25024 Federal Register / Vol. 77, No. 82 / Friday, April 27, 2012 / Rules and Regulations 

Dated: April 16, 2012. 

Richard Cordray, 

Director, Bureau of Consumer Financial 

Protection. 

Don Fox, 

Principal Deputy Director, Office of 

Government Ethics. 

[FR Doc. 2012–10122 Filed 4–26–12; 8:45 am] 

BILLING CODE 4810–AM–P 

DEPARTMENT OF AGRICULTURE 

Food and Nutrition Service 

7 CFR Part 210 

[FNS–2011–0025] 

RIN 0584–AE15 

Certification of Compliance With Meal 

Requirements for the National School 

Lunch Program Under the Healthy, 

Hunger-Free Kids Act of 2010 

AGENCY: Food and Nutrition Service, 

USDA. 

ACTION: Interim final rule. 

SUMMARY: This interim rule amends 

National School Lunch Program 

regulations to conform to requirements 

contained in the Healthy, Hunger-Free 

Kids Act of 2010 regarding performancebased cash assistance for school food 

authorities certified compliant with 

meal pattern and nutrition standards. 

This rule requires State agencies to 

certify participating school food 

authorities (SFAs) that are in 

compliance with meal pattern and 

nutrition standard requirements as 

eligible to receive performance-based 

cash assistance for each reimbursable 

lunch served (an additional six cents 

per lunch available beginning October 1, 

2012 and adjusted annually thereafter). 

This rule also requires State agencies to 

disburse performance-based cash 

assistance to certified SFAs, and 

withhold the performance-based cash 

assistance if the SFA is determined to be 

out of compliance with meal pattern or 

nutrition standards during a subsequent 

administrative review. The intended 

effect of this rule is to provide 

additional funding for SFAs to 

implement new meal pattern 

requirements, thus increasing the 

healthfulness of meals served to school 

children. 

DATES: Effective date: This interim rule 

is effective July 1, 2012. 

Comment dates: Comments on rule 

provisions: Mailed comments on the 

provisions in this rule must be 

postmarked on or before July 26, 2012; 

emailed or faxed comments must be 

submitted by 11:59 p.m. on July 26, 

2012; and hand-delivered comments 

must be received by 5 p.m. July 26, 2012 

to be assured of consideration. 

Comments on Paperwork Reduction 

Act requirements: Comments on the 

information collection requirements 

associated with this rule must be 

received by June 26, 2012. 

ADDRESSES: The Food and Nutrition 

Service (FNS) invites interested persons 

to submit comments on this interim 

rule. Comments may be submitted by 

any of the following methods: 

• Federal eRulemaking Portal: Go to 

http://www.regulations.gov. Follow the 

online instructions for submitting 

comments. 

• Mail: Julie Brewer, Chief, Policy 

and Program Development Branch, 

Child Nutrition Division, FNS, 

Department of Agriculture, 3101 Park 

Center Drive, Room 640, Alexandria, 

Virginia 22302–1594. 

• Hand Delivery or Courier: Deliver 

comments to 3101 Park Center Drive, 

Room 640, Alexandria, Virginia 22302– 

1594, during normal business hours of 

8:30 a.m.–5 p.m. All submissions 

received in response to this interim rule 

will be included in the record and will 

be available to the public. Please be 

advised that the substance of the 

comments and the identity of the 

individuals or entities submitting 

comments will be subject to public 

disclosure. FNS will also make the 

comments publicly available by posting 

a copy of all comments on 

http://www.regulations.gov. 

FOR FURTHER INFORMATION CONTACT: Julie 

Brewer, Chief, Policy and Program 

Development Branch, Child Nutrition 

Division, FNS, 3101 Park Center Drive, 

Alexandria, Virginia 22302, or by 

telephone at (703) 305–2590. 

SUPPLEMENTARY INFORMATION: 

I. Background 

The National School Lunch Program 

(NSLP) provides cash assistance to 

States to assist schools in providing 

nutritious lunches for school children. 

In order to receive reimbursement, 

schools must serve lunches that meet 

program requirements, including 

statutory and regulatory nutrition 

standards. 

Prior to the enactment of the Healthy, 

Hunger-Free Kids Act of 2010 (Pub. L. 

111–296), on December 13, 2010, the 

Richard B. Russell National School 

Lunch Act (NSLA) (42 U.S.C. 1751 et 

al.) authorized only general and special 

cash assistance for lunches served in the 

NSLP. Section 4 of the NSLA authorizes 

the Secretary to provide two levels of 

general cash assistance for all lunches 

served, including lunches to children 

whose family income is above 185 

percent of the Federal poverty 

guidelines. The lower cash assistance 

level applies to lunches served by SFAs 

in which less than 60 percent of the 

lunches served in the school lunch 

program during the second preceding 

school year were served free or at a 

reduced price. The higher payment level 

applies to lunches served by SFAs in 

which 60 percent or more of the lunches 

served during the second preceding 

school year were served free or at a 

reduced price. 

To supplement the general cash 

assistance payments, section 11 of the 

NSLA (42 U.S.C. 1759a) authorizes the 

Secretary to provide special cash 

assistance payments to schools 

providing free and reduced price meals. 

Children from families with income at 

or below 130 percent of the Federal 

poverty level are eligible for free meals, 

while those from families with incomes 

between 130 and 185 percent are 

eligible for reduced price meals. As a 

result, lunches served to those students 

are reimbursable at a higher, special 

assistance rate. 

In accordance with section 11 of the 

NSLA, both the general and special cash 

assistance reimbursement rates are 

adjusted annually on July 1 of each year. 

Annual adjustments reflect changes in 

the cost of operating the NSLP, as 

indicated by the change in the Food 

Away From Home series of the 

Consumer Price Index for All Urban 

Consumers, published by the Bureau of 

Labor Statistics of the Department of 

Labor. Each year, the Department of 

Agriculture (the Department) publishes 

a Notice specifying the annual 

adjustments. 

The Healthy, Hunger-Free Kids Act of 

2010 

The Healthy, Hunger-Free Kids Act of 

2010 (the HHFKA) made significant 

changes to the NSLA. Section 201 of the 

HHFKA amended section 4(b) of the 

NSLA, 42 U.S.C. 1753(b), by requiring 

the Secretary to update the meal 

patterns and nutrition standards for the 

NSLP and School Breakfast Program 

(SBP) and to issue regulations requiring 

all SFAs to comply with the updated 

meal patterns and nutrition standards. 

On January 13, 2011, the Department 

published a proposed rule, Nutrition 

Standards in the National School Lunch 

and School Breakfast Programs (76 FR 

2494), which proposed to update the 

meal patterns and nutrition 

requirements for the NSLP and SBP, as 

required by the NSLA. The Department 

received over 132,000 comments from 

the public on the proposed rule. 

Subsequently, on January 26, 2012, the 

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Federal Register / Vol. 77, No. 82 / Friday, April 27, 2012 / Rules and Regulations 25025 

1Senate Report 111–178, page 2. 

2The legislative history of the HHFKA contains 

the following: 

In addition to their importance in addressing food 

insecurity, Federal child nutrition programs play a 

critical role in providing nutritious, balanced meals 

to children and promoting healthy lifestyles. Major 

strides have been made in recent years to improve 

the quality of meals served to children through 

child nutrition programs. According to the third 

USDA School Nutrition Dietary Assessment (SNDA 

III), in school year 2004–2005, over 95 percent of 

NSLP lunches offered and served by most schools 

met USDA goals for cholesterol over a typical week 

and were lower in saturated fat than meals served 

in school year 1998–1999, when the last SNDA was 

conducted. Larger proportions of elementary 

schools met the standards for total fat and saturated 

fat, and a larger proportion of secondary schools 

met the standard for saturated fat. 

Despite this significant progress, however, 

considerable work remains to be done to improve 

children’s diets and to bring Federally-subsidized 

meals in line with USDA nutritional guidelines. 

According to USDA, roughly 99 percent of lunches 

included amounts of sodium above the 

recommended levels. And, only 26 percent and 34 

percent of schools served lunches that met USDA 

guidelines for total fat and saturated fat, 

respectively. Additionally, available research has 

consistently shown that the diets of U.S. children 

do not meet current national dietary 

recommendations for nutrition and health. Overall, 

children today have diets that are low in fruits, 

vegetables, whole grains, and dairy foods, and high 

in sodium, fat and added sugars. The 2005 Dietary 

Guidelines recommend that Americans consume 

half of their grains as whole grains, but according 

to the U.S. Department of Health and Human 

Services report, Healthy People 2010, only 7 

percent of children ages two to 19 years currently 

meet this recommendation. (Senate Report 111–178, 

page 4.) 

Department issued a final rule, also 

entitled Nutrition Standards in the 

National School Lunch and School 

Breakfast Programs, (77 FR 4088) 

(hereafter referred to in this preamble as 

‘‘the updated meal pattern rule’’). The 

implementation date of the final rule is 

July 1, 2012. 

Section 201 of the HHFKA also 

amended the NSLA to provide for 

additional assistance payments in the 

form of performance-based 

reimbursement of 6 cents per lunch 

served beginning on October 1, 2012. 

Performance-based cash reimbursement 

is in addition to the general and special 

cash assistance described above and is 

to be provided for each lunch served in 

SFAs certified by the State agency to be 

in compliance with the updated meal 

patterns and nutrition standards 

(hereafter referred to in this preamble as 

‘‘updated meal patterns’’). 

In recognition of the significance of 

changes necessitated by the new 

statutory requirements, section 201 of 

the HHFKA also amended section 4(b) 

of the NSLA to provide $50 million for 

each of two years to assist in the 

implementation of the updated meal 

patterns. During each of those two years, 

$47 million of the $50 million will be 

made available to State agencies for 

training, technical assistance, 

certification, and oversight activities. 

The remaining $3 million will be used 

to support Federal implementation of 

the new requirements. This is in 

addition to the annual allocation of 

State administrative expense funds 

made available to State agencies in 

accordance with section 7 of the Child 

Nutrition Act of 1966, 42 U.S.C. 1776, 

and 7 CFR Part 235. 

Performance-Based Reimbursement 

As noted above, Section 201 

authorized the provision of 

performance-based cash assistance 

(performance-based reimbursement) for 

each lunch served in SFAs certified to 

be in compliance with the updated meal 

patterns. Specifically, section 201 added 

subparagraphs (D) and (E) to section 

4(b)(3) of the NSLA which read as 

follows: 

• ELIGIBLE SCHOOL FOOD 

AUTHORITY.—To be eligible to receive 

an additional reimbursement described 

in this paragraph, a school food 

authority shall be certified by the State 

to be in compliance with the interim or 

final regulations described in 

subparagraph (A)(ii). 

• FAILURE TO COMPLY.— 

Beginning on the later of the date 

described in subparagraph (A)(ii)(II), the 

date of enactment of this paragraph, or 

October 1, 2012, school food authorities 

found to be out of compliance with the 

meal patterns or nutrition standards 

established by the implementing 

regulations shall not receive the 

additional reimbursement for each 

lunch served described in this 

paragraph. 

Congress clearly intended that each 

SFA recognized as complying with 

updated meal patterns should be 

certified and should receive 

performance-based reimbursement for 

each eligible meal served. However, the 

method for assessing such compliance 

and determining such eligibility for 

performance-based reimbursement was 

not clearly enunciated in the abovecited provisions. Further, in 

subparagraph (E), it is not clear whether 

the reference to ‘‘meal patterns or 

nutrition standards established by the 

implementing regulations’’ refers to 

both the SBP and the NSLP or just the 

NSLP, especially considering that the 

provision reinforces the concept that the 

performance reimbursement is only 

applied to lunches served. As a result, 

it was necessary for the Secretary to 

develop an interpretation of this 

provision in order to determine how to 

implement it in this interim rule. Key to 

that determination was establishing the 

extent to which failure to comply with 

the updated meal patterns in SBP would 

jeopardize a SFA’s ability to continue to 

receive the performance-based 

reimbursement. First, the Department 

considered the overall purposes of the 

HHFKA, as Congress articulated them in 

the legislative history: 

In summary, it is evident that tremendous 

needs exist to reduce childhood hunger and 

food insecurity, as well as to improve the 

diets and overall health of American children 

more generally. The purpose of this bill is to 

address those needs in order that fewer lowincome children have to go without food, and 

to ensure that more children from all income 

levels adopt the kind of healthful eating 

habits and lifestyles that will enable them to 

live longer, more productive lives. (Senate 

Report 111–178, page 5.) 

It was apparent that in considering 

the HHFKA, Congress noted that 

participation in the SBP was 

substantially lower than participation in 

the NSLP and that the need for both of 

these programs is growing as a large 

segment of America’s school aged 

children face food insecurity.1 Congress 

also explicitly discussed the need to 

raise nutrition standards for both SBP 

and NSLP, noting in pertinent part that 

‘‘considerable work remains to be done 

to improve children’s diets and to bring 

Federally-subsidized meals in line with 

USDA nutritional guidelines.’’ 2 The 

HHFKA performance-based 

reimbursement provisions were 

intended to facilitate the raising of 

nutritional standards in these programs. 

After consideration of expressed 

Congressional intent and given the dual 

focus of the HHFKA on raising 

nutritional standards and improving 

program access in order to address food 

insecurity, the Department adopted a 

balanced approach in implementing the 

performance-based reimbursement 

provisions in this interim rule. The 

Department is of the view that the 

burden on SFAs should not be too 

onerous in scope nor too rapid in 

implementation insofar as either result 

could lead SFAs to decide not to make 

the changes necessary to receive the 

performance-based reimbursement or to 

cease SBP participation and focus solely 

on raising the nutritional standards for 

lunches served in the NSLP. On the 

other hand, the Department is 

committed to implementing the 

provisions in a way that is robust 

enough to ensure that SFAs receiving 

the performance-based reimbursement 

have implemented improved nutritional 

standards. The approach taken in this 

interim rule, then, is to strike the 

appropriate implementation balance to 

achieve both the goal of expanding 

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25026 Federal Register / Vol. 77, No. 82 / Friday, April 27, 2012 / Rules and Regulations 

participation and of raising nutritional 

standards of the school meals served to 

America’s children. 

Thus, in formulating regulations to 

implement the performance-based 

reimbursement, the Department sought 

to further the overall goals of the 

HHFKA as expressed by Congress and 

the ultimate purposes of the 

performance-based reimbursement. 

Specifically, the Department views 

section 4(b)(3)(D) and (E) as establishing 

two separate requirements. 

Subparagraph (D) requires that at the 

time an SFA is certified by the State 

agency to receive the 6 cents per lunch 

performance-based reimbursement, the 

State agency must determine that the 

SFA is in compliance with the updated 

meal patterns and nutrition 

requirements in effect at the time of 

certification for the NSLP (and for the 

SBP if the SFA participates in that 

program). That is, for an SFA to be 

eligible for the performance-based 

reimbursement, it must meet the 

improved nutritional standards then in 

effect for the lunches and breakfasts it 

serves under these programs. The 

Department believes that this approach 

to the certification requirement of 

subparagraph (D) meets the overall goals 

of the HHFKA, comports with the 

expectations of Congress, and 

incentivizes SFAs to raise the 

nutritional standards for all meals 

served. 

In subparagraph (E), the HHFKA 

provides that an SFA which falls out of 

compliance with the meal patterns or 

nutritional requirements is precluded 

from receiving the 6 cents per lunch 

performance-based reimbursement. In 

considering the implementation of this 

provision, the Department focused on 

the statutory intent of the phrase 

‘‘school food authorities found to be out 

of compliance with the meal patterns or 

nutrition standard.’’ As discussed 

above, in examining this phrase, the 

Department determined that it is 

unclear whether ‘‘meal patterns or 

nutrition standards’’ encompasses the 

patterns and standards in both the SBP 

and the NSLP or refers solely to those 

of the NSLP. The determination is 

especially important given that the 6 

cents performance-based reimbursement 

may only be provided to an SFA for the 

service of eligible lunches. There is no 

legislative history that provides 

additional insight or explanation as to 

the intent of Congress regarding the 

interpretation of this key phrase in the 

provision. Thus, after analysis and in 

consideration of the other changes to the 

NSLP and SBP accomplished in 

accordance with section 201 of the 

HHFKA, the Department shaped its 

interpretation of this phrase in light of 

the overall intent of the HHFKA and in 

keeping with federal experience in 

administering these programs. 

State agencies currently conduct 

regular administrative reviews of 

participating SFAs for both the NSLP 

and the SBP. In instances in which a 

State agency finds that the SFA has 

violated one of more critical areas of 

review, program regulations require that 

the SFA implement corrective action. 

The State agency may withhold program 

payments during the corrective action 

period, but will also provide technical 

and other assistance to the SFA and 

confirm corrective action through one or 

more follow up reviews. Pursuant to 

program regulations and consistent with 

the general policy of the Department, 

only in the rare instance in which an 

SFA fails to complete corrective action 

in a critical area of review does a State 

agency disallow meal reimbursements. 

The regulatory framework reflects the 

reality that a reduction in program 

payments of any amount is most likely 

to have an adverse impact on those who 

these programs are designed to help, the 

children receiving these school meals. 

Accordingly, in interpreting 

subparagraph (E) for the purposes of 

developing the implementing 

regulations in the interim rule, the 

Department has taken the following 

factors into account: 

(1) As explained above, it is clear that 

the 6 cents performance-based 

reimbursement and the compliance 

requirements of subparagraph (E) have a 

dual intent—to expand SFA 

participation in the NSLP and SBP and 

to encourage SFAs to raise nutritional 

standards for both the NSLP and SBP. 

In implementing the statute, the 

Department must balance the need 

effectively to encourage compliance 

with the increased nutritional standards 

for both programs without imposing 

unnecessary burdens likely to 

discourage SFAs from raising their 

breakfast and lunch nutrition standards 

or from participating in SBP. Neither of 

these outcomes would be compatible 

with the purposes of the HHFKA. 

(2) The implementation of the meal 

patterns and nutrition standards 

developed pursuant to the HHFKA will 

be phased in over a period of several 

years with SBP implementation likely to 

be more dynamic over the course of the 

next several years. 

Taking into account all of these 

factors and balancing the overall goals 

of the HHFKA-mandated performancebased reimbursement, the Department 

concluded that for the purposes of the 

interim rule, Congress’ use of the phrase 

‘‘the meal patterns or nutrition 

standards’’ in subparagraph (E) of the 

HHFKA means the meal patterns or 

nutrition standards of the NSLP but not 

the SBP. As a result, this interim rule 

provides that if the SFA is certified to 

receive the performance-based 

reimbursement and, during a State 

agency’s administrative review, is found 

to be in violation of a review area of the 

updated meal patterns for the SBP 

established in program regulations, the 

SFA is not in jeopardy of losing the 

performance-based reimbursement for 

eligible lunches served under the NSLP. 

Conversely, if the SFA is found to be out 

of compliance with the updated meal 

patterns for the NSLP, the SFA is at risk 

of losing the performance-based 

reimbursement. In addition, if the State 

agency finds a SFA out of compliance 

with the updated meal patterns for 

either SBP or the NSLP, the State agency 

is required to follow the standard 

operating procedures for administrative 

reviews. This means that a SFA could 

be subject to fiscal sanctions if the State 

agency determines that the SFA has not 

completed timely the corrective action 

as required by the regulations. 

The Department has determined that 

this approach strikes the right balance 

regarding the implementation of the 

requirements the HHFKA added to 

NSLA in sections 4(b)(3)(D) and (E) and 

reflects the intent of Congress as 

clarified in pertinent legislative history 

regarding the goals of the HHFKA. 

Consistent with the HHFKA provisions, 

the interim rule clearly requires SFAs 

that participate in the SBP and the 

NSLP to meet the higher nutritional 

standards in effect for both programs at 

the time the SFAs are certified. Existing 

regulations continue to require State 

agencies to establish corrective action 

plans and work with SFAs to timely 

complete corrective actions for any 

violations identified during 

administrative reviews relating to either 

program. On balance, the 

implementation of performance-based 

reimbursement and the higher nutrition 

standards will allow the performancebased reimbursement and compliance 

tools to serve as an effective incentive 

for SFAs to increase participation in 

these programs while raising nutritional 

standards. 

II. Overview 

This interim rule amends 7 CFR part 

210, the regulations governing the 

NSLP, to add the procedures for 

performance-based certifications, 

required documentation and 

timeframes, validation reviews, 

compliance and administrative reviews, 

reporting and recordkeeping, and 

technical assistance. 

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Federal Register / Vol. 77, No. 82 / Friday, April 27, 2012 / Rules and Regulations 25027 

Performance-Based Certification 

Requirements 

In accordance with the HHFKA, State 

agencies must provide performancebased reimbursements for each lunch 

served in eligible SFAs, i.e., SFAs 

certified by the State agency to be in 

compliance with the updated meal 

patterns for the NSLP (as well as for the 

SBP, if the SFA participates in the SBP). 

Section 210.7(d) has been revised to set 

forth the procedures for performancebased certifications for both State 

agencies and SFAs. 

(1) State Agency Certification 

Responsibilities 

Section 210.7(d)(1) of this interim rule 

requires State agencies to establish 

procedures to certify SFAs for 

performance-based cash reimbursement 

in accordance with guidance established 

by the Food and Nutrition Service 

(FNS). State agencies must provide 

guidance to facilitate the certification 

process, including making SFAs aware 

of certification protocol and 

documentation required to demonstrate 

compliance with updated meal patterns 

set forth in § 210.10 and for those SFAs 

participating in the SBP, 7 CFR 220.8 or 

220.23. Compliance with both NSLP 

and SBP updated meal patterns is 

necessary to be certified for 

performance-based cash 

reimbursements for lunch. However, 

because some aspects of the updated 

meal patterns are phased in over several 

years, SFAs must demonstrate 

compliance with requirements in effect 

at the time of certification. 

In school years subsequent to the 

school year of certification, through 

School Year 2014–2015, State agencies 

must require SFAs to submit an annual 

attestation of compliance with meal 

pattern requirements as new 

requirements are phased in. The phase 

in timeline for meal pattern 

requirements is established in the 

updated meal pattern rule.FNS will 

provide SFAs with a prototype 

attestation which includes a statement 

attesting compliance with each of the 

phased in meal pattern requirements. 

The attestation must be provided to the 

State agency as an addendum to the 

written agreement required in 

§ 210.9(b). Additionally, this interim 

rule requires in new § 210.18(g) that 

compliance with new requirements in 

subsequent years will be confirmed 

during State administrative reviews. 

This interim regulation also requires 

that State agencies’ procedures must 

also include a protocol for timely review 

of certification documents and 

disbursement of funds to eligible SFAs. 

Once a SFA is certified, a State agency 

must promptly disburse performancebased reimbursement to the SFA 

beginning with the start of certification. 

State agencies must begin making 

performance-based reimbursement 

payments for lunches served in certified 

SFAs in the calendar month for which 

the SFA is certified. However, because 

performance-based cash reimbursement 

is not available until October 1, 2012, 

State agency procedures must ensure 

that no performance-based 

reimbursement is provided for meals 

served by SFAs prior to October 1, 2012. 

Finally, during School Year 2012– 

2013, State agencies must conduct onsite validation reviews for a sample of 

certified SFAs to ensure that submitted 

certification documentation accurately 

reflects the meal service. 

These requirements are discussed in 

more detail below. 

(2) SFA Responsibilities 

Section 210.7(d)(2)of this interim rule 

establishes requirements for SFAs 

seeking to obtain performance-based 

reimbursement. SFAs must submit 

certification materials to the State 

agency in accordance with State agency 

certification procedures, including 

documentation to support receipt of 

performance-based reimbursement. 

SFAs must attest that the 

documentation provided is 

representative of the ongoing meal 

service within the SFA. Required 

documentation is described below. 

SFAs certified to earn performancebased reimbursement must maintain 

documentation of compliance, 

including production and menu records, 

and other records, and SFAs must make 

appropriate records available to State 

agencies upon request. 

Required Documentation and 

Timeframes 

SFAs may demonstrate compliance 

with the updated meal patterns to the 

State agency in a variety of ways, briefly 

described below. FNS developed the 

following options for certification using, 

to the maximum extent possible, 

existing processes and information 

available to the State agency and SFAs. 

This flexible approach is intended to 

facilitate the timely completion of 

certification activities with a reasonable 

burden on State agencies and SFAs. 

Additionally, the approach ensures that 

an SFA’s compliance with the updated 

meal patterns is assessed accurately. 

Option 1: Menus and nutrient 

analysis. Approximately two-thirds of 

SFAs currently plan menus using 

nutrient analysis software. Although 

SFAs will no longer be required to 

conduct a nutrient analysis once 

updated nutrition standards are in 

effect, those using software to plan 

menus may use the software’s nutrient 

analysis function to document 

compliance with updated meal patterns. 

SFAs that select this option must submit 

to the State agency one week of each 

type of menu offered in the schools 

under its jurisdiction, nutrient analyses 

of the submitted menus, and a detailed 

menu worksheet which shows food 

items and quantities (as specified by 

FNS) which will be used to assess 

compliance with updated meal patterns. 

Option 2: Menus and a simplified 

nutrient assessment. In lieu of showing 

compliance with updated meal patterns 

via a full menu nutrient analysis, SFAs 

may perform a simplified nutrient 

assessment related to foods offered on 

school menus to demonstrate to the 

State agency compliance with updated 

meal patterns. SFAs that exercise this 

certification option must submit to the 

State agency, a simplified nutrient 

assessment (as specified by FNS), one 

week of each type of menu offered, and 

a detailed menu worksheet with food 

items and quantities (as specified by 

FNS). 

Option 3: State agency review 

findings. An SFA may also demonstrate 

compliance with updated meal patterns 

during the course of a regular State 

agency-conducted administrative 

review, if the State offers this option. A 

detailed menu worksheet with food 

items and quantities (as specified by 

FNS) is required as part of the materials 

used to demonstrate compliance. When 

conducting an administrative review, a 

State agency may certify an SFA to 

receive performance-based 

reimbursement if the State agency can 

confirm compliance with all meal 

pattern and nutrition standards. The 

State agency may document certification 

in lieu of asking the SFA to submit 

documentation. 

SFAs may choose whether to submit 

menus with a nutrient analysis (option 

1), or with the simplified nutrient 

assessment (option 2). The option to 

certify SFA compliance during the 

course of an administrative review is 

left to the State agency. State agencies 

that wish to use this approach for some 

or all of their SFAs should notify these 

SFAs promptly. 

To ensure that certification 

documentation accurately reflect 

current SFA practices, menus submitted 

for certification after October 1, 2012 

must be submitted for certification at or 

around the time of planned usage. To 

facilitate disbursement of performancebased reimbursement as soon as it 

becomes available (October 1, 2012), 

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25028 Federal Register / Vol. 77, No. 82 / Friday, April 27, 2012 / Rules and Regulations 

State agencies should begin preparing 

for certification activities upon 

publication of this interim rule, so that 

the certification process for SFAs may 

begin as soon as possible following the 

beginning of SY 2012–2013. SFAsubmitted certification materials 

submitted prior to October 1, 2012 

should include menus that will be 

served October 1, 2012 or later. If a SFA 

submits certification materials to the 

State agency and is found to be out of 

compliance, the State agency may not 

authorize the performance-based 

reimbursement, must provide technical 

assistance in non-compliant areas, and 

encourage the SFA to take corrective 

action and reapply for certification. The 

SFA may reapply for certification as 

soon as corrective action is taken. If, in 

reviewing performance-based 

certification materials, the State agency 

finds a significant noncompliance 

violation (e.g., a missing meal 

component), the State agency must 

require the SFA to undergo an 

administrative review early in the 

review cycle. 

In years subsequent to the year 

certified, through School Year 2014– 

2015, SFA’s will be required to submit 

an annual attestation of compliance 

with meal pattern requirements as new 

requirements are phased in. The phase 

in timeline for meal pattern 

requirements is established in the 

updated meal pattern rule. The 

attestation must be provided to the State 

agency as an addendum to the written 

agreement required in § 210.9(b). 

State Agency Timeframes 

Because of the short implementation 

timeline prior to performance-based 

reimbursement becoming available, FNS 

seeks to ensure that certification 

activities are conducted in a timely 

manner. This interim rule requires in 

the new § 210.7(d)(1) that State agencies 

must review certification materials and 

make a certification determination 

within 60 days of receipt from the SFA 

or as otherwise authorized by FNS. 

Upon certification, the State agency 

must reimburse the certified SFA with 

the additional performance-based 

reimbursement for each lunch served 

beginning in the start of the month in 

which the certified menus are served. 

For example, if menus for the first week 

of October are certified in December, the 

State agency must retroactively 

reimburse the additional performancebased reimbursement for all lunches 

served on or after October 1. 

Documentation must reflect current 

meal service, i.e., meal service in the 

calendar month the certification 

materials are submitted or, in the month 

preceding the calendar month of 

submission. For the time period prior to 

the availability of funds (July 1, 2012– 

September 30, 2012), SFAs may submit 

documentation of compliance reflecting 

planned meal service beginning October 

1, 2012. However, in no case can 

reimbursement be made for meals 

served prior to October 1, 2012. 

Provision of the performance-based 

reimbursement is added by this interim 

rule at § 210.7(d). 

State Agency Validation Reviews 

For School Year 2012–2013, State 

agencies also must conduct on-site 

validation reviews for a sample of 

certified SFAs to validate the 

information submitted for certification. 

This interim rule requires in 

§ 210.7(d)(1)(vi)(A) State agencies to 

conduct on-site validation reviews for a 

random sample of 25 percent of certified 

SFAs, except that the sample must 

include all large certified SFAs, as 

defined in 210.18(b)(6). Because 

certifications will be ongoing 

throughout School Year 2012–2013, 

State agencies should select SFAs for 

validation reviews throughout the year 

to ensure that all certified SFAs are 

included in the sample universe. During 

on-site validation reviews, State 

agencies must observe a meal service for 

each type of certified menu, review the 

production records for observed meals 

to ensure they are consistent with the 

menus on which the certification 

determination was based, and review 

the documentation submitted for 

certification to ensure that ongoing meal 

service operations are consistent with 

certification documentation. These 

requirements are added by this rule at 

§ 210.7(d)(vi). 

The Department is mindful of State 

agency concerns about increased 

administrative burden related to 

implementing new meal pattern 

requirements, training and technical 

assistance, increased review frequency, 

and performance-based reimbursement 

certifications and validation reviews. In 

response to these concerns, for School 

Year 2012–2013, § 210.18(a) of this rule 

permit State agencies to conduct 

performance-based reimbursement 

certifications and validation reviews in 

lieu of administrative reviews, unless an 

SFA is determined by the State agency 

to be at-risk for improper payments. 

This flexibility for the 2012–2013 

School Year is discussed later in this 

preamble. 

FNS anticipates that SFAs in 

compliance with updated standards will 

seek certification by the State agency in 

a timely manner in order to receive 

performance-based reimbursement at 

the earliest possible date. An SFA that 

either does not voluntarily submit 

certification documentation or that 

submits materials that do not support 

certification will not receive the 

performance-based reimbursement. 

Further, § 210.18(d)(3) and (e)(4) require 

State agencies to conduct an 

administrative review of a noncompliant school food authority earlier 

in the review cycle. For these SFAs, 

compliance with the updated meal 

patterns will be evaluated at the next 

administrative review, at which time the 

State agency will assess compliance 

with the updated meal patterns and 

determine eligibility for the 

performance-based reimbursement. This 

provision is established by this rule in 

§ 210.18(e)(4). State agencies are 

strongly encouraged to include those 

SFAs not certified in School Year 2012– 

2013 in the first year of the 

administrative review cycle (which is 

School Year 2013–2014). 

Ongoing Compliance and Subsequent 

Administrative Reviews 

The updated meal pattern rule 

increases the scope of State agency 

administrative reviews of SFAs by 

eliminating School Meals Initiative 

(SMI) reviews and revising the 

Performance Standard 2 portion of the 

administrative review (commonly 

referred to as, Coordinated Review 

Effort) to reflect new meal pattern 

requirements. The final rule also 

increases review frequency to once 

every three years beginning School Year 

2013–2014, requires that breakfasts be 

reviewed during administrative reviews, 

and establishes requirements for fiscal 

action related to specific meal pattern 

violations. 

Administrative reviews will continue 

to assess both general and critical areas. 

The critical areas contain two 

performance standards: Performance 

Standard 1 assesses certification, 

counting, and claiming procedures to 

ensure that all free, reduced, and paid 

lunches are served to eligible children 

and that lunches are counted correctly 

to yield accurate claims; and 

Performance Standard 2 assesses 

whether lunches meet the updated meal 

patterns set forth in § 210.10 and 

breakfast meets § 220.8 or § 220.23, as 

applicable. The rule also establishes 

requirements for when State agencies 

must take fiscal action for specific meal 

pattern violations. 

After the initial certification to receive 

performance-based reimbursement, 

State agencies will assess continued 

compliance with the lunch and 

breakfast patterns at subsequent 

administrative reviews, as described 

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Federal Register / Vol. 77, No. 82 / Friday, April 27, 2012 / Rules and Regulations 25029 

above. If the SFA is certified to receive 

the performance-based reimbursement 

and, on an administrative review, is 

found to be non-compliant with the 

updated meal patterns for lunch 

established in § 210.10,the State agency 

must follow the standard operating 

procedures set forth in §§ 210.18 and 

210.19. As a result of this interim rule, 

these procedures include cessation of 

the performance-based reimbursement 

for noncompliance with lunch 

requirements until the SFA 

demonstrates to the satisfaction of the 

SA that corrective action has taken 

place. Absent immediate corrective 

action, the State agency must turn off 

the 6 cents per lunch reimbursement 

with the beginning of the month 

following the administrative review 

and, at State discretion, may turn off the 

6 cent per lunch reimbursement for the 

month under review. As always, the 

State agency may recover any funds 

improperly paid back through the 

beginning of the certification period. 

Non-compliance with the breakfast 

requirements would be handled in the 

usual review procedure and would not 

be a basis for cessation of the 

performance-based reimbursement. As 

required by the updated meal pattern 

rule, breakfast requirements are now 

part of the administrative review 

process which means that violations of 

the breakfast requirements will now 

result in fiscal action until such time as 

corrective action occurs. This 

requirement is established by this 

interim rule in § 210.18(m)(3) and 

§ 210.19(c)(2)(iv). 

School Year 2012–2013 Monitoring 

Adjustments 

The Department recognizes updating 

the school meal patterns and 

implementing the new performancebased reimbursement certification 

process will require a significant effort 

on the part of the State agencies, and 

local SFAs. To help ensure State 

agencies provide SFAs with the training 

and technical assistance needed to 

implement the updated meal patterns 

and performance-based funding 

requirements, the Department has 

reduced the administrative review 

requirements for School Year 2012– 

2013, as indicated above. 

The previously mentioned final rule, 

Nutrition Standards in the National 

School Lunch and School Breakfast 

Programs, eliminated the School Meal 

Initiative reviews (formerly required 

under § 210.19), effective with the 

beginning of School Year 2012–2013. 

This interim rule revises § 210.18(a) to 

permit State agencies to conduct 

administrative Coordinated Review 

Effort reviews scheduled for School 

Year 2012–2013 in either School Year 

2012–2013 or 2013–2014, with one 

exception: State agencies must conduct 

a scheduled School Year 2012–2013 

review in that year of any school food 

authority at risk for improper payments, 

as determined by the State agency. State 

agencies are advised that any reviews 

moved to School Year 2013–2014 count 

toward, and are not in addition to, the 

required number of reviews for the first 

three-year administrative review cycle. 

State agencies must continue to 

conduct additional administrative 

reviews (AARs) of selected local 

educational agencies that have a 

demonstrated level of, or are at high risk 

for, administrative error. On November 

4, 2010, State agencies were provided 

guidance on the implementation of 

AARs in school year 2010–2011 

(Additional Administrative Reviews and 

State Retention, SP_07—2011 

(Revised)). Because AARs target local 

educational agencies that have a 

demonstrated level of, or are at high risk 

for, administrative error, the Department 

has determined AARs are an essential 

review activity and this interim rule 

does not modify their use. 

These changes are expected to 

provide State agencies with the 

flexibility needed to conduct necessary 

training, technical assistance, and 

certification activities while exercising 

proper stewardship of federal funds. 

Reporting and Recordkeeping 

To facilitate disbursement of 

performance-based reimbursement to 

State agencies and, ultimately, SFAs, 

this interim rule establishes 

performance-based reimbursement 

reporting requirements for State 

agencies and SFAs. 

In addition to incorporating meal 

counts earning the performance-based 

reimbursement on the Report of School 

Program Operations (FNS–10), State 

agencies must submit a quarterly report, 

as specified by FNS, detailing the 

disbursement of performance-based 

reimbursement, including the total 

number of SFAs in the State, the names 

and locations of certified SFAs, and, for 

each school food authority, the total 

number of lunches earning the 

performance-based reimbursement for 

each month. In addition, this rule 

requires SFAs to submit to the State 

agency documentation to demonstrate 

compliance and support the receipt of 

performance-based reimbursement and 

an annual attestation of compliance 

with the meal pattern as new 

requirements become effective. The new 

reporting requirements for SFAs and 

State agencies, respectively, are 

contained in § 210.5(d)(2)(ii) and 

§ 210.15(b)(2). 

Technical Assistance 

FNS will work with State agencies to 

facilitate transition to the new meal 

requirements and assist SFAs in 

becoming eligible to receive 

performance-based reimbursement. FNS 

and the National Food Service 

Management Institute are developing 

technical assistance resources and 

training to help school foodservice staff 

improve menus, order appropriate foods 

to meet the new meal requirements, and 

control costs while maintaining quality. 

Resources and training materials being 

developed include identifying and 

purchasing whole grain-rich foods, 

lowering sodium in menus, and 

understanding and meeting the new 

meal pattern requirements. Training 

will be available through a variety of 

methods including webinars and online 

learning modules. 

In addition, Section 201 of the 

HHFKA amended Section 9(b)(3)(F) of 

the NSLA, by providing $50 million for 

each of two years to help FNS and State 

agencies implement new requirements 

implemented by this interim rule, 

including training, technical assistance, 

and conducting performance-based 

certifications. As provided for in 

HHFKA, we expect that all but $3 

million of each year’s funds (which will 

be used to support Federal 

implementation) will be made available 

to State agencies for those purposes. 

These funds, combined with subsequent 

increases in State Administrative 

Expense funding, aim to provide 

resources that State agencies may use to 

assist local program operators to 

improve the quality of school meals 

provided to children and come into 

compliance with the new meal patterns. 

FNS is also developing guidance, 

resources, and necessary forms to assist 

with the timely execution of 

performance-based certifications, and 

will make these materials available on a 

centralized Web site. These materials 

will be available at: http:// 

www.fns.usda.gov/cnd/Governance/ 

Legislation/CNR_resources.htm. 

III. Procedural Matters 

Issuance of an Interim Rule and Date of 

Effectiveness 

The Department, under the provisions 

of the Administrative Procedure Act at 

5 U.S.C. 553(b)(B), finds for good cause 

that use of prior notice and comment 

procedures for issuing this interim rule 

is impracticable. Section 201 of the 

Healthy, Hunger-Free Kids Act of 2010, 

Public Law 111–296, enacted on 

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25030 Federal Register / Vol. 77, No. 82 / Friday, April 27, 2012 / Rules and Regulations 

December 13, 2010, requires provision 

of the performance-based 

reimbursement to SFAs determined to 

be eligible beginning on October 1, 

2012. Because the provision of 

performance-based reimbursement is 

dependent on the publication and 

implementation of the final meal pattern 

requirements, the Department concludes 

that there is insufficient time to issue 

both a proposed rule and final rule prior 

to the statutory implementation 

deadline. As a result, this interim rule 

is necessary to comply with the 

requirements of Section 201 of Public 

Law 111–296 and ensure that those 

provisions are implemented and 

effected by State agencies and SFAs by 

October 1, 2012. 

The Department invites public 

comment on this interim rule, and will 

consider amendments to the interim 

rule based on comments submitted 

during the 90-day comment period. The 

Department will address comments and 

affirm or amend the interim rule in a 

final rule. 

Executive Order 12866 and Executive 

Order 13563 

Executive Orders 12866 and 13563 

direct agencies to assess all costs and 

benefits of available regulatory 

alternatives and, if regulation is 

necessary, to select regulatory 

approaches that maximize net benefits 

(including potential economic, 

environmental, public health and safety 

effects, distributive impacts, and 

equity). Executive Order 13563 

emphasizes the importance of 

quantifying both costs and benefits, of 

reducing costs, of harmonizing rules, 

and of promoting flexibility. 

This interim rule has been designated 

an ‘‘economically significant regulatory 

action,’’ under section 3(f) of Executive 

Order 12866. Accordingly, the rule has 

been reviewed by the Office of 

Management and Budget. As required 

for all rules that have been designated 

significant by the Office of Management 

and Budget, a Regulatory Impact 

Analysis (RIA) was developed for this 

interim rule. The following is a 

summary of the RIA. The complete RIA 

is published in this docket (FNS–2011– 

0025) on www.regulations.gov. 

Need for Action 

Section 201 of the Healthy HungerFree Kids Act of 2010 (HHFKA) 

provides for a 6 cent per lunch 

performance-based reimbursement to 

SFAs that comply with NSLP and SBP 

meal standards that take effect on July 

1, 2012. This rule provides the 

regulatory framework for establishing 

initial school food authority (SFA) 

compliance with the new meal 

standards and for monitoring ongoing 

compliance. 

Benefits 

This rule establishes procedures that 

will result in a transfer from the Federal 

government to SFAs of as much as $1.4 

billion through FY 2016 to implement 

improved NSLP and SBP meal patterns 

that are more fully aligned with the 

Dietary Guidelines for Americans. The 

2010 Dietary Guidelines Advisory 

Committee emphasizes the importance 

of a diet consistent with DGA 

recommendations as a contributing 

factor to overall health and a reduced 

risk of chronic disease. The new meal 

patterns are intended not only to 

improve the quality of meals consumed 

at school, but to encourage healthy 

eating habits generally. Those goals of 

the meal patterns rule are furthered by 

the funding made available by this 

interim rule. 

Costs 

In addition to the estimated $1.4 

billion 5-year transfer from the Federal 

government to SFAs in NSLP meal 

reimbursements, SFAs will incur some 

minor costs to prepare materials to 

document and certify their compliance 

with the new meals patterns. State 

agencies will incur costs to review that 

documentation, make certification 

decisions, conduct on-site SFA 

verification reviews, and provide 

technical assistance to the SFAs. 

Through FY 2016, these administrative 

functions are expected to cost $3.7 

million. Finally, the interim rule 

provides for an additional $100 million 

over fiscal years 2012 and 2013 to fund 

technical assistance, oversight, 

monitoring, and certification activity by 

the States. 

Accounting Statement 

The following accounting statement 

gives the estimated discounted, 

annualized costs and transfers of the 

rule. The figures are computed from 

nominal 5-year estimates developed in 

the full RIA. The accounting statement 

contains figures computed with 7 

percent and 3 percent discount rates 

under two scenarios. The first scenario 

estimates the cost of full and immediate 

SFA compliance with the new meal 

patterns. Under that upper bound 

scenario, summarized in the preceding 

paragraphs, the nominal 5-year increase 

in NSLP reimbursements totals $1.4 

billion, and State and SFA 

administrative expenses equal $3.7 

million. The second scenario models 

full SFA compliance within 3 years. 

Under that alternate scenario, the 

nominal 5-year increase in NSLP 

reimbursements totals $1.2 billion, and 

State and SFA administrative expenses 

are $3.8 million. 

The figures in the accounting 

statement rows labeled ‘‘costs’’ include 

State and SFA administrative expenses 

as well as the $3 million retained by 

USDA in each of the fiscal years 2012 

and 2013 out of the $100 million 

provided by HHFKA for State technical 

assistance, certification, and monitoring 

activity. 

The figures in the rows labeled 

‘‘transfers’’ include Federal NSLP 

reimbursements to SFAs plus the $47 

million in Federal assistance ($50 

million less $3 million retained for 

Federal expenses) in each of the fiscal 

years 2012 and 2013 for State technical 

assistance, certification, and monitoring 

activity. 

Primary 

estimate 

Alternate 

estimate 

Year 

dollar 

Discount 

rate 

Period 

covered 

Benefits: 

Qualitative: This rule encourages SFA compliance with the NSLP and SBP meal standards that take effect on July 1, 2012 by providing an additional 6 cent reimbursement for lunches served that meet the new requirements. The additional funds will help offset about 30 percent of 

the costs incurred by SFAs to serve meals that comply with the new requirements. 

Costs: 

Annualized Monetized ($millions/year) ...................................... $2.2 $2.2 2012 7% FY2012–2016. 

2.0 2.0 2012 3% 

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Federal Register / Vol. 77, No. 82 / Friday, April 27, 2012 / Rules and Regulations 25031 

Primary 

estimate 

Alternate 

estimate 

Year 

dollar 

Discount 

rate 

Period 

covered 

Costs shown here are a combination of State, SFA, and Federal costs. State and SFA costs are the administrative costs associated with submitting and processing SFA documentation to support SFA claims of compliance with the meal standards rule. Federal costs are equal to the 

$3 million retained by the USDA in each of the years FY 2012 and FY 2013 from the $100 million made available by HHFKA for State agency technical assistance, certification, and monitoring activity. 

Transfers: 

Annualized Monetized ($millions/year) ...................................... 288 260 2012 7% FY2012–2016. 

292 264 2012 3% 

There are two transfers included in these figures. The first is the $47 million transfer from the Federal government to State agencies each of the 

years FY 2012 and FY 2013 to support State agency technical assistance, certification, and monitoring activity. The second is the transfer 

from the Federal government to SFAs for increased NSLP meal reimbursements. 

Regulatory Flexibility Act 

This interim 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 

rule will not have a significant impact 

on a substantial number of small 

entities. 

While there may be some SFA burden 

associated with initial certification for 

the performance-based reimbursement 

in this rule, the burdens will not be 

significant and will be outweighed by 

the benefits of increased Federal 

reimbursement for school lunches. 

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, 

the Department generally must prepare 

a written statement, including a cost/ 

benefit analysis, for proposed and final 

rules with Federal mandates that may 

result in expenditures to State, local, or 

tribal governments, in the aggregate, or 

to the private sector, of $100 million or 

more in any one year. When such a 

statement is needed for a rule, section 

205 of the UMRA generally requires the 

Department to identify and consider a 

reasonable number of regulatory 

alternatives and adopt the least costly, 

more cost-effective or least burdensome 

alternative that achieves the objectives 

of the rule. This rule does not contain 

Federal mandates (under the regulatory 

provisions of Title II of the UMRA) that 

impose costs on State, local, or tribal 

governments or to the private sector of 

$100 million or more in any one year. 

This rule is, therefore, not subject to the 

requirements of sections 202 and 205 of 

the UMRA. 

Executive Order 12372 

The National School Lunch Program 

and School Breakfast Program are listed 

in the Catalog of Federal Domestic 

Assistance under No. 10.555. For the 

reasons set forth in the final rule in 7 

CFR part 3015, subpart V and related 

notice (48 FR 29115, June 24, 1983), this 

program is included in the scope of 

Executive Order 12372, which requires 

intergovernmental consultation with 

State and local officials. In developing 

this regulation, FNS gathered input from 

State and local program operators, and 

other stakeholders, via listening 

sessions held at the School Nutrition 

Association Legislative Action 

Conference in March 2011, and at the 

School Nutrition Association Annual 

National Conference in July 2011. 

Executive Order 13132 

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 interim rule, FNS 

staff received informal input from 

various stakeholders while participating 

in various State, regional, national, and 

professional conferences. The School 

Nutrition Association, the Center for 

Science in the Public Interest, and the 

American Dietetic Association shared 

their views about performance-based 

reimbursement. Numerous stakeholders, 

including State and local program 

operators, also provided input at public 

meetings held by the School Nutrition 

Association. 

Nature of Concerns and the Need To 

Issue This Rule 

State Agencies and SFAs want to 

provide the best possible school meals 

through the NSLP and SBP but are 

concerned about the costs and 

administrative burden associated with 

increased program oversight. While FNS 

is aware of these concerns, the National 

School Lunch Act, 42 U.S.C. 

1753(b)(a)(4) requires that State agencies 

certify whether SFAs are in compliance 

with meal pattern and nutrition 

standards, and disburse performancebased reimbursement to eligible SFAs. 

Extent to Which We Meet Those 

Concerns 

FNS has considered the impact of this 

interim rule on State and local program 

operators and has attempted to develop 

a rule that would implement the 

performance-based reimbursement in 

the most effective and least burdensome 

manner. FNS recognizes that 

implementing the new performancebased reimbursement certification 

process will require a significant effort 

on the part of State and local program 

operators. To ensure State agencies 

conduct performance-based funding 

requirements and provide SFAs with 

the training and technical assistance 

needed to implement the improved 

school meal patterns, FNS has reduced 

the administrative review requirements 

for School Year 2012–2013. Per the 

requirements of the HHFKA, FNS will 

provide $47 million to States for each of 

two years to assist with meal pattern 

implementation, training, technical 

assistance, and performance-based 

certification activities. FNS is also 

exploring additional approaches to 

alleviate program operators’ 

administrative burden, including 

support for implementation and 

certification activities. 

Executive Order 12988 

This rule has been reviewed under 

Executive Order 12988, Civil Justice 

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25032 Federal Register / Vol. 77, No. 82 / Friday, April 27, 2012 / Rules and Regulations 

Reform. This rule is intended to have 

preemptive effect with respect to any 

State or local laws, regulations or 

policies which conflict with its 

provisions or which would otherwise 

impede its full implementation. This 

rule is not intended to have a retroactive 

effect unless specified in the DATES

section of the final rule. Prior to any 

judicial challenge to the provisions of 

this rule or the application of its 

provisions, all applicable administrative 

procedures must be exhausted. 

Civil Rights Impact Analysis 

FNS has reviewed this rule in 

accordance with Departmental 

Regulations 4300–4, ‘‘Civil Rights 

Impact Analysis’’, and 1512–1, 

‘‘Regulatory Decision Making 

Requirements.’’ After a careful review of 

the rule’s intent and provisions, FNS 

has determined that this rule is not 

intended to limit or reduce in any way 

the ability of protected classes of 

individuals to receive benefits on the 

basis of their race, color, national origin, 

sex, age or disability nor is it intended 

to have a differential impact on minority 

owned or operated business 

establishments, and woman- owned or 

operated business establishments that 

participate in the Child Nutrition 

Programs. 

Paperwork Reduction Act 

The Paperwork Reduction Act of 1995 

(44 U.S.C. Chap. 35; see 5 CFR part 

1320), requires that the Office of 

Management and Budget (OMB) 

approve all collections of information 

by a Federal agency 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 

increase burden hours, affect the 

information collection requirements that 

will be merged into the National School 

Lunch Program, OMB Control Number 

0584–0006, expiration date 5/31/2012. 

The current collection burden inventory 

for the National School Lunch Program 

is 12,654,440. 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 interim rule must be 

received by June 26, 2012. 

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 interim 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 interim 

information collection burden, 

including the validity of the 

methodology and assumptions used; (3) 

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: Certification of Compliance 

with Meal Requirements for the 

National School Lunch Program Under 

the Healthy, Hunger-Free Kids Act of 

2010. 

OMB Number: 0584–NEW. 

Expiration Date: Not yet determined. 

Type of Request: New collection. 

Abstract: This rule amends National 

School Lunch Program regulations to 

conform to requirements contained in 

the Healthy, Hunger-Free Kids Act of 

2010 (Pub. L. 111–296) regarding 

performance-based reimbursement for 

SFAs certified compliant with meal 

patterns and nutrition standards. This 

rule requires State agencies to certify 

whether participating SFAs are in 

compliance with meal requirements 

and, therefore, eligible to receive 

performance-based reimbursement for 

each reimbursable lunch served (an 

additional six cents per lunch available 

beginning October 1, 2012, adjusted 

annually thereafter). This rule also 

requires States to disburse performancebased cash assistance to certified SFAs, 

and withhold the performance-based 

reimbursement if an SFA is found to be 

out of compliance with meal pattern or 

nutrition standards during a subsequent 

administrative review. The intended 

effect of this rule is to incentivize SFAs 

to implement new meal pattern 

requirements to increase the 

healthfulness of meals served to school 

children. 

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 Interim Rule: 

State administering agencies (56) and 

School Food Authorities (20,858). 

Estimated Number of Respondents for 

this Interim Rule: 20,914. 

Estimated Number of Responses per 

Respondent for This Interim Rule: 

4.9960. 

Estimated Total Annual Responses: 

104,488. 

Estimated Time per Respondent: 

1.4988. 

Estimated Total Annual Reporting 

and Recordkeeping Burden on 

Respondents for this Interim Rule: 

156,608. 

ESTIMATED ANNUAL BURDEN FOR 0584–NEW, 6 CENTS RULE, 7 CFR PART 210 

Section 

Estimated 

number of 

respondents 

Frequency of 

response 

Average 

annual 

responses 

Average 

burden per 

response 

Annual 

burden hours 

Reporting 

SAs review submitted certification materials and notify 

SFAs of the certification determination.

210.7(d)(1)(iv) .............. 56 372 20,832 2 41,664 

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ESTIMATED ANNUAL BURDEN FOR 0584–NEW, 6 CENTS RULE, 7 CFR PART 210—Continued 

Section 

Estimated 

number of 

respondents 

Frequency of 

response 

Average 

annual 

responses 

Average 

burden per 

response 

Annual 

burden hours 

SAs submit a quarterly report to 

FNS detailing the disbursement of performance-based 

reimbursement to SFAs.

210.5(d)(2)(ii) ............... 56 4 224 1.0 224 

Total SA Reporting ............. ..................................... 56 376 21,056 1.9894 41,888 

SFAs must submit certification 

materials to State agency to 

support receipt of performance based reimbursement.

210.7(d)(2) .................. 20,858 1 20,858 4.5 93,861 

SFAs must submit an annual attestation of compliance with 

meal pattern requirements as 

new requirements are phased 

in.

210.7(d)(2) .................. 20,858 1 20,858 0.25 5,215 

Total SFA Reporting ........... ..................................... 20,858 1 20,858 4.75 99,076 

Total Reporting for 6 cents 

Interim rule.

..................................... 20,914 2.0041 41,914 3.3631603 140,964 

Total Existing Reporting 

Burden for Part 210.

..................................... ........................ ........................ ........................ ........................ 2,912,745 

Total Reporting Burden for 

Part 210 with 6 cents interim rule.

..................................... ........................ ........................ ........................ ........................ 3,053,709 

Recordkeeping 

SFAs maintain documentation to 

support performance-based 

reimbursement.

210.7(d)(2) .................. 20,858 2 41,716 0.25 10,429 

SFAs maintain documentation 

related to the attestation of 

compliance submitted to the 

SA as an attachment to the 

written agreement required in 

210.9(b).

210.7(d)(2) .................. 20,858 1 20.858 0.25 5,215 

Total Recordkeeping for 6 

cents interim rule.

..................................... 20,858 3.0 62,574 0.25 15,644 

Total Existing Recordkeeping Burden for 0584– 

0006, Part 210.

..................................... ........................ ........................ ........................ ........................ 8,893,821 

Total Recordkeeping Burden for 0584–0006, Part 

210 with 6 cents interim 

rule.

..................................... ........................ ........................ ........................ ........................ 8,909,465 

SUMMARY OF BURDEN (OMB #0584– 

NEW) 

TOTAL NO. RESPONDENTS .. 20,914 

AVERAGE NO. RESPONSES 

PER RESPONDENT ............. 4.99608 

TOTAL ANNUAL RESPONSES 104,488 

AVERAGE HOURS PER RESPONSE ............................... 1.49880 

TOTAL BURDEN HOURS FOR 

PART 210 WITH INTERIM 

RULE ..................................... 11,963,174 

CURRENT OMB INVENTORY 

FOR PART 210 ..................... 11,806,566 

SUMMARY OF BURDEN (OMB #0584– 

NEW)—Continued 

DIFFERENCE (NEW BURDEN 

REQUESTED WITH INTERIM RULE) ....................... 156,608 

E-Government Act Compliance 

The Food and Nutrition Service is 

committed to complying with the EGovernment 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. 

Executive Order 13175—Consultation 

and Coordination With Indian Tribal 

Governments 

Executive Order 13175 requires 

Federal agencies to consult and 

coordinate with tribes on a governmentto-government basis on policies that 

have tribal implications, including 

regulations, legislative comments or 

proposed legislation, and other policy 

statements or actions that have 

substantial direct effects on one or more 

Indian tribes, on the relationship 

between the Federal Government and 

Indian tribes, or on the distribution of 

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25034 Federal Register / Vol. 77, No. 82 / Friday, April 27, 2012 / Rules and Regulations 

power and responsibilities between the 

Federal Government and Indian tribes, 

or distribution of power and 

responsibilities between the Federal 

government and Indian tribes. In spring 

2011, FNS offered opportunities for 

consultation with Tribal officials or 

their designees to discuss the impact of 

the Healthy Hunger Free Kids Act of 

2010 on Tribes or Indian Tribal 

governments. The consultation sessions 

were coordinated by FNS and held on 

the following dates and locations: 

1. HHFKA Webinar & Conference 

Call—April 12, 2011. 

2. Mountain Plains—HHFKA 

Consultation, Rapid City, SD—March 

23, 2011. 

3. HHFKA Webinar & Conference 

Call—June, 22, 2011. 

4. Tribal Self-Governance Annual 

Conference in Palm Springs, CA—May 

2, 2011. 

5. National Congress of American 

Indians Mid-Year Conference, 

Milwaukee, WI—June 14, 2011. 

There were no comments about this 

regulation received during any of the 

aforementioned Tribal Consultation 

sessions. 

Reports from these consultations are 

part of the USDA annual reporting on 

Tribal consultation and collaboration. 

FNS will respond in a timely and 

meaningful manner to Tribal 

government requests for consultation 

concerning this rule. Currently, FNS 

provides regularly scheduled quarterly 

consultation sessions through the end of 

FY2012 as a venue for collaborative 

conversations with Tribal officials or 

their designees. 

List of Subjects in 7 CFR Part 210 

Grant programs—education; Grant 

programs—health; Infants and children; 

Nutrition; Penalties; Reporting and 

recordkeeping requirements; School 

breakfast and lunch programs; Surplus 

agricultural commodities. 

Accordingly, 7 CFR part 210 is 

amended as follows: 

PART 210—NATIONAL SCHOOL 

LUNCH PROGRAM 

■ 1. The authority citation for part 210 

continues to read as follows: 

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

■ 2. Amend § 210.4 by revising 

paragraph (b)(1) to read as follows: 

§ 210.4 Cash and donated food assistance 

to States. 

* * * * * 

(b) * * * 

(1) Cash assistance will be made 

available to each State agency 

administering the National School 

Lunch Program as follows: 

(i) General: Cash assistance payments 

are composed of a general cash 

assistance payment and a performancebased cash assistance payment, 

authorized under section 4 of the Act, 

and a special cash assistance payment, 

authorized under section 11 of the Act. 

General cash assistance is provided to 

each State agency for all lunches served 

to children in accordance with the 

provisions of the National School Lunch 

Program. Performance-based cash 

assistance is provided to each State 

agency for lunches served in accordance 

with § 210.7(d). Special cash assistance 

is provided to each State agency for 

lunches served under the National 

School Lunch Program to children 

determined eligible for free or reduced 

price lunches in accordance with part 

245 of this chapter. 

(ii) Cash assistance for lunches. The 

total general cash assistance paid to 

each State for any fiscal year shall not 

exceed the lesser of amounts reported to 

FNS as reimbursed to school food 

authorities in accordance with 

§ 210.5(d)(3) or the total calculated by 

multiplying the number of lunches 

reported in accordance with 

§ 210.5(d)(1) for each month of service 

during the fiscal year, by the applicable 

national average payment rate 

prescribed by FNS. The total 

performance-based cash assistance paid 

to each State for any fiscal year shall not 

exceed the lesser of amounts reported to 

FNS as reimbursed to school food 

authorities in accordance with 

§ 210.5(d)(3) or the total calculated by 

multiplying the number of lunches 

reported in accordance with 

§ 210.5(d)(1) for each month of service 

during the fiscal year, by 6 cents for 

school year 2012–2013, adjusted 

annually thereafter as specified in 

paragraph (b)(1)(iii) of this section. The 

total special assistance paid to each 

State for any fiscal year shall not exceed 

the lesser of amounts reported to FNS as 

reimbursed to school food authorities in 

accordance with § 210.5(d)(3) or the 

total calculated by multiplying the 

number of free and reduced price 

lunches reported in accordance with 

§ 210.5(d)(1) for each month of service 

during the fiscal year by the applicable 

national average payment rate 

prescribed by FNS. 

(iii) Annual adjustments. In 

accordance with section 11 of the Act, 

FNS will prescribe annual adjustments 

to the per meal national average 

payment rate (general cash assistance), 

the performance-based cash assistance 

rate (performance-based cash 

assistance), and the special assistance 

national average payment rates (special 

cash assistance) which are effective on 

July 1 of each year. These adjustments, 

which reflect changes in the food away 

from home series of the Consumer Price 

Index for all Urban Consumers, are 

annually announced by Notice in July of 

each year in the Federal Register. 

(iv) Maximum per meal rates. FNS 

will also establish maximum per meal 

rates of reimbursement within which a 

State may vary reimbursement rates to 

school food authorities. These 

maximum rates of reimbursement are 

established at the same time and 

announced in the same Notice as the 

national average payment rates. 

* * * * * 

■ 3. Amend § 210.5 by revising 

paragraph (d)(2) to read as follows: 

§ 210.5 Payment process to States. 

* * * * * 

(d) * * * 

(2) Quarterly report. Each State 

agency administering the National 

School Lunch Program shall submit 

quarterly reports to FNS as follows: 

(i) Each State agency shall submit to 

FNS a quarterly Financial Status Report 

(FNS–777) on the use of Program funds. 

Such reports shall be postmarked and/ 

or submitted no later than 30 days after 

the end of each fiscal year quarter. 

(ii) Each State agency shall also 

submit a quarterly report, as specified 

by FNS, detailing the disbursement of 

performance-based cash assistance 

described in § 210.4(b)(1). Such report 

shall be submitted no later than 30 days 

after the end of each fiscal year quarter. 

The report shall include the total 

number of school food authorities in the 

State, the names and locations of 

certified school food authorities, and for 

each school food authority, the total 

number of lunches earning the 

performance-based cash assistance for 

each month. 

* * * * * 

■ 4. Amend § 210.7 by redesignating 

paragraph (d) as paragraph (e) and 

adding a new paragraph (d) to read as 

follows: 

§ 210.7 Reimbursement for school food 

authorities. 

* * * * * 

(d) Performance-based cash 

assistance. The State agency must 

provide performance-based cash 

assistance as authorized under 

§ 210.4(b)(1) for lunches served in 

school food authorities certified by the 

State agency to be in compliance with 

meal pattern and nutrition requirements 

set forth in § 210.10 and, if the school 

food authority participates in the School 

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Federal Register / Vol. 77, No. 82 / Friday, April 27, 2012 / Rules and Regulations 25035 

Breakfast Program (7 CFR part 220), 

§ 220.8 or § 220.23, as applicable. 

(1) State agency requirements. State 

agencies must establish procedures to 

certify school food authorities for 

performance-based cash assistance in 

accordance with guidance established 

by FNS. Such procedures must ensure 

State agencies: 

(i) Make certification procedures 

readily available to school food 

authorities and provide guidance 

necessary to facilitate the certification 

process. 

(ii) Require school food authorities to 

submit documentation to demonstrate 

compliance with meal pattern 

requirements set forth in § 210.10 and 

§ 220.8 or § 220.23, as applicable. Such 

documentation must reflect meal service 

at or about the time of certification. 

(iii) Certification procedures must 

ensure that no performance-based cash 

assistance is provided to school food 

authorities for meals served prior to 

October 1, 2012. 

(iv) Within 60 calendar days of a 

certification submission or as otherwise 

authorized by FNS, review submitted 

materials and notify school food 

authorities of the certification 

determination, the date that 

performance-based cash assistance is 

effective, and consequences for noncompliance; 

(v) Disburse performance-based cash 

assistance for all lunches served 

beginning with the start of certification 

provided that documentation reflects 

meal service in the calendar month the 

certification materials are submitted or, 

in the month preceding the calendar 

month of submission; and 

(vi) For school year 2012–2013, State 

agencies must conduct on-site 

validation reviews for a sample of 

certified school food authorities. State 

agencies must: 

(A) Ensure that all certified school 

food authorities are subject to review 

and randomly select at least 25 percent 

of certified school food authorities for 

an on-site validation review; except 

that, all large school food authorities, as 

defined in § 210.18(b)(6) must be 

included in the sample selected; and 

(B) Conduct validation reviews that 

include, at a minimum, observation of a 

meal service for each type of certified 

menu, review of production records for 

observed meals to ensure they are 

consistent with the menus on which 

certification was based, and a review of 

documentation submitted for 

certification to ensure that ongoing meal 

operations are consistent with 

certification documentation. 

(vii) In years subsequent to the year 

certified, through School Year 2014– 

2015, State agencies must require school 

food authorities to submit an annual 

attestation of compliance with meal 

pattern requirements as new 

requirements are phased in. The 

attestation must be provided to the State 

agency as an addendum to the written 

agreement required in § 210.9(b). 

(2) School food authority 

requirements. School food authorities 

seeking to obtain performance-based 

cash assistance must submit 

certification documentation to the State 

agency in accordance with State agency 

certification procedures, including 

documentation to support receipt of 

performance-based cash assistance. 

School food authorities must attest that 

the documentation provided is 

representative of the ongoing meal 

service within the school food authority. 

Required documentation includes a 

nutrient analysis and a detailed menu 

work sheet with food items and 

quantities or, a simplified nutrient 

assessment as well as a detailed menu 

worksheet with food items and 

quantities, and/or other materials 

specified in guidance issued by FNS. In 

years subsequent to the year of 

certification, through School Year 2014– 

2015, school food authorities must 

submit an annual attestation of 

compliance with meal pattern 

requirements as new requirements are 

phased in. The attestation must be 

provided to the State agency as an 

addendum to the written agreement 

required in § 210.9(b). School food 

authorities certified to earn 

performance-based cash assistance must 

maintain documentation of compliance, 

including production and menu records, 

and other records, as specified by FNS. 

School food authorities must make 

appropriate records available to State 

agencies upon request. 

* * * * * 

■ 5. Amend § 210.15 by revising 

paragraph (b)(2) to read as follows: 

§ 210.15 Reporting and recordkeeping. 

* * * * * 

(b) * * * 

(2) Production and menu records as 

required under § 210.10 and 

documentation to support performancebased cash assistance, as required under 

§ 210.7(d)(2). 

* * * * * 

■ 6. Amend § 210.18 by: 

■ a. Revising paragraph (a); 

■ b. Revising paragraph (d)(3); 

■ c. Adding paragraph (e)(4); 

■ d. Adding paragraph (g)(2)(v); 

■ e. Revising paragraph (m)(2) 

introductory text; and 

■ f. Adding paragraph (m)(2)(iv). 

The revisions and additions read as 

follows: 

§ 210.18 Administrative reviews. 

(a) Implementation dates. 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. For school food 

authorities selected for administrative 

review in school year 2012–2013, State 

agencies may conduct the 

administrative reviews in school year 

2012–13 or 2013–14; except that, State 

agencies must conduct reviews of those 

school food authorities identified as atrisk school food authorities in school 

year 2012–2013. 

* * * * * 

(d) * * * 

(3) Exceptions. (i) In any school year 

in which FNS or OIG conducts a review 

or investigation of a school food 

authority in accordance with 

§ 210.19(a)(5) of this part, the State 

agency shall, unless otherwise 

authorized by FNS, delay conduct of a 

scheduled administrative review until 

the following school year. The State 

agency shall document any exception 

authorized under this paragraph. 

(ii) Any school food authority that 

was not reviewed in the review cycle for 

school year 2007–2008 through school 

year 2012–2013, shall be reviewed in 

the first year of the 3-year review cycle 

set forth in paragraph (c) of this section 

(school year 2013–2014). 

(e) * * * 

(4) Noncompliance with meal pattern 

requirements. If the State agency 

determines there is significant 

noncompliance with the meal pattern 

and nutrition requirements as set forth 

in § 210.10 and § 220.8 and § 220.23, as 

applicable, the State agency must select 

the school food authority for 

administrative review earlier in the 

review cycle. 

* * * * * 

(g) * * * 

(2) * * * 

(v) If the school food authority is 

receiving performance-based cash 

assistance under § 210.7(d), assess the 

school food authority’s meal service and 

documentation of lunches served and 

determine whether performance-based 

cash assistance should continue to be 

provided. 

* * * * * 

(m) * * * 

(2) Performance Standard 2 

violations. Except as noted under 

paragraph (m)(2)(iv) of this section, a 

State agency is required to take fiscal 

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25036 Federal Register / Vol. 77, No. 82 / Friday, April 27, 2012 / Rules and Regulations 

action for violations of Performance 

Standard 2 as follows: 

* * * * * 

(iv) Performance-based cash 

assistance. In addition to fiscal action 

described in paragraphs (m)(2)(i) 

through (iii) of this section, school food 

authorities may not earn performancebased cash assistance authorized under 

§ 210.4(b)(1) unless immediate 

corrective action occurs. School food 

authorities will not be eligible for the 6 

cents per lunch reimbursement, as 

adjusted, with the beginning of the 

month following the administrative 

review and, at State discretion, for the 

month of review. Performance-based 

cash assistance may resume beginning 

in the first full month the school food 

authority demonstrates to the 

satisfaction of the State agency that 

corrective action has taken place. 

* * * * * 

■ 7. Amend § 210.19 by revising the 

second sentence of paragraph (c)(1) as 

follows: 

§ 210.19 [Amended] 

* * * * * 

(c) * * * 

(1) * * * 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, including the disallowance 

of performance-based cash assistance 

described in § 210.4(b)(1). * * * 

* * * * * 

Dated: April 20, 2012. 

Kevin Concannon, 

Under Secretary, Food, Nutrition and 

Consumer Services. 

[FR Doc. 2012–10229 Filed 4–26–12; 8:45 am] 

BILLING CODE 3410–30–P 

DEPARTMENT OF AGRICULTURE 

National Institute of Food and 

Agriculture 

7 CFR Part 3434 

RIN 0524–AA39 

Hispanic-Serving Agricultural Colleges 

and Universities (HSACU) Certification 

Process 

AGENCY: National Institute of Food and 

Agriculture, USDA. 

ACTION: Final rule. 

SUMMARY: This final rule establishes the 

process and procedures to certify a 

qualifying college or university as a 

Hispanic-Serving Agricultural Colleges 

and Universities (HSACU) institution. 

NIFA will publish 7 CFR part 3434 in 

the Code of Federal Regulations to 

chronicle the eligibility criteria colleges 

and universities must satisfy in order to 

be certified as HSACU institutions by 

the Secretary of Agriculture. The Food, 

Conservation, and Energy Act of 2008 

(FCEA) amended section 1404 of the 

National Agricultural Research, 

Extension, and Teaching Policy Act of 

1977 to add a definition for a new group 

of cooperating educational institutions 

known as Hispanic-Serving Agricultural 

Colleges and Universities. Section 1404 

defines HSACUs as colleges and 

universities that qualify as Hispanicserving Institutions (HSIs) and offer 

associate, bachelors, or other accredited 

degree programs in agriculture-related 

fields. HSACUs do not include 1862 

land-grant institutions, as defined in the 

Agricultural Research, Extension, and 

Education Reform Act of 1998. 

A separate part, 7 CFR part 3437, will 

be published in the future to provide 

specific administrative provisions for 

the HSACU Endowment Program (e.g., 

applicability of regulations, purpose, 

definitions, eligibility, use of funds, 

administrative duties, and other 

sections, as appropriate). 

DATES: This final rule is effective April 

27, 2012. 

FOR FURTHER INFORMATION CONTACT: 

Matthew Lockhart, Senior Policy 

Specialist; National Institute of Food 

and Agriculture; U.S. Department of 

Agriculture; STOP 2299; 1400 

Independence Avenue SW., 

Washington, DC 20250–2299; Voice: 

(202) 559–5088; Email: 

mlockhart@nifa.usda.gov. 

SUPPLEMENTARY INFORMATION: 

Background and Purpose 

Section 7101 of the Food, 

Conservation, and Energy Act of 2008 

(FCEA) (Pub. L. 110–246) amended 

section 1404 of the National 

Agricultural Research, Extension, and 

Teaching Policy Act of 1977, 7 U.S.C. 

3103, to add a definition for a new 

group of cooperating educational 

institutions known as Hispanic-serving 

agricultural colleges and universities 

(HSACUs). Section 1404 defines 

HSACUs as colleges or universities that 

qualify as ‘‘Hispanic-serving 

institutions,’’ as that term is defined in 

Section 1101a of title 20, and that offer 

associate, bachelors, or other accredited 

degree programs in agriculture-related 

fields. An exception is made to the 

HSACU definition so that it does not 

include 1862 institutions as defined in 

Section 2 of the Agricultural Research, 

Extension, and Education Reform Act of 

1998 (7 U.S.C. 7601). 

Section 7129 of the FCEA authorizes 

the following five new programs for 

HSACUs: (1) HSACU Endowment Fund 

(formula-based); (2) HSACU Equity 

Grants Program (formula-based); (3) 

HSACU Institutional Capacity-Building 

Grants Program (competitive); (4) 

HSACU Extension Grants Program 

(competitive); and (5) HSACU 

Fundamental and Applied Research 

Grants Program (competitive). Funding 

for these programs is subject to the 

availability of appropriations. 

In addition, the FCEA amends section 

406(b) of the Agricultural Research, 

Extension, and Education Reform Act of 

1998, 7 U.S.C. 7626, to expand the 

eligibility for NIFA Integrated Research, 

Education, and Extension Competitive 

Grants Programs to include HSACUs. 

NIFA’s mission is to work with 

university partners to advance research, 

extension, and higher education in the 

food, agricultural, and related 

environmental and human sciences to 

benefit people, communities, and the 

nation. 

The rules for funds distributed to the 

HSACUs from the HSACU Endowment 

Fund shall be contained within 7 CFR 

part 3437. 

Solicitation of Stakeholder Input and 

Publication of the Proposed Rule 

Because HSACUs were not 

specifically named in the authorizing 

statute, NIFA was required to establish 

the eligibility criteria to designate 

HSACUs based on the definition 

provided in the legislation, which stated 

that HSACUs are defined as HSIs that 

offer ‘‘agriculture-related programs.’’ On 

September 24, 2008, NIFA published a 

Federal Register notice [73 FR 54988– 

54989] to announce a public meeting to 

be held on October 12, 2008, at the 

Hyatt Regency in Denver, Colorado, to 

discuss the definition of HSACUs and 

the new HSACU programs. The notice 

also allowed stakeholders to submit 

written comments on the 

implementation of HSACU programs 

and the HSACU certification process by 

October 27, 2008. 

Twenty individuals, from 17 

institutions and 2 organizations, 

provided oral comments during this 

public meeting. NIFA also received 17 

written comments from individuals, 

academic institutions, and 

organizations. A transcript of the public 

meeting and a scanned copy of all 

written comments are available for 

review on the NIFA Web site at the 

following web page: www.nifa.usda.gov/ 

business/reporting/stakeholder/ 

hsacu.html. 

NIFA considered all comments 

received in the construction of the 

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