---------------------------------------------------------------------------

    Despite the challenge of meeting these requirements, it is 
relatively uncommon for schools to serve meals for Federal 
reimbursement that lack required food group or meal components. FNS' 
study of improper payments in the school meal programs found no point-
of-sale error in identifying reimbursable lunches at 45 percent of 
schools in SY 2005-2006, and high error rates (more than 20 percent) in 
just 2 percent of schools. These errors were somewhat more prevalent in 
breakfast service, but still far below the level of noncompliance with 
nutrient standards.\55\
---------------------------------------------------------------------------

    \55\ USDA 2007b, vol. I, p. 116. The comparable rates for 
breakfast were 48 percent with no error, and 11 percent with error 
rates above 20 percent.
---------------------------------------------------------------------------

    Taken together, these results indicate that schools make a 
relatively successful effort to comply with food group and meal 
component requirements, but serve too many high fat options in 
satisfaction of those requirements.

[[Page 2533]]

    The proposed rule is intended to facilitate meeting most micro- and 
macronutrient targets by focusing on a set of food group requirements. 
This plays to the strengths of the current system which tends to 
produce meals that satisfy food item or meal component requirements, 
but is less successful at monitoring the nutrient content of those 
foods. The cost estimate we developed above is the cost of serving more 
fruits and vegetables, substituting whole grains for refined grains, 
and limiting the fat content of fluid milk, as required by the proposed 
rule's food group requirements; the estimate assumes, we believe 
reasonably, that schools may comply with those food level changes.
    Although schools are expected to satisfy most nutrient requirements 
through compliance with the rule's proposed food group standards, IOM 
recognized the need to retain four separate nutrient targets for 
saturated fat, trans fat, calories, and sodium. While schools may have 
difficulty meeting those requirements, at least in the short term, they 
may eventually meet them within the same food group requirements that 
are effective on initial implementation of the rule. For this reason, 
we believe that less than full compliance with these four nutrient 
standards offers little cost savings to schools.
    We estimate that a committed effort by schools to serve meals 
consistent with the proposed rule's food-based requirements may 
increase costs as summarized in Table 6. Nevertheless, it remains 
possible that some schools may find it operationally difficult, or too 
costly, to prepare and serve meals that satisfy the new food group and 
subgroup requirements of the rule. If some schools fall short of the 
proposed food group requirements in the initial years after 
implementation by not serving enough of certain foods, the aggregate 
cost of the rule may be lower than estimated.
    The nature of noncompliance with the proposed rule, if observed, is 
likely to resemble compliance with current standards as illustrated by 
SNDA-III. That is, most schools can be expected to work toward and 
achieve compliance with most provisions of the rule. We would expect 
some variation across schools in the degree to which individual food 
group requirements are met, given differences in current menus, what 
students in different schools are accustomed to eating, and variations 
in school policy on a la carte foods, other non-program choices, 
implementation of offer versus serve, etc. But it is also possible that 
some schools may be unable to make any changes to current menus, at 
least initially. Those schools' compliance with the proposed rule may 
depend on current differences in the content of school menus relative 
to the new standards.
    Table 14, Section H presents an estimate of the cost of the rule 
under the alternate assumption that some schools fail to meet the 
proposed rule's food group requirements. This alternate estimate looks 
to SNDA-III's school-level compliance rates with current nutrient 
standards to model compliance with proposed rule food group 
requirements. Specifically, the estimate assumes:
    1. Initial (FY 2012 and FY 2013) school-level compliance with the 
proposed standard for the meat group is equal to the average of the 
observed school-level rates of compliance with the SMI standards for 
protein and iron,
    2. Initial school-level compliance with the proposed fruit and 
vegetable group standards matches the average of the observed school-
level rates of compliance with SMI standards for vitamins A and C,
    3. Initial school-level compliance with the fluid milk standard 
equals the average of the observed school-level rates of compliance 
with the SMI standards for protein and vitamin A,
    4. Initial school-level compliance with the grains standard equals 
the average of the observed school-level rates of compliance with SMI 
standards for iron, protein, and vitamin A.
    In each case, school-level compliance means the percent of schools 
that serve meals that meet the current or proposed requirements. For 
schools that do not initially comply with a proposed food group 
standard, we assume that they may serve the same amount from that food 
group in fiscal years 2012 and 2013 that they did prior to 
implementation of the rule. In that way, we assume a distribution of 
food level compliance rates based on actual recent performance. This 
recognizes that some schools are much closer to meeting particular food 
group standards than other schools. The alternative estimate assumes 
that these schools' average rate of compliance may rise to 100 percent, 
in equal increments, over the FY 2014 through 2016 period.
    This assumption of less than full compliance would reduce the five 
year cost of the rule by $743 million.
i. Cost Attributable to Noncompliance With Existing Meal Requirements
    In subsection h, we point to results from SNDA-III that show most 
schools fall short on at least some SMI nutrient standards for lunch 
and breakfast.
    The cost estimate developed in this impact analysis measures the 
difference in the cost of serving meals that comply with the proposed 
rule's requirements, and the current cost of serving meals consistent 
with the findings of SNDA-III. Note that in concept, some portion of 
that cost difference could represent the cost for schools to reach 
existing nutrition requirements. Arguably, any cost incurred to reach 
existing standards should not be considered a cost of the proposed 
rule.
    We note, however, that an assessment of the cost to schools of 
changing meals to achieve current nutrition requirements is sharply 
limited by a lack of specific relevant data . Existing requirements for 
school meals consist of a limited number of food item requirements and 
a range of nutrient standards. Most schools that do not meet current 
standards are missing one or more nutrient standards--most commonly, 
those for total fat, saturated fat, and calories.
    The proposed rule, as IOM recommended, moves more fully to a set of 
food-based standards--requiring increases in particular kinds of foods 
(such as fruits and vegetables), and replacement of other foods with 
different types (whole-grain versus refined grain products, and low fat 
versus full fat dairy). The proposed rule includes only four stand-
alone nutrient requirements (for sodium, saturated fat, calories and 
trans fat).
    The estimates presented in this analysis address the cost of 
providing more fruits and vegetables and replacing some or all high 
refined grains with whole grains--changes that could be modeled using 
school food purchase and cost data. In contrast, many of the kinds of 
changes needed to meet current standards, such as changing from frying 
to baking, and replacing full-fat milk with lower-fat varieties, would 
cost little. And for some nutrients, relatively small changes may be 
sufficient to reach current standards. For example, while SNDA-III 
shows that few schools met current requirements for total fat and 
saturated fat at lunch, on average schools were relatively close to 
meeting them. So, while just 21 percent of schools served lunches with 
no more than 30 percent of calories from total fat, the mean percent of 
energy from total fat across all schools was only 33.8 percent. For 
saturated fat, just 30 percent of schools met the 10 percent of total 
calories standard, but the mean percent of calories across all schools 
was just 10.9 percent. If reductions in those measures can be achieved 
with modest changes in menus and preparation methods, then the cost to 
meet them

[[Page 2534]]

would represent a small part of the overall cost of moving to the 
proposed rule's standards. At the same time, it is plausible to 
envision changes to meet existing standards, for vitamins A and C for 
example, that would cost nearly as much as the proposed rule's food 
group standards for fruits and vegetables.
    Second, the cost of compliance with existing rules relies as much 
on assumptions about student acceptance of certain foods and menus as 
it does on the cost per nutrient. This too can be illustrated with 
SNDA-III data. School compliance with current SMI standards is far 
lower in high schools than in elementary schools for almost all 
nutrients. Because ``offer versus serve'' (OVS) is required in high 
schools, meals served to high school students better reflect student 
preferences than meals served to elementary school students, as roughly 
one in five elementary schools do not use OVS.\56\ Given a choice, the 
SNDA data indicates that students tend to select foods that do not 
satisfy current nutrient standards. That does not mean that schools 
cannot offer a mix of foods that students accept, but it may take a 
more comprehensive and costly change in school menus to gain that 
acceptance.
---------------------------------------------------------------------------

    \56\ SNDA-III found that 78 percent of elementary schools and 93 
percent of middle schools used OVS in SY 2004-2005. These 
percentages are the same for lunch and breakfast. USDA 2007, vol. I, 
Table II.11A, p. 52.
---------------------------------------------------------------------------

    For these reasons, we do not know the likely order of magnitude of 
the estimated cost to reach current standards.
    Table 14 below assumes that State administrative costs are not 
impacted by any of the alternate assumptions (a-h) listed above.
BILLING CODE 3410-30-P

[[Page 2535]]

[GRAPHIC] [TIFF OMITTED] TP13JA11.015

BILLING CODE 3410-30-C

C. Administrative Impact

1. School Food Authorities (SFA)
    An initial increase in administrative staff time for training and 
implementation is anticipated at the SFA level. Most of these impacts 
will be limited to the transition to the rule's new requirements as a 
result of:
    <bullet> Training staff on the required components of reimbursable 
lunches and breakfasts;
    <bullet> Changes to menus and portion size may necessitate 
revisions to menus and recipes currently used by SFAs;
    <bullet> Changes to food purchasing and commodity food use (for 
example, increasing purchases for fresh fruit and vegetables, whole 
grain products, and lower sodium products), as well as changes in the 
methods of preparation of food, may be necessary for many schools;
    <bullet> Changes in SFA financial structure, as SFAs may need to 
review finances in order to determine how to deal with any cost changes 
associated with the proposed requirements;
    <bullet> Forging new relationships with local farmers to supply 
fresh produce

[[Page 2536]]

appealing to the tastes of school children; and
    <bullet> Modifying a la carte foods and other foods at school to 
maintain NSLP and SBP participation rates.
    The proposed rule also increases the length of State reviews of 
SFAs through the Coordinated Review Effort (CRE) by incorporating the 
requirements of School Meals Initiative (SMI) reviews, and increases 
their frequency to once every three years. SFAs that previously held 
separate CREs and SMIs may experience a decrease in burden, because 
they will undergo just one CRE every three years, rather than two 
reviews (one CRE and one SMI) every five years.
    The proposed rule incorporates the provision of training and 
technical assistance by SAs to the SFAs. SFAs must, in turn, adjust 
their current training agenda to include the new requirements, as no 
funding has been provided in the proposed rule to accommodate new 
training.
    FNS expects these additional burdens on SFA staff time and budgets 
may be offset by other benefits. For instance, new age/grade groupings 
would require school districts to offer different portion sizes instead 
of the same portions to all ages/grades. While this could be an 
additional burden to some SFAs, it could also reduce plate waste with 
use of more appropriate age/grade groupings. Moreover, it is expected 
that, as food service workers gain experience and become comfortable 
with the new requirements, administrative efforts associated with 
implementation may decline. Therefore, although an initial 
administrative impact is anticipated, FNS does not expect any 
significant long-term increase in administrative burden.
2. State Agencies
    State Child Nutrition Agencies (SAs) play a key role in the 
implementation of school meal programs through their agreements and 
partnership with local SFAs. FNS anticipates that SAs that administer 
the school meals programs will work closely with SFAs to meet the 
requirements of the proposed rules, and to remove barriers that may 
hinder compliance.
    Many changes associated with implementation of the proposed rule 
may result in an increased burden and additional required level of 
effort from States, such as:
    <bullet> Training and technical assistance: SAs may provide 
training and technical assistance to SFAs on new calorie and meal 
pattern requirements, age/grade groupings, and revised nutrient 
requirements. Moving to a single, food-based menu planning system may 
simplify the meal service for some schools and will likely streamline 
the meal planning process, but may require initial training to 
accomplish.
    Although SAs may meet most of this demand by modifying current 
training and technical assistance efforts, we recognize that SAs may 
incur additional costs assisting SFAs with the transition to the 
proposed requirements. Our cost estimate provides for an additional 80 
hours per SA in each of fiscal years 2012 and 2013, for a total of $0.2 
million.
    <bullet> Systems assistance: SAs may assist SFAs with any changes 
in the meal planning process occurring as a result of this rule. This 
is included in our $0.2 million estimate for training and technical 
assistance.
    <bullet> Food procurement and preparation: More fruits, vegetables, 
whole grains, and foods that are lower in sodium may be necessary to 
align meals with the proposed meal patterns. SAs may also review SFA 
contracts with food service management companies (FSMCs). We have not 
estimated this cost, but expect that it may be small.
    <bullet> Monitoring and compliance: SAs may be required to conduct 
CREs more frequently, once every 3 years for each SFA; nutrient 
analysis will be required for all SFAs and will become an additional 
component of each CRE (although separate SMIs will be eliminated); 
nutrient-based menus will be eliminated and only food-based menu 
planning will be permitted; menus will be reviewed from a two-week 
period preceding the review date; and a breakfast meal will be reviewed 
as part of each CRE.\57\
---------------------------------------------------------------------------

    \57\ FNS estimated in 1994 that extending the SFA review cycle 
from four to five years would decrease costs associated with this 
effort by 20 percent. (June 10, 1994, Federal Register Vol. 59, No. 
111, p. 30234) A similar, but opposite, effect might be expected 
from shortening the cycle from five to three years.
---------------------------------------------------------------------------

    SAs are currently required to conduct a CRE for each SFA once every 
5 years; to conduct a nutrient analysis via SMI review for only those 
SFAs with food-based menu planning systems (although approximately 30 
percent of these SFAs elect to conduct the nutrient analysis 
themselves); to review menus from a one-week period preceding the 
review date; and to review a breakfast meal only in the case of a 
follow-up CRE (which is only conducted in those cases in which problems 
are noted in the initial CRE). Total costs for each SA to complete a 
CRE include costs for staff labor, travel (including transportation, 
accommodations, and meals/incidental expenses), and possible printing 
costs for those SAs that provide CRE results to SFAs and FNS in hard 
copy rather than electronically.
    Limited discussion with a small number of SA and FNS Regional 
Office officials suggest that a typical CRE or SMI review costs about 
$2,000 in 2010, with about half of that cost used for staff travel. 
Because travel is a largely fixed cost, SAs that previously conducted 
separate CRE and SMI reviews should realize some savings once SMIs are 
ended and the nutrient analysis is made part of the CRE. That may help 
offset some of the cost of increased CRE frequency. A mid-sized State 
that now conducts 100 CRE reviews might incur annual expenses of 
$200,000. Under the proposed rule, that SA could expect to conduct \2/
3\ more CRE reviews, or roughly 167 per year. If we assume 
conservatively that the SA realizes no savings from elimination of SMI 
reviews, its review costs would increase by $134,000 per year--an 
upper-bound estimate. If all SAs incurred this same expense, the total 
cost would be roughly $8 million per year by FY 2013.
3. USDA/FNS
    FNS will assist State Agencies by providing nutrition education, 
training, guidance, and technical assistance to facilitate their work 
with local school food professionals. This may include developing 
training standards, materials, updated measures for nutrition analysis, 
and revisions to the food buying guide.
    While we expect a small increase in administrative burden for FNS 
under the proposed rule because of the need to provide additional 
training and technical assistance to SAs, and to support their role in 
the CRE process, this may largely be met by adapting existing efforts 
to the new requirements.

D. Food Service Equipment

    Changes in meal pattern requirements as a result of the proposed 
rule may cause some SFAs to require different, or additional, equipment 
than that which they currently possess. For example, some SFAs may need 
to replace fryers with ovens or steamers. In FY 2009, FNS solicited 
requests from SFAs for food service equipment grants, awarding $100 
million in 2009 American Recovery and Reinvestment Act (ARRA) Equipment 
Grants and an additional $25 million in one-time funds included in the 
FY 2010 Agriculture Appropriations Act. In response to its 
solicitation, FNS received a total of approximately $600 million in 
grant requests from SFAs. The strong response to these grant programs 
indicates that schools could make productive use of an even greater

[[Page 2537]]

investment in kitchen equipment. However, much of that demand is 
associated with the routine need to replace equipment that is nearing 
the end of its useful life--a cost that is appropriately covered by 
USDA meal reimbursements and other sources of food service revenue. 
Although some schools may need additional upgrades to prepare meals 
that meet the proposed rule's standards, we do not have the data 
necessary to assess that need or to estimate the associated cost. The 
$125 million in kitchen equipment grants distributed to schools through 
ARRA funds and the FY 2010 appropriation should have addressed much of 
the most pressing need. For these reasons, we do not include additional 
incremental equipment costs as a result of the proposed rule in our 
estimate.

E. Implementation of Proposed Rule--SFA Resources

    We estimate that the proposed rule may raise the average cost of 
producing and serving school lunches by almost 7 cents and school 
breakfasts by 37 cents on initial implementation. By FY 2015, when the 
100 percent whole grain rich requirement takes effect, the cost per 
lunch may be 14 cents higher than our baseline estimate; the cost per 
breakfast may be 50 cents higher than our baseline.
    Not all schools will face the same cost changes. Schools with menus 
that already emphasize fruits, non-starchy vegetables, and whole grains 
may need to make fewer changes, and the costs of implementation in 
those schools may be lower than average. Because the per-meal costs of 
complying with the proposed requirements are much higher for breakfast 
than for lunch, the overall costs of implementation in schools that 
serve more school breakfasts relative to lunches may be higher than the 
costs faced by schools that do not serve breakfast.
    SFAs have a variety of funding sources used to cover the cost of 
preparing and serving school meals. The SLBCS-II found that about half 
of average SFA revenues are provided by Federal reimbursements (cash 
and donated foods), about one-quarter by payments from participating 
families, and the remainder from other sources (See Figure 3).
[GRAPHIC] [TIFF OMITTED] TP13JA11.016

    Covering the increased costs estimated to implement the proposed 
rule may be challenging for many schools. However, some schools are 
already making substantial progress using available resources. USDA's 
HealthierUS Schools Challenge (HUSSC) recognizes elementary schools 
that meet voluntary school meal and physical activity standards. HUSSC 
school meal standards exceed NSLP requirements on several levels, 
including requirements for a variety of vegetables each week, including 
dark green and orange vegetables and legumes; a variety of whole 
fruits, and limits on fruit juice; and whole grain and low fat milk 
requirements. USDA has certified more than 840 HUSSC schools since 
2004. HUSSC schools have demonstrated an ability to operate cost-
effective school meals programs that emphasize many of the same foods 
required by the proposed rule. These schools receive no financial 
assistance from USDA beyond the meal reimbursements and USDA Foods 
available to other schools that participate in the Federal school lunch 
and breakfast programs.
---------------------------------------------------------------------------

    \58\ USDA 2008, p. xii.
---------------------------------------------------------------------------

    Most schools will have a number of options and flexibilities within 
available revenue streams and operational approaches that can help to 
balance costs and resources.
    Federal Reimbursements: As noted above, about half of all SFA 
revenues are from Federal reimbursements. These payments are adjusted 
annually for changes in food and labor costs by statute.\59\ SLBCS-II 
found that in 2005-

[[Page 2538]]

06, for most reimbursable lunches and in most SFAs, reported lunch 
production costs were less than the Federal free lunch subsidy by a 
small amount, with the difference greatest in SFAs that produce more 
meals, resulting in a lower per-meal cost.
---------------------------------------------------------------------------

    \59\ The Healthy, Hunger-Free Kids Act of 2010 increases the 
Federal subsidy for reimbursable school lunches by 6 cents on 
implementation of final regulations to update the school meal 
patterns. All SFAs in compliance with the regulations would be 
eligible for the increased reimbursement. Further guidance on how 
SFAs may fulfill this legislative requirement will be forthcoming 
and may be addressed in a subsequent rulemaking.
---------------------------------------------------------------------------

    Student Payments: School districts have the discretion to set 
student payments for ``paid meals'' and [agrave] la carte foods at 
levels of their choosing, so long as the resulting revenues are paid 
into the non-profit school food service account. Some currently set 
prices for these meals and foods at levels that do not cover the full 
cost of production, with Federal payments for free and reduced-price 
meals covering the difference. Schools will likely face additional 
incentives to adjust their pricing policies so that adequate revenue is 
generated to cover the cost of production.\60\
---------------------------------------------------------------------------

    \60\ The Healthy, Hunger-Free Kids Act of 2010, requires SFAs to 
gradually raise non-Federal revenues for reimbursable paid lunches, 
if necessary, until those revenues equaled the difference between 
the Federal reimbursements for free and paid lunches, to address the 
disparity in SFA revenue between paid and free lunches discussed 
above. Raising paid meal prices represents one approach by which 
schools may derive increased revenue, but is not a requirement of 
the law. Further guidance on how SFAs may fulfill this legislative 
requirement will be forthcoming and may be addressed in a subsequent 
rulemaking.
---------------------------------------------------------------------------

    State and Local Funds: A limited but nonetheless substantial 
portion of meal production costs are paid from State and local 
government sources. The contributions of these entities may need to 
increase to cover costs.
    Operational Changes: Like other service businesses, schools may 
need to consider changes to their operations to increase efficiency and 
meet the requirements of the proposed rule. As noted above, several 
hundred HUSSC schools have demonstrated an ability to operate cost-
effective school meals programs that meet many of the proposed rule's 
requirements. These schools may offer models for others as 
implementation moves forward.

F. Impact on Participation

    As noted in Table 12, the cost estimate in this analysis assumes no 
net change in student participation following introduction of the 
rule's new meal pattern requirements. This assumption reflects 
uncertainties in a number of areas, including how schools will reflect 
the new requirements in menus, the acceptance of those changes by 
students, and potential changes in prices for reimbursable paid meals 
to provide additional revenue. These factors are discussed below.
1. Acceptance of Meals
    Any revision to the content of school meals or the method of 
preparation may have an effect on the acceptance of school meals. 
Concerns are often raised that students may react negatively to changes 
designed to improve nutrition. USDA launched the School Meals 
Initiative for Healthy Children (SMI) in 1995 to help schools improve 
the nutritional quality of NSLP and SBP meals. The SMI offers an 
opportunity to examine how students react to substantial changes in 
school meal patterns.
    As a result of the SMI many school food service directors reported 
making changes in procurement and preparation practices (Abraham, 
2002). For example, they reported increased purchases of low-fat/
reduced-fat foods (81 percent) and fresh fruits and vegetables (75 
percent). The majority reported no change in food waste. However, to 
the extent that there was change in the amount of food wasted, more 
respondents reported a reduction rather than an increase in food waste 
(with the exception of cooked vegetables). School food service 
directors report that the SMI has generally had a neutral-to-positive 
impact on program performance.
    SNDA-III found that ``[c]haracteristics of NSLP lunches offered, 
including percent of calories from fat, whether dessert or French fries 
were frequently offered, and average number of fresh fruits and 
vegetables offered per day, were generally not significantly associated 
with NSLP participation.'' \61\ This suggests that changes in meal 
patterns that enhance nutrition can be well received by students. 
Furthermore, the increased emphasis on a healthy school nutrition 
environment in recent years, and greater awareness of the importance of 
healthy eating habits in schools, may help to support student 
acceptance of changes in program meals.
---------------------------------------------------------------------------

    \61\ For breakfast, the study estimated that projected 
participation rates ``were higher in schools that offered a greater 
percentage of calories from fat in the SBP breakfast; however, these 
differences were not statistically significant at conventional 
levels.'' USDA 2007, vol. II, pp. 113 and 127.
---------------------------------------------------------------------------

    There is also a strong and growing school nutrition effort and 
infrastructure already in place. For example, Team Nutrition is an FNS 
initiative to support healthier meals through training and technical 
assistance for food service, nutrition education for children and their 
caregivers, and school and community support for healthy eating and 
physical activity. Similarly, in 2004 Congress required school 
districts to establish local wellness policies; through these policies, 
schools have made changes to their school nutrition environments, 
improved the quality of foods offered, and students are provided with 
more nutritious, healthy choices. In the context of these initiatives, 
implementation of the proposed rule will not be an isolated endeavor, 
but rather may build upon a range of ongoing local, State and Federal 
efforts to promote children's nutrition and health.
2. Impact of Price on Participation
    FNS estimates that the average cost of preparing school meals may 
increase by 12 percent. SFAs may raise student prices for reimbursable 
paid meals to compensate for some of this increase in cost. All else 
being equal, increased paid meal prices may reduce NSLP paid-meal 
participation. Mathematica[supreg], Inc. modeled the effect of paid 
meal prices on student participation as part of the SNDA-III study.\62\ 
All else equal, students who were not income-eligible for free or 
reduced-price meals were less likely to participate in the program when 
the full price of the meals was higher. For lunch, the model estimates 
a 0.11 percent decrease in participation for each 1 cent increase in 
paid lunch prices.\63\ For breakfast, the model estimates a 0.12 
percent decrease in participation per 1 cent increase in price.
---------------------------------------------------------------------------

    \62\ USDA 2007, vol. II, pp. 116-117, 123-124.
    \63\ This relationship between price and participation applies 
to prices in the range of $1.50 to $2.00 in SY 2004-2005 dollars. A 
much bigger price increase might trigger a bigger reduction in 
participation.
---------------------------------------------------------------------------

    The model's predicted student participation rate was 54 percent in 
schools that charged $2.00 for an NSLP lunch, compared to 59 percent in 
schools that charged $1.50. The study also predicts lower breakfast 
participation in schools that charged higher prices. Predicted 
participation was 10.3 percent in schools that charged $0.70 for an SBP 
breakfast versus 7.2 percent in schools that charged $1.00. Since meals 
meeting the new requirements will be improved in nutritional content it 
is not clear how this factor would balance against the effects of 
higher meal prices. Although price changes may be a necessary option 
for some SFAs, FNS expects that efforts designed to maintain 
participation would be concurrently implemented.

G. Benefits

    As noted in the preamble to this proposed rule, NSLA requires that

[[Page 2539]]

schools serving lunches and breakfasts under its program authority 
ensure that those meals are consistent with the goals of the most 
recent Dietary Guidelines for Americans and the Dietary Reference 
Intakes. The proposed rule, by updating program regulations consistent 
with Dietary Guidelines goals and aligning the regulations with the 
requirements placed on schools under the statute, will ensure that 
school meal nutrition requirements reflect current nutrition science, 
increase the availability of key food groups, better meet the 
nutritional needs of children, and foster healthy eating habits.
    In so doing, it also provides a clear means of meeting the 
statutory requirements through a food-based meal pattern designed with 
the particular circumstances and challenges of school food service in 
mind, to ensure that it is feasible for school foodservice operators 
and does not jeopardize student and school participation in the meal 
programs. A related benefit of the proposal is that it simplifies meal 
requirements to create a single, food-based approach to meal planning. 
This approach helps to simplify menu planning and monitoring, and 
streamline training and technical assistance needs.
    Once implemented by schools, USDA projects that this rule will 
change the types and quantities of foods prepared, offered and served 
through the school meals programs (the sources of the costs described 
in this analysis). The proposed rule is expected to result in (1) 
increased servings of fruits and vegetables, (2) replacement of 
refined-grain foods with whole-grain rich foods, and (3) replacement of 
higher-fat dairy products with low-fat varieties. As documented in the 
IOM recommendations, each of these changes corresponds to an 
inconsistency between the typical diets of school-aged children in the 
United States and the Dietary Guidelines/MyPyramid recommendations. In 
particular, the report cited an analysis of NHANES 1999-2002 data that 
showed that:
    <bullet> Total vegetable intake was only about 40 percent of the 
MyPyramid levels, with intake of dark green and orange vegetables less 
than 20 percent of MyPyramid levels.
    <bullet> Total fruit intake was about 80 percent of the MyPyramid 
levels for children ages 5-8, with far lower levels for older children.
    <bullet> Intake of whole grains was less than one-quarter of 
MyPyramid levels, although total grain intake was at or above MyPyramid 
levels.
    <bullet> Intake of dairy products varied by age, with the intakes 
of the youngest children exceeding MyPyramid levels, while those of 
older children were below those levels. However, most dairy consumed 
contained 2 percent or more milk fat, while the Dietary Guidelines 
recommend fat-free or low-fat dairy products.\64\
---------------------------------------------------------------------------

    \64\ IOM 2009, pp. 49-53.
---------------------------------------------------------------------------

    In addition, the rule would make significant changes to the level 
of sodium in school meals over time. Research suggests that modest 
population-wide reductions in dietary salt could substantially reduce 
cardiovascular events and medical costs.\65\ More specifically, a 
forthcoming study suggests that reducing dietary salt in adolescents 
could yield substantial health benefits by decreasing the number of 
teenagers with hypertension and the rates of cardiovascular disease and 
death as these teenagers reach young and middle age adulthood.\66\
---------------------------------------------------------------------------

    \65\ See, for example, Smith-Spangler, 2010; Bibbins-Domingo, 
2010.
    \66\ Bibbins-Domingo, 2010b.
---------------------------------------------------------------------------

    The rule also makes substantial changes in the calorie targets for 
meals that are designed to promote healthful energy balance for the 
children served by these programs. For the first time, the rule sets 
maximum as well as minimum calorie targets, and creates a finer 
gradation of calorie levels by age. As a result, minimum calorie 
requirements for some groups are reduced by as much as 225 calories per 
lunch.\67\ Implemented consistent with other requirements that ensure 
that lunches provide appropriate nutrient content, these changes in 
calorie levels can help to reduce the energy imbalance that contributes 
to obesity among the Nation's children, without compromising nutrition 
to support healthy growth and development.
---------------------------------------------------------------------------

    \67\ The minimum calorie level for a lunch served to Grade 7 
students is 825 calories under current standards (Grades 7-12); this 
would change to a range of 600 calories minimum, 700 calories 
maximum under the new standards (Grades 6-8).
---------------------------------------------------------------------------

    This approach is fully consistent with the recommendations of the 
Dietary Guidelines for Americans. Recognizing that the Dietary 
Guidelines apply to a total diet, rather than a specific meal or 
portion of an individual's consumption, the intention of the proposed 
rule is to make changes to school meals nutrition requirements to 
promote diets more consistent with the Guidelines among program 
participants. Such diets, in turn, are useful behavioral contributors 
to health and well-being. As the report of the 2010 Dietary Guidelines 
Advisory Committee notes, ``evidence is accumulating that selecting 
diets that comply with the Guidelines reduces the risk of chronic 
disease and promotes health.'' \68\ The report describes and 
synthesizes the evidence linking diet and different chronic disease 
risks, including cardiovascular disease and blood pressure, as well as 
the effects of dietary patterns on total mortality. Children are a 
subpopulation of particular focus for the Committee; the report 
emphasizes the increasing common evidence of chronic disease risk 
factors, such as glucose intolerance and hypertension, among children, 
and explains that ``[e]vidence documents the importance of optimal 
nutrition starting during the fetal period through childhood and 
adolescence because this has a substantial influence on the risk of 
chronic disease with age.'' \69\
---------------------------------------------------------------------------

    \68\ Dietary Guidelines Advisory Committee, p. B1-2.
    \69\ Dietary Guidelines Advisory Committee, pp. B1-2, B1-3.
---------------------------------------------------------------------------

    In response, the report notes improvements in food at schools as a 
critical strategy to prevent obesity, and related health risks, among 
children. Indeed, the Committee recommends ``[i]mprov[ing] foods sold 
and served in schools, including school breakfast, lunch, and after-
school meals and competitive foods so that they meet the 
recommendations of the IOM report on school meals (IOM, 2009) and the 
key findings of the 2010 DGAC. This includes all age groups of 
children, from preschool through high school.'' \70\
---------------------------------------------------------------------------

    \70\ Dietary Guidelines Advisory Committee, p. B3-6.
---------------------------------------------------------------------------

    The linkage between poor diets and health problems such as 
childhood obesity are also a matter of particular policy concern, given 
their significant social costs. One in every three children (31.7 
percent) ages 2-19 is overweight or obese.\71\ Along with the effects 
on our children's health, childhood overweight and obesity imposes 
substantial economic costs, and the epidemic is associated with an 
estimated $3 billion in direct medical costs.\72\ Perhaps more 
significantly, obese children and adolescents are more likely to become 
obese as adults.\73\ In 2008, medical spending on adults that was 
attributed to obesity increased to an estimated $147 billion.\74\
---------------------------------------------------------------------------

    \71\ Ogden et al., 2010.
    \72\ Trasande et al., 2009.
    \73\ Whitaker et al., 1997; Serdula et al., May 1993.
    \74\ Finkelstein et al., 2009.
---------------------------------------------------------------------------

    Because of the complexity of factors that contribute both to 
overall food consumption and to obesity, we are not able to define a 
level of disease or cost reduction that is attributable to the changes 
in meals expected to result from implementation of the rule. As the 
rule is projected to make substantial improvements in meals served to 
more

[[Page 2540]]

than half of all school-aged children on an average school day, we 
judge that the likelihood is reasonable that the benefits of the rule 
exceed the costs, and that the proposal thus represents a cost-
effective means of conforming NSLP and SBP regulations to the statutory 
requirements for school meals.
    There are other, corollary benefits to improvement in school meals 
that are worthy of note. The changes could increase confidence by 
parents and families in the nutritional quality of school meals, which 
may encourage more families to opt for them as a reliable source of 
nutritious food for their children. Improved school meals can reinforce 
school-based nutrition education and promotion efforts and contribute 
significantly to the overall effectiveness of the school nutrition 
environment in promoting healthful food and physical activity choices. 
Finally, the new requirements provide a clearer alignment between 
Federal program benefits and national nutrition policy, which can help 
to reinforce overall understanding of the linkages between diet and 
health.

IV. Alternatives

    In response to NSLA Section 9(a)(4) amended into law in 2004, USDA 
contracted with IOM to assemble an expert panel to undertake a review 
of the nutritional needs of children, the recommendations of the 
Dietary Guidelines, and IOM's Dietary Reference Intakes. USDA asked IOM 
to develop recommendations for updating NSLP and SBP meal patterns and 
nutrition requirements based on that review of need and nutrition 
science, with consideration given to operational feasibility and cost.
    The USDA contract with IOM called for the creation of a panel with 
representatives from the fields of public health, epidemiology, 
pediatrics, child nutrition and child nutrition behavior, statistics, 
and economics. The contract also called for representatives with 
knowledge of cultural differences in food preference and eating habits, 
experience in menu planning, and experience in managing and operating a 
school lunch and breakfast program. IOM held workshops at which the 
panel heard presentations from invited speakers, and solicited public 
input. The panel also accepted public comment on its planned approach 
to the project.
    The process undertaken by IOM was designed to consider different 
perspectives and competing priorities. The panel necessarily weighed 
the merits of alternatives as it developed a preferred option. USDA's 
commitment was to implement IOM's recommendations where feasible. This 
commitment is driven by the statutory requirement that schools serve 
meals that are consistent with the goals of the Dietary Guidelines.\75\
---------------------------------------------------------------------------

    \75\ Section 9(a)(4) and 9(f)(1) of the NSLA (42 U.S.C. 
1758(a)(4) and (f)(1)).
---------------------------------------------------------------------------

    We did not consider alternatives that depart significantly from 
IOM's recommendations and cannot satisfy USDA's statutory obligation. 
Nevertheless, the proposed rule makes a few small changes to IOM's 
recommendations. In addition, the rule contains a handful of provisions 
that are not addressed by IOM. These proposed rule provisions are 
summarized below.
    The final alternative discussed in this section is to retain the 
status quo.

a. Whole Grains

    Proposed rule: Within two years of implementation of a final rule 
all grains offered to students must be whole grain rich (a minimum 
whole grain content of 51 percent).
    IOM alternative: Within three years of implementation, the whole 
grain content of grain products offered to students must average at 
least 50 percent.
    The proposed rule aligns the dates of the whole grain transition 
with the first intermediate sodium target for ease of program 
operation. The IOM alternative introduces additional administrative 
disruption, and delays the benefits of the stronger whole grain 
requirement by one year. That delay, however, also postpones the added 
cost of the stronger requirement. The alternative would reduce the five 
year cost of the proposed rule by an estimated $510 million.

b. Sodium Targets

    Proposed rule: Reduce sodium content of school meals to the levels 
specified by IOM within ten years of a final rule. Set three 
intermediate sodium targets, 2 years, 4 years, and 10 years after 
implementation of a final rule.
    IOM alternative: Reach sodium targets by 2020. Set intermediate 
targets every 2 years.
    Given the time necessary to publish proposed and final rules, 
reaching IOM's recommended sodium target by 2020 would leave relatively 
little time for phased implementation. The proposed rule's 10-year 
schedule is intended to win greater student acceptance. It also allows 
industry and schools added time to reformulate their products and 
school recipes between intermediate target dates. A rapid reduction in 
the sodium content of school meals would likely reduce participation in 
the lunch and breakfast programs, and thus undermine the goal of 
improved student nutrition.\76\ Added time may also allow the market to 
respond to increased demand for lower sodium foods, reducing upward 
pressure on prices and the costs of compliance with the rule. We have 
not quantified these risks to student participation or food prices.\77\
---------------------------------------------------------------------------

    \76\ See the preamble to the proposed rule for a more thorough 
discussion of this issue.
    \77\ Section III.B.5 examines the effect of an arbitrary two 
percent drop in student participation on the cost of preparing 
school meals, and on Federal reimbursements to schools.
---------------------------------------------------------------------------

c. Offer Versus Serve at Breakfast

    Proposed rule: Students may decline one item at breakfast, but they 
must take at least one fruit or fruit juice or non-starchy vegetable.
    IOM alternative: Students may decline one item at breakfast, but 
they must take at least one fruit or fruit juice.
    The proposed rule recognizes that some schools offer vegetables at 
breakfast. The cost effects of this change are minimal.

d. Require Schools To Identify Reimbursable Meals

    Proposed rule: Schools are required to identify the components of 
the day's reimbursable meals at or near the start of the serving line.
    Alternative: Schools are not required to identify the components of 
the day's reimbursable meals.
    This provision is intended to help students select a reimbursable 
meal and avoid a la carte charges. The provision is also meant to 
educate students on the content of a balanced, healthy meal. The school 
revenue and cost effects of this provision are small.

e. Crediting of Specific Foods

    Proposed rule: Schools may credit tomato paste based on volume 
served. Schools may not credit snack-type fruit or vegetable products 
(such as fruit leather), nor may they credit formulated grain-fruit 
products.
    Alternative: Schools can only credit tomato paste based on its 
calculated whole tomato equivalent. Schools may credit snack-type fruit 
and vegetable products and formulated grain-fruit products.
    Allowing schools to credit tomato paste based on volume served is 
consistent with the treatment of similar products. Disallowing the 
crediting of snack-type fruit or vegetable products reinforces the 
Dietary Guidelines emphasis on whole fruits and vegetables, and 
supports nutrition education to the extent that these foods

[[Page 2541]]

are not recognized by children as fruits or vegetables. In addition, 
the crediting of certain fruit snacks was based on an FDA standard of 
identity for canned fruit nectar which has been removed from the Code 
of Federal Regulations. The crediting of formulated grain-fruit 
products is disallowed because those products typically contain high 
levels of fortification, rather than naturally occurring nutrients, and 
are high in sugar and fat. The effect of these changes on school costs 
is minimal.

f. Low Fat Flavored Milk

    Proposed rule: Low fat milk cannot be flavored. Only fat-free milk 
can be flavored.
    Alternative: Schools may allow flavored low fat milk.
    The proposed rule is based on the IOM recommendation. FNS 
considered allowing schools to offer flavored low fat milk if they 
could stay within the proposed rule's calorie ranges. This was 
potentially achievable since the calorie difference between plain low 
fat milk and flavored low fat milk is modest (about 30 calories). We 
ultimately rejected this alternative; allowing only fat-free milk to be 
offered in flavored form is intended to reduce students' fat intakes. 
The difference in cost between the proposed rule and the alternative is 
very small (fat-free milk is less expensive than low fat milk).

g. Phase-In Implementation of IOM Recommendations

    Proposed rule: All schools are expected to implement the proposed 
rule beginning with school year 2012-2013, with final whole grain 
requirements implemented by the school year 2014-2015.
    Alternative: Phase-in implementation of the rule based on LEA size. 
LEAs with:
    <bullet> More than 25,000 students would implement by SY 2012-2013;
    <bullet> 10,000 to 25,000 students would implement by SY 2013-2014; 
and
    <bullet> Less than 10,000 schools would implement by SY 2014-2015.
    Final whole grain requirements in effect two years after 
implementation in each cohort of LEAs.
    Schools vary in the extent to which they meet current nutrition 
requirements for reimbursable meals. Though most are reasonably 
successful in meeting the food group requirements under current rules, 
some schools may find it operationally difficult, or too costly, to 
prepare, serve, and gain acceptance for meals that satisfy the new food 
group and subgroup requirements of the proposed rule. There is 
potential concern that the magnitude of the changes required could make 
it difficult for some schools to meet the requirements of the proposed 
rule by SY 2012-2013.
    As an alternative, USDA could consider an approach that would 
phase-in the requirements of the rule so that schools that can comply 
most readily do so early, and those for which compliance may be more 
difficult would have additional time. Though we are not aware of any 
evidentiary basis to distinguish groups of schools that may find it 
more difficult to meet the proposed requirements than others, we offer 
as an alternative scenario the phase-in schedule adopted by Congress 
for the requirement to conduct direct certification under Section 104 
of the Child Nutrition and WIC Reauthorization Act of 2004 (Public Law 
108-265). This gave smaller LEAs more time to meet the requirements 
than larger ones. The cost of implementing the rule under this 
alternative scenario is shown in Table 15, below:

                              Table 15--Cost (in Millions) of Proposed Rule With Implementation Phase-In Based on LEA Size
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                            Total 2012-
                                                               2012            2013            2014            2015            2016            2016
--------------------------------------------------------------------------------------------------------------------------------------------------------
Food Costs..............................................           $31.4          $243.3          $443.2          $805.1          $918.4        $2,441.4
Labor Costs.............................................            30.6           237.4           432.5           785.6           896.3         2,382.5
State Admin.............................................             0.1             8.9             9.0             9.3             9.6            36.9
 
    Total...............................................            62.1           489.6           884.8         1,600.0         1,824.4         4,860.9
--------------------------------------------------------------------------------------------------------------------------------------------------------

    A phase-in of the new meal standards would reduce estimated 
benefits as well as costs for those schools not yet phased-in. 
Participation in the school meals program is highest among elementary 
school students; participation decreases as students move to middle and 
high school (see Figure 4). One of the goals of USDA-sponsored IOM 
recommendations for updated meal requirements was to ``foster healthy 
eating habits'' through exposure to the school meals program.\78\ But, 
because of the decrease in participation among older students, the 
school meals program has only a limited opportunity to influence the 
eating habits of some students. Students who are not introduced to the 
proposed meal requirements while still in elementary school may not 
benefit at all from the potential positive impact of these changes on 
their diets.
---------------------------------------------------------------------------

    \78\ IOM 2009, p. 2.
---------------------------------------------------------------------------

h. Do Not Implement IOM Recommendations

    Proposed rule: With few minor exceptions, discussed above, the 
proposed rule adopts IOM's recommendations.
    Alternative: Do not adopt the recommendations, or postpone their 
implementation.
    By statute, schools are required to serve NSLP and SBP meals that 
are consistent with the goals of the Dietary Guidelines.\79\ Given this 
mandate, USDA contracted with IOM to review current meal pattern and 
nutrition requirements and recommend changes. IOM assembled a panel of 
child nutrition experts and school foodservice practitioners. That 
panel accepted input from industry, interest groups, and 
representatives of the school foodservice community. The panel was 
charged with recommending program changes that reflect Dietary 
Guidelines goals but are also operationally practical and cost-
efficient, to the extent possible. Although a different review might 
have generated a different set of recommendations, any proposal 
consistent with Dietary Guidelines goals would be obligated to 
recommend increases in the amounts and varieties of vegetables and 
fruits offered to students, the substitution of whole grains for 
refined grains, and limits on the fat content of milk. These changes 
are the principal cost drivers of the IOM recommendations (see Table 
11). Alternate proposals to align program requirements with the goals 
of the Dietary Guidelines would necessarily confront these same costs, 
and thus

[[Page 2542]]

would be unlikely to cost significantly less than the proposed rule.
---------------------------------------------------------------------------

    \79\ Section 9(a)(4) and 9(f)(1) of the NSLA (42 U.S.C. 
1758(a)(4) and (f)(1)).
---------------------------------------------------------------------------

    We did not consider alternatives that would move significantly away 
from the objective to align school meal patterns with the goals of the 
Dietary Guidelines. Such alternatives include making no change to 
program rules, or delaying implementation of the proposed rule. Both of 
these would reduce costs relative to the proposed rule.
    Taking no action would, of course, forfeit all of the benefits 
discussed in section III.G. Delaying implementation would have lesser, 
but still significant negative consequences. As noted under alternative 
g, students who are not introduced to the proposed meal requirements 
while still in elementary school may not benefit at all from delayed 
implementation of the rule.
---------------------------------------------------------------------------

    \80\ USDA 2007, Vol. II, pp. 39-40.
    [GRAPHIC] [TIFF OMITTED] TP13JA11.017
    
V. References

Abraham, S., M. Chattopadhyay, M. Montgomery, D. M. Steiger, L. 
Daft, B. Wilbraham. (Abraham, 2002) The School Meals Initiative 
Implementation Study-Third Year Report. U.S. Department of 
Agriculture, Food and Nutrition Service.
Bibbins-Domingo K et al. (Bibbins-Domingo, 2010) Projected effect of 
dietary salt reductions on future cardiovascular disease. New 
England Journal of Medicine, 2010 Feb 18;362(7):590-9. Epub 2010 Jan 
20.
Bibbins-Domingo K. (Bibbins-Domingo, 2010b) Abstract 18899: 
Cardiovascular Benefits of Dietary Salt Reduction for US 
Adolescents. Presented at: American Heart Association Scientific 
Sessions 2010; Nov. 13-17; Chicago.
Dietary Guidelines Advisory Committee. Report of the Dietary 
Guidelines Advisory Committee on the Dietary Guidelines for 
Americans, 2010 (http://www.cnpp.usda.gov/DGAs2010-DGACReport.htm).
Finkelstein, E., Trogdon, J., Cohen J., Dietz, W. (2009). Annual 
Medical Spending Attributable to Obesity: Payer- And Service-
Specific Estimates. Health Affairs, 28(5).
Institute of Medicine (IOM 2009). School Meals: Building Blocks for 
Healthy Children. Washington, D.C: The National Academies Press. 
http://www.fns.usda.gov/ora/MENU/Published/CNP/FILES/SchoolMealsIOM.pdf.
Institute of Medicine (IOM 2009). Nutrition Standards for Foods in 
Schools: Leading the Way toward Healthier Youth. Washington, D.C: 
The National Academies Press. http://books.nap.edu/openbook.php?record_id=11899.
Maurer, K. The National Evaluation of School Nutrition Programs: 
Program Impact on Family Food Expenditures. The American Journal of 
Clinical Nutrition 40: August 1984, pp 448-453.
Ogden, C.L., Carroll, M., Curtin, L., Lamb, M., Flegal, K. (2010). 
Prevalence of High Body Mass Index in US Children and Adolescents 
2007-2008. Journal of American Medical Association, 303(3), 242-249.
Smith-Spangler CM et al. (2010) Population strategies to decrease 
sodium intake and the burden of cardiovascular disease: A cost-
effectiveness analysis. Annals of Internal Medicine, 2010 Apr 
20;152(8):481-7, W170-3. Epub 2010 Mar 1.
Serdula MK, Ivery D, Coates RJ, Freedman DS. Mayiamson DF. Byers T. 
Do obese children become obese adults? A review of the literature. 
Prev Med 1993;22:167-177.
Trasande, L., Chatterjee, S. (2009). Corrigendum: The Impact of 
Obesity on Health Service Utilization and Costs in Childhood. 
Obesity, 17(9).
Whitaker RC, Wright JA, Pepe MS, Seidel KD, Dietz WH. Predicting 
obesity in young adulthood from childhood and parental obesity. N 
Engl J Med 1997; 37(13):869-873.
U.S. Department of Agriculture, Food and Nutrition Service (USDA 
2008). School Lunch and Breakfast Cost Study-II, Final Report, by 
Susan Bartlett, et al. http://www.fns.usda.gov/ora/MENU/Published/CNP/FILES/MealCostStudy.pdf.
U.S. Department of Agriculture, Food and Nutrition Service (USDA 
2007). School Nutrition Dietary Assessment Study-III by Anne Gordon, 
et al. http://www.fns.usda.gov/ora/MENU/Published/CNP/FILES/SNDAIII-SummaryofFindings.pdf.
U.S. Department of Agriculture, Food and Nutrition Service (USDA 
2007a). White Paper: USDA Commodities in the National School Lunch 
Program.
U.S. Department of Agriculture, Food and Nutrition Service (USDA 
2007b). NSLP/SBP Access, Participation, Eligibility, and 
Certification Study--Erroneous Payments in the NSLP and SBP, by 
Michael Ponza, et al. http://www.fns.usda.gov/ora/MENU/Published/CNP/FILES/apecvol1.pdf.
U.S. Department of Agriculture, Dietary Guidelines Advisory 
Committee (USDA

[[Page 2543]]

2004). Report of the Dietary Guidelines Advisory Committee on the 
Dietary Guidelines for Americans, 2005 http://www.health.gov/dietaryguidelines/dga2005/report/.
U.S. Department of Agriculture, Food and Nutrition Service (USDA 
2001). School Nutrition Dietary Assessment Study-II by Mary Kay Fox, 
et al. http://www.fns.usda.gov/ora/MENU/Published/CNP/FILES/SNDAIIfind.pdf.
U.S. Department of Agriculture, Food and Nutrition Service. The 
Impact of the School Nutrition Programs on Household Food 
Expenditures. Prepared by Mathematica Policy Research, Inc., October 
30, 1987.
U.S. Department of Health and Human Services (HHS 2010). The Surgeon 
General's Vision for a Healthy and Fit Nation. http://www.surgeongeneral.gov/library/obesityvision/obesityvision2010.pdf.
U.S. Department of Health and Human Services and U.S. Department of 
Agriculture (HHS/USDA 2005). Dietary Guidelines for Americans, 6th 
Edition. http://www.cnpp.usda.gov/Publications/DietaryGuidelines/2005/2005DGPolicyDocument.pdf.
Wagner, B., B. Senauer, and F.C. Runge. (Wagner, 2007). An Empirical 
Analysis of and Policy Recommendations to Improve the Nutritional 
Quality of School Meals. Review of Agricultural Economics 29(4):672-
688.

VI. Appendix A

    The following tables detail the major steps in the computation 
of food cost estimates described in the main body of the impact 
analysis. The tables develop both a baseline food cost estimate and 
an estimate under the proposed rule.
    Note that the dollar values of our baseline food cost estimates 
are lower than the figures reported in the SLBCS-II. The primary 
reason that our figures differ is that we use SNDA-III rather than 
SLBCS-II for baseline totals of food served; we only use the SLBCS-
II for unit prices.\81\ We chose SNDA-III as our source for food 
quantities because of its information on student take rates. In 
order to estimate the cost of the proposed rule, we need to take the 
rule's food group requirements, which are expressed in terms of 
quantities that schools must offer to students, and estimate the 
quantity of food actually served. The take rates from SNDA-III allow 
us to do that; \82\ the SLBCS-II is not designed to estimate take 
rates. Because of the relationship between take rates and quantities 
served, it would be inappropriate to mix SNDA-III take rates and 
SLBCS-II quantities. Because we use SNDA-III take rates to estimate 
the cost of serving meals under the proposed rule, we use SNDA-III 
quantities to estimate our baseline.
---------------------------------------------------------------------------

    \81\ Another small part of the difference in cost is our 
omission of items such as snack chips, drinks other than milk and 
fruit juice, condiments, and salad dressing; these items are served 
in addition to the foods that help satisfy the NSLP and SBP meal 
requirements. We exclude them from both the baseline and the 
proposed rule estimates under the assumption that they will 
contribute similarly to each estimate and will have no effect on the 
difference in cost.
    \82\ The SNDA-III dataset was designed to allow the computation 
of take rates by food item in order to support a nutrient analysis 
of school meals.
---------------------------------------------------------------------------

    The lower scale of our baseline food cost estimate compared to 
the SLBCS-II should not impact our cost estimate of the proposed 
rule. As long as the take rates are computed from the same source 
for both our baseline and proposed rule estimates, the estimated 
cost of an incremental change in quantities offered should not be 
biased.
    Table A-1 contains total food and labor cost estimates for the 
baseline and under the proposed rule. The difference is summarized 
in the shaded panel at the bottom of the table. That difference is 
the estimated cost of the rule, as presented in Table 6 in section 
III.A.1.
    Table A-2 shows each of the major inputs into our baseline cost 
estimate. The first two columns are the estimated volumes of food 
served per meal, expressed in grams, and weighted average prices per 
gram. We estimate the cost per meal of prepared and processed foods 
without breaking them into food group ingredients. Quantities of 
food served per meal are from SNDA-III; unit prices are from SLBCS-
II. The product of these figures give the estimated food cost per 
school meal served. We inflate each of the meal components by 
historic and projected changes in food group specific prices to 
estimate per meal costs through FY 2016. Inflation factors, not 
shown in Table A-2, are weighted averages, computed from CPI-U data 
from the Bureau of Labor Statistics. The next set of columns 
contains projections of meals served through FY 2016. Total baseline 
costs, in the five rightmost columns of Table A-2, are the product 
of the estimated costs per meal and FNS projections of the number of 
meals served.
    Our estimate of total cost under the proposed rule is developed 
in Tables A-3 and A-4. Table A-3 summarizes the steps that we took 
to estimate a per-meal food cost in FY 2012, the year in which the 
rule is expected to take effect. Table A-4 takes that FY 2012 figure 
and projects total costs through FY 2016.
    Table A-3 begins with a set of food group quantities per meal 
consistent with proposed rule meal pattern requirements. There is a 
considerable amount of work behind these numbers that cannot be 
summarized in a simple table. The first three columns of numbers in 
Table A-3 represent the quantities of food that may be served to 
students, by grade level, on a per-meal basis. These figures include 
estimated quantities by food group and for prepared and processed 
foods. The process that we used to develop these figures is 
described in detail in section III.B.2. The key steps in that 
process (not shown in Table A-3) are summarized as follows:
    <bullet> Begin with the food group specific quantities that must 
be offered to students under the proposed rule.
    <bullet> Multiply quantities that must be offered by anticipated 
student take rates to generate estimated ``target'' amounts that may 
be served.
    <bullet> Assume that schools will offer the same amount of 
prepared and processed (``combination'') foods as they reported 
serving in SY 2004-2005 (from SNDA-III). Estimate the amount of 
creditable servings of vegetables, refined grains, whole grains, and 
meat or meat alternate satisfied by these combination foods and 
subtract those creditable amounts from our food group targets.
    <bullet> The differences between targeted servings and amounts 
satisfied by combination foods must be satisfied with non-
combination single-item servings of those foods.
    Some of the food group targets satisfied by single-item servings 
are negative; see the refined grain figures for all grade groups, 
and the meat or meat alternate figure for middle schools in Table A-
3. This means that the combination foods more than satisfy the 
serving targets for those foods. We use the negative numbers to 
compute the value of that excess and subtract it from our proposed 
rule cost estimate.
    Table A-3's fourth column of numbers is weighted average prices 
per unit of food served for FY 2012. Note that the prices by food 
group are different for lunch and breakfast; we estimate different 
weighted average prices based on the different mix of foods served 
at breakfast and lunch. Our price figures use data from the SLBCS-
II, and are inflated with FNS-computed factors constructed with CPI-
U data (not shown in Table A-3). The product of our food group 
serving targets and estimated unit prices give estimated food group 
component costs per meal (the three columns under the ``Weighted 
Average Price--Dollar Cost per Meal'' header). To this point, all of 
the figures are specific to elementary, middle, and high schools. 
The last column in Table A-3 uses the percent distribution of meals 
served by grade level to estimate an overall weighted average cost 
per meal by food group.
    Table A-4 resembles Table A-2. It takes the weighted average 
prices per meal for combination foods and single-item foods for FY 
2012, projects them through FY 2016 using food group specific 
inflation factors, then multiplies those inflated per meal figures 
by FNS projections of meals served. The final estimated cost of 
meals served under the proposed rule is displayed in the last five 
columns of the table.
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Initial Regulatory Flexibility Analysis

Proposed Rule: Nutrition Standards in the National School Lunch and 
School Breakfast Programs

[RIN 0584-AD59]

    Agency: Food and Nutrition Service, USDA.
    Background: The Regulatory Flexibility Act (RFA) requires agencies 
to consider the impact of their rules on small entities and to evaluate 
alternatives that would accomplish the objectives of the rules without 
unduly burdening small entities when the rules impose a significant 
economic impact on a substantial number of small entities. Inherent in 
the RFA is Congress' desire to remove barriers to competition and 
encourage agencies to consider ways of tailoring regulations to the 
size of the regulated entities.
    The RFA does not require that agencies necessarily minimize a 
rule's impact on small entities if there are significant legal, policy, 
factual, or other reasons for the rule's having such an impact. The RFA 
requires only that agencies determine, to the extent feasible, the 
rule's economic impact on small entities, explore regulatory 
alternatives for reducing any significant economic impact on a 
substantial number of such entities, and explain the reasons for their 
regulatory choices.

Reasons That Action Is Being Considered

    Section 103 of the Child Nutrition and WIC Reauthorization Act of 
2004 inserted Section 9(a)(4) into the National School Lunch Act 
requiring the Secretary to promulgate rules revising nutrition 
requirements, based on the most recent Dietary Guidelines for 
Americans, that reflect specific recommendations for increased 
consumption of foods and food ingredients offered in school meal 
programs. This proposed rule amends Sections 210 and 220 of the 
regulations that govern the National School Lunch Program (NSLP) and 
the School Breakfast Program (SBP). The proposed rule implements 
recommendations of the National Academies' Institute of Medicine (IOM). 
Under contract to the United States Department of Agriculture (USDA), 
IOM proposed changes to NSLP and SBP meal pattern requirements 
consistent with the 2005 Dietary Guidelines and IOM's Dietary Reference 
Intakes. The proposed rule advances the mission of the Food and 
Nutrition Service (FNS) to provide children access to food, a healthful 
diet, and nutrition education in a manner that inspires public 
confidence.

Objectives of, and Legal Basis for, the Proposed Rule

    Under Section 9(a)(4) and Section 9(f)(1) of the NSLA, schools that 
participate in the NSLP or SBP must offer lunches and breakfasts that 
are consistent with the goals of the most recent Dietary Guidelines for 
Americans. Current nutrition requirements for school lunches and 
breakfasts are based on the 1995 Dietary Guidelines and the 1989 RDAs. 
(School lunches and breakfasts were not updated when the 2000 Dietary 
Guidelines were issued because those recommendations did not require 
significant changes to the school meal patterns.) The 2005 Dietary 
Guidelines provide more prescriptive and specific nutrition guidance 
than earlier releases and require significant changes to school meal 
requirements.

Number of Small Entities to Which the Proposed Rule Will Apply

    This rule directly regulates the 55 State education agencies and 2 
State Departments of Agriculture (SAs) that operate the NSLP and SBP 
pursuant to agreements with USDA's Food and Nutrition Service (FNS); in 
turn, its provisions apply to entities that prepare and provide NSLP 
and SBP meals to students. While SAs are not small entities under the 
RFA as State populations exceed the 50,000 threshold for a small 
government jurisdiction, many of the service-providing institutions 
that work with them to implement the program do meet definitions of 
small entities:
    <bullet> There are currently about 19,000 School Food Authorities 
(SFAs) participating in NSLP and SBP. More than 99 percent of these 
have fewer than 50,000 students.\83\ About 26 percent of SFAs with 
fewer than 50,000 students are private. However, private school SFAs 
account for only 3 percent of all students in SFAs with enrollments 
under 50,000.\84\
---------------------------------------------------------------------------

    \83\ FNS 742 School Food Verification Survey, School Year 2009-
2010. This number is approximate, not all SFAs are required to 
submit the 742 form.
    \84\ Ibid. RCCIs include but are not limited to juvenile 
detention centers, orphanages, and medical institutions. We do not 
have information on the number of children enrolled in these 
institutions.
---------------------------------------------------------------------------

    <bullet> Nearly 102,000 schools and residential child care 
institutions participate in the NSLP. These include more than 90,000 
public schools, 6,000 private schools, and about 5,000 residential 
child care institutions (RCCIs).\85\ We focus on the impact at the SFA 
level in this document, rather than the school level, because SFAs are 
responsible for the administration of the NSLP and the SBP.
---------------------------------------------------------------------------

    \85\ FNS program data for FY 2010.
---------------------------------------------------------------------------

    <bullet> Food service management companies (FSMCs) that prepare 
school meals or menus under contract to SFAs are affected indirectly by 
the proposed rule. Thirteen percent of public school SFAs contracted 
with FSMCs in school year (SY) 2004-2005.\86\ Of the 2,460 firms 
categorized as ``food service contractors'' under NAICS code 72231, 96 
percent employ fewer than 500 workers.\87\
---------------------------------------------------------------------------

    \86\ U.S. Department of Agriculture, Food and Nutrition Service, 
Office of Research, Nutrition and Analysis, School Nutrition Dietary 
Assessment Study-III, Vol. I, 2007, p. 34 http://www.fns.usda.gov/ora/MENU/Published/CNP/FILES/SNDAIII-Vol1.pdf
    \87\ Ibid.
---------------------------------------------------------------------------

Projected Reporting, Recordkeeping and Other Compliance Requirements

    The analysis below covers only those organizations impacted by the 
proposed rule that were determined to be small entities.

School Food Authorities (SFA)/Schools

Increased Cost To Produce School Meals

    It is estimated that the proposed rule will raise the average cost 
of producing and serving school lunches by almost 7 cents and school 
breakfasts by 37 cents on initial implementation. By FY 2015, when the 
100 percent whole grain rich requirement takes effect, the cost per 
lunch will be 14 cents higher than our baseline estimate; the cost per 
breakfast will be 50 cents higher. Across all SFAs we estimate that the 
total cost of compliance will be $6.8 billion over five years. Although 
about 99 percent of SFAs enroll fewer than 50,000 students, they enroll 
only about 80 percent of all students. If they serve about 80 percent 
of all meals (we do not have data on meals served by SFA size) then 
these small entities would incur roughly 80 percent of estimated costs.
    Increased costs of producing school meals as a result of the 
proposed rule are not expected to fall disproportionally on smaller 
SFAs. We estimate the cost of the proposed rule on a per meal basis. 
Schools that face average labor and food costs, and have menus typical 
of the average school will incur costs directly proportional to their 
size. We estimate that those costs will equal our estimated cost per 
meal multiplied by the number of meals served.
    The most important factors that will separate schools with higher 
than

[[Page 2550]]

average per-meal costs from those with lower than average costs are not 
necessarily associated with the size of the SFA. For instance, schools 
with menus that already emphasize fruits, non-starchy vegetables, and 
whole grains will need to make fewer changes, and the costs of 
implementation in those schools may be lower than average. Also, 
because the per-meal cost of complying with the proposed requirements 
is much higher for breakfast than for lunch, the overall costs of 
implementation in schools that serve the most school breakfasts 
relative to lunches will be higher than the costs faced by schools that 
do not serve breakfast.

Increased Cost of Administering School Meals Programs

    An initial increase in administrative staff time for training and 
implementation is anticipated at the SFA level. The proposed rule 
increases the length of State reviews of SFAs through the Coordinated 
Review Effort (CRE) by incorporating the requirements of School Meals 
Initiative (SMI) reviews, and increases their frequency to once every 
three years. SFAs that previously had separate CREs and SMIs may 
experience a decrease in burden, because they will undergo just one CRE 
every three years, rather than two reviews (one CRE and one SMI) every 
five years.
    The proposed rule incorporates the provision of training and 
technical assistance by SAs to the SFAs. SFAs must, in turn, adjust 
their current training agenda to include the new requirements, as no 
funding has been provided in the proposed rule to accommodate new 
training.
    In total, these administrative changes, in the form of 
recordkeeping and reporting burden arising from the proposed rule, are 
estimated to result in a net change of 8.2 hours for each of about 
7,000 SFAs per year. The additional 8.2 hours of record keeping and 
reporting burden to SFAs per year would not rise to the level of a 
significant impact for RFA purposes.\88\
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    \88\ SBA's ``A Guide for Government Agencies'' identifies 
several examples of significant impact: A rule that provides a 
strong disincentive to seek capital; 175 staff hours per year for 
recordkeeping; impacts greater than the $500 fine (in 1980 dollars) 
imposed for noncompliance; new capital requirements beyond the reach 
of the entity; and any impact less cost-efficient than another 
reasonable regulatory alternative.
---------------------------------------------------------------------------

Increased Equipment Costs

    SFAs may need to purchase new equipment to prepare and serve meals 
that comply with the proposed standards. For example, some SFAs may 
need to replace fryers with ovens or steamers. In FY 2009, FNS 
solicited requests from SFAs for food service equipment grants, 
awarding $100 million in 2009 American Recovery and Reinvestment Act 
(ARRA) Equipment Grants and an additional $25 million in one-time funds 
included in the FY 2010 Appropriations Act. In response to their 
solicitations for these funds, State agencies received a total of 
approximately $600 million in grant requests from SFAs. The strong 
response to these grant programs indicates a substantial demand for 
investment in kitchen equipment.
    We do not have the data necessary to measure the remaining unmet 
demand in smaller SFAs or in SFAs that did not receive grants. However, 
much of that demand is driven by the routine need to replace equipment 
that is nearing the end of its useful life--a cost that is 
appropriately covered by USDA meal reimbursements and other sources of 
food service revenue. For recipient SFAs, the grants temporarily freed 
some of those revenue sources for other priorities. In the absence of 
additional Congressional action, SFAs must again turn to those sources 
to meet their ongoing equipment needs.

Options for Addressing Increased Costs

    Most schools will have a number of options and flexibilities within 
available revenue streams and operational approaches that can help to 
balance costs and resources. The primary resources available to SFAs 
are listed here.
    1. Federal Reimbursements: About half of all SFA revenues are from 
Federal reimbursements. These payments are adjusted annually for 
changes in food and labor costs by statute. SLBCS-II found that in 
2005-06, for most reimbursable lunches and in most SFAs, reported lunch 
production costs were less than the Federal free lunch subsidy by a 
small amount, with the difference greatest in SFAs that produce more 
meals, resulting in a lower per-meal cost.
    2. Student Payments: School districts have the discretion to set 
student payments for ``paid meals'' and [agrave] la carte foods at 
levels of their choosing, so long as the resulting revenues are paid 
into the non-profit school food service account. Some currently set 
prices for these meals and foods at levels that do not cover the full 
cost of production, with Federal payments for free and reduced-price 
meals covering the difference. Schools will likely face additional 
incentives to adjust their pricing policies so that adequate revenue is 
generated to cover the cost of production.
    3. State and Local Funds: A limited but nonetheless substantial 
portion of meal production costs are paid from State and local 
government sources. The contributions of these entities may need to 
increase to cover costs.
    4. Operational Changes: Like other service businesses, schools may 
need to consider changes to their operations to increase efficiency and 
meet the requirements of the proposed rule. Several hundred schools 
recognized as part of the HealthierUS School Challenge (HUSSC) have 
demonstrated an ability to operate cost-effective school meals programs 
that meet many of the proposed rule's requirements. These schools may 
offer models for others as implementation moves forward.
    We recognize that small SFAs, like others, will face substantial 
costs and potential challenges in implementing the proposed rule. These 
costs are not significantly greater for small SFAs than for larger 
ones, as implementation costs are driven primarily by factors other 
than SFA size. Nevertheless, we do not discount the special challenges 
that may face some smaller SFAs. As a group, small SFAs may have less 
flexibility to adjust resources in response to immediate budgetary 
needs. The time between publication of the proposed and final rules 
offers these SFAs some opportunity, however, for advance planning.

Food Service Management Companies

    FSMCs are potentially indirectly affected by the proposed rule. 
FSMCs that provide school meals under contract to SFAs will need to 
alter those products to conform to the proposed changes in meal 
requirements. In addition, FSMCs may find new opportunities to work 
with SFAs that currently do not contract for food service assistance, a 
``beneficial impact'' of the regulation. Consistent with SBA guidance, 
which notes that ``[t]he courts have held that the RFA requires an 
agency to perform a regulatory flexibility analysis of small entity 
impacts only when a rule directly regulates them'',\89\ we do not 
attempt to quantify the economic effect of the proposed rule on FSMCs.
---------------------------------------------------------------------------

    \89\ SBA, ``A Guide for Government Agencies'', p. 20.
---------------------------------------------------------------------------

Federal Rules That May Duplicate, Overlap or Conflict With the Proposed 
Rule

    FNS is unaware of any such Federal rules or laws.

[[Page 2551]]

Significant Alternatives

    The proposed rule establishes a single effective date that applies 
to all local educational agencies (LEAs), regardless of size. Schools 
vary in the extent to which they meet current nutrition requirements 
for reimbursable meals. Though most are reasonably successful in 
meeting the food group requirements under current rules, some schools 
may find it operationally difficult, or too costly, to prepare and 
serve meals that satisfy the new requirements of the proposed rule by 
SY 2012-2013.
    Though we are not aware of any evidentiary basis to distinguish 
groups of schools that may find it more difficult to meet the proposed 
requirements than others, the regulatory impact analysis considers as 
an alternative the phase-in adopted by Congress for the requirement to 
conduct direct certification under Section 104 of the Child Nutrition 
and WIC Reauthorization Act of 2004 (Public Law 108-265). LEAs with 
more than 25,000 students could be required to implement by SY 2012-
2013, those with 10,000 to 25,000 students by SY 2013-2014, and those 
with less than 10,000 students by SY 2014-2015. Final whole grain 
requirements would become effective two years after implementation in 
each cohort of LEAs. Such an approach would give smaller LEAs more time 
to meet the requirements than larger ones and reduce the cost and 
impact of the rule during the first five years of implementation.
    It would also, however, reduce the potential benefits of providing 
more nutritious meals to the children in those schools. Participation 
in the school meals program is highest among elementary school 
students; participation decreases as students move to middle and high 
school. One of the stated goals of IOM was to ``foster healthy eating 
habits'' through exposure to the school meals program. Because of the 
decrease in participation among older students, the school meals 
program has only a limited opportunity to influence the eating habits 
of some students. Students in smaller SFAs who are not introduced to 
the proposed meal requirements while still in elementary school may not 
benefit at all from delayed implementation of the rule. Because a 
phased implementation would deny some students the benefits of 
healthier school meals, this alternative schedule was not proposed.

List of Subjects

7 CFR Part 210

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

7 CFR Part 220

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

    Accordingly, 7 CFR Parts 210 and 220 are proposed to be amended as 
follows:

PART 210-NATIONAL SCHOOL LUNCH PROGRAM

    1. The authority citation for 7 CFR part 210 continues to read as 
follows:

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

    2. In Sec.  210.2:
    a. Revise the definition of Food component;
    b. Revise the definition of Food item;
    c. Amend the definition of Lunch by removing the words ``applicable 
nutrition standards and portion sizes'' and adding in their place the 
words ``meal requirements'';
    d. Remove the definition of Menu item;
    e. Remove the definition of Nutrient Standard Menu Planning/
Assisted Nutrient Standard Menu Planning;
    f. Revise the definition of School week; and
    g. Add the definition of Whole grains.
    The revisions and additions read as follows:


Sec.  210.2  Definitions.

* * * * *
    Food component means one of the five food groups which comprise 
reimbursable meals. The five food components are: Meats/meat 
alternates, grains, vegetables, fruits, and fluid milk.
* * * * *
    Food item means a specific food offered within the five food 
components: Meats/meat alternates, grains, vegetables, fruits, and 
fluid milk.
* * * * *
    School week means the period of time used to determine compliance 
with the meal requirements in Sec.  210.10. The period shall be a 
normal school week of five consecutive days; however, to accommodate 
shortened weeks resulting from holidays and other scheduling needs, the 
period shall be a minimum of three consecutive days and a maximum of 
seven consecutive days. Weeks in which school lunches are offered less 
than three times shall be combined with either the previous or the 
coming week.
* * * * *
    Whole grains means grains that consist of the intact, ground, 
cracked, or flaked grain seed whose principal anatomical components--
the starchy endosperm, germ and bran--are present in the same relative 
proportions as they exist in the intact grain seed. Whole grain-rich 
products must conform to FNS guidance to count toward the grains 
component.
* * * * *
    3. Revise Sec.  210.10 to read as follows:


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

    (a) General requirements. (1) General nutrition requirements. 
Schools must offer nutritious, well-balanced, and age-appropriate meals 
to all the children they serve to improve their diets and safeguard 
their health.
    (i) Requirements for lunch. School lunches offered to children age 
5 or older must meet, at a minimum, the meal requirements in paragraph 
(b) of this section. Schools must follow a food-based menu planning 
approach and produce enough food to offer each child the quantities 
specified in the meal pattern established in paragraph (c) of this 
section for each age/grade group served in the school. In addition, 
school lunches must meet the dietary specifications in paragraph (f) of 
this section. Schools offering lunches to children ages 1 to 4 and 
infants must meet the meal pattern requirements in paragraph (p) of 
this section.
    (ii) Requirements for afterschool snacks. Schools offering 
afterschool snacks in afterschool care programs must meet the meal 
pattern requirements in paragraph (o) of this section. Schools must 
plan and produce enough food to offer each child the minimum quantities 
under the meal pattern in paragraph (o) of this section. The component 
requirements for meal supplements served under the Child and Adult Care 
Food Program authorized under part 226 of this chapter also apply to 
afterschool snacks served in accordance with paragraph (o) of this 
section.
    (2) Unit pricing. Schools must price each meal as a unit. Schools 
need to consider participation trends in an effort to provide one 
reimbursable lunch and, if applicable, one reimbursable afterschool 
snack for each child every school day. If there are leftover meals, 
schools may offer them to the students but cannot get reimbursement for 
them. Schools must identify, near or at the beginning of the serving 
line(s), the food items that constitute the unit-priced reimbursable 
school meal(s).
    (3) Production and menu records. Schools or school food 
authorities, as

[[Page 2552]]

applicable, must keep production and menu records for the meals they 
produce. These records must show how the meals offered contribute to 
the required food components and food quantities for each age/grade 
group every day. Labels or manufacturer specifications for food 
products and ingredients used to prepare school meals must indicate 
zero grams of trans fat per serving (less than 0.5 grams). Schools or 
school food authorities must maintain records of the latest nutritional 
analysis of the school menus conducted by the State agency. Production 
and menu records must be maintained in accordance with FNS guidance.
    (b) Meal requirements for school lunches. School lunches for 
children ages 5 and older must reflect food and nutrition requirements 
specified by the Secretary. Compliance with these requirements is 
measured as follows:
    (1) On a daily basis: (i) Meals offered to each age/grade group 
must include the food components and food quantities specified in the 
meal pattern in paragraph (c) of this section;
    (ii) Food products or ingredients used to prepare meals must 
contain zero grams of trans fat per serving or a minimal amount of 
naturally-occurring trans fat; and
    (iii) Meals selected by each student must have the number of food 
components required for a reimbursable meal and include at least one 
fruit or vegetable.
    (2) Over a 5-day school week: (i) Average calorie content of meals 
offered to each age/grade group must be within the minimum and maximum 
calorie levels specified in paragraph (f) of this section;
    (ii) Average saturated fat content of the meals offered to each 
age/grade group must be less than 10 percent of total calories; and
    (iii) Average sodium content of the meals offered to each age/grade 
group must not exceed the maximum level specified in paragraph (f) of 
this section.
    (c) Meal pattern for school lunches. Schools must offer the food 
components and quantities required in the lunch meal pattern 
established in the following table:

[[Page 2553]]

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    (1) Age/grade groups. Schools must plan menus for students using 
the following age/grade groups: grades K-5 (ages 5-10), grades 6-8 
(ages 11-13), and grades 9-12 (ages 14-18). If an unusual grade 
configuration in a school prevents the use of these established age/
grade groups, students in grades K-5 and grades 6-8 may be offered the 
same food quantities at lunch provided that the calorie and sodium 
standards for each age/grade group are met. No customization of the 
established age/grade groups is allowed.
    (2) Food components. Schools must offer students in each age/grade 
group the food components specified in paragraph (c) of this section.
    (i) Meats/meat alternates component. Schools must offer meats/meat 
alternates daily as part of the lunch meal pattern. The quantity of 
meats/meat alternates must be the edible portion as served. This 
component must be served in a main dish or in a main dish and only one 
other food item. Schools without daily choices in this component should 
not serve any one meat alternate or form of meat (for example, ground, 
diced, pieces) more than three times in the same week. If a portion 
size of this component does not meet the daily requirement for a 
particular age/grade group, schools may supplement it with another 
meats/meat alternates to meet the full requirement. Schools may adjust 
the daily quantities of this component provided that a minimum of one 
ounce is offered daily and the total weekly requirement is met over a 
five-day period.
    (A) Enriched macaroni. Enriched macaroni with fortified protein as 
defined in Appendix A to this part may be used to meet part of the 
meats/meat alternates requirement when used as specified in Appendix A 
to this part. An enriched macaroni product with fortified protein as 
defined in Appendix A to this part may be used to meet part

[[Page 2554]]

of the meats/meat alternates component or the grains component but not 
as both food components in the same lunch.
    (B) Nuts and seeds. Nuts and seeds and their butters are allowed as 
meat alternates in accordance with program guidance. Acorns, chestnuts, 
and coconuts may not be used because of their low protein and iron 
content. Nut and seed meals or flours may be used only if they meet the 
requirements for Alternate Protein Products established in Appendix A 
to this part. Nuts or seeds may be used to meet no more than one-half 
(50 percent) of the meats/meat alternates component with another meats/
meat alternates to meet the full requirement.
    (C) Yogurt. Yogurt may be used to meet all or part of the meats/
meat alternates component. Yogurt may be plain or flavored, unsweetened 
or sweetened. Noncommercial and/or non-standardized yogurt products, 
such as frozen yogurt, drinkable yogurt products, homemade yogurt, 
yogurt flavored products, yogurt bars, yogurt covered fruits and/or 
nuts or similar products are not creditable. Four ounces (weight) or 
\1/2\ cup (volume) of yogurt equals one ounce of the meats/meat 
alternates requirement.
    (ii) Fruits component. Schools must offer fruits daily as part of 
the lunch menu. Fruits that are fresh; frozen without sugar; canned in 
light syrup, water or fruit juice; or dried may be offered to meet the 
requirements of this paragraph. All fruits are credited based on their 
volume as served, except that \1/4\ cup of dried fruit counts as \1/2\ 
cup of fruit. Only pasteurized, full-strength fruit juice may be used, 
and may be credited to meet no more than one-half of the fruits 
component.
    (iii) Vegetables component. Schools must offer vegetables daily as 
part of the lunch menu. Fresh, frozen, or canned vegetables and dried 
legumes may be offered to meet this requirement. All vegetables are 
credited based on their volume as served, except that 1 cup of leafy 
greens counts as \1/2\ cup of vegetables. Pasteurized, full-strength 
vegetable juice may be used to meet no more than one-half of the 
vegetable requirement. Cooked dry beans or peas may be counted as 
either a vegetable or as a meat alternate but not as both in the same 
meal. Vegetable offerings at lunch must include the following vegetable 
subgroups in the quantities specified in the meal pattern in paragraph 
(c) of this section:
    (A) Dark green vegetables. This subgroup includes bok choy, 
broccoli, collard greens, dark green leafy lettuce, kale, mustard 
greens, romaine lettuce, spinach, turnip greens, and watercress;
    (B) Orange vegetables. This subgroup includes acorn squash, 
butternut squash, carrots, pumpkin, and sweet potato;
    (C) Legumes (dry beans). This subgroup includes black beans, black-
eyed peas, garbanzo beans, green peas, kidney beans, lentils, lima 
beans, soy beans, split peas, and white beans;
    (D) Starchy vegetables. This subgroup includes corn, green peas, 
lima beans, and white potatoes. Green peas and fresh, frozen, or canned 
(not dried) lima beans are considered part of this subgroup and part of 
the legumes subgroup, but must be counted in one subgroup only in the 
same meal; and
    (E) Other vegetables. This subgroup includes all other fresh, 
frozen, and canned vegetables, cooked or raw, including tomatoes, 
tomato juice, iceberg lettuce, green beans, and onions.
    (iv) Grains component. (A) Enriched or whole grains. All grains 
must be enriched or whole grain-rich, or made with enriched or whole 
grain meal or flour, in accordance with the most recent grains guidance 
from FNS.
    (B) Daily and weekly servings. The grains requirement is based on 
minimum daily servings plus total servings over a five-day school week. 
Half of the grains offered during the school week must meet the whole 
grain-rich criteria specified in FNS guidance. Two years post 
implementation of the final rule all grains offered during the school 
week must meet the whole grain-rich criteria specified in FNS guidance. 
The whole grain-rich criteria may be updated to reflect additional 
information provided voluntarily by industry on the food label or a 
whole grains definition by the Food and Drug Administration. Schools 
serving lunch 6 or 7 days per week must increase the weekly grains 
quantity by approximately 20 percent (1/5th) for each additional day. 
When schools operate less than 5 days per week, they may decrease the 
weekly quantity by approximately 20 percent (1/5th) for each day less 
than five. The servings for biscuits, rolls, muffins, pastas, cereals, 
and other grains varieties are specified in program guidance.
    (C) Desserts. Schools may count up to one grain-based dessert per 
day towards meeting the grains requirement as specified in the Grains/
Bread Instruction issued by FNS.
    (v) Fluid milk component. Fluid milk must be offered daily in 
accordance with paragraph (d) of this section.
    (3) Food components in outlying areas. Schools in American Samoa, 
Puerto Rico and the Virgin Islands may serve vegetables such as yams, 
plantains, or sweet potatoes to meet the grains component.
    (4) Adjustments to the school menus. Schools must adjust future 
menu cycles to reflect production and how often the food items are 
offered. Schools may need to change the foods offered given the 
students' selections and may need to modify the recipes and other 
specifications to make sure that the meal requirements are met.
    (5) Standardized recipes. All schools must develop and follow 
standardized recipes. A standardized recipe is a recipe that was tested 
to provide an established yield and quantity using the same ingredients 
for both measurement and preparation methods. Standardized recipes 
developed by USDA/FNS are in the Child Nutrition Database. If a school 
has its own recipes, they may seek assistance from the State agency or 
school food authority to standardize the recipes. Schools must add any 
local recipes to their local database as outlined in FNS guidance.
    (6) Processed foods. The Child Nutrition Database includes a number 
of processed foods. Schools may use purchased processed foods that are 
not in the Child Nutrition Database. Schools or the State agency must 
add any locally purchased processed foods to their local database as 
outlined in FNS guidance. The State agencies must obtain the levels of 
calories, saturated fat, and sodium in the processed foods.
    (7) Menu substitutions. Schools should always try to substitute 
nutritionally similar foods.
    (d) Fluid milk requirement. (1) Types of fluid milk. (i) Schools 
must offer students a variety of fluid milk. Milk must be fat-free or 
low-fat. Milk with higher fat content is not allowed. Fat-free fluid 
milk may be flavored or unflavored, and low-fat fluid milk must be 
unflavored. Lactose-free fluid milk may also be offered.
    (ii) All fluid milk served in the Program must be pasteurized fluid 
milk which meets State and local standards for such milk. All fluid 
milk must have vitamins A and D at levels specified by the Food and 
Drug Administration and must be consistent with State and local 
standards for such milk.
    (2) Inadequate fluid milk supply. If a school cannot get a supply 
of fluid milk, it can still participate in the Program under the 
following conditions:
    (i) If emergency conditions temporarily prevent a school that 
normally has a supply of fluid milk from obtaining delivery of such 
milk, the State agency may allow the school to serve meals during the 
emergency period with an alternate form of fluid milk or without fluid 
milk.

[[Page 2555]]

    (ii) If a school is unable to obtain a supply of any type of fluid 
milk on a continuing basis, the State agency may approve the service of 
meals without fluid milk if the school uses an equivalent amount of 
canned milk or dry milk in the preparation of the meals. In Alaska, 
Hawaii, American Samoa, Guam, Puerto Rico, and the Virgin Islands, if a 
sufficient supply of fluid milk cannot be obtained, ``fluid milk'' 
includes reconstituted or recombined fluid milk, or as otherwise 
allowed by FNS through a written exception.
    (3) Fluid milk substitutes. If a school chooses to offer one or 
more substitutes for fluid milk for non-disabled students with medical 
or special dietary needs, the nondairy beverage(s) must provide the 
nutrients listed in the following table. Fluid milk substitutes must be 
fortified in accordance with fortification guidelines issued by the 
Food and Drug Administration. A school need only offer the nondairy 
beverage(s) that it has identified as allowable fluid milk substitutes 
according to the following chart.

------------------------------------------------------------------------
                                                              Per cup (8
                          Nutrient                              fl oz)
------------------------------------------------------------------------
Calcium....................................................      276 mg.
Protein....................................................         8 g.
Vitamin A..................................................      500 IU.
Vitamin D..................................................      100 IU.
Magnesium..................................................       24 mg.
Phosphorus.................................................      222 mg.
Potassium..................................................      349 mg.
Riboflavin.................................................     0.44 mg.
Vitamin B-12...............................................     1.1 mcg.
------------------------------------------------------------------------

     (4) Restrictions on the sale of fluid milk. A school participating 
in the Program, or a person approved by a school participating in the 
Program, must not directly or indirectly restrict the sale or marketing 
of fluid milk (as identified in paragraph (d)(1) of this section) at 
any time or in any place on school premises or at any school-sponsored 
event.
    (e) Offer versus serve. School lunches must offer daily the five 
food components specified in the meal pattern in paragraph (c) of this 
section. Under offer versus serve, students in senior high (as defined 
by the State educational agency) must be allowed to decline two items 
at lunch but must select at least one fruit or vegetable. Students 
below the senior high level may participate in offer versus serve at 
the discretion of the school food authority. The price of a 
reimbursable lunch does not change if the student does not take a food 
item or requests smaller portions. Schools may not require a student to 
take the entr[eacute]e, which is a combination of foods or a single 
food item that is offered as the main course.
    (f) Dietary specifications. (1) Calories. School lunches offered to 
each age/grade group must meet, on average over the school week, the 
minimum and maximum calorie levels specified in the following table:

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

    (2) Saturated fat. School lunches offered to all age/grade groups 
must, on average over the school week, provide less than 10 percent of 
total calories from saturated fat.
    (3) Sodium. School lunches offered to each age/grade group must 
meet, on average over the school week, the levels of sodium specified 
in the following table:
[GRAPHIC] [TIFF OMITTED] TP13JA11.024


[[Page 2556]]


    (4) Trans fat. Food products and ingredients used to prepare school 
meals must contain zero grams of trans fat (less than 0.5 grams) per 
serving. Schools must add the trans fat specification and request the 
required documentation (nutrition label or manufacturer specifications) 
in their procurement contracts. Documentation for food products and 
food ingredients must indicate zero grams of trans fat per serving. 
Meats that contain a minimal amount of naturally-occurring trans fats 
are allowed in the school meal programs.
    (g) Compliance assistance. The State agency and school food 
authority must provide technical assistance and training to assist 
schools in planning lunches that meet the meal pattern in paragraph (c) 
of this section and the calorie, saturated fat, sodium, and trans fat 
specifications established in paragraph (f) of this section. Compliance 
assistance may be offered during annual training, onsite visits, and/or 
administrative reviews.
    (h) State Agency responsibilities for monitoring dietary 
specifications. (1) Calories, saturated fat and sodium. As part of the 
administrative review authorized under Sec.  210.18 of this chapter, 
State agencies must conduct a nutrient analysis for the school(s) 
selected for review to evaluate the average levels of calories, 
saturated fat, and sodium of the lunches offered to students in grades 
K and above during the review period. The nutrient analysis must be 
conducted in accordance with the procedures established in paragraph 
(i)(3) of this section. If the results of the nutrient analysis 
indicate that the school lunches are not meeting the standards for 
calories, saturated fat, and sodium specified in paragraph (f) of this 
section, the State agency or school food authority must provide 
technical assistance and require the reviewed school to take corrective 
action to meet the established standards.
    (2) Trans fat. During the administrative review, State agencies 
must verify that the food products or ingredients used by the reviewed 
school(s) contain zero grams of trans fat (less than 0.5 grams) per 
serving.
    (i) State agency's responsibilities for nutrient analyses. (1) 
Conducting the nutrient analyses. State agencies must conduct a 
nutrient analysis of the reimbursable meals offered to children in 
grades K and above by a school selected for administrative review under 
Sec.  210.18 of this chapter. The nutrient analysis must be conducted 
in accordance with the procedures established in paragraph (i)(3) of 
this section. The purpose of the nutrient analysis is to determine the 
average levels of calories, saturated fat, and sodium in the meals 
offered over a school week. Unless offered as part of a reimbursable 
meal, foods of minimal nutritional value (see appendix B to part 210) 
are not included in the nutrient analysis.
    (2) Software elements. (i) The Child Nutrition Database. The 
nutrient analysis is based on the USDA Child Nutrition Database. This 
database is part of the software used to do a nutrient analysis. 
Software companies or others developing systems for schools may contact 
FNS for more information about the database.
    (ii) Software evaluation. FNS or an FNS designee evaluates any 
nutrient analysis software before it may be used in schools. FNS or its 
designee determines if the software, as submitted, meets the minimum 
requirements. The approval of software does not mean that FNS or USDA 
endorses it. The software must be able to perform a weighted average 
analysis after the basic data is entered. The combined analysis of the 
lunch and breakfast programs is not allowed.
    (3) Nutrient analysis procedures. (i) Weighted averages. State 
agencies must include all foods offered in the reimbursable meals in 
the nutrient analysis. Foods items are included based on the portion 
sizes and projected serving amounts. They are also weighted based on 
their proportionate contribution to the meals offered. This means that 
food items offered more frequently are weighted more heavily than those 
not offered as frequently. State agencies calculate weighting as 
indicated by FNS guidance and by the guidance provided by the software.
    (ii) Analyzed nutrients. The analysis determines the average levels 
of calories, saturated fat, and sodium in the meals offered over a 
school week. It includes all food items offered by the reviewed school 
over a two-week period.
    (4) Comparing the results of the nutrient analysis. Once the 
procedures in paragraph (i)(3) of this section are completed, State 
agencies must compare the results of the analysis to the calorie, 
saturated fat, and sodium levels established in Sec.  210.10 or Sec.  
220.8, as appropriate, for each age/grade group to evaluate the 
school's compliance with the meal requirements.
    (j) State agency's responsibilities for compliance monitoring. 
Compliance with the meal requirements in paragraph (b) of this section, 
including dietary specifications for calories, saturated fat and 
sodium, will be monitored by the State agency through administrative 
reviews authorized in Sec.  210.18 of this chapter.
    (k) Menu choices at lunch. (1) Availability of choices. Schools may 
offer children a selection of nutritious foods within a reimbursable 
lunch to encourage the consumption of a variety of foods. Children who 
are eligible for free or reduced price lunches must be allowed to take 
any reimbursable lunch or any choices offered as part of a reimbursable 
lunch. Schools may establish different unit prices for each 
reimbursable lunch offered provided that the benefits made available to 
children eligible for free or reduced price lunches are not affected.
    (2) Opportunity to select. Schools that choose to offer a variety 
of reimbursable lunches, or provide multiple serving lines, must make 
all required food components available to all students, on every lunch 
line, in at least the minimum required amounts.
    (l) Requirements for lunch periods. (1) Timing. Schools must offer 
lunches meeting the requirements of this section during the period the 
school has designated as the lunch period. Schools must offer lunches 
between 10 a.m. and 2 p.m. Schools may request an exemption from these 
times from the State agency.
    (2) Adequate lunch periods. FNS encourages schools to provide 
sufficient lunch periods that are long enough to give all students 
adequate time to be served and to eat their lunches.
    (m) Exceptions and variations allowed in reimbursable meals. (1) 
Exceptions for disability reasons. Schools must make substitutions in 
lunches and afterschool snacks for students who are considered to have 
a disability under 7 CFR 15b.3 and whose disability restricts their 
diet. Substitutions must be made on a case by case basis only when 
supported by a written statement of the need for substitution(s) that 
includes recommended alternate foods, unless otherwise exempted by FNS. 
Such statement must be signed by a licensed physician.
    (2) Exceptions for non-disability reasons. Schools may make 
substitutions for students without disabilities who cannot consume the 
regular lunch or afterschool snack because of medical or other special 
dietary needs. Substitutions must be made on a case by case basis only 
when supported by a written statement of the need for substitutions 
that includes recommended alternate foods, unless otherwise exempted by 
FNS. Except with respect to substitutions for fluid milk, such a 
statement must be signed by a recognized medical authority.

[[Page 2557]]

    (i) Fluid milk substitutions for non-disability reasons. Schools 
may make substitutions for fluid milk for non-disabled students who 
cannot consume fluid milk due to medical or special dietary needs. A 
school that selects this option may offer the nondairy beverage(s) of 
its choice, provided the beverage(s) meets the nutritional standards 
established under paragraph (d) of this section. Expenses incurred when 
providing substitutions for fluid milk that exceed program 
reimbursements must be paid by the school food authority.
    (ii) Requisites for fluid milk substitutions. (A) A school food 
authority must inform the State agency if any of its schools choose to 
offer fluid milk substitutes other than for students with disabilities; 
and
    (B) A medical authority or the student's parent or legal guardian 
must submit a written request for a fluid milk substitute identifying 
the medical or other special dietary need that restricts the student's 
diet.
    (iii) Substitution approval. The approval for fluid milk 
substitution must remain in effect until the medical authority or the 
student's parent or legal guardian revokes such request in writing, or 
until such time as the school changes its substitution policy for 
nondisabled students.
    (3) Variations for ethnic, religious, or economic reasons. Schools 
should consider ethnic and religious preferences when planning and 
preparing meals. Variations on an experimental or continuing basis in 
the food components for the meal pattern in paragraph (c) of this 
section may be allowed by FNS. Any variations must be consistent with 
the food and nutrition requirements specified under this section and 
needed to meet ethnic, religious, or economic needs.
    (4) Exceptions for natural disasters. If there is a natural 
disaster or other catastrophe, FNS may temporarily allow schools to 
serve meals for reimbursement that do not meet the requirements in this 
section.
    (n) Nutrition disclosure. To the extent that school food 
authorities identify foods in a menu, or on the serving line or through 
other communications with program participants, school food authorities 
must identify products or dishes containing more than 30 parts fully 
hydrated alternate protein products (as specified in appendix A of this 
part) to less than 70 parts beef, pork, poultry or seafood on an 
uncooked basis, in a manner which does not characterize the product or 
dish solely as beef, pork, poultry or seafood. Additionally, FNS 
encourages schools to inform the students, parents, and the public 
about efforts they are making to meet the meal requirements for school 
lunches.
    (o) Afterschool snacks. Eligible schools operating afterschool care 
programs may be reimbursed for one afterschool snack served to a child 
(as defined in Sec.  210.2) per day.
    (1) Eligible schools mean schools that:
    (i) Operate school lunch programs under the Richard B. Russell 
National School Lunch Act; and
    (ii) Sponsor afterschool care programs as defined in Sec.  210.2.
    (2) Afterschool snacks shall contain two different components from 
the following four:
    (i) A serving of fluid milk as a beverage, or on cereal, or used in 
part for each purpose;
    (ii) A serving of meat or meat alternate. Nuts and seeds and their 
butters listed in program guidance are nutritionally comparable to meat 
or other meat alternates based on available nutritional data. Acorns, 
chestnuts, and coconuts are excluded and shall not be used as meat 
alternates due to their low protein content. Nut or seed meals or 
flours shall not be used as a meat alternate except as allowed under 
appendix A of this part;
    (iii) A serving of vegetable(s) or fruit(s) or full-strength 
vegetable or fruit juice, or an equivalent quantity of any combination 
of these foods. All fruits and vegetables are credited based on their 
volume as served. Juice may not be served when fluid milk is served as 
the only other component;
    (iv) A serving of whole-grain or enriched bread; or an equivalent 
serving of a bread product, such as cornbread, biscuits, rolls, or 
muffins made with whole-grain or enriched meal or flour; or a serving 
of cooked whole-grain or enriched pasta or noodle products such as 
macaroni, or cereal grains such as enriched rice, bulgur, or enriched 
corn grits; or an equivalent quantity of any combination of these 
foods.
    (3) Afterschool snacks served to infants ages birth through 11 
months must meet the requirements in paragraph (o)(3)(iv) of this 
section. Foods offered as meal supplements must be of a texture and a 
consistency that are appropriate for the age of the infant being 
served. The foods must be served during a span of time consistent with 
the infant's eating habits. For those infants whose dietary needs are 
more individualized, exceptions to the meal pattern must be made in 
accordance with the requirements found in paragraph (m) of this 
section.
    (i) Breastmilk and iron-fortified formula. Either breastmilk or 
iron-fortified infant formula, or portions of both, must be served for 
the entire first year. Snacks containing breastmilk and snacks 
containing iron-fortified infant formula supplied by the school are 
eligible for reimbursement. However, infant formula provided by a 
parent (or guardian) and breastmilk fed directly by the infant's 
mother, during a visit to the school, contribute to a reimbursable 
snack only when the school supplies at least one component of the 
infant's snack.
    (ii) Fruit juice. Juice should not be offered to infants until they 
are 6 months of age and ready to drink from a cup. Fruit juice served 
as part of the meal pattern for infants 8 through 11 months must be 
full-strength and pasteurized.
    (iii) Solid foods. Solid foods of an appropriate texture and 
consistency are required only when the infant is developmentally ready 
to accept them. The school should consult with the infant's parent (or 
guardian) in making the decision to introduce solid foods. Solid foods 
should be introduced one at a time, on a gradual basis, with the intent 
of ensuring the infant's health and nutritional well-being.
    (iv) Infant meal pattern. Meal supplements for infants must 
include, at a minimum, breastmilk or iron-fortified infant formula, or 
portions of both, in the appropriate amount indicated for the infant's 
age. For some breastfed infants who regularly consume less than the 
minimum amount of breastmilk per feeding, a serving of less than the 
minimum amount of breastmilk may be offered. In these situations, 
additional breastmilk must be offered if the infant is still hungry. 
Some infants may be developmentally ready to accept an additional food 
component. Meal supplements are reimbursable when schools provide all 
of the components in the Supplements for Infants table that the infant 
is developmentally ready to accept.
    (4) The minimum amounts of food components to be served as meal 
supplements follow. Select two different components from the four 
listed in the Supplements for Infants table (Juice may not be served 
when fluid milk is served as the only other component). A serving of 
bread/bread alternate must be made from whole-grain or enriched meal or 
flour. It is required only when the infant is developmentally ready to 
accept it.

[[Page 2558]]



                                             Supplements for Infants
----------------------------------------------------------------------------------------------------------------
                                        Birth through 3 months     4 through 7 months      8 through 11 months
----------------------------------------------------------------------------------------------------------------
Supplement (snack)...................  4-6 fl. oz. breastmilk   4-6 fl. oz. breastmilk   2-4 fl. oz. breastmilk
                                        1,2 or formula \3\.      1,2 or formula \3\.      1,2, formula \3\, or
                                                                                          fruit juice \4\; 0-\1/
                                                                                          2\ bread \5\ or 0-2
                                                                                          crackers \5\
----------------------------------------------------------------------------------------------------------------
\1\ It is recommended that breastmilk be served in place of formula from birth through 11 months.
\2\ For some breastfed infants who regularly consume less than the minimum amount of breastmilk per feeding, a
  serving of less than the minimum amount of breastmilk may be offered with additional breastmilk offered if the
  infant is still hungry.
\3\ Infant formula must be iron-fortified.
\4\ Fruit juice must be full-strength and pasteurized.
\5\ Bread and bread alternates must be made from whole grain or enriched meal or flour. A serving of this
  component must be optional.

    (p) Lunches for preschoolers and infants. (1) Requirements for 
preschooler's lunch pattern. (i) General. Until otherwise instructed by 
the Secretary, lunches for children ages 1 to 4 must meet the nutrition 
standards in paragraph (p)(2) of this section, the nutrient and calorie 
levels in paragraph (p)(3) of this section, and meal pattern in 
paragraph (p)(4) of this section.
    (ii) Unit pricing. Schools must price each meal as a unit. Schools 
need to consider participation trends in an effort to provide one 
reimbursable lunch for each child every day. If there are leftover 
meals, schools may offer them to the students but cannot receive 
reimbursement for them.
    (iii) Production and menu records. Schools must keep production and 
menu records for the meals they produce. These records must show how 
the meals contribute to the required food components and quantities 
every day. In addition, these records must show how the lunches 
contribute to the nutrition standards in paragraph (p)(2) of this 
section and the appropriate calorie and nutrient requirements for the 
children served. Schools or school food authorities must maintain 
records of the latest nutritional analysis of the school menus 
conducted by the State agency.
    (2) Nutrition standards for preschoolers' lunches. Children ages 1 
to 4 must be offered lunches that meet the following nutrition 
standards for their age group:
    (i) Provision of one-third of the Recommended Dietary Allowances 
(RDAs) for protein, calcium, iron, vitamin A and vitamin C in the 
appropriate levels for the ages/grades (see paragraph (p)(3) of this 
section).
    (ii) Provision of the lunchtime energy allowances (calories) in the 
appropriate levels (see paragraph (p)(3) of this section);
    (iii) The following dietary recommendations:
    (A) Eat a variety of foods;
    (B) Limit total fat to 30 percent of total calories;
    (C) Limit saturated fat to less than 10 percent of total calories;
    (D) Choose a diet low in cholesterol;
    (E) Choose a diet with plenty of grain products, vegetables, and 
fruits; and
    (F) Choose a diet moderate in salt and sodium.
    (iv) The following measures of compliance:
    (A) Limit the percent of calories from total fat to 30 percent of 
the actual number of calories offered;
    (B) Limit the percent of calories from saturated fat to less than 
10 percent of the actual number of calories offered;
    (C) Reduce sodium and cholesterol levels; and
    (D) Increase the level of dietary fiber.
    (v) Compliance with the nutrition standards and the appropriate 
nutrient and calorie levels is determined by the State agency in 
accordance with the procedures in paragraph (p)(10) of this section.
    (3) Nutrient and calorie levels. The minimum levels of nutrients 
and calories that lunches for preschoolers must offer are specified in 
the following table:

[[Page 2559]]

[GRAPHIC] [TIFF OMITTED] TP13JA11.025

    (4) Meal pattern for preschoolers' lunches. Schools must follow the 
traditional food-based menu planning approach to plan lunches for 
children ages 1-2 and ages 3-4.
    (i) Food components and quantities. Lunches must offer the food 
components and quantities specified in the following meal pattern:
BILLING CODE 3410-30-P

[[Page 2560]]

[GRAPHIC] [TIFF OMITTED] TP13JA11.026

BILLING CODE 3410-30-C
    (ii) Meat/meat alternate component. The quantity of the meat/meat 
alternate component must be the edible portion as served. If the 
portion size of a food item for this component is excessive, the school 
must reduce that portion and supplement it with another meat/meat 
alternate to meet the full requirement. This component must be served 
in a main dish or in a main dish and only one other food item. Schools 
without daily choices in this component should not serve any one meat 
alternate or form of meat (for example, ground, diced, pieces) more 
than three times in the same week. Schools may adjust the daily 
quantities of this component provided that a minimum of one ounce is 
offered daily and the total weekly requirement is met over a five-day 
period.
    (A) Enriched macaroni. Enriched macaroni with fortified protein as 
defined in appendix A to this part may be used to meet part of the 
meat/meat alternate requirement when used as specified in appendix A to 
this part. An enriched macaroni product with fortified protein as 
defined in appendix A to this part may be used to meet part of the 
meat/meat alternate component or the grains/breads component but not as 
both food components in the same lunch.
    (B) Nuts and seeds. Nuts and seeds and their butters are allowed as 
meat alternates in accordance with program guidance. Acorns, chestnuts, 
and coconuts must not be used because of their low protein and iron 
content. Nut and seed meals or flours may be used only as allowed under 
appendix A to this part. Nuts or seeds may be used to meet no more than 
one-half of the meat/

[[Page 2561]]

meat alternate component with another meat/meat alternate to meet the 
full requirement.
    (C) Yogurt. Yogurt may be used to meet all or part of the meat/meat 
alternate requirement. Yogurt may be plain or flavored, and unsweetened 
or sweetened. Noncommercial and/or non-standardized yogurt products, 
such as frozen yogurt, homemade yogurt, yogurt flavored products, 
yogurt bars, yogurt covered fruit and/or nuts or similar products are 
not creditable. Four ounces (weight) or \1/2\ cup (volume) of yogurt 
equals one ounce of the meat/meat alternate requirement.
    (iii) Vegetable/fruit component. Full strength vegetable or fruit 
juice may be used to meet no more than one-half of the vegetable/fruit 
requirement. Cooked dry beans or peas may be counted as either a 
vegetable or as a meat alternate but not as both in the same meal.
    (iv) Grains/breads component. (A) Enriched or whole grains. All 
grains/breads must be enriched or whole grain or made with enriched or 
whole grain meal or flour.
    (B) Daily and weekly servings. The requirement for the grain/bread 
component is based on minimum daily servings plus total servings over a 
five day period. Schools serving lunch 6 or 7 days per week should 
increase the weekly quantity by approximately 20 percent (\1/5\th) for 
each additional day. When schools operate less than 5 days per week, 
they may decrease the weekly quantity by approximately 20 percent (\1/
5\th) for each day less than five. The servings for biscuits, rolls, 
muffins, and other grain/bread varieties are specified in the Food 
Buying Guide for Child Nutrition Programs (PA 1331), an FNS 
publication.
    (C) Minimums under the traditional food-based menu planning 
approach. Schools must offer daily at least one-half serving of the 
grain/bread component to children in Group I and at least one serving 
to children in Group II. Schools which serve lunch at least 5 days a 
week shall serve a total of at least five servings of grains/breads to 
children in Group I and eight servings per week to children in Group 
II.
    (D) Offer versus serve. Schools must offer all five required food 
items. At the school food authority's option, students in preschool may 
decline one or two of the five food items. The price of a reimbursable 
lunch does not change if the student does not take a food item or 
requests smaller portions.
    (E) Meal pattern exceptions for outlying areas. Schools in American 
Samoa, Puerto Rico and the Virgin Islands may serve a starchy vegetable 
such as yams, plantains, or sweet potatoes to meet the grain/bread 
requirement.
    (5) Fluid milk requirement. Schools must offer students in age 
group 1-2 years and age group 3-4 years fluid milk in a variety of fat 
contents. Schools may offer flavored or unflavored fluid milk and 
lactose-free fluid milk. All fluid milk served must be pasteurized 
fluid milk which meets State and local standards for such milk. All 
fluid milk must have vitamins A and D at levels specified by the Food 
and Drug Administration and must be consistent with State and local 
standards for such milk. Schools must also comply with other applicable 
milk requirements in Sec.  210.10(d)(2), Sec.  210.10(d)(3), and Sec.  
210.10(d)(4) of this part.
    (6) Menu choices. FNS encourages schools to offer children a 
selection of foods at lunch. Choices provide variety and encourage 
consumption. Schools may offer choices of reimbursable lunches or foods 
within a reimbursable lunch. Children who are eligible for free or 
reduced price lunches must be allowed to take any reimbursable lunch or 
any choices offered as part of a reimbursable lunch. Schools may 
establish different unit prices for each lunch offered provided that 
the benefits made available to children eligible for free or reduced 
price lunches are not affected.
    (7) Requirements for lunch periods. (i) Timing. Schools must offer 
lunches meeting the requirements of this section during the period the 
school has designated as the lunch period. Schools must offer lunches 
between 10 a.m. and 2 p.m. Schools may request an exemption from these 
times only from FNS.
    (ii) Lunch periods for young children. With State agency approval, 
schools are encouraged to serve children ages 1 through 4 over two 
service periods. Schools may divide the quantities and/or the menu 
items, foods, or food items offered each time any way they wish.
    (iii) Adequate lunch periods. FNS encourages schools to provide 
sufficient lunch periods that are long enough to give all students 
enough time to be served and to eat their lunches.
    (8) Exceptions and variations allowed in reimbursable meals. 
Schools must comply with the requirements in Sec.  210.10(m) of this 
part.
    (9) Nutrition disclosure. If applicable, schools must follow the 
provisions on disclosure of Alternate Protein Products in Sec.  
210.10(n) of this part.
    (10) State agency's responsibilities for monitoring lunches. As 
part of the administrative review authorized under Sec.  210.18(g)(2) 
of this chapter, State agencies must evaluate compliance with the meal 
pattern requirements (food components and quantities) in paragraph (d) 
of this section. If the meals for preschoolers do not meet the 
requirements of this section, the State agency or school food authority 
must provide technical assistance and require the reviewed school to 
take corrective action. In addition, the State agency may take fiscal 
action as authorized in Sec.  210.18(m) and Sec.  210.19(c) of this 
part.
    (11) Requirements for the infant lunch pattern. (i) Definitions. 
(A) Infant cereal means any iron-fortified dry cereal, specially 
formulated and generally recognized as cereal for infants, that is 
routinely mixed with breastmilk or iron-fortified infant formula prior 
to consumption.
    (B) Infant formula means any iron-fortified formula intended for 
dietary use solely as a food for normal, healthy infants. Formulas 
specifically formulated for infants with inborn errors of metabolism or 
digestive or absorptive problems are not included in this definition. 
Infant formula, when served, must be in liquid state at recommended 
dilution.
    (ii) Feeding lunches to infants. Lunches served to infants ages 
birth through 11 months must meet the requirements in paragraph (k)(5) 
of this section. Foods included in the lunch must be of a texture and a 
consistency that are appropriate for the age of the infant being 
served. The foods must be served during a span of time consistent with 
the infant's eating habits. For those infants whose dietary needs are 
more individualized, exceptions to the meal pattern must be made in 
accordance with the requirements found in Sec.  210.10(m) of this part.
    (iii) Breastmilk and iron-fortified formula. Either breastmilk or 
iron-fortified infant formula, or portions of both, must be served for 
the entire first year. Meals containing breastmilk and meals containing 
iron-fortified infant formula supplied by the school are eligible for 
reimbursement. However, infant formula provided by a parent (or 
guardian) and breastmilk fed directly by the infant's mother, during a 
visit to the school, contribute to a reimbursable lunch only when the 
school supplies at least one component of the infant's meal.
    (iv) Solid foods. For infants ages 4 through 7 months, solid foods 
of an appropriate texture and consistency are required only when the 
infant is developmentally ready to accept them. The school should 
consult with the infant's parent (or guardian) in making the decision 
to introduce solid foods. Solid foods should be introduced one at a 
time, on a gradual basis, with the

[[Page 2562]]

intent of ensuring the infant's health and nutritional well-being.
    (v) Infant meal pattern. Infant lunches must include, at a minimum, 
each of the food components indicated in Lunch Pattern for Infants 
table in the amount that is appropriate for the infant's age. For some 
breastfed infants who regularly consume less than the minimum amount of 
breastmilk per feeding, a serving of less than the minimum amount of 
breastmilk may be offered. In these situations, additional breastmilk 
must be offered if the infant is still hungry. Lunches may include 
portions of breastmilk and iron-fortified infant formula as long as the 
total number of ounces meets, or exceeds, the minimum amount required 
of this food component. Similarly, to meet the component requirements 
for vegetables and fruits, portions of both may be served. Infant 
lunches are reimbursable when schools provide all of the components in 
the Lunch Pattern for Infants table that the infant is developmentally 
ready to accept.
[GRAPHIC] [TIFF OMITTED] TP13JA11.027

    5. In Sec.  210.18:
    a. Revise paragraphs (a), (b)(2)(ii), (c), (g)(2), (i)(3)(ii), and 
(m); and
    b. Remove paragraph (h)(2) and redesignate paragraph (h)(3), 
(h)(4), (h)(5), and (h)(6) as paragraphs (h)(2), (h)(3), (h)(4), and 
(h)(5).
    The revisions read as follows:


Sec.  210.18  Administrative reviews.

    (a) General. Each State agency must follow the requirements of this 
section to conduct administrative reviews of school food authorities 
serving meals under parts 210 and 220 of this chapter.
    (b) * * *
    (2) * * *
    (i) * * *
    (ii) Performance Standard 2--Meal Requirements. Reimbursable 
lunches meet the meal requirements in Sec.  210.10 of this chapter, as 
applicable to the age/grade group reviewed. Reimbursable breakfasts 
meet the meal requirements in Sec.  220.8 of this chapter, as 
applicable to the age/grade group reviewed.
* * * * *
    (c) Timing of reviews. State agencies must conduct administrative 
reviews of all school food authorities participating in the NSLP and/or 
SBP at least once during a 3-year review cycle. For each State agency, 
the first 3-year review cycle will start the school year that begins on 
July 1, 2012 and ends on June 30, 2013. Administrative reviews and 
follow-up reviews must be conducted as follows:
    (1) Administrative reviews. At a minimum, State agencies must 
conduct administrative reviews of all school food authorities at least 
once during each 3-year review cycle, provided that each school food 
authority is reviewed at least once every 4 years. The on-site portion 
of the administrative review must be completed during the school year 
in which the review was begun.
    (2) Exceptions. FNS may, on an individual school food authority 
basis, approve written requests for 1-year extensions to the 3-year 
review cycle specified in paragraph (c)(1) of this section if FNS 
determines this 3-year cycle requirement conflicts with efficient State 
agency management of the Programs.
    (3) Follow-up reviews. The State agency is encouraged to conduct 
first follow-up reviews in the same school year as the administrative 
review. The first follow-up review must be conducted no later than 
December 31 of the school year following the administrative review. 
Subsequent follow-up reviews must be scheduled in accordance with 
paragraph (i)(5) of this section.
* * * * *

[[Page 2563]]

    (g) * * *
    (2) Performance Standard 2 (Reimbursable lunches meet the meal 
requirements in Sec.  210.10 of this chapter, as applicable to the age/
grade group reviewed. Reimbursable breakfasts meet the meal 
requirements in Sec.  220.8 of this chapter, as applicable to the age/
grade group reviewed). When reviewing meals, the State agency must:
    (i) For the day of the review, observe the serving line(s) to 
determine whether all food components and food quantities required 
under Sec.  210.10, as applicable, and Sec.  220.8, as applicable, are 
offered.
    (ii) For the day of the review, observe a significant number of the 
Program meals counted at the point of service for each type of serving 
line to determine whether the meals selected by the students contain 
the food components and food quantities required for a reimbursable 
meal under Sec.  210.10, as applicable, and Sec.  220.8, as applicable. 
If visual observation suggests that quantities offered are insufficient 
or excessive, the State agency must require the reviewed school(s) to 
provide documentation demonstrating that the required amounts of each 
food component were available for service for each day of the review 
period.
    (iii) Review menu and production records for a minimum of ten 
operating days (specified by the State agency); such review must 
determine whether all food components and food quantities required 
under Sec.  210.10, as applicable, and Sec.  220.8, as applicable, of 
this chapter have been offered.
    (iv) Conduct a nutrient analysis of the meals for students in age/
grade groups K and above to determine whether the meals offered meet 
the calorie, sodium, and saturated fat requirements in Sec.  210.10 and 
Sec.  220.8 of this chapter, as applicable. The State agency must 
conduct the nutrient analysis in accordance with the procedures 
established in Sec.  210.10(i) of this part. Until instructed by the 
Secretary, a nutrient analysis for the meals offered to preschoolers is 
not required. The State agency must also review nutrition labeling or 
manufacturer specifications for products or ingredients used to prepare 
school meals to verify they contain zero grams (less than 0.5 grams) of 
trans fat per serving.
* * * * *
    (i) * * *
    (3) * * *
    (ii) For Performance Standard 2--10 percent or more of the total 
number of Program lunches or Program breakfasts observed in a school 
food authority are missing one or more of the food components required 
under parts 210 and 220.
* * * * *
    (m) Fiscal action. Fiscal action for violations identified during 
an administrative review or any follow-up reviews must be taken in 
accordance with the provisions in Sec.  210.19(c) of this part.
    (1) Performance Standard I violations. A State agency is required 
to take fiscal action for all violations of the critical areas of 
Performance Standard 1. The State agency may limit fiscal action from 
the point corrective action occurs back through the beginning of the 
review period for errors identified under paragraphs (g)(1)(i)(A), 
(g)(1)(i)(B) and (g)(1)(i)(C) of this section, provided corrective 
action occurs.
    (2) Performance Standard 2 violations. A State agency is required 
to take fiscal action for violations of the critical areas of 
Performance Standard 2 as follows:
    (i) For food component violations cited under paragraph (g)(2) of 
this section, the State agency must take fiscal action and require the 
school food authority and/or school reviewed to take corrective action 
for the missing component. If a corrective action plan is in place, the 
State agency may limit fiscal action from the point corrective action 
occurs back through the beginning of the review period for errors 
identified under paragraph (g)(2) of this section.
    (ii) For repeated violations involving vegetable subgroups and milk 
type cited under paragraph (g)(2) of this section, the State agency 
must take fiscal action provided that:
    (A) Technical assistance has been given by the State agency;
    (B) Corrective action has been previously required and monitored by 
the State agency; and
    (C) The school food authority remains in noncompliance with the 
meal requirements established in parts 210 and 220 of this chapter.
    (iii) For violations involving food quantities and whole grains 
cited under paragraph (g)(2) of this section and for violations of 
calorie, saturated fat, sodium, and trans fat requirements cited under 
paragraph (g)(2)(iv) of this section, the State agency has discretion 
to apply fiscal action provided that:
    (A) Technical assistance has been given by the State agency;
    (B) Corrective action has been previously required and monitored by 
the State agency; and
    (C) The school food authority remains in noncompliance with the 
meal requirements established in parts 210 and 220 of this chapter.
* * * * *
    6. In Sec.  210.19:
    a. Remove paragraph (a)(1) and redesignate paragraphs (a)(2), 
(a)(3), (a)(4), (a)(5), and (a)(6) as paragraph (a)(1), (a)(2), (a)(3), 
(a)(4), (a)(5); and
    b. Revise paragraphs (c) introductory text, (c)(1) and (c)(6) to 
read as follows:


Sec.  210.19  Additional responsibilities.

* * * * *
    (c) Fiscal action. State agencies are responsible for ensuring 
Program integrity at the school food authority level. State agencies 
must take fiscal action against school food authorities for Claims for 
Reimbursement that are not properly payable, including, if warranted, 
the disallowance of funds for failure to take corrective action to 
comply with the meal requirements in parts 210 and 220 of this chapter. 
In taking fiscal action, State agencies must use their own procedures 
within the constraints of this Part and must maintain all records 
pertaining to action taken under this section. The State agency may 
refer to FNS for assistance in making a claim determination under this 
part.
    (1) Definition. Fiscal action includes, but is not limited to, the 
recovery of overpayment through direct assessment or offset of future 
claims, disallowance of overclaims as reflected in unpaid Claims for 
Reimbursement, submission of a revised Claim for Reimbursement, and 
correction of records to ensure that unfiled Claims for Reimbursement 
are corrected when filed. Fiscal action also includes disallowance of 
funds for failure to take corrective action to meet the meal 
requirements in Parts 210 and 220 of this chapter.
* * * * *
    (6) Exceptions. The State agency need not disallow payment or 
collect an overpayment when any review or audit reveals that a school 
food authority is approving applications which indicate that the 
households' incomes are within the Income Eligibility Guidelines issued 
by the Department or the applications contain Supplemental Nutrition 
Assistance Program or TANF case numbers or FDPIR case numbers or other 
FDPIR identifiers but the applications are missing the information 
specified in paragraph (1)(ii) of the definition of Documentation in 
Sec.  245.2 of this chapter.
* * * * *


Sec.  210.21  [Amended]

    7. In Sec.  210.21, amend paragraph (e) by removing the phrase 
``paragraph

[[Page 2564]]

(m)(1)(ii) of this section'' and adding in its place the phrase ``Sec.  
210.10(d)(4)) of this chapter.''
    8. Revise Sec.  210.30 to read as follows:


Sec.  210.30  State agency and Regional office addresses.

    School food authorities and schools desiring information about the 
Program should contact their State educational agency or the 
appropriate FNS Regional Office at the address or telephone number 
listed on the FNS Web site (http://www.fns.usda.gov/cnd).
    9. In Appendix B to part 210:
    a. Amend paragraph (b)(1) by removing from the fourth sentence the 
words ``, and the public by notice in the Federal Register as indicated 
below under paragraph (b)(3) of this section;''
    b. Amend paragraph (b)(2) by removing the words ``as indicated 
under paragraph (b)(3) of this section'' from the last sentence.
    c. Remove paragraph (b)(3) and redesignate paragraph (b)(4) as 
paragraph (b)(3); and
    d. Revise the first sentence of newly redesignated paragraph (b)(3) 
to read as follows:
* * * * *

Appendix B to Part 210--Categories of Foods of Minimal Nutritional 
Value.

    (b) * * *
    (3) Written petitions should be sent to the Chief, Nutrition 
Promotion and Training Branch, Child Nutrition Division, FNS, USDA, 
3101 Park Center Drive, Room 632, Alexandria, Virginia 22302.* * *
* * * * *

PART 220--SCHOOL BREAKFAST PROGRAM

    10. The authority citation for 7 CFR part 220 continues to read as 
follows:

    Authority: 42 U.S.C. 1773, 1779.

    11. In Sec.  220.2:
    a. Amend the definition of Breakfast by removing the word 
``nutritional'' and adding in its place the word ``meal'',
    b. Remove the definition of Menu item and the definition of 
Nutrient Standard Menu Planning/Assisted Nutrient Standard Menu 
Planning;
    c. Revise the definition of School week; and
    d. Add the definition of Whole grains and placing the definition in 
alphabetical order.
    The revisions and additions read as follows:


Sec.  220.2  Definitions.

* * * * *
    School week means the period of time used to determine compliance 
with the meal requirements in Sec.  220.8. The period must be a normal 
school week of five consecutive days; however, to accommodate shortened 
weeks resulting from holidays and other scheduling needs, the period 
must be a minimum of three consecutive days and a maximum of seven 
consecutive days. Weeks in which school breakfasts are offered less 
than three times must be combined with either the previous or the 
coming week.
* * * * *
    Whole grains means grains that consist of the intact, ground, 
cracked, or flaked grain seed whose principal anatomical components--
the starchy endosperm, germ and bran--are present in the same relative 
proportions as they exist in the intact grain seed. Whole grain-rich 
products must conform to FNS guidance to count toward the grains 
component.
* * * * *
    12. Revise Sec.  220.8 to read as follows:


Sec.  220.8  Meal requirements for breakfasts.

    (a) General. School food authorities must ensure that participating 
schools provide nutritious, well-balanced, and age-appropriate 
breakfasts to all the children they serve to improve their diet and 
safeguard their health. School breakfasts offered to children age 5 and 
older must meet, at a minimum, the meal requirements in paragraph (b) 
of this section. Schools must follow a food-based menu planning 
approach and produce enough food to offer each child the quantities 
specified in the meal pattern established in paragraph (c) of this 
section for each age/grade group served in the school. In addition, 
school breakfasts must meet the dietary specifications in paragraph (f) 
of this section. Schools offering breakfasts to children ages 1 to 4 
and infants must meet the meal pattern requirements in paragraph (n) of 
this section.
    (b) Meal requirements for school breakfasts. School breakfasts for 
children ages 5 and older must reflect food and nutrition requirements 
specified by the Secretary. Compliance with these requirements is 
measured as follows:
    (1) On a daily basis:
    (i) Meals offered to each age/grade group must include the food 
components and food quantities specified in the meal pattern in 
paragraph (c) of this section;
    (ii) Food products or ingredients used to prepare meals must 
contain zero grams of trans fat per serving or a minimal amount of 
naturally-occurring trans fat; and
    (iii) Meals selected by each student must have the number of food 
components required for a reimbursable meal and include at least one 
fruit or vegetable.
    (2) Over a 5-day school week:
    (i) Average calorie content of the meals offered to each age/grade 
group must be within the minimum and maximum calorie levels specified 
in paragraph (f) of this section;
    (ii) Average saturated fat content of the meals offered to each 
age/grade group must be less than 10 percent of total calories;
    (iii) Average sodium content of the meals offered to each age/grade 
group must not exceed the maximum level specified in paragraph (f) of 
this section.
    (c) Meal pattern for school breakfasts. A school must offer the 
food components and quantities required in the breakfast meal pattern 
established in the following table:

[[Page 2565]]

[GRAPHIC] [TIFF OMITTED] TP13JA11.028

    (1) Age/grade groups. Schools must plan menus for students using 
the following age/grade groups: Grades K-5 (ages 5-10), grades 6-8 
(ages 11-13), and grades 9-12 (ages 14-18). If an unusual grade 
configuration in a school prevents the use of the established age/grade 
groups, students in grades K-5 and grades 6-8 may be offered the same 
food quantities at breakfast provided that the calorie and sodium 
standards for each age/grade group are met. No customization of the 
established age/grade groups is allowed.
    (2) Food components. Schools must offer students in each age/grade 
group the food components specified in meal pattern in paragraph (c). 
Food component descriptions in Sec.  210.10 of this chapter apply to 
this Program. A serving of non-starchy vegetables may be offered in 
place of fruits at breakfast. Only pasteurized full-strength fruit and 
vegetable juice may be used, and may be credited to meet no more than 
one-half of the fruits component.
    (3) Food components in outlying areas. Schools in American Samoa, 
Puerto Rico and the Virgin Islands may serve a vegetable such as yams, 
plantains, or sweet potatoes to meet the grains component.
    (4) Production and menu records. Schools or school food 
authorities, as applicable, must keep production and menu records for 
the meals they produce. These records must show how the meals offered 
contribute to the required food components and food quantities for each 
age/grade group every day. Labels or manufacturer specifications for 
food products and ingredients used to prepare school meals must 
indicate zero grams of trans fat per serving (less than 0.5 grams). 
Schools or school food authorities must maintain records of the latest 
nutritional analysis of the school menus conducted by the State agency. 
Production and menu records must be maintained in accordance with FNS 
guidance.
    (d) Fluid milk requirement. A serving of fluid milk as a beverage 
or on cereal or used in part for each purpose must be offered for 
breakfasts. Schools must offer students a variety of fluid milk. Milk 
must be fat-free or low-fat. Milk with higher fat content is not 
allowed. Fat-free fluid milk may be flavored or unflavored, and low-fat 
fluid milk must be unflavored. Lactose-free fluid milk may also be 
offered. Schools must also comply with other applicable fluid milk

[[Page 2566]]

requirements in Sec.  210.10(d)(1), Sec.  210.10(d)(2), Sec.  
210.10(d)(3), and Sec.  210.10(d)(4) of this chapter.
    (e) Offer versus serve. School breakfasts must offer daily the four 
food components specified in the meal pattern in paragraph (c) of this 
section. At the option of the school food authority, each school may 
allow students to decline food items they do not intend to consume. 
Under offer versus serve, the student may decline one item at breakfast 
but must select at least one fruit serving, or one vegetable serving 
(if a vegetable is offered in place of fruit). The price of a 
reimbursable breakfast does not change if a student does not take a 
food item or requests smaller portions.
    (f) Dietary specifications. (1) Calories. School breakfasts offered 
to each age/grade group must meet, on average over the school week, the 
minimum and maximum calorie levels specified in the following table:

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

    (2) Saturated fat. School breakfasts offered to all age/grade 
groups must, on average over the school week, provide less than 10 
percent of total calories from saturated fat.
    (3) Sodium. School breakfasts offered to each age/grade group must 
meet, on average over the school week, the levels of sodium specified 
in the following table:
[GRAPHIC] [TIFF OMITTED] TP13JA11.029

    (4) Trans fat. Food products and ingredients used to prepare school 
meals must contain zero grams of trans fat (less than 0.5 grams) per 
serving. Schools must add the trans fat specification and request the 
required documentation (nutrition label or manufacturer specifications) 
in their procurement contracts. Documentation for food products and 
food ingredients must indicate zero grams of trans fat per serving. 
Meats that contain a minimal amount of naturally-occurring trans fats 
are allowed in the school meal programs.
    (g) Compliance assistance. The State agency and school food 
authority must provide technical assistance and training to assist 
schools in planning breakfasts that meet the meal pattern in paragraph 
(c) of this section and the calorie, saturated fat, sodium, and trans 
fat specifications established in paragraph (f) of this section. 
Compliance assistance may be offered during annual training, onsite 
visits, and/or administrative reviews.
    (h) State Agency responsibilities for monitoring dietary 
specifications. (1) Calories, saturated fat, and sodium. As part of the 
administrative review authorized under Sec.  210.18 of this chapter, 
State agencies must conduct a nutrient analysis for the school(s) 
selected for review to evaluate the average levels of calories, 
saturated fat, and sodium of the breakfasts offered during the review 
period. The nutrient analysis must be conducted in accordance with the 
procedures established in section 210.10(i) of this chapter. State 
agencies must also review nutrition labeling or manufacturer 
specifications for products or ingredients used to prepare school meals 
to verify they contain zero grams of trans fat per serving. If the 
results of the review indicate that the school breakfasts are not 
meeting the standards for calories, saturated fat, sodium, or trans fat 
levels specified in paragraph (f) of this section, the State agency or 
school food authority must provide technical assistance and require the 
reviewed school to develop a corrective action plan.

[[Page 2567]]

    (2) Trans fat. During an administrative review, State agencies must 
verify that the food products or ingredients used by the reviewed 
school(s) contain zero grams of trans fat (less than 0.5 grams) per 
serving.
    (i) State agency responsibilities for nutrient analysis. State 
agencies must conduct a nutrient analysis of all foods offered in a 
reimbursable breakfast by a school selected for administrative review 
to determine the average levels of calories, saturated fat, and sodium 
in the meals offered over a school week. The analysis must be conducted 
in accordance with the procedures established in Sec.  210.10(i) of 
this chapter.
    (j) State agency's responsibilities for compliance monitoring. 
Compliance with the meal requirements in paragraph (b) will be 
monitored by the State agency through administrative reviews authorized 
in Sec.  210.18 of this chapter.
    (k) Menu choices at breakfast. The requirements in Sec.  210.10(k) 
of this chapter apply to this Program.
    (l) Exceptions and variations allowed in reimbursable meals. The 
requirements in Sec.  210.10(m) of this chapter apply to this Program.
    (m) Nutrition disclosure. The requirements in Sec.  210.10(n) of 
this chapter apply to this Program.
    (n) Breakfasts for preschoolers and infants. (1) Nutrition 
standards for breakfasts for children age 1 to 4. Until otherwise 
instructed by the Secretary, breakfasts for preschoolers, when averaged 
over a school week, must meet the nutrition standards and the 
appropriate nutrient and calorie levels in this section. The nutrition 
standards are:
    (i) Provision of one-fourth of the Recommended Dietary Allowances 
(RDA) for protein, calcium, iron, vitamin A and vitamin C in the 
appropriate levels (see paragraph (n)(2) of this section);
    (ii) Provision of the breakfast energy allowances (calories) for 
children in the appropriate levels (see paragraph (n)(2) of this 
section);
    (iii) The following dietary recommendations:
    (A) Eat a variety of foods;
    (B) Limit total fat to 30 percent of total calories;
    (C) Limit saturated fat to less than 10 percent of total calories;
    (D) Choose a diet low in cholesterol;
    (E) Choose a diet with plenty of grain products, vegetables, and 
fruits; and
    (F) Choose a diet moderate in salt and sodium.
    (iv) The following measures of compliance:
    (A) Limit the percent of calories from total fat to 30 percent of 
the actual number of calories offered;
    (B) Limit the percent of calories from saturated fat to less than 
10 percent of the actual number of calories offered;
    (C) Reduce sodium and cholesterol levels; and
    (D) Increase the level of dietary fiber.
    (v) School food authorities must follow the traditional food-based 
menu planning approach to plan breakfasts for preschoolers and provide 
daily the food components and quantities specified in paragraph (n)(3) 
of this section.
    (vi) Schools must keep production and menu records for the 
breakfasts they produce. These records must show how the breakfasts 
contribute to the required food components and food quantities every 
school day. In addition, these records must show how the breakfasts 
contribute to the nutrition standards in paragraph (n)(1) of this 
section and the appropriate calorie and nutrient levels in paragraph 
(n)(2) of this section over the school week. Schools or school food 
authorities must maintain records of the latest nutritional analysis of 
the school menus conducted by the State agency.
    (2) Nutrient and calorie levels for breakfasts for preschoolers. 
Under the traditional food-based menu planning approach, the required 
levels are:
[GRAPHIC] [TIFF OMITTED] TP13JA11.030

    (3) Meal pattern for preschoolers. (i) Food items. Schools must 
offer these food items in at least the portions required for each age 
group:
    (A) A serving of fluid milk as a beverage or on cereal or used 
partly for both;
    (B) A serving of fruit or vegetable or both, or full-strength fruit 
or vegetable juice; and
    (C) Two servings from one of the following components or one 
serving from each component:
    (1) Grains/breads; and/or
    (2) Meat/meat alternate.

[[Page 2568]]

    (ii) Quantities for the traditional food-based menu planning 
approach. At a minimum, schools must offer the food items in the 
quantities specified for the appropriate age/grade group in the 
following table:
[GRAPHIC] [TIFF OMITTED] TP13JA11.031

    (iii) Offer versus serve. Schools must offer all four required food 
items. At the school food authority's option, students in preschool may 
decline one of the four food items. The price of a reimbursable 
breakfast does not change if the student does not take a menu item or 
requests smaller portions.
    (iv) Exceptions and variations allowed in reimbursable breakfasts. 
Schools must follow the requirements in Sec.  210.10(m) of this 
chapter.
    (4) Fluid milk requirement. A serving of fluid milk as a beverage 
or on cereal or used in part for each purpose must be offered for 
breakfasts. Schools must offer students in age group 1-2 and age group 
3-4 fluid milk in a variety of fat contents. Schools may offer flavored 
or unflavored fluid milk and lactose-free fluid milk. All milk served 
in the Program must be pasteurized fluid milk which meets State and 
local standards for such milk. All fluid milk must have vitamins A and 
D at levels specified by the Food and Drug Administration and must be 
consistent with State and local standards for such milk. Schools must 
also comply with other applicable milk requirements in Sec.  
210.10(d)(2), Sec.  210.10(d)(3), and Sec.  210.10(d)(4) of this 
chapter.
    (5) Additional foods. Schools may offer additional foods with 
breakfasts to children over one year of age.
    (6) Menu choices at breakfast. Schools must follow the requirements 
in Sec.  210.10(l) of this chapter.
    (7) Exceptions and variations allowed in reimbursable meals. 
Schools must follow the requirements in Sec.  210.10(m) of this 
chapter.
    (8) Nutrition disclosure. Schools must follow the requirements in 
Sec.  210.10(n) of this chapter.
    (9) State agency's responsibilities for monitoring breakfasts. As 
part of the administrative review authorized under Sec.  210.18(g)(2)of 
this chapter, State agencies must evaluate compliance with the meal 
pattern requirements (food components and quantities) in paragraph 
(n)(3) of this section. If the meals do not meet the requirements of 
this section, the State agency or school food authority must provide 
technical assistance and require the reviewed

[[Page 2569]]

school to take corrective action. In addition, the State agency must 
take fiscal action as authorized in Sec.  210.18(m) and 210.19(c) of 
this chapter.
    (10) Requirements for the infant breakfast pattern. (i) Feeding 
breakfasts to infants. Breakfasts served to infants ages birth through 
11 months must meet the requirements described in paragraph (n)(11)(iv) 
of this section. Foods included in the breakfast must be of a texture 
and a consistency that are appropriate for the age of the infant being 
served. The foods must be served during a span of time consistent with 
the infant's eating habits. For those infants whose dietary needs are 
more individualized, exceptions to the meal pattern must be made in 
accordance with the requirements found in Sec.  210.10(m) of this 
chapter.
    (ii) Breastmilk and iron-fortified formula. Either breastmilk or 
iron-fortified infant formula, or portions of both, must be served for 
the entire first year. Meals containing breastmilk and meals containing 
iron-fortified infant formula supplied by the school are eligible for 
reimbursement. However, infant formula provided by a parent (or 
guardian) and breastmilk fed directly by the infant's mother, during a 
visit to the school, contribute to a reimbursable breakfast only when 
the school supplies at least one component of the infant's meal.
    (iii) Solid foods. For infants ages 4 through 7 months, solid foods 
of an appropriate texture and consistency are required only when the 
infant is developmentally ready to accept them. The school should 
consult with the infant's parent (or guardian) in making the decision 
to introduce solid foods. Solid foods should be introduced one at a 
time, on a gradual basis, with the intent of ensuring the infant's 
health and nutritional well-being.
    (iv) Infant meal pattern. Infant breakfasts must have, at a 
minimum, each of the food components indicated, in the amount that is 
appropriate for the infant's age. For some breastfed infants who 
regularly consume less than the minimum amount of breastmilk per 
feeding, a serving of less than the minimum amount of breastmilk may be 
offered. In these situations, additional breastmilk must be offered if 
the infant is still hungry. Breakfasts may include portions of 
breastmilk and iron-fortified infant formula as long as the total 
number of ounces meets, or exceeds, the minimum amount required of this 
food component. Similarly, to meet the component requirement for 
vegetables and fruit, portions of both may be served.
    (A) Birth through 3 months. 4 to 6 fluid ounces of breastmilk or 
iron-fortified infant formula--only breastmilk or iron-fortified 
formula is required to meet the infant's nutritional needs.
    (B) 4 through 7 months. Breastmilk or iron-fortified formula is 
required. Some infants may be developmentally ready for solid foods of 
an appropriate texture and consistency. Breakfasts are reimbursable 
when schools provide all of the components in the meal pattern that the 
infant is developmentally ready to accept.
    (1) 4 to 8 fluid ounces of breastmilk or iron-fortified infant 
formula; and
    (2) 0 to 3 tablespoons of iron-fortified dry infant cereal.
    (C) 8 through 11 months. Breastmilk or iron-fortified formula and 
solid foods of an appropriate texture and consistency are required.
    (1) 6 to 8 fluid ounces of breastmilk or iron-fortified infant 
formula; and
    (2) 2 to 4 tablespoons of iron-fortified dry infant cereal; and
    (3) 1 to 4 tablespoons of fruit or vegetable.
    (v) Infant meal pattern table. The minimum amounts of food 
components to serve to infants, as described in paragraph (n)(11)(iv) 
of this section, are:
[GRAPHIC] [TIFF OMITTED] TP13JA11.032

    14. Paragraph 220.13 is amended as follows:
    a. Amend paragraph (f)(2) by removing the words ``Sec.  210.30'' 
wherever it appears and adding in its place the words ``Sec.  210.29''; 
and
    b. Revise paragraph (f)(3) to read as follows:


Sec.  220.13  Special responsibilities of State agencies.

* * * * *
    (f) * * *

[[Page 2570]]

    (3) For the purposes of compliance with the meal requirements in 
Sec.  220.8, the State agency must follow the provisions specified in 
Sec.  210.18(g)(2) of this chapter, as applicable.
* * * * *

Appendix A to Part 220 [Amended]

    15. Amend Appendix A to part 220 by removing section I. Formulated 
Grain-Fruit Products in its entirety, and by removing the Roman numeral 
``II.'' from the words ``II. Alternate Protein Products''.

    Dated: January 3, 2011.
Kevin Concannon,
Under Secretary, Food, Nutrition, and Consumer Services.
[FR Doc. 2011-485 Filed 1-12-11; 8:45 am]
BILLING CODE 3410-30-P