[Federal Register Volume 77, Number 17 (Thursday, January 26, 2012)]
[Rules and Regulations]
[Pages 4088-4167]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-1010]



[[Page 4087]]

Vol. 77

Thursday,

No. 17

January 26, 2012

Part II





Department of Agriculture





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 Food and Nutrition Service





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7 CFR Parts 210 and 220





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

Federal Register / Vol. 77 , No. 17 / Thursday, January 26, 2012 / 
Rules and Regulations

[[Page 4088]]


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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 (FNS), USDA.

ACTION: Final rule.

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SUMMARY: This final rule updates the meal patterns and nutrition 
standards for the National School Lunch and School Breakfast Programs 
to align them with the Dietary Guidelines for Americans. This rule 
requires most schools to increase the availability of fruits, 
vegetables, whole grains, and fat-free and low-fat fluid milk in school 
meals; reduce the levels of sodium, saturated fat and trans fat in 
meals; and meet the nutrition needs of school children within their 
calorie requirements. These improvements to the school meal programs, 
largely based on recommendations made by the Institute of Medicine of 
the National Academies, are expected to enhance the diet and health of 
school children, and help mitigate the childhood obesity trend.

DATES: Effective date: This rule is effective March 26, 2012.
    Compliance date: Compliance with the provisions of this rule must 
begin July 1, 2012, except as otherwise noted on the implementation 
table provided in the preamble under SUPPLEMENTARY INFORMATION.

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

SUPPLEMENTARY INFORMATION:

Executive Summary

    This final rule modifies several key proposed requirements to 
respond to commenter concerns and facilitate successful implementation 
of the requirements at the State and local levels. The rule phases in 
many of the changes to help ensure that all stakeholders--the children, 
the schools, and their supply chains--have time to adapt. Most notably, 
this final rule provides additional time for implementation of the 
breakfast requirements and modifies those requirements in a manner that 
reduces the estimated costs of breakfast changes, as compared to the 
proposed rule. As a result, the final rule is estimated to add $3.2 
billion to school meal costs over 5 years, considerably less than the 
estimated cost of the proposed rule.
    When considered in the context of other related provisions of the 
Healthy Hunger-Free Kids Act (HHFKA) of 2010, sufficient resources are 
expected to be available to school food authorities to cover the 
additional costs of updated meal offerings to meet the new standards.
    Specifically, in addition to improving nutritional quality, the 
HHFKA mandated that beginning July 1, 2011, revenue streams for a la 
carte foods relative to their costs be at least as high as the revenue 
streams for Program meals compared to their costs. Consequently schools 
should receive over $1 billion a year in new food revenues beginning in 
School Year 2011-2012. That will help schools work toward implementing 
the new standards effective the following year, i.e., July 1, 2012. In 
addition, USDA estimates that the ``School Food Authorities revenues'' 
rule will increase participation in school meal programs by 800,000 
children.
    In addition, the six-cent per lunch performance-based reimbursement 
increase included in the HHFKA will provide additional revenue 
beginning October 1, 2012. The Congressional Budget Office estimated 
about $1.5 billion over 5 years will be provided in performance-based 
funding.

I. Background

    The Richard B. Russell National School Lunch Act (NSLA) in Section 
9(a)(4), 42 U.S.C. 1758(a)(4), requires that school meals reflect the 
latest ``Dietary Guidelines for Americans'' (Dietary Guidelines). In 
addition, section 201 of the Healthy, Hunger-Free Kids Act of 2010 
(Pub. L. 111-296, HHFKA) amended Section 4(b) of the NSLA, 42 U.S.C. 
1753(b), to require the Department of Agriculture (USDA) to issue 
regulations to update the meal patterns and nutrition standards for 
school lunches and breakfasts based on the recommendations issued by 
the Food and Nutrition Board of the National Research Council of the 
National Academies of Science, part of the Institute of Medicine (IOM). 
On January 13, 2011, USDA published a proposed rule in the Federal 
Register (76 FR 2494) to update the meal patterns and nutrition 
standards for the National School Lunch Program (NSLP) and the School 
Breakfast Program (SBP) to align them with the 2005 Dietary Guidelines.
    The proposed rule sought to increase the availability of fruits, 
vegetables, whole grains, and fat-free and low-fat fluid milk in the 
school menu; reduce the levels of sodium, saturated fat and trans fat 
in school meals; and meet the nutrition needs of school children within 
their calorie requirements. The intent of the proposed rule was to 
provide nutrient-dense meals (high in nutrients and low in calories) 
that better meet the dietary needs of school children and protect their 
health. The proposed changes, designed for meals offered to school 
children in grades Kindergarten (K) to 12, were largely based on the 
IOM recommendations set forth in the report ``School Meals: Building 
Blocks for Healthy Children'' (October 2009).
    In summary, the January 2011 proposed rule sought to improve 
lunches and breakfasts by requiring schools to:
    <bullet> Offer fruits and vegetables as two separate meal 
components;
    <bullet> Offer fruit daily at breakfast and lunch;
    <bullet> Offer vegetables daily at lunch, including specific 
vegetable subgroups weekly (dark green, orange, legumes, and other as 
defined in the 2005 Dietary Guidelines) and a limited quantity of 
starchy vegetables throughout the week;
    <bullet> Offer whole grains: half of the grains would be whole 
grain-rich upon implementation of the rule and all grains would be 
whole-grain rich two years post implementation;
    <bullet> Offer a daily meat/meat alternate at breakfast;
    <bullet> Offer fluid milk that is fat-free (unflavored and 
flavored) and low-fat (unflavored only);
    <bullet> Offer meals that meet specific calorie ranges for each 
age/grade group;
    <bullet> Reduce the sodium content of meals gradually over a 10-
year period through two intermediate sodium targets at two and four 
years post implementation;
    <bullet> Prepare meals using food products or ingredients that 
contain zero grams of trans fat per serving;
    <bullet> Require students to select a fruit or a vegetable as part 
of the reimbursable meal;
    <bullet> Use a single food-based menu planning approach; and
    <bullet> Use narrower age/grade groups for menu planning.
    In addition, the proposed rule sought to improve school meals by 
requiring State agencies (SAs) to:
    <bullet> Conduct a nutritional review of school lunches and 
breakfasts as part of the administrative review process;
    <bullet> Determine compliance with the meal patterns and dietary 
specifications based on a review of menu and

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production records for a two-week period; and
    <bullet> Review school lunches and breakfasts every 3 years, 
consistent with the HHFKA.
    The 2010 Dietary Guidelines were released on January 31, 2011, 
after USDA published the proposed rule. On March 21, 2011 USDA issued a 
Notice in the Federal Register (76 FR 15225) seeking public comment on 
the need to modify the proposed rule to reflect the 2010 Dietary 
Guidelines recommendations to consume red-orange vegetables and protein 
subgroups: (1) Seafood; (2) meat, poultry and eggs, and (3) nuts, 
seeds, and soy products. The public comments to the Notice (76 FR 
15225) were added to the proposed rule docket and all comments 
associated with the proposed rule were considered in preparing this 
final rule.
    USDA received a total of 133,268 public comments during the comment 
period January 13-April 13, 2011. This total included several single 
submissions with thousands of comments. The types of comments received 
included 7,107 unique letters, 122,715 form letters from 159 mass mail 
campaigns, 3,353 non-germane letters, and 93 duplicates. Comments were 
analyzed using computer software that facilitated the identification of 
the key issues addressed by the commenters, as well as by USDA policy 
officials.
    Although USDA considered all comments, the description and analysis 
in this final rule preamble focuses on the most frequent comments and 
those that influenced revisions to the proposed rule, and discusses 
modifications made to the proposed rule in response to public input. 
USDA greatly appreciates the public comments as they have been 
essential in developing a final rule that is expected to improve school 
meals in a sound and practical manner. To view all public comments on 
the proposed rule go to www.regulations.gov and search for public 
submissions under docket number FNS-2007-0038. A Summary of Public 
Comments is available as supporting material under the docket folder 
summary.

    Note: This final rule does not update the Pre-K school meal 
patterns. These are under review and will be updated in a future 
rulemaking amending regulations implementing the USDA's Child and 
Adult Care Food Program. However, two provisions in this final rule, 
menu planning approach and fluid milk requirements, impact Pre-K 
meals as discussed later in this preamble.

II. Public Comments and USDA Response

    USDA received comments from nutrition, health, and child advocates 
at the national, state and local levels; SAs that administer the school 
meal programs; school districts/boards; schools; school food service 
staff; superintendents, principals, and teachers; food manufacturers 
and distributors; food industry representatives; food service 
management companies; academia; nutritionists/dietitians; community 
organizations; parents and students; and many other interested groups 
and individuals. Overall, the comments provided were generally more 
supportive of the proposed rule than opposed. Comments from nutrition, 
health and child advocates; community organizations; academia; and 
parents favor the proposed rule, citing concern about the national 
childhood obesity problem and the increased likelihood of preventable 
diseases such as cardiovascular disease, high blood pressure, high 
cholesterol, stroke, and type 2 diabetes, all of which increase the 
cost of healthcare nationally. Many comments enthusiastically supported 
the increase in fruits, vegetables, whole grains, fat-free milk/low-fat 
milk in the school menus, and most other proposed changes designed to 
improve the nutritional quality of school meals.
    Comments from SAs and school food authorities (SFAs), food 
industry, industry representatives, food service management companies, 
and others in the public and private sectors associated with the 
operation of the school meals programs also supported improving school 
meals but voiced strong concerns about some aspects of the proposed 
rule. The proposed food quantities, meat/meat alternate component at 
breakfast, weekly vegetable subgroup requirement at lunch, starchy 
vegetables limit, sodium reductions, whole grains requirement, and 
frequency of administrative review were the parts of the proposal that 
prompted most of their concerns. Program operators also raised concerns 
about the rule cost and implementation timeline, the impact of the 
proposed changes on student participation in the meal programs, and the 
potential for increased plate waste if meals are not acceptable to 
students. A number of commenters suggested that USDA conduct additional 
research or pilot test the proposed changes before implementation. All 
of the above concerns are more prevalent in the SBP than the NSLP. 
Schools that operate the SBP voiced significant concern about the 
estimated 50 cents increase in food and labor costs for each 
reimbursable breakfast in FY 2015, when all the requirements will be in 
place as stated in the proposed rule.
    USDA has taken into consideration the different views expressed by 
commenters and seeks to be responsive to the concerns raised by 
stakeholders, especially those responsible for the management and day 
to day operation of the school meal programs. At the same time, we are 
mindful that the overweight and obesity epidemic affecting many 
children in America requires that all sectors of our society, including 
schools, help children make significant changes in their diet to 
improve their overall health and become productive adults. This final 
rule makes significant improvements to the NSLP and SBP to facilitate 
successful implementation of the requirements at the State and local 
levels. This final rule modifies several key proposed requirements to 
respond to commenter concerns as well as to address requirements of the 
Consolidated and Further Continuing Appropriations Act, 2012, Public 
Law 112-55. Most notably, this final rule provides additional time for 
implementation of the SBP requirements and modifies those requirements 
in a manner that reduces the estimated costs of breakfast changes, as 
compared to the proposed rule.
    No changes to the SBP meal pattern take effect immediately upon 
publication of this final rule, except limiting flavor to fat-free 
milk, and requiring the service of only fat-free and low-fat milk (the 
latter is a statutory requirement codified in the NSLA in the HHFKA. 
See the discussion on ``Milk'' for further details). Furthermore, this 
rule introduces selected requirements into the SBP beginning SY 2013-
2014 (the second year of implementation) to ease the estimated increase 
in breakfast costs and minimize impact on SBP operations. This approach 
is intended to enable program operators to concentrate on improving 
school lunches first and then focus on the breakfast changes. It also 
allows USDA to meet the statutory requirement to offer meals that 
reflect the Dietary Guidelines while being responsive to the concerns 
raised by program operators and other stakeholders. However, SFAs that 
are able to implement the new meal requirements concurrently in the SBP 
and NSLP are encouraged to do so with SA approval.
    Section G of the Regulatory Impact Analysis discusses in greater 
detail the key differences between the proposed and final rules. Most 
of the estimated reduction in cost is due to the policy changes 
discussed above, including the

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phased in breakfast meal pattern requirements and the elimination of a 
separate meat component at breakfast, as well as more modest changes to 
the lunch meal pattern requirements' grain and vegetable components. In 
addition to these policy changes, lower food inflation since 
preparation of the proposed rule cost estimate contributes to the 
reduction in the cost of the final rule compared to the proposed rule.
    The following is a summary of the key public comments on the 
proposed rule and USDA's response. Public comments unrelated to the 
specific provisions of the rule (e.g., standards for cholesterol, 
dietary fiber, artificial sweeteners, caffeine) are not discussed here 
but are addressed in the Summary of Public Comments. For a more 
detailed discussion of the public comments see the Summary of Public 
Comments posted online at www.Regulations.gov.

Menu Planning Approach

    Proposed Rule: Follow a single Food-Based Menu Planning (FBMP) 
approach.
    Comments: Nutrition, health and child advocates; community 
organizations; academia; parents; and SAs support the FBMP approach 
because it helps children easily identify the key food groups necessary 
for a well-balanced meal. According to a health advocate, FBMP also 
minimizes the opportunity to offer unhealthy foods that have been 
fortified to meet the nutrient requirements. SAs support a single menu 
planning approach as it supports a more cost effective delivery of 
training and technical assistance resources.
    However, a number of SFAs that currently use the Nutrient Standard 
Menu Planning (NSMP) and some school advocacy organizations, trade 
associations, food manufacturers, nutritionists, and other commenters 
suggested that NSMP be allowed as an option. SFAs that use NSMP claimed 
that they would still have to conduct a nutrient analysis to assess if 
they are meeting the new dietary specifications (calories, sodium, and 
saturated fat levels). Several commenters also claimed that NSMP 
schools are better able to control costs and that changing to FBMP 
would result in increased training costs. Some stated that eliminating 
NSMP decreases menu planning flexibility and menu variety.
    USDA Response: To ensure that school meals reflect the key food 
groups recommended by the Dietary Guidelines, this final rule 
establishes FBMP as the single menu planning approach for the NSLP 
(including for Pre-K meals) in SY 2012-2013. A single food-based menu 
planning approach simplifies menu planning, serves as a teaching tool 
to help children choose a balanced meal, and assures that students 
nationwide have access to key food groups recommended by the Dietary 
Guidelines. It also makes it easier for schools to communicate the meal 
improvements to parents and the community-at-large. Simplifying program 
management, training and monitoring is expected to result in program 
savings. Over 70 percent of the program operators currently use FBMP, 
and training and technical assistance resources will be available to 
help all schools successfully transition to the new meal patterns.
    In response to commenters' concerns about the estimated cost 
increase of the breakfast meal, this final rule gives those SBP program 
operators not currently using FBMP additional time to convert to this 
planning approach. SBP operators who are not currently using FBMP may 
continue with their current menu planning approach through SY 2012-
2013. However, all SBP operators must use a single FBMP approach 
beginning SY 2013-2014 (the second year of implementation).
    This final rule sets forth the new food-based meal patterns in 7 
CFR 210.10 for lunches and Sec.  220.8 for breakfasts. In order to 
accommodate the extended implementation for non-FBMP operators, this 
final rule creates a new Sec.  220.23 that restates the nutrition 
standards and menu planning approaches that apply to all SBP operators 
in SY 2012-2013 only. Individual SFAs wishing to adopt the provisions 
of Sec.  220.8 prior to the required implementation date specified 
therein may do so with the approval of the SA.
    Accordingly, this final rule implements the proposed FBMP approach 
and codifies the proposal under Sec.  210.10(a)(1)(i) of the regulatory 
text for the NSLP and Sec.  220.8(a)(1) for the SBP. Menu planning 
approaches applicable to the SBP in SY 2012-2013 are under Sec.  
220.23(a)(5).

Age/Grade Groups

    Proposed Rule: Plan lunches and breakfasts using age/grade groups 
K-5, 6-8, and 9-12.
    Comments: A number of nutrition, health and child advocates; and 
dietitians agreed that the proposed age/grade groups would result in 
more age-appropriate school meals. They also supported the provision 
allowing schools to serve the same breakfast and lunch meal patterns 
for students in grades K through 8, provided that the meals meet the 
calorie, saturated fat, and sodium standards for each the of the age/
grade groups.
    Several commenters argued the proposed meal patterns offer too much 
food, especially for young children. Some commenters recommended 
different age/grade groups, and an SA recommended that USDA retain the 
current age/grade groups. Some SFAs requested flexibility in the use of 
the age/grade groups (e.g., a one-grade level leeway). A number of 
commenters expressed concerns regarding use of the age/grade groups in 
the SBP, as schools generally serve K-12 students in the same line.
    USDA Response: This final rule requires schools to use the age/
grade groups K-5, 6-8, and 9-12 to plan menus in the NSLP upon 
implementation of this rule in SY 2012-2013. These age/grade groups 
reflect predominant school grade configurations and are consistent with 
the IOM's Dietary Reference Intake (DRI) groupings. This rule allows 
reasonable flexibility in the use of the age/grade groups and permits a 
school to use one meal pattern for students in grades K through 8 as 
food quantity requirements for groups K-5 and 6-8 overlap. In such a 
case, the school continues to be responsible for meeting the calorie, 
saturated fat, and sodium standards for each of the age/grade groups 
receiving the school meals. The following example illustrates this 
concept:
    Example: A school could offer all students in grade groups K-5 and 
6-8 the same lunch choices for the fruit, vegetable, grains, meat/meat 
alternate, and milk components because the quantity requirements are 
the same or overlap. Similarly, the calorie requirements for grades K-5 
(550-650 average calories per week) and grades 6-8 (600-700 average 
calories per week) overlap. Therefore, a school could offer both grade 
groups a range of 600-650 average calories per week 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 the lower sodium standard that was developed for age/grades 
K-5 but would also meet the requirement for students in age/grades 6-8.
    In the SBP, the new age/grade groups take effect in SY 2013-2014 
(the second year of implementation) to ease the burden on program 
operators. Until then, schools have the option to continue the age/
grade group K-12 for planning breakfasts. Meals planned for the age/
grade group K-12 must meet the nutrition standards developed for that

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age/grade group, which have been moved from Sec.  220.8 to a new Sec.  
220.23 of the regulatory text.
    Accordingly, this final rule implements the proposed age/grade 
groups and codifies the proposal under Sec.  210.10(c)(1) of the 
regulatory text for the NSLP and Sec.  220.8(c)(1) for the SBP. Age/
grade groups applicable to the SBP in SY 2012-2013 are under Sec.  
220.23(b) for nutrient standards menu planning, and under Sec.  
220.23(g) for food based menu planning.

Meal Components

Fruits
    Proposed Rule: Offer fruit as a separate food component at lunch 
daily. Increase the fruit and vegetable amounts at lunch and double the 
minimum required fruit quantity at breakfast. Allow schools to offer a 
non-starchy vegetable in place of fruit/fruit juice at breakfast. Allow 
frozen fruit without added sugar only.
    Comments: There is general support for the proposal to establish 
fruit as separate food component. Stakeholders such as nutrition, 
health and child advocates supported the proposal because they are 
concerned that children are not consuming the recommended intake of 
fruits. One major health advocate noted that it is possible to 
significantly increase the quantity of fruits and vegetables in the 
school menu in a cost effective way, stating that many schools already 
exceed the current NSLP meal requirements, and noting that of thousands 
of schools participating in the Alliance for a Healthier Generation's 
Healthy School Program, 85 percent provide at least one fruit (fresh, 
canned, or frozen in fruit juice or light syrup) at breakfast and 72 
percent provide at least four non-fried, no-added-sugars fruit or 
vegetable options daily.
    However, many commenters opposed the proposed minimum required 
fruit quantities, and were particularly concerned about the fruit 
requirement for breakfast. A number of commenters stated that one cup 
of fruit at breakfast is too much for young children to consume at one 
time and will result in significant plate waste. Commenters also 
emphasized that students usually have very little time to eat breakfast 
at school and are concerned about the logistics of offering more food 
through alternative breakfast delivery methods such as Breakfast in the 
Classroom or on the bus. In general, these commenters argued that the 
proposal to double the amount of fruit at breakfast would contribute to 
higher costs for food, labor, equipment, and storage.
    Regarding the types of fruit to be offered, several commenters 
supported the proposed limitation on added sugar in frozen fruit to 
limit the sources of discretionary calories. Some commenters 
recommended a prohibition on canned fruit in light syrup. Some program 
operators asked how to credit whole fresh fruit, and other commenters 
requested that the quantities in the meal patterns be changed from cups 
to servings to better account for fresh whole fruit. A few suggested 
that USDA adopt the HealthierUS School Challenge Gold Level requirement 
to serve fresh fruit twice per week with school meals.
    USDA Response: This final rule establishes fruits and vegetables as 
separate food components in the NSLP and adds a fruits requirement at 
lunch beginning SY 2012-2013. The intent of the new requirements is to 
promote the consumption of these fruits, as recommended by the Dietary 
Guidelines. Fruits (and vegetables) that are prepared without added 
solid fats, sugars, refined starches, and sodium are nutrient rich 
foods and supply important nutrients that are under-consumed by school 
children in the United States (including potassium and dietary fiber) 
with relatively little calories.
    This rule also gives program operators additional time to meet the 
required minimum fruit quantity increase in the SBP. Schools are 
required to offer 1 cup of fruit to all age/grade groups at breakfast 
beginning in SY 2014-2015 (the third year of implementation). This 
modification gives program operators more time to prepare for this 
important change to SBP menus. This rule also gives schools the option 
to offer vegetables in place of all or part of the required fruit 
component for menu flexibility and as a potential cost control measure. 
However, the first two cups per week of any such substitution must be 
from the dark green, red/orange, beans and peas (legumes) or other 
vegetable subgroups. These vegetable subgroups have been identified as 
being under-consumed by school children, according to the IOM report. 
Starchy vegetables may also be offered in substitution of fruits, once 
the first two cups offering of non-starchy vegetables have been met. 
This change to the proposed rule allows schools flexibility and the 
option to offer vegetables in place of fruit in accordance with the 
substitution protocol specified here.
    Although schools must offer the full amount of the required food 
component, to minimize the potential for food waste in the NSLP and 
SBP, all students are allowed to select \1/2\ cup of fruit for a 
reimbursable meal under Offer versus Serve (OVS), instead of requiring 
them to take the full fruit component. This change in the application 
of OVS with regard to the fruits and vegetables components is further 
discussed in ``Standards for Meals Selected by the Student (Offer 
versus Serve).''
    Schools may meet the fruit component at lunch and breakfast by 
offering fruit that is fresh; canned in fruit juice, water, or light 
syrup; frozen without added sugar, or dried. Through its USDA Foods 
Programs, USDA offers schools a range of fresh, frozen without added 
sugar, dried and canned fruits. Although 100 percent juice can be 
offered, no more than half of the per-meal fruit component may be juice 
because it lacks dietary fiber and when consumed in excess can 
contribute extra calories. Schools should offer fresh fruit whenever 
possible.
    Although some commenters suggested that the meal patterns set the 
fruit and other food requirements as servings rather than cups, this 
final rule does not adopt this suggestion, as a serving can be any 
amount of food determined by the menu planner and does not ensure 
uniformity. The 2005 Dietary Guidelines recommended amounts were given 
in cups and ounce equivalents (oz. eq.), which are standard defined 
amounts. Menu planners must continue to use the Food Buying Guide for 
Child Nutrition Programs to determine how to credit whole fruit. USDA 
will update the Food Buying Guide as soon as possible, and will also 
develop other technical assistance resources as needed.
    Accordingly, this final rule implements the proposed fruit 
requirements, with modifications, and codifies them under Sec.  
210.10(c) for the NSLP and under Sec.  220.8(c) for the SBP. Fruit 
requirements applicable to the SBP in SY 2012-2013 are under Sec.  
220.23(g).

Vegetables

    Proposed Rule: Offer vegetables as a separate food component at 
lunch daily. Increase the variety of vegetables over the week to 
include the following subgroups: dark green, orange, legumes, and other 
as defined in the Dietary Guidelines. Limit starchy vegetables at lunch 
to 1 cup per week for all age/grade groups. Allow non-starchy 
vegetables in place of fruit at breakfast.
    Comments: Nutrition, health and child advocates; community 
organizations; academia; and parents welcomed the proposal to divide 
fruits and vegetables into two separate components and expressed 
support for the proposed weekly vegetable requirements. Some of these

[[Page 4092]]

commenters stated the proposed increase in vegetable variety and 
quantity should positively impact overall consumption.
    State and local program operators, however, suggested that the 
vegetable subgroups be encouraged, rather than required (similar to the 
approach in the HealthierUS School Challenge guidelines). Some 
commenters stated that the vegetable subgroup requirements are too 
complicated. Others argued that children will not eat vegetables they 
are not familiar with and, therefore, the vegetable subgroup 
requirements will result in plate waste. Several commenters expressed 
concern that procuring some vegetable subgroups will be difficult and 
costly during specific times of the year in certain parts of the 
country. Others requested clarification regarding when beans should be 
considered a legume versus a meat alternate.
    Many State and local program operators opposed the starchy 
vegetable limit. They argued that all vegetables should be encouraged, 
and that a limit on starchy vegetables will lead to a decrease in 
vegetable consumption, or a decrease in participation in the NSLP. Some 
suggested that the weekly limit only apply to potatoes. Several 
suggested that instead of limiting starchy vegetables, USDA should 
prohibit French fries or deep-fried preparation methods for all 
vegetables. Others requested gradual introduction of the weekly limit 
on starchy vegetables. Many program operators argued that white 
potatoes are inexpensive and would need to be replaced by more 
expensive fruits and vegetables, which will be a costly strain on 
school/state budgets. A few asked that starchy vegetables in mixed 
dishes, such as soups, not count towards the weekly starchy vegetable 
limit.
    Nutrition and health advocates favored allowing non-starchy 
vegetables in place of fruit in the SBP. However, numerous commenters 
opposed disallowing starchy vegetables at breakfast. These commenters, 
including SFAs, food industry, and some parents, stated that starchy 
vegetables such as potatoes are affordable and popular, and complement 
many breakfast dishes. They also noted that potatoes supply potassium 
and other minerals, vitamins and fiber, and are naturally low in fat 
and sodium. Many stakeholders suggested that USDA ease the proposed 
restrictions on starchy vegetables.
    Program operators also addressed the use of salad bars to meet the 
vegetable requirement. They stated that salad bars are good ways to 
serve a wide variety of fruits and vegetables and are an effective 
strategy to increase children's consumption of these food groups. 
However, they expressed concern that the proposed vegetable 
requirements increase challenges with or could discourage the use of 
self-serve salad bars. Schools asked how to determine if the required 
foods/portions are being served.
    USDA Response: This final rule establishes vegetables as a separate 
food component in the NSLP, and requires schools to offer all the 
vegetable subgroups identified by the 2010 Dietary Guidelines (dark 
green, red/orange, beans and peas (legumes), starchy, and other) over 
the course of the week at minimum required quantities as part of the 
lunch menus in SY 2012-2013. As required by the Consolidated and 
Further Continuing Appropriations Act, 2012, Public Law 112-55 (FY 2012 
Agriculture Appropriations Act), we are removing the proposed rule 
limit on starchy vegetables, and instead requiring schools to offer at 
least minimum quantities of all vegetable subgroups in the NSLP over 
the course of the week. This change encourages consumption from all 
vegetable subgroups, and is consistent with the Dietary Guidelines' 
recommendation to increase variety in vegetable consumption. In 
addition, to be consistent with the 2010 Dietary Guidelines 
classification of vegetable subgroups, this final rule expands the 
proposed orange vegetable subgroup to include red/orange vegetables. 
USDA asked commenters about this change in the vegetable subgroups in 
the Notice published by USDA in the Federal Register (76 CFR 15225) on 
March 21, 2011 and there was no public opposition.
    This final rule also allows schools the option to offer vegetables 
in place of all or part of the fruits requirement at breakfast 
beginning July 1, 2014. This is consistent with the Dietary Guidelines' 
recommendation to eat a variety of vegetables, especially dark green, 
red and orange vegetables, and beans and peas (legumes). This 
recommendation is applicable to the school meals because most 
vegetables and fruits are major contributors of nutrients that are 
under-consumed in the United States, including potassium and dietary 
fiber. Consumption of vegetables and fruits is also associated with 
reduced risk of many chronic diseases, including obesity, heart attack, 
stroke, and cancer. By providing more and a variety of vegetables in a 
nutrient-dense form (without added solid fats, sugars, refined 
starches, and sodium), schools help students obtain important nutrients 
and maintain a healthy weight.
    This final rule does not implement the proposed rule limitation on 
servings of starchy vegetables offered as part of the lunch and 
breakfast reimbursable meals. This change is in response to commenters' 
concerns and the requirements of the FY 2012 Agriculture Appropriations 
Act, which specifically prevented USDA from adopting the IOM 
recommendation for setting maximum limits on starchy vegetables, 
providing for fiscal year 2012 USDA appropriations. Therefore, schools 
are allowed to offer any vegetable subgroup identified by the 2010 
Dietary Guidelines to meet the vegetables component required for each 
reimbursable school meal. The vegetable quantities in the lunch meal 
pattern have been modified to reflect this change to the proposal while 
remaining consistent with the Dietary Guidelines' focus on increasing 
the intake of vegetables that are under-consumed.
    Commenters asked USDA to clarify when to credit beans and peas 
(legumes) toward the vegetable component. Local menu planners decide 
how to incorporate beans and peas (legumes) into the school meal but 
may not offer one serving of beans and peas (legumes) to meet the 
requirements for both vegetables and meat/meat alternate components. 
Beans and peas (legumes) can be credited toward the vegetable component 
because they are excellent sources of dietary fiber and nutrients such 
as folate and potassium. These nutrients are often low in the diets of 
many Americans. Because of their high nutrient content and low cost, 
USDA encourages menu planners to include beans and peas (legumes) in 
the school menu regularly, either as a vegetable or as a meat alternate 
(as discussed later). Some foods commonly referred to as beans and peas 
(e.g., green peas, green lima beans, and green (string) beans) are not 
considered part of the beans and peas subgroup because their nutrient 
profile is dissimilar. More information on the use and categorization 
of beans and peas (legumes) is available online at http://www.choosemyplate.gov/foodgroups/proteinfoods_beanspeas.html.
    In response to commenter questions about how to use salad bars to 
meet the new meal requirements, the Department would like to emphasize 
that schools may continue to use salad bars to enhance the variety of 
vegetables in the school menu. See FNS memorandum SP 02-2010--Revised 
(January 21, 2011) for more information on how salad bars can be used 
effectively as part of the reimbursable meals. The memorandum is 
available online at http://www.fns.usda.gov/cnd/governance/

[[Page 4093]]

Policy-Memos/2011/SP02-2011revised--os.pdf.
    As with the proposed rule, this final rule allows schools to use 
fresh, frozen, and canned products to meet the vegetable requirement. 
Schools have access to nutritious vegetable choices through USDA Foods. 
For example, USDA Foods offers only reduced sodium canned vegetables at 
no more than 140 mg of sodium per half-cup serving, which is in line 
with the 2010 Dietary Guidelines. Schools also have the option to order 
frozen vegetables with no added salt, including green beans, carrots, 
corn, peas, and sweet potatoes.
    Accordingly, this final rule implements the proposed vegetables 
requirements, with modifications, and codifies them under Sec.  
210.10(c) for the NSLP and under Sec.  220.8(c) for the SBP. Vegetable 
requirements applicable to the SBP in SY 2012-2013 are under Sec.  
220.23(g).

Grains

    Proposed Rule: Offer at least a daily serving of grains at 
breakfast and lunch. When this rule is initially implemented, at least 
half of the grains offered during the week must be whole grain-rich. 
Two years after implementation, all grains offered during the week must 
be whole grain-rich. In addition, allow schools the option to offer up 
to one serving of a grain-based dessert daily to meet part of the 
weekly grains requirement.
    Comments: Many commenters, primarily nutrition and health 
advocates, and parents, favored introducing a whole grains requirement 
in the NSLP and SBP. A number of program operators, however, objected 
to the final whole grains requirement (that all grains offered must be 
whole grain-rich), and stated that the initial requirement (at least 
half of grains offered must be whole grain-rich) is sufficient. These 
commenters asserted that prohibiting all refined grains would restrict 
many grains that children and adolescents enjoy such as white rice and 
white bread. Other program operators that objected to the final whole 
grains requirement expressed concern with the timeline and the higher 
food costs associated with using only whole grain-rich products, which 
they argued are generally more expensive than refined grain products. 
Many commenters asked that USDA clarify the criteria schools must use 
to identify whole grain-rich products.
    USDA Response: While children generally eat enough total grains, 
most of the grains they consume are refined grains rather than whole 
grains. Whole grains (e.g., whole-wheat flour, oatmeal, whole cornmeal, 
and brown rice) are a source of nutrients such as iron, magnesium, 
selenium, B vitamins, and dietary fiber. Evidence suggests that eating 
whole grains in nutrient dense forms may lower body weight and reduce 
the risk of cardiovascular disease. Currently, schools may offer 
enriched or whole grains, and are allowed to offer enriched, refined 
grains only. Therefore, this final rule establishes a minimum whole 
grain-rich requirement in the NSLP and SBP to help children increase 
their intake of whole grains and benefit from the important nutrients 
they provide.
    For the NSLP, the whole grain requirement takes effect upon 
implementation of the rule. Therefore, in SY 2012-2013 and SY 2013-2014 
(the first two years of implementation) whole grain-rich products must 
make up half of all grain products offered to students. During this 
time only, refined-grain foods that are enriched may be included in the 
lunch menu. In SY 2014-2015 (the third year of implementation) and 
beyond, schools must offer only whole grain-rich products.
    In the SBP, this final rule provides that schools must offer the 
weekly grain ranges and half of the grains as whole grain-rich 
beginning July 1, 2013 (SY 2013-2014, the second year of 
implementation). All grains offered in the SBP must be whole grain-rich 
in SY 2014-2015 (the third year of implementation) and beyond. Once 
schools meet the daily minimum grain quantity required (1 oz. eq. for 
all age-grade groups) for breakfast, they are allowed to offer a meat/
meat alternate in place of grains. The meat/meat alternate can count 
toward the weekly grains requirement (credited as 1 oz. eq. of meat/
meat alternate is equivalent to 1 oz. eq. of grain). This modification 
is intended to retain the flexibility that menu planners currently have 
to offer a combination of grains and meats/meat alternates at 
breakfast. This final rule eliminates the proposed provision to require 
a meat/meat alternate daily at breakfast due to the cost concerns 
voiced by program operators. (For more details, please see the 
discussion on meat/meat alternate.)
    In this final rule, to receive credit in the meal programs, a whole 
grain-rich food must contain at least 51 percent whole grains and the 
remaining grain content of the product must be enriched. Because 
current labeling regulations and practices may limit the school's 
ability to determine the actual whole grain content of many grain 
products, schools would use both elements of the following criterion to 
identify whole grain-rich foods. This is consistent with USDA's 
approach on whole grains in the HealthierUS School Challenge 
(HealthierUS School Challenge Whole-Grains Resource, http://teamnutrition.usda.gov/healthierUS/NFSMI/lesson2handouts.pdf). 
Therefore, until the whole grain content of food products is required 
on a product label by the Food and Drug Administration (FDA), schools 
must evaluate a grain product according to forthcoming FNS guidance as 
follows:
    Element #1. A serving of the food item must meet portion size 
requirements for the Grains/Breads component as defined in FNS 
guidance.

And

    Element #2. The food must meet at least one of the following:
    a. The whole grains per serving (based on minimum serving sizes 
specified for grains/breads in FNS guidance) must be >= 8 grams. This 
may be determined from information provided on the product packaging or 
by the manufacturer, if available. Also, manufacturers currently may 
apply for a Child Nutrition Label for qualifying products to indicate 
the number of grains/breads servings that are whole grain-rich.
    b. The product includes the following Food and Drug Administration 
(FDA)-approved whole grain health claim on its packaging. ``Diets rich 
in whole grain foods and other plant foods and low in total fat, 
saturated fat and cholesterol may reduce the risk of heart disease and 
some cancers.''
    c. Product ingredient listing lists whole grain first, 
specifically:
    I. Non-mixed dishes (e.g., breads, cereals): Whole grains must be 
the primary ingredient by weight (a whole grain is the first ingredient 
in the list).
    II. Mixed dishes (e.g., pizza, corn dogs): Whole grains must be the 
primary grain ingredient by weight (a whole grain is the first grain 
ingredient in the list).
    For foods prepared by the school food service, the recipe is used 
as the basis for a calculation to determine whether the total weight of 
whole grain ingredients exceeds the total weight of non-whole grain 
ingredients.
    Several commenters noted that the industry standard of identity for 
whole grain products is 14.75 grams, while the IOM recommendations for 
school meals were based on 16 grams per serving. They suggested that 
schools be permitted to round up to the nearest quarter on gram 
equivalents in products. USDA will continue to provide SAs and schools 
guidance on this subject.
    Many program operators expressed concern about the increased 
quantity of

[[Page 4094]]

food offered to children. The weekly grains quantity for the NSLP is 
reduced to 8-9 oz. eq. for age/grade group K-5, to 8-10 oz. eq. for 
age/grade group 6-8, and to 10-12 oz. eq. for age/grade group 9-12. 
This grains requirement still reflects the Dietary Guidelines' 
recommendation to increase consumption of whole grains as half of all 
grains offered must be whole grain-rich during the first two years of 
implementation, and all grains must be whole grain-rich thereafter.
    Commenters also expressed concerns regarding the cost and 
availability of whole grain-rich products. USDA would like to emphasize 
that such products are now available through USDA Foods, including: 
brown rice; parboiled brown rice; rolled oats; whole-wheat flour; 
whole-grain kernel corn; and whole-grain rotini, spaghetti, and 
macaroni.
    This final rule modifies the provision in the proposed rule to 
allow schools the option to meet part of the weekly grains requirement 
with grain-based desserts. USDA had proposed to allow up to one serving 
of grain-based dessert per day to allow additional opportunities to 
incorporate whole grains in the lunch menu. However, the 2010 Dietary 
Guidelines cite grain-based desserts as a significant source of solid 
fats and added sugars in Americans' diets. Therefore, this final rule 
reduces the number of allowable grain-based desserts from five to two 
per school week, as recommended by several commenters.
    Accordingly, this final rule implements the proposed grains 
requirements and codifies them under Sec.  210.10(c) for the NSLP and 
under Sec.  220.8(c) for the SBP. Grains requirements applicable to the 
SBP in SY 2012-2013 are under Sec.  220.23(g).

Meats/Meat Alternates

    Proposed Rule: Offer a meat/meat alternate at lunch and breakfast 
daily to meet weekly requirements. Solicit comments on whether or not 
the meat/meat alternate component should include the three protein food 
subgroups recommended by the 2010 Dietary Guidelines: (1) Seafood; (2) 
meat, poultry, and eggs; and (3) nuts, seeds, and soy products. Solicit 
comments on whether or not tofu should be an allowable meat alternate 
and a methodology for crediting commercially prepared tofu.
    Comments: A few commenters, primarily health advocates, expressed 
support for the overall meat/meat alternate requirement. They supported 
the proposed rule's emphasis on lean sources of protein and on lower-
sodium meats/meat alternates. Several commenters, however, indicated 
that applying a weekly meat/meat alternate requirement, rather than a 
daily source of protein, might decrease the estimated meal cost and 
increase menu planning flexibility.
    Many of the public comments focused on the proposed requirement to 
offer a meat/meat alternate daily at breakfast. Commenters who favored 
the proposal stated that a breakfast with a meat/meat alternate would 
provide greater satiety and help increase the protein intake for 
children that do not drink milk. They said the protein requirement 
would result in a more nutritious and balanced breakfast.
    However, many school districts expressed concerns about offering a 
daily meat/meat alternate at breakfast. Several of these commenters 
argued that there is insufficient scientific support for the proposed 
meat/meat alternate requirement at breakfast. Others asserted that the 
daily requirement would be costly, create logistical difficulties and 
food safety challenges for schools, make it difficult for schools to 
achieve the new sodium limits, and discourage new breakfast modalities 
and school participation in the SBP. Some also noted that children in 
most schools have very limited time to eat breakfast and offering more 
food would result in increased plate waste.
    A few commenters also expressed concerns about the availability of 
meat/meat alternate products that will enable schools to offer meals 
that meet the dietary specifications for sodium, saturated fat, and 
trans fat. A commenter asked whether USDA Foods is able to provide low-
sodium processed meats, cheeses, and other meat/meat alternate 
products.
    Commenters had different opinions on whether or not the meal 
pattern should require that schools offer the specific protein food 
subgroups identified in the 2010 Dietary Guidelines. Those in favor 
stated that it would diversify students' diet and provide health 
benefits. Those against it said that requiring protein food subgroups 
would be cost-prohibitive to many schools and that it might not be 
feasible in certain geographical areas. They also indicated that many 
parents do not recognize nuts, seeds, and soy products as a substitute 
for meats.
    Many commenters suggested that USDA allow schools to offer tofu as 
a meat/meat alternate. A range of stakeholders, including SAs, 
nutrition professionals, advocacy organizations, and individual 
commenters, expressed support for allowing commercially prepared tofu 
in the school meal programs. Some commenters suggested a methodology 
for crediting commercially prepared tofu as a meat alternate. The 
predominant approach suggested is that USDA credit tofu based on the 
grams of protein per ounce equivalent.
    USDA Response: This final rule implements the meat/meat alternate 
requirements for the NSLP as proposed. Schools must offer at least a 
minimum amount of meat/meat alternate daily (2 oz eq. for students in 
grades 9-12, and 1 oz eq. for younger students), and provide a weekly 
required amount for each age/grade group. Offering a meat/meat 
alternate daily as part of the school lunch supplies protein, B 
vitamins, vitamin E, iron, zinc, and magnesium to the diet of children, 
and also teaches them to recognize the components of a balanced meal. 
Menu planners are encouraged to offer a variety of protein foods (e.g., 
lean or extra lean meats, seafood, and poultry; beans and peas; fat-
free and low-fat milk products; and unsalted nuts and seeds) to meet 
the meat/meat alternate requirement.
    The Department is mindful of the cost and operational concerns 
expressed by schools and other stakeholders regarding the proposed 
meat/meat alternate component in the SBP. Previously, schools have had 
the flexibility to offer one serving each of grains and meat/meat 
alternate, or two servings of either one at breakfast. We have seen a 
steady increase in the number of schools participating in the SBP and 
more schools are offering breakfast in the classroom and other creative 
delivery options. Therefore, this final rule retains some flexibility 
offered by the grains and meat/meat alternate combination available in 
the current SBP meal pattern, and does not require a daily meat/meat 
alternate in the SBP. Menu planners may offer a meat/meat alternate in 
place of grains after the minimum daily grains requirement is met. For 
example, for the K-5 age-grade group, the SBP minimum daily grain 
requirement is 1 oz. eq. As long as at least 1 oz. eq. of grain is 
served as part of the breakfast menu, a meat/meat alternate may also be 
served. The meat/meat alternate may count toward meeting the weekly 
grains requirement. For crediting, 1 oz. eq. of meat/meat alternate is 
equivalent to 1 oz. eq. of grains.
    As suggested by many stakeholders, this final rule gives schools 
the option to offer commercially prepared tofu as a meat alternate in 
the NSLP and SBP. This provision, which is codified under Sec.  
210.10(c)(2)(i)(D) of the regulatory text for the NSLP, allows schools 
to diversify the sources of protein available to students and better 
meet the dietary

[[Page 4095]]

needs of vegetarians and culturally diverse groups in schools. Although 
tofu does not have an FDA standard of identity, the Dietary Guidelines 
recognize plant-based sources of protein such as tofu. USDA will 
continue to provide SAs and schools guidance on this issue.
    USDA wishes to clarify that schools have the option to offer mature 
beans and dry peas (e.g., kidney beans, pinto beans, black beans, 
garbanzo beans/chickpeas, black-eyed peas, split peas and lentils) as 
meat alternates. Mature beans and peas dry longer on the plant, fix 
more nitrogen, and have a higher protein content, which makes them 
nutritionally comparable to protein foods. They are also excellent 
sources of other nutrients such as iron and zinc. Because beans and 
peas are similar to meats, poultry, and fish in their contribution of 
these nutrients, they can be credited as a meat alternate.
    Note that a serving of beans and peas must not be offered as a meat 
alternate and as a vegetable in the same meal. Some foods commonly 
referred to as beans and peas (e.g., green peas, green lima beans, and 
green (string) beans) are not considered part of the beans and peas 
subgroup because their nutrient profile is dissimilar. For more 
information about the use and categorization of beans and peas see 
http://www.choosemyplate.gov/foodgroups/proteinfoods_beanspeas.html.
    Schools also have discretion to offer ready-to-eat foods such as 
cold cuts, cheese, and yogurt to meet the meat/meat alternate 
component. Regardless of the protein foods offered, schools must plan 
all meals with the goal to meet the dietary specifications for sodium, 
saturated fat, trans fat, and calories. When selecting protein foods 
that are affordable and easy to prepare, we strongly encourage menu 
planners to use low-fat and low-sodium products that contribute to 
improved nutrient intake and health benefits (e.g., fat-free/low-fat 
yogurt and unsalted nuts and seeds).
    To support school meal improvements, USDA Foods has reduced the 
upper salt limit on mozzarella cheese from 2 percent to 1.6 percent. 
The current range for mozzarella is 130-175 mg of sodium per 28 g (1 
oz.) serving. The sodium in processed and blended cheeses has been 
reduced from 450 milligrams or more, to between 200 and 300 milligrams 
per 28 g (1 oz.) serving, which is closer to the sodium levels found in 
natural cheeses.
    USDA had solicited comments on whether schools should be required 
to offer the protein food subgroups recommended by the 2010 Dietary 
Guidelines. In response to program operators' concerns, this final rule 
does not require the three protein food subgroups recommended by the 
2010 Dietary Guidelines. However, USDA is developing technical 
assistance to assist schools in offering students a variety of protein 
foods consistent with the Dietary Guidelines.
    Accordingly, this final rule implements the proposed meat/meat 
alternate requirements, with modifications, and codifies them under 
Sec.  210.10(c) for the NSLP and under Sec.  220.8(c) for the SBP. 
Meat/meat alternate requirements applicable to the SBP in SY 2012-2013 
are under Sec.  220.23(g).

Fluid Milk

    Proposed Rule: Offer plain or flavored fat-free milk and unflavored 
low-fat milk (1 percent milk fat or less), and include variety that is 
consistent with Dietary Guidelines recommendations.
    Comments: Many parents and nutrition and health advocates favored 
the proposed requirement to limit flavor to fat-free milk. They believe 
that saturated fat and sugar in children's diets can be reduced by 
restricting milk choices to fat-free and low-fat, and by limiting 
flavor to fat-free milk. Several commenters stated that schools have 
already limited flavor to fat-free milk and student acceptability has 
been good. Some commenters recommended a total ban on flavored milk and 
argued that several states are in the process of banning flavored milk.
    However, more commenters stated that flavored low-fat (1 percent or 
\1/2\ percent) milk should be allowed. Many of these cited a lack of 
availability of flavored fat-free milk. Others were concerned that poor 
student acceptability of flavored fat-free milk could result in lower 
milk consumption or participation in the school meal programs. Some 
commenters said that the amount of extra calories and fat in low-fat 
flavored milk is not significant enough to warrant allowing only 
flavored fat-free milk. A few asked that USDA phase in the limit on 
flavored milk, and others suggested that USDA set a maximum level of 
added sugar in flavored milk instead of allowing flavor only in fat-
free milk.
    Several commenters addressed the need to accommodate lactose-
intolerant students and, others requested USDA to clarify milk variety 
in school meals. Also, although the proposed rule did not address meal 
variations for special dietary reasons, some commenters discussed the 
nutrition standards for non-dairy milk substitutes (e.g., soy drinks) 
and other miscellaneous topics related to the milk component, including 
OVS.
    USDA Response: This final rule allows flavor in fat-free milk only, 
and fat-free and low-fat choices only (consistent with Dietary 
Guidelines recommendations and the NSLA as amended by the HHFKA). 
Flavored low-fat (1 percent or \1/2\ percent) milk is not allowed in 
the NSLP or the SBP upon implementation of the rule in SY 2012-2013 
because it contributes added sugars and fat to the meal and would make 
it more difficult for schools to offer meals that meet the limits on 
calories and saturated fat. We anticipate that the new calorie limits 
will lead menu planners to select milk with the lowest levels of added 
sugar. Implementing calorie maximums gives menu planners more 
flexibility than limiting added sugar.
    Schools already have the option to offer lactose-free and reduced-
lactose milk (fat-free and/or low-fat) as part of the reimbursable 
meal. Offering lactose free/reduced milk (fat-free or low-fat) is 
allowed and counts toward the milk variety requirement established by 
in the NSLA by the HHFKA. For the NSLP and SBP, variety (at least two 
choices of milk) can be accomplished by offering different allowable 
fat levels (fat-free and low-fat) and milk flavor in fat-free milk 
only. For additional guidance on milk variety, please see the FNS 
memorandum SP-29-2011, Child Nutrition Reauthorization: Nutrition 
Requirements for Fluid Milk, dated April 14, 2011.)
    The milk fat restriction established by this final rule also 
applies to the meals for children in the age group 3-4 even though the 
meal patterns for preschoolers will be updated later through a separate 
rule. The amendments made to the NSLA by the HHFKA require fat-free and 
low-fat milk for all school lunches. Although this change was not 
addressed in the proposed rule due to the timing of publication, USDA 
notified program operators of this requirement for all school meals 
through implementation memorandum SP-29-2011. The milk flavor 
restriction also extends to the milk offered to children in age group 
3-4.
    As requested by commenters, we wish to clarify that this final rule 
does not change the nutrition standards for the optional non-dairy 
drinks offered to students with special dietary needs (not 
disabilities) in place of milk at the request from parents. Those 
products (e.g., soy, rice and almond drinks) are offered as meal 
exceptions on a case by

[[Page 4096]]

case basis and are not intended for general consumption with the school 
meal. The nutrition standards for non-dairy milk substitutes for 
children without disabilities were established through a separate final 
rule ``Fluid Milk Substitutions in the School Nutrition Program,'' 
which was published in the Federal Register (73 FR 52903) on September 
12, 2008. Those standards do not include fat or flavor/sugar 
restrictions.
    We also wish to clarify that although fluid milk must be offered 
with every school meal, students may decline milk under OVS. In 
addition, water may not be offered in place of fluid milk as part of 
the reimbursable meal, but must be available in the food service area 
for students who wish to drink it in accordance with the NSLA as 
amended by the HHFKA and as discussed in the memorandum ``SP-28-2011 
Revised Child Nutrition Reauthorization 2010: Water Availability During 
National School Lunch Program Meal Service'' dated July 12, 2011.
    Accordingly, this final rule implements the proposed milk 
requirements and codifies them under Sec.  210.10(d) for the NSLP and 
under Sec.  220.8(d) for the SBP.

Dietary Specifications

Calories
    Proposed Rule: Offer lunches and breakfasts that supply, on average 
over the school week, a number of calories that is within the 
established minimum and maximum levels for each age/grade group.
    Comments: Many commenters agreed in general with the proposal to 
establish minimum and maximum calorie levels, and were particularly 
supportive of the maximum calorie levels. These commenters included 
advocacy organizations, food banks, a health department, a professional 
association, and an industry association. Many stated that setting 
minimum and maximum calorie levels along with providing nutrient dense 
meals will help address food insecurity and obesity concerns.
    A few commenters said many students are not active enough and 
recommended lower calorie limits. Others, however, indicated that the 
proposed maximum calorie limits for school lunch might not be adequate 
to meet the dietary needs of taller and active students. Several 
commenters asserted that the calorie levels must be adequate enough to 
support the dietary needs of children who may not have access to 
sufficient food outside of school. There is also a concern among 
commenters about the ability of schools to adhere to the minimum and 
maximum calorie limits in the absence of a nutritional analysis.
    In order to control calorie intake, some commenters suggested that 
USDA establish limits on added sugars for products such as such ready-
to-eat cereal, grain-based desserts, and dairy-based desserts to 
improve the diet of school children. A few commenters, including an 
advocacy organization, suggested adopting the World Health 
Organization's recommendation to limit added sugars to ``no more than 
10 percent of a person's daily caloric intake.'' An advocacy 
organization and a professional association of health nutrition 
directors suggested adopting the Special Supplemental Nutrition Program 
for Women, Infants and Children (WIC) breakfast standard, which sets 
the added sugars limit to no more than 6 grams of sugars per ounce of 
dry cereal.
    USDA Response: This final rule is intended to respond to serious 
concerns about childhood obesity, and the importance for children to 
consume nutritious school meals within their calorie needs. Therefore, 
this rule implements the proposed minimum and maximum calorie levels 
for each grade group. In the NSLP, the calorie limits for each age/
grade group take effect upon implementation of this final rule. In the 
SBP, however, calorie limits are not implemented until the SY 2013-2014 
(the second year of implementation). This modification from the 
proposed rule is intended to give program operators additional time to 
implement the new meal requirements in the SBP.
    USDA acknowledges the school meal programs provide a nutrition 
safety net for food-insecure children and agrees with commenters that 
meals must supply adequate calories for growth and development. IOM 
considered this aspect of the Child Nutrition Program missions when 
developing the minimum and maximum calorie levels for various age/grade 
groups in the NSLP and SBP. They also took into consideration other 
opportunities for food intake available to most children outside of 
school, and the role of community organizations and other groups in 
supporting the nutritional needs of low-income children.
    Although some commenters suggested setting a limit on added sugars 
for products such as flavored milk, USDA, consistent with the Institute 
of Medicine recommendations, does not believe a standard is necessary 
and would unnecessarily restrict menu planning flexibility. The 
required maximum calorie levels are expected to drive menu planners to 
select nutrient dense foods and ingredients to prepare meals, and avoid 
products that are high in fats and added sugars. In addition, this 
final rule includes other provisions that limit the sources of 
discretionary calories.
    We also wish to clarify that the calorie standards established for 
each age/grade group are to be met on average over the course of the 
week. On any given school day, the calorie level for the meal may fall 
outside of the minimum and maximum levels as long as the average number 
of calories for the week is within the required range. This provides 
some flexibility to menu planners, but careful procurement, planning 
and preparation are important to stay within the calorie ranges.
    Accordingly, this final rule implements the proposed calorie 
requirements and codifies them under Sec.  210.10(f) for the NSLP and 
under Sec.  220.8(f) for the SBP. Calorie requirements applicable to 
the SBP in SY 2012-2013 are under Sec.  220.23(b) and Sec.  220.23(c).

Saturated Fat

    Proposed Rule: Offer lunches and breakfasts that supply, on average 
over the school week, less than 10 percent of total calories from 
saturated fat.
    Comments: Most commenters concerned about childhood obesity also 
expressed general support for limiting saturated fat in school meals at 
less than 10 percent of total calories. This is the same as the current 
saturated fat restriction and the 2010 Dietary Guidelines did not 
change this recommendation. A small number of commenters (a health care 
professional, a member of academia, and an advocacy organization) 
suggested a more restrictive standard, recommending that USDA require 
less than 7 percent of total calories from saturated fat. This limit is 
listed in the Dietary Guidelines Advisory Committee report but was not 
adopted as a recommendation in the 2010 Dietary Guidelines.
    USDA Response: This final rule implements the proposed saturated 
fat standard, which is the same as the restriction currently in place 
in the NSLP and SBP. Schools must continue to limit saturated fat in 
the school meals to help reduce childhood obesity and children's risk 
of cardiovascular disease later in life. Many schools are still having 
difficulty meeting this requirement in the NSLP. Several major sources 
of saturated fat in the American diet are popular items in the lunch 
menu.
    This final rule implements two new requirements set forth in the 
proposed rule and are anticipated to encourage

[[Page 4097]]

schools to reduce the saturated fat in meals: allowing only fat-free 
and low-fat milk, and establishing maximum calorie limits. USDA's 
technical assistance will continue to emphasize the need to purchase 
and prepare foods in ways that help reduce the saturated fat level in 
school meals (e.g., procuring skinless chicken or using meat from which 
fat has been trimmed, and using vegetable oils that are rich in 
monounsaturated and polyunsaturated fatty acids such as canola and corn 
oils).
    This rule does not require schools to meet a total fat standard 
under current regulations. The IOM report did not recommend that USDA 
require a total fat standard for school meals. The expectation is that 
the new meal requirements, including the dietary specifications for 
calories, saturated fat and trans fat, will enable schools to offer 
meals that are low in total fat.
    Accordingly, this final rule implements the proposed saturated 
requirement and codifies it under Sec.  210.10(f) for the NSLP and 
under Sec.  220.8(f) for the SBP.

Sodium

    Proposed Rule: Offer lunches and breakfasts that supply, on average 
over the school week, no more than the maximum sodium levels set for 
each age/grade group. Meet the intermediate sodium targets (two and 
four years post implementation of the rule), and the final sodium 
targets (ten years post implementation of the rule; changes represent a 
sodium reduction of approximately 25-50 percent in breakfasts and 
lunches). The proposed targets aimed to help reduce students' sodium 
intakes to less than the Tolerable Upper Intake Levels established in 
the Dietary Reference Intakes, which range from 1,900-2,300 milligrams 
per day for children ages 4-18.
    Comments: Nutrition and health advocates, community-action groups, 
individuals, and some school districts expressed support for the 
proposed sodium restrictions and timeline. A medical association and an 
advocacy organization supported the proposed sodium restriction to help 
address the health risks associated with high sodium intake. A 
professional association recommended that USDA consider further 
reductions in sodium limits after progress has been assessed. An 
advocacy organization suggested that USDA base the proposed 
restrictions on the Dietary Guidelines recommendation of 1,500 mg of 
sodium per day for special population groups. The 2010 Dietary 
Guidelines recommend that persons who are 51 years and older, African 
American children and adults, and persons of any age that have 
hypertension, diabetes, or chronic kidney disease limit sodium intake 
to 1,500 mg per day (compared to the 2,300 mg per day recommended for 
the general population).
    However, many commenters were concerned that schools will likely 
struggle to meet the proposed intermediate sodium limits and fail to 
achieve the final target within 10 years. Some commenters asserted that 
the final targets for each age/grade group are lower than the 
therapeutic levels set for certain high-risk populations and should be 
increased. A school advocacy organization and school districts argued 
that it would be difficult for schools to prepare palatable foods at 
the proposed final sodium targets and, therefore, students would be 
motivated to drop from the meal program and pack lunches that contain 
high levels of sodium.
    Some commenters expressed concerns about the potential use of 
sodium substitutes in schools. Commenters also indicated that industry 
needs time for product development and testing, and schools need time 
for procurement changes, menu development, sampling, and to foster 
student acceptance. Two food manufacturers commented that pizza 
manufacturers would need to complete research in order to secure low 
sodium cheeses that adhere to the proposed final target and that 
children like. Some argued that many schools rely on canned and 
processed food items and have limited access to reduced-sodium 
products.
    School food service staff, a food manufacturer, a nutrition 
professional and individual commenters suggested that USDA lengthen the 
time to reach the intermediate sodium targets, and eliminate or 
reevaluate the final target. Commenters also encouraged USDA to monitor 
the progress of sodium reductions toward targets before moving forward. 
Some offered various alternatives to the proposed sodium limits and 
timeline (e.g., a food manufacturer suggested 33 percent reduction over 
ten years and a school food service staff member suggested 30 percent 
over ten years). Several commenters suggested a 10-20 percent reduction 
over ten years to allow schools to continue purchasing affordable 
processed foods while working on recipe modification, in order to 
reduce food costs and potential loss of student participation. Others 
recommended establishing daily limits for each school meal (e.g., 
1,000-1,200 mg/day for lunch and 1,000 mg/day for breakfast).
    Some school districts and a child nutrition consultant stated that 
there is not enough scientific data linking sodium consumption with 
health issues in children, and did not agree with claims that 
children's early exposure to sodium leads them to develop a preference 
for salty foods. A child nutrition consultant, a school nutrition 
directors' association, a professional association, and a school 
district argued that further studies should be conducted so that the 
final target levels are science-based.
    USDA Response: Reducing the sodium content of school meals is a key 
objective of this final rule reflecting the Dietary Guidelines 
recommendation for children and adults to limit sodium intake to lower 
the risk of chronic diseases. USDA has encouraged schools to reduce 
sodium since the implementation of the School Meals Initiative in 1995. 
According to the SNDA-III study, the average sodium content of school 
lunches (for all schools) remains high: More than 1400 mg. Therefore, 
this final rule requires schools to make a gradual reduction in the 
sodium content of the meals, as recommended by IOM and consistent with 
the requirements of the FY 2012 Agriculture Appropriations Act.
    Schools will be required to meet the first intermediate sodium 
target for each age/grade group (target 1 in the chart) in the NSLP and 
SBP no later than July 1, 2014 (SY 2014-2015), two years post 
implementation of this final rule. To meet target 1, schools are 
expected to modify menus and recipes promptly to reduce the sodium 
content of school lunches by approximately 5-10 percent from their 
baseline.
    Prior to the implementation of the second (target 2) and final 
sodium targets contained in this rule, USDA will evaluate relevant 
studies on sodium intake and human health, as required by Section 743 
of the FY 2012 Agriculture Appropriations Act. The scheduled compliance 
date for target 2 is no later than July 1, 2017 (SY 2017-2018), five 
years post implementation of the final rule for both meal programs. In 
response to stakeholders' concerns, and the provisions of Section 743 
of the FY 2012 Agriculture Appropriations Act, this final rule 
lengthens the time to reach the second intermediate targets from 4 to 5 
years. This modification to the sodium proposal is intended to allow 
food manufacturers additional time to reformulate products and schools 
more time to build student acceptance of lower sodium meals. To meet 
target 2, schools have to reduce sodium in school lunches by 
approximately 15-30 percent from their baseline. We

[[Page 4098]]

anticipate schools will have to incorporate new low-sodium products and 
ingredients in meals offered in order to meet this target.
    The scheduled compliance date for the final sodium targets is no 
later than July 1, 2022 (SY 2022-2023), ten years post implementation 
of the final rule. To meet the final sodium target, schools will have 
to reduce the sodium content of the meals by approximately 25-50 
percent from the school baseline. This will require innovation on the 
part of product manufacturers in the form of new technology and/or food 
products. As required by Section 743 of the FY 2012 Agriculture 
Appropriations Act, USDA will certify that it has evaluated relevant 
data on sodium intake and human health prior to requiring compliance 
with the second and final sodium targets.
    Meeting the final sodium targets will enable schools to offer meals 
that reflect the 2010 Dietary Guidelines' recommendation to limit 
sodium intake to less than 2,300 mg per day. Nearly all schools have to 
reduce the sodium content of school meals to meet final sodium targets, 
but the extent of the needed reduction varies by school/district as 
sodium limits for school meals do not currently exist. The following 
chart illustrates the sodium reduction in school meals:

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                         Sodium reduction: Timeline and amount
                                                              ------------------------------------------------------------------------------------------
                                         Baseline: Current                                                                               Percent change
           Age/grade group             average sodium levels    Target 1: meet by July  Target 2: meet by July  Final target: \2\ Meet   (current levels
                                        as offered \1\ (mg)     1, 2014 (SY 2014-2015)  1, 2017 (SY 2017-2018)    by July 1, 2022 (SY       vs. final
                                                                         (mg)                    (mg)               2022-2023) (mg)         targets)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                School Breakfast Program
--------------------------------------------------------------------------------------------------------------------------------------------------------
K-5.................................  573 (elementary).......  <= 540 (28.4% of UL)...  <= 485 (25.5% of UL)..  <= 430 (22.6% of UL)..               -25
6-8.................................  629 (middle)...........  <= 600 (27.3% of UL)...  <= 535 (24.3% of UL)..  <= 470 (21.4% of UL)..               -25
9-12................................  686 (high).............  <= 640 (27.8% of UL)...  <= 570 (24.8% of UL)..  <= 500 (21.7% of UL)..               -27
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                              National School Lunch Program
--------------------------------------------------------------------------------------------------------------------------------------------------------
K-5.................................  1,377 (elementary).....  <= 1,230 (64.8% of UL).  <= 935 (49.2% of UL)..  <= 640 (33.7% of UL)..               -54
6-8.................................  1,520 (middle).........  <= 1,360 (61.8% of UL).  <= 1,035 (47.0% of UL)  <= 710 (32.3% of UL)..               -53
9-12................................  1,588 (high)...........  <= 1,420 (61.7% of UL).  <= 1,080 (47.0% of UL)  <= 740 (32.2% of UL)..               -53
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Current Average Sodium Levels as Offered are from the School Nutrition and Dietary Assessment Study-III. Data were collected in the 2004-05 school
  year.
\2\ The IOM final targets are based on the Tolerable Upper Intake Limits (ULs) for sodium, established in the Dietary Reference Intakes (DRI) (IOM,
  2004). The sodium ULs for school-aged children are 2,300 mg (ages 14-18), 2,200 mg (ages 9-13), and 1,900 mg (ages 4-8). The final sodium targets
  represent the UL for each age/grade group multiplied by the percentage of nutrients supplied by each meal (approximately 21.5% for breakfast, 32% for
  lunch), as recommended by IOM. IOM's recommended final sodium targets for the K-5 age/grade group breakfasts and lunches are slightly higher than
  21.5% and 32% 32%, respectively, of the UL because this proposed elementary school group spans part of two DRI age groups (ages 4-8 and 9-13 years).

    USDA is committed to helping program operators reduce sodium in 
school menus. USDA's Team Nutrition and the National School Food 
Service Management Institute have developed guidance for reducing 
sodium. USDA also continues to make low-sodium USDA Foods available to 
schools. For example, USDA offers only reduced sodium canned beans and 
vegetables at no more than 140 mg per half-cup serving, including 
spaghetti sauce, salsa, and tomato paste. Canned whole kernel corn, 
whole tomatoes, and diced tomatoes are being offered with no added 
salt. Frozen vegetables, including green beans, carrots, corn, peas, 
and sweet potatoes are available with no added salt. USDA has also 
reduced the upper salt limit on mozzarella cheese (current range is 
130-175 mg of sodium per 1 oz. serving) and chicken fajita strips (220 
mg per 2 oz serving).
    Accordingly, this final rule implements the proposed sodium limits, 
with modifications, and codifies them under Sec.  210.10(f) for the 
NSLP and under Sec.  220.8(f) for the SBP.

Tracking Calories, Saturated Fat, and Sodium

    Proposed Rule: State agencies must monitor compliance with the 
dietary specifications (calories, saturated fat and sodium levels) by 
conducting a weighted nutrient analysis for the schools selected for 
administrative review every 3 years. The analysis must cover menu and 
production records for a 2-week period.
    Comments: Commenters did not specifically address the proposal to 
combine the nutritional assessment of school meals with the 
administrative review for stronger program accountability. Overall, 
health and child nutrition advocates welcomed the new SA requirement to 
conduct administrative reviews every 3 years, which is codified through 
this final rule. They also agreed in general that reviewing menu and 
production records for a 2-week period and conducting a weighted 
nutrient analysis offer a more accurate assessment of school meals than 
current regulations.
    However, State and local program operators expressed concern about 
the requirement to conduct administrative reviews every 3 years. 
Several commenters stated that SAs have limited time and resources to 
conduct more frequent administrative reviews and provide technical 
assistance to all SFAs. In addition, school districts, SAs, trade 
associations, advocacy organizations and others opposed removing 
responsibility to conduct a nutrient analysis from the SFAs, believing 
this change limit the SFAs' ability to assess their own efforts to 
reduce sodium and saturated fat, and comply with the calorie ranges. 
Other commenters also opposed the requirement for a weighted nutrient 
analysis because it would not identify issues in menu planning or 
reflect what students actually consume. Several commenters requested 
that a tool be developed for SAs to identify issues and help implement 
the new meal requirements for schools.
    USDA Response: The HHFKA amended the NSLA to require improvements 
to school meals and more frequent monitoring of school meals to 
facilitate transition to the new meal requirements. This rule requires 
SAs to begin the 3-year Coordinated Review Effort (CRE) cycle on July 
1, 2013 (SY 2013-2014) for the NSLP and SBP. To

[[Page 4099]]

help SAs meet this requirement, USDA will develop technical assistance 
tools to facilitate monitoring of school meals.
    This rule requires SAs to conduct the nutrient analysis of school 
lunches and breakfasts as part of the administrative review, but does 
not limit SFA discretion to conduct a nutrient analysis of the school 
meals to determine if they are in line with the dietary specifications. 
We understand that many SFAs currently have the ability to conduct a 
nutrient analysis.
    USDA is mindful of SA concerns about increased administrative 
burden. In response to concerns about the requirement to conduct a 
nutrient analysis of school meals using menus for a two-week period, 
this final rule reduces the time period to one-week, which is the 
current requirement. This modification to the proposed rule is expected 
to lessen the information collection burden on SAs without affecting 
their ability to assess the nutritional integrity of the meals offered 
and the general quality of the food service operation.
    Accordingly, this final rule implements the proposed monitoring 
requirements, with modifications, and codifies them under Sec.  
210.18(c), Sec.  210.18(g)(2), Sec.  210.18(i)(3), Sec.  210.18(m), and 
Sec.  210.19(c) for the NSLP and under Sec.  220.8(h), Sec.  220.8(i), 
and Sec.  220.8(j) for the SBP.

Tracking Trans Fat

    Proposed Rule: Food products and ingredients used to prepare school 
lunches and breakfasts must contain zero grams of trans fat per serving 
(less than 0.5 grams per serving) according to the nutrition labeling 
or manufacturer's specifications.
    Comments: Many commenters, including advocacy organizations, 
schools, health care professionals, community organizations and others 
expressed support for the proposal to restrict trans fat in school 
meals. Several of them asked that naturally-occurring trans fat be 
excluded from the trans fat limit. A few commenters suggested that the 
trans fat limit be greater than zero due to concerns over potential 
increased use of hydrogenated oils and saturated fats in school meals. 
No commenters opposed the proposal to restrict trans fat.
    USDA Response: A number of studies suggest an association between 
trans fatty acid intake and increased risk of cardiovascular disease. 
The Dietary Guidelines recommend that all persons keep trans fatty acid 
consumption as low as possible by limiting foods that contain synthetic 
sources of trans fats, such as partially hydrogenated oils, and by 
limiting other solid fats. Therefore, to safeguard children's health, 
this final rule requires that food products and ingredients used to 
prepare school meals contain zero grams of added trans fat per serving 
(less than 0.5 grams per serving as defined by FDA) according to the 
nutrition labeling or manufacturer's specifications. This requirement 
takes effect in the NSLP on July 1, 2012 (SY 2012-2013). In the SBP, 
the requirement is effective on July 1 2013 (SY 2013-2014, the second 
year of implementation).
    This requirement is intended to restrict synthetic trans fatty 
acids and does not apply to naturally occurring trans fats, which are 
present in meat and dairy products. Synthetic trans fatty acids are 
found in partially hydrogenated oils used in some margarines, snack 
foods, and prepared desserts. See USDA Foods guidance on trans fat at 
http://www.fns.usda.gov/fdd/facts/nutrition/TransFatFactSheet.pdf.
    Accordingly, this final rule implements the proposed trans fat 
restriction and codifies it under Sec.  210.10(g) Sec.  210.10(h) and 
Sec.  210.10(j), for the NSLP and under Sec.  220.8(g), Sec.  220.8(h), 
and Sec.  220.8(j) for the SBP.

Standards for Meals Selected by the Student (Offer versus Serve (OVS)

    Proposed Rule: Under OVS, students may not decline more than two 
food items at lunch and one food item at breakfast, and must select a 
fruit or a vegetable at each meal.
    Comments: Many commenters expressed their views about this proposed 
requirement. Nutrition and health advocates, a professional 
association, a State department of health, some school districts and 
food service staff, and individuals expressed support for the proposed 
requirement to require a fruit or a vegetable as part of the 
reimbursable meal. They viewed this requirement as a means to encourage 
children to eat more fruits and vegetables. An advocacy group commented 
that requiring students to take a fruit or a vegetable should help 
increase actual fruit and vegetable consumption citing a pilot study in 
which more students consumed fruit when prompted to take a fruit item.
    However, many commenters expressed concerns about potential food 
waste and overall costs associated with this proposed requirement. The 
commenters that opposed this proposal included a State department of 
education, school districts, school food service staff, school advocacy 
organizations, a teachers union, students, a child nutrition industry 
consultant, a food manufacturer, food service industry firms, nutrition 
professionals, and individuals. Generally, these commenters argued the 
proposed requirement that a reimbursable meal include a fruit or a 
vegetable would result in increased plate waste and increased cost by 
requiring students to choose a food they do not intend to eat. School 
food service staff also argued that indirect costs such as more 
frequent trash collection would increase if the students throw away 
more food. These commenters asserted that this proposed requirement 
would negate the purpose of OVS.
    Commenters asked USDA to clarify the minimum amount of fruit or 
vegetable that a student must take for a reimbursable meal. Many 
commenters suggested that USDA allows students to select less than the 
full fruit or vegetable component under OVS. Suggestions included a 
minimum of \1/2\ cup, \1/4\ cup, and \1/8\ cup of fruit or vegetable 
for a reimbursable meal.
    USDA Response: Increased vegetable and fruit intake is a key 
recommendation of the Dietary Guidelines. This recommendation applies 
to the NSLP and SBP because these programs are intended to nourish 
children but also help them develop healthy eating patterns. By 
requiring students to take a fruit or a vegetable, schools emphasize 
food choices that are high in nutrients and low in calories. Therefore, 
consistent with the Dietary Guidelines and the IOM recommendations, 
this final rule requires that the reimbursable lunch selected by the 
student includes a fruit or a vegetable beginning SY 2012-2013. In the 
SBP, this requirement is effective in SY 2014-2015 (the third year of 
implementation), when the fruit quantities for breakfast are required 
to increase.
    However, in response to the commenters' concerns about potential 
food waste and cost increases, this final rule allows students to take 
\1/2\ cup of a fruit or a vegetable as suggested by several commenters, 
rather than the full component, to have a reimbursable meal under OVS. 
For example, if a school is offering \1/2\ cup of fruit pieces and \1/
2\ cup fruit juice to meet the 1 cup fruit component at lunch, the 
student must select at least one of those two items to have a 
reimbursable lunch under OVS.
    This rule continues the current OVS practice under FBMP to allow 
students to decline up to two food components at lunch (preferred OVS 
option presented in the IOM report). Some commenters suggested that 
USDA implement the second OVS option identified in the IOM report to 
allow

[[Page 4100]]

students to decline more food components and, thus, have greater 
control of the amount of food on their plate. USDA is not adopting this 
suggestion. Although the second option would give school districts 
greater flexibility, it could negatively affect the nutritional 
integrity of the meal.
    In the SBP, OVS applies to food items rather than food components 
because of the flexibility to substitute meats/meat alternates for 
grains (once the daily grain requirement is met). In SBP, schools must 
offer fruit, milk, and grains daily. On multiple days per week, schools 
will need to offer more than the minimum daily grains requirement of 1 
oz. eq. per day to meet the weekly grain requirement. To accomplish 
this, schools will need to offer at least three or four food items on 
the breakfast menu. When a school offers four food items at breakfast, 
students may decline one food item. If only three food items are 
offered, students must take all the food items to preserve the 
nutritional integrity of the breakfast. More details about OVS will be 
provided in guidance.
    Schools that offer salad bars must follow the OVS requirements. To 
ensure that students actually take the minimum required portion size 
from a salad bar, foods may be pre-portioned to allow staff to quickly 
identify if the student has a reimbursable meal under OVS. If not pre-
portioning, then the cashier must be trained to judge accurately the 
quantities of self-serve items on student trays, to determine if the 
food item can count toward a reimbursable meal. For more information, 
see FNS memorandum SP 02-2010--Revised, dated January 21, 2011.
    Accordingly, this final rule implements the proposed requirements, 
with modifications, and codifies them under Sec.  210.10(e) for the 
NSLP and under Sec.  220.8(e) for the SBP. The OVS requirements 
applicable to the SBP in SY 2012-2013 are under Sec.  220.23(e)(2) and 
Sec.  220.23(g)(4).

Monitoring Procedures

    Proposed Rule:
    <bullet> State agencies must review school lunches and breakfasts 
every three years during scheduled administrative reviews to monitor 
compliance with the meal requirements (meal patterns and dietary 
specifications for calories, saturated fat, sodium and trans fats).
    <bullet> State agencies must conduct a weighted nutrient analysis 
for the schools selected for an administrative review to monitor 
compliance with the specifications for calories, saturated fat, and 
sodium. The analysis must cover menu and production records for a two-
week meal period.
    <bullet> State agencies must take immediate fiscal action if a 
required food component is not offered.
    <bullet> For repeat violations of the vegetable subgroup and milk 
requirements, State agencies must take fiscal action if technical 
assistance and corrective action have not resolved these violations.
    <bullet> For repeat violations of the food quantity and whole grain 
requirements, and the dietary specifications (calorie, sodium, 
saturated fat and trans fat), State agencies have discretion to take 
fiscal action if technical assistance and corrective action have not 
resolved these violations.
    Comments: Various commenters, including a health care association, 
State department of education, trade association, nutrition 
professional, food service staff, and advocacy organizations supported 
the proposal to eliminate the School Meals Initiative (SMI) review and 
monitor the nutritional quality of school meals through the scheduled 
administrative review. Although a few commenters expressed concern with 
eliminating the SMI review, several commenters voiced support for a 
single monitoring system.
    However, numerous commenters said that this proposal would not 
simplify monitoring because it increases the frequency of the review 
cycle and the meal review period, and requires SAs to conduct a 
nutrient analysis for the SFAs to determine compliance with the dietary 
specifications. Some commenters argued that SFAs would still have to 
conduct their own nutrient analysis to plan meals that meet the 
calorie, saturated fat, and sodium restrictions. They expressed concern 
that many food-based SFAs do not have the specialized tools to ensure 
compliance with the dietary specifications, and that SAs do not have 
enough time or resources to provide technical assistance to all SFAs.
    Although some commenters supported establishing a 3-year review 
cycle, most commenters opposed increasing the frequency of the 
administrative reviews. Those in favor of the proposal (health and 
nutrition advocates and providers) stated that it would increase 
opportunities to provide technical assistance to the SFAs and result in 
improved meals. Those opposed included school districts, food service 
management companies, school food service staff, a school advocacy 
organization, State departments of education, and nutrition 
professionals. These commenters argued that retaining the 5-year review 
cycle would give SAs more time to provide training and technical 
assistance to the SFAs. They indicated that SAs would not have the 
staff to handle the increased workload of a 3-year review cycle and, 
therefore, the quality of the reviews could suffer.
    Regarding the proposal to review menu and production records for a 
two-week meal period, most commenters expressed opposition. These 
commenters, including State and local operators, school food service 
staff, school advocacy organizations, professional associations, trade 
associations, and other groups argued that reviewing menus for one week 
is a reasonable amount of time to determine if an SFA is meeting the 
meal requirements. Some commenters estimated that the increased 
paperwork of a 3-year review cycle and a 2-week review of menus would 
triple the cost of completing the administrative review.
    There was a mixed response to the proposal to include breakfast in 
the administrative reviews. Commenters that agreed school breakfasts 
should be included argued that these meals often contain less nutrient-
dense foods than lunch. A similar number of commenters opposed the 
proposal because of cost concerns. The latter group stated that the 
reviews should only include lunch to offset the increased time and 
effort involved in conducting reviews every 3 years rather than every 5 
years.
    There were few and mixed opinions about the use of fiscal action. 
School food service staff argued that fiscal penalties are 
counterproductive and create an adversarial relationship between the SA 
and the SFA. They recommended that more emphasis be placed on providing 
technical assistance, not fiscal action. Other commenters favored 
increasing accountability to improve meal quality.
    Commenters offered some suggestions regarding monitoring 
procedures, including that SAs monitoring report be made available on-
line to the public. Another suggested that SAs target schools with 
prior non-compliance rather that assess a broad sample of schools.
    USDA Response: Section 207 of the HHFKA amended the NSLA to require 
USDA to establish a unified monitoring system. Accordingly, this final 
rule eliminates the SMI review and strengthens the administrative 
review to assess compliance with the new meal requirements. As required 
by this rule, SAs must monitor compliance with the meal patterns and 
the dietary specifications (calories, saturated fat, sodium and trans 
fat) under the administrative review responsibilities established in 7 
CFR 210.18. This

[[Page 4101]]

change is intended to focus more attention on the importance of 
providing lunches and breakfasts that reflect the science-based meal 
requirements, in accordance with Sec.  9 of the NSLA and Sec.  201 of 
the HHFKA.
    In addition to observing the serving line and the meals counted at 
point of service during the administrative review, the SAs must conduct 
a nutrient analysis to ensure that the average levels of calories, 
saturated fat, and sodium in the meals offered over the school week are 
within the values specified in this final rule. However, in response to 
commenters' concerns, this final rule requires SAs to review menu and 
production records for one week only within the review period, instead 
of the two weeks stated in the proposed rule. This modification reduces 
the information collection burden for SAs. USDA is reviewing potential 
alternative approaches to nutrient analysis and will provide further 
guidance to SAs.
    This final rule changes the administrative review cycle from 5 to 3 
years in accordance with the NSLA, as amended by Sec.  207 of the 
HHFKA. This change takes effect in SY 2013-2014, after the current 5-
year review cycle ends. More frequent monitoring is intended to 
increase opportunities for the SAs to provide guidance and technical 
assistance to the SFAs during implementation of the new meal 
requirements. USDA is aware of program operators' concerns regarding 
increased monitoring and will provide technical assistance resources 
and guidance to SAs to facilitate transition to the 3-year review 
cycle.
    This final rule also makes several improvements to the SBP to bring 
those meals closer to the recommendations of the Dietary Guidelines. 
Therefore, and in accordance with the NSLA as amended by the HHFKA, 
beginning SY 2013-2014, SAs must monitor breakfasts under the 
administrative review. However, because the new meal requirements 
(other than limiting types of milk) are being implemented gradually in 
the SBP, part of the compliance assessment must be based on prior 
nutrition standards (which are now in Sec.  220.23) until new 
requirements in the SBP regulations at Sec.  220.8 take effect. The 
requirement to conduct a nutrient analysis of breakfast menu records 
for one-week period begins July 1, 2013 (SY 2013-2014).
    SAs must continue to use technical assistance and corrective action 
as the primary strategies to help schools comply with the meal 
requirements. However, this final rule gives SAs the ability to use 
fiscal action to enforce compliance with specific meal requirements. As 
currently done, SAs must apply immediate fiscal action if the meals 
offered are completely missing one of the required food components. SAs 
must also take fiscal action for repeated violations of the vegetable 
subgroup and milk type requirements when technical assistance efforts 
and required corrective action have not resolved these violations. 
However, SAs have discretion to take fiscal action for repeated 
violations of the food quantity and whole grain requirements, and for 
repeated violations of the dietary specifications (calories, saturated 
fat, sodium and trans fats).
    A commenter suggested public disclosure of the administrative 
review findings. The NSLA, as amended by the HHFKA, requires schools to 
post review final findings and make findings available to the public. 
Also, the NSLA requires local education agencies to report on the 
school nutrition environment to USDA and to the public, including 
information on food safety inspections, local wellness policies, school 
meal program participation, and nutritional quality of program meals. 
These statutory requirements will be implemented through a separate 
rule.
    Accordingly, this final rule implements the proposed monitoring 
requirements, with the modification discussed above, and codifies them 
under Sec.  210.18(a), Sec.  210.18(c), Sec.  210.18(g) and Sec.  
210.18(m) for the NSLP and under Sec.  220.8(h) and Sec.  220.8(j) for 
the SBP.

Identification of Reimbursable Meal

    Proposed Rule: Identify the foods that are part of the reimbursable 
meal(s) for the day at or near the beginning of the serving line(s).
    Comments: Most of the commenters that addressed this proposal 
supported it because they believe it helps students avoid unintentional 
purchase of food items not included in the reimbursable meal. A few 
commenters opposed the proposed requirement and argued that it will 
overtly identify students that receive free and reduced price meals.
    USDA Response: Beginning July 1, 2012 (SY 2012-2013), this final 
rule requires schools to identify the components of the reimbursable 
meal at or near the beginning of the serving line(s) as students and 
parents often are not aware of what is included in the school meal. 
Identifying the components of the reimbursable meal also reinforces 
nutrition education messages that emphasize selecting healthy choices 
for a balanced meal. Schools have discretion to determine the best way 
to present this information on the serving line. Implementing this 
requirement must not result in overt identification of any student 
participating in the NSLP or SBP through use of a separate serving line 
for the reimbursable meal or other segregation of certified students.
    Accordingly, this final rule implements the proposed requirement 
and codifies it under Sec.  210.10(a)(2) for the NSLP, and under Sec.  
220.8(h) and Sec.  220.8(j) for the SBP.

Crediting

    Proposed Rule:
    <bullet> 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.
    <bullet> 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.
    Comments: Comments in favor of disallowing snack-type fruit or 
vegetable products exceeded the comments opposed. Those in favor stated 
that permitting such products sends the wrong nutrition message to 
children. Others said that children should be offered a variety of 
whole fruits and vegetables. However, some commenters opposed the 
requirement due to concerns over the cost of providing whole fruit. 
They suggested that USDA allow products made with 100 percent fruit.
    Many commenters opposed the proposal that all fruits and vegetables 
(and their concentrates, purees, and pastes) be credited based on 
volume as served. These commenters included school districts, school 
advocacy organizations, trade associations, food manufacturers, a food 
service management company, a State department of education and others. 
They expressed concern over the potential cost increase due to product 
reformulation and reduced product acceptability. Many commenters 
recommended that USDA keep the current practice to credit tomato paste 
and puree based on their whole-food equivalency using the percent 
natural tomato soluble solids in paste and puree.
    USDA Response: One of the goals of the School Meal Programs is to 
help children easily recognize the key food groups that contribute to a 
balanced meal, including fruits and vegetables.

[[Page 4102]]

Effective July 1, 2012 (SY 2012-2013), reimbursable meals must not 
include snack-type fruit products that have been previously 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). FDA revoked the standard of identity for canned fruit 
nectars through a final rule published in the Federal Register (60 FR 
56513) on November 9, 1995; therefore, there is no regulatory basis for 
allowing the crediting of these snack-type fruit products.
    As a result of Section 743 of the FY 2012 Agriculture 
Appropriations Act, this final rule does not adopt the proposed 
crediting change for tomato paste and puree. USDA will credit tomato 
paste and puree as a calculated volume based on the whole food 
equivalency. Although this specific proposal was intended to promote 
consistency and improved nutrition by crediting all fruits and 
vegetables (and their concentrates, purees, and pastes) based on volume 
as served, this final rule must comply with the statutory provision.
    Accordingly, this final rule disallows the crediting of any snack-
type fruit or vegetable products, and continues the crediting of tomato 
paste and puree as a calculated volume under Sec.  210.10(c)(2)(iii) of 
the regulatory text.

Fortification

    Proposed Rule: Disallow the use of formulated grain-fruit products 
as defined in Appendix A to 7 CFR part 220.
    Comments: Most commenters were in favor of removing formulated 
grain-fruit products from the School Meal Programs. They indicated that 
such products do not support the Dietary Guidelines' recommendation to 
consume fruits as a separate food group. However, some commenters 
opposed the removal of formulated grain-fruit products, and claimed 
that these products are cost-effective and convenient in new breakfast 
delivery systems such as Grab and Go and Breakfast in the Classroom.
    USDA Response: This final rule disallows the use of formulated 
grain-fruit products to meet the grain and fruit components in the SBP 
beginning July 1, 2012 (SY 2012-2013). Formulated grain-fruit products, 
as defined in Appendix A to 7 CFR part 220, 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 products typically contain high levels of fortification, 
rather than naturally occurring nutrients, and are high in sugar and 
fat. Furthermore, they no longer meet a need in the school meal 
programs because schools can procure more nutrient-dense breakfast 
options with a similar shelf-life. This rule does not prohibit the use 
of fortified cereals or cereals with fruit (e.g., ready-to-eat cereals) 
which may provide good sources of whole grains, fiber, and other 
important nutrients. In most instances, however, the use of highly-
fortified food products is inconsistent with the Dietary Guidelines.
    Accordingly, this final rule amends Appendix A to 7 CFR part 220 by 
removing Formulated Grain-Fruit Products in its entirety. It also makes 
a technical change to Appendix B to 7 CFR part 210 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 Federal Register 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 is 
maintaining the requirement to publish a Federal Register Notice and 
update the regulations to reflect any changes to the categories.
    Accordingly, this final rule implements the proposed change by 
removing the Formulated Grain-Fruit Products from Appendix A to 7 CFR 
part 220.

III New Meal Patterns and Dietary Specifications

    The following meal patterns must be implemented in SY 2012-2013 for 
the NSLP, and phased-in the SBP as specified in the footnotes and 
regulatory text.

----------------------------------------------------------------------------------------------------------------
                                         Breakfast meal pattern                     Lunch meal pattern
                               ---------------------------------------------------------------------------------
         Meal pattern            Grades  K-5   Grades  6-8  Grades  9-12
                                     \a\           \a\           \a\       Grades K-5    Grades 6-8  Grades 9-12
----------------------------------------------------------------------------------------------------------------
                                                  Amount of food \b\ per week (minimum per day)
----------------------------------------------------------------------------------------------------------------
Fruits (cups) \c\ \d\.........  5 (1) \e\     5 (1) \e\     5 (1) \e\     2\1/2\ (\1/   2\1/2\ (\1/  5 (1)
                                                                           2\)           2\)
Vegetables (cups) \c\ \d\.....  0             0             0             3\3/4\ (\3/   3\3/4\ (\3/  5 (1)
                                                                           4\)           4\)
    Dark green \ f\...........  0             0             0             \1/2\         \1/2\        \1/2\
    Red/Orange \ f\...........  0             0             0             \3/4\         \3/4\        1\1/4\
    Beans/Peas (Legumes) \ f\.  0             0             0             \1/2\         \1/2\        \1/2\
    Starchy \f\...............  0             0             0             \1/2\         \1/2\        \1/2\
    Other \f\ \g\.............  0             0             0             \1/2\         \1/2\        \3/4\
Additional Veg to Reach Total   0             0             0             1             1            1\1/2\
 \h\.
Grains (oz eq) \i\............  7-10 (1) \j\  8-10 (1) \j\  9-10 (1) \j\  8-9 (1)       8-10 (1)     10-12 (2)
Meats/Meat Alternates (oz eq).  0 k           0 k           0 k           8-10 (1)      9-10 (1)     10-12 (2)
Fluid milk (cups) \l\.........  5 (1)         5 (1)         5 (1)         5 (1)         5 (1)        5 (1)
----------------------------------------------------------------------------------------------------------------
                    Other Specifications: Daily Amount Based on the Average for a 5-Day Week
----------------------------------------------------------------------------------------------------------------
Min-max calories (kcal) \m\     350-500       400-550       450-600       550-650       600-700      750-850
 \n\ \o\.
Saturated fat % of total        < 10          < 10          < 10          < 10          < 10         < 10
 calories) \n\ \o\.
Sodium (mg) \n\ \p\...........  <= 430        <= 470        <= 500        <= 640        <= 710       <= 740
----------------------------------------------------------------------------------------------------------------
Trans fat \n\ \o\.............  Nutrition label or manufacturer specifications must indicate zero grams of trans
                                                                 fat per serving.
----------------------------------------------------------------------------------------------------------------
\a\ In the SBP, the above age-grade groups are required beginning July 1, 2013 (SY 2013-14). In SY 2012-2013
  only, schools may continue to use the meal pattern for grades K-12 (see Sec.   220.23).
\b\ Food items included in each food group and subgroup and amount equivalents. Minimum creditable serving is \1/
  8\ cup.

[[Page 4103]]

 
\c\ One quarter-cup of dried fruit counts as \1/2\ cup of fruit; 1 cup of leafy greens counts as \1/2\ cup of
  vegetables. No more than half of the fruit or vegetable offerings may be in the form of juice. All juice must
  be 100% full-strength.
\d\ For breakfast, vegetables may be substituted for fruits, but the first two cups per week of any such
  substitution must be from the dark green, red/orange, beans and peas (legumes) or ``Other vegetables''
  subgroups as defined in Sec.   210.10(c)(2)(iii).
\e\ The fruit quantity requirement for the SBP (5 cups/week and a minimum of 1 cup/day) is effective July 1,
  2014 (SY 2014-2015).
\f\ Larger amounts of these vegetables may be served.
\g\ This category consists of ``Other vegetables'' as defined in Sec.   210.10(c)(2)(iii)(E). For the purposes
  of the NSLP, ``Other vegetables'' requirement may be met with any additional amounts from the dark green, red/
  orange, and beans/peas (legumes) vegetable subgroups as defined in Sec.   210.10(c)(2)(iii).
\h\ Any vegetable subgroup may be offered to meet the total weekly vegetable requirement.
\i\ At least half of the grains offered must be whole grain-rich in the NSLP beginning July 1, 2012 (SY 2012-
  2013), and in the SBP beginning July 1, 2013 (SY 2013-2014). All grains must be whole grain-rich in both the
  NSLP and the SBP beginning July 1, 2014 (SY 2014-15).
\j\ In the SBP, the grain ranges must be offered beginning July 1, 2013 (SY 2013-2014).
\k\ There is no separate meat/meat alternate component in the SBP. Beginning July 1, 2013 (SY 2013-2014),
  schools may substitute 1 oz. eq. of meat/meat alternate for 1 oz. eq. of grains after the minimum daily grains
  requirement is met.
\l\ Fluid milk must be low-fat (1 percent milk fat or less, unflavored) or fat-free (unflavored or flavored).
\m\ The average daily amount of calories for a 5-day school week must be within the range (at least the minimum
  and no more than the maximum values).
\n\ 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. Foods of minimal nutritional value and
  fluid milk with fat content greater than 1 percent milk fat are not allowed.
\o\ In the SBP, calories and trans fat specifications take effect beginning July 1, 2013 (SY 2013-2014).
\p\ Final sodium specifications are to be reached by SY 2022-2023 or July 1, 2022. Intermediate sodium
  specifications are established for SY 2014-2015 and 2017-2018. See required intermediate specifications in
  Sec.   210.10(f)(3) for lunches and Sec.   220.8(f)(3) for breakfasts.

IV Implementation Timeline

    The following chart provides a summary of the new requirements and 
the required implementation dates in the NSLP and SBP. Refer to the 
regulatory text for details.

----------------------------------------------------------------------------------------------------------------
                                             Implementation (school year) for NSLP (L) and SBP (B)
      New requirements       -----------------------------------------------------------------------------------
                                2012/13     2013/14     2014/15     2015/16     2016/17     2017/18     2022/23
----------------------------------------------------------------------------------------------------------------
Fruits Component:
    <bullet> Offer fruit      L.........  ..........  ..........  ..........  ..........  ..........  ..........
     daily.
    <bullet> Fruit quantity   ..........  ..........  B.........  ..........  ..........  ..........  ..........
     increase to 5 cups/week
     (minimum 1 cup/day).
Vegetables Component:
    <bullet> Offer            L.........  ..........  ..........  ..........  ..........  ..........  ..........
     vegetables subgroups
     weekly.
Grains Component:
    <bullet> Half of grains   L.........  B.........  ..........  ..........  ..........  ..........  ..........
     must be whole grain-
     rich.
    <bullet> All grains must                          L, B......  ..........  ..........  ..........  ..........
     be whole-grain rich.
    <bullet> Offer weekly     L.........  B.........  ..........  ..........  ..........  ..........  ..........
     grains ranges.
Meats/Meat Alternates
 Component:
    <bullet> Offer weekly     L.........  ..........  ..........  ..........  ..........  ..........  ..........
     meats/meat alternates
     ranges (daily min.).
Milk Component:
    <bullet> Offer only fat-  L, B......  ..........  ..........  ..........  ..........  ..........  ..........
     free (unflavored or
     flavored) and low-fat
     (unflavored) milk.
Dietary Specifications (to
 be met on average over a
 week):
    <bullet> Calorie ranges.  L.........  B.........  ..........  ..........  ..........  ..........  ..........
    <bullet> Saturated fat    L, B......  ..........  ..........  ..........  ..........  ..........  ..........
     limit (no change).
    <bullet> Sodium Targets   ..........  ..........  L, B......  ..........  ..........  ..........  L, B
     \1\.
        [cir] Target 1......
        [cir] Target 2......
        [cir] Final target..
    <bullet> Zero grams of    L.........  B.........  ..........  ..........  ..........  ..........  ..........
     trans fat per portion.
Menu Planning:
    <bullet> A single FBMP    L.........  B.........  ..........  ..........  ..........  ..........  ..........
     approach.
Age-Grade Groups:
    <bullet> Establish age/   L.........  B.........  ..........  ..........  ..........  ..........  ..........
     grade groups: K-5, 6-8,
     and 9-12.
Offer vs. Serve:
    <bullet> Reimbursable     L.........              B.........  ..........  ..........  ..........  ..........
     meals must contain a
     fruit or vegetable (\1/
     2\ cup minimum).
Monitoring:
    <bullet> 3-year adm.      ..........  L, B......  ..........  ..........  ..........  ..........  ..........
     review cycle.
    <bullet> Conduct          L.........  B.........  ..........  ..........  ..........  ..........  ..........
     weighted nutrient
     analysis on 1 week of
     menus.
----------------------------------------------------------------------------------------------------------------
\1\ Target 2 and the final target will only be required after USDA evaluates relevant data on sodium intake and
  human health, as required by Section 743 of the FY 2012 Agriculture Appropriations Act.

Implementation Resources

    With respect to resources for the changes, USDA estimates suggest 
that the common-sense revenue reforms for school food businesses 
included in the HHFKA will provide an additional $7.5 billion in non-
Federal revenues over 5 years to the food service accounts of local 
school districts. This includes over $5.3 billion in additional revenue 
from a la carte foods, over $300 million in additional payments from 
paid lunches, and over $1.9 billion in additional revenue schools 
resulting from making school meals more competitive with a la carte 
foods.
    Since the statute mandated that revenue streams from non-Program

[[Page 4104]]

foods relative to the costs of those foods, should be at least as high 
as the revenue stream for Program meals bears to costs beginning July 
1, 2011, schools should receive over $1 billion in new revenues in 
School Year 2011-2012. That will help schools work toward implementing 
the new standards effective the following year, i.e., July 1, 2012. In 
addition, USDA estimates that the interim rule ``National School Lunch 
Program: School Food Service Account Revenue Amendments Related to the 
Healthy, Hunger-Free Kids Act of 2010'' will increase participation in 
school meals programs by 800,000 children.
    The six-cent performance-based reimbursement increase included in 
the HHFKA will provide additional revenue beyond this amount. The 
Congressional Budget Office estimated about $1.5 billion over the same 
period in performance-based funding.
    USDA will work with the SAs to facilitate transition to the new 
meal requirements. USDA 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 the sodium 
on menus, and meeting the new meal pattern requirements. Training will 
be available through a variety of methods including webinars and online 
learning modules.
    We are updating the Child Nutrition Database and will reevaluate 
nutrient analysis software systems available from industry to assist 
SAs with monitoring calories, saturated fat, and sodium in the meals 
offered to students in grades K through 12 during the administrative 
review. The Child Nutrition Labeling Program is being updated to report 
whole grain-rich contributions to the grains component and to provide 
standardized claims for the vegetable subgroups consistent with the 
2010 Dietary Guidelines.
    In addition, the HHFKA provides USDA $50 million for each of the 
first two years of the new meal requirements for use in assisting SAs 
implement the new requirements. These funds, combined with increases in 
State Administrative Expense funding, should assist States and local 
operators in improving the quality of school meals provided to 
children.

V. Procedural Matters

Executive Order 12866 and Executive Order 13563

    Executive Orders 13563 and 12866 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 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.

Regulatory Flexibility Act

    This final 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 have a 
significant impact on a substantial number of small entities.
    The requirements established by this final rule will 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 most cost-effective or 
least burdensome alternative that achieves the objectives of the rule. 
The Regulatory Impact Analysis conducted by FNS in connection with this 
final rule includes a cost/benefit analysis and explains the options 
considered to implement the Dietary Guidelines in the school meal 
programs.
    USDA sought the assistance of the Institute of Medicine of the 
National Academies to recommend changes to school meal standards in the 
least burdensome and costly manner consistent with the Dietary 
Guidelines. However, this final 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. The HHFKA authorizes $50 
million over two years to help State agencies implement the new meal 
pattern requirements. These funds, combined with increases in State 
Administrative Expense funding, should assist States and local 
operators in implementing the requirements established by this final 
rule. Local program operators 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 to meet the rule requirements in a cost-effective manner.

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, these Programs 
are 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, including ITO 
representatives, 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.

[[Page 4105]]

Prior Consultation With State Officials
    FNS staff received informal input from various stakeholders while 
participating in various State, regional, national, and professional 
conferences. Various departments of education, boards of education, 
departments of health, and other state and local organizations provided 
input during the public comment period. 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. Numerous 
stakeholders also provided input at the public meetings held by the 
Institute of Medicine in connection with its school meals study.
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, food waste, and increasing administrative burden. 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
    Although there is general support for the meal requirements 
established by this final rule, State and local program operators, food 
industry, and others associated with the operation of the school meals 
programs expressed concern about the proposed increase in food 
quantities, limit on starchy vegetables, sodium reductions, and 
implementation timeline, as well as the estimated meal costs. USDA has 
taken into consideration these concerns, and the requirements of the FY 
2012 Agriculture Appropriations Act, and has modified several of the 
key meal requirements to be responsive to the concerns of State and 
local program operators. This final rule makes significant improvements 
to the school meals, while modifying the following provisions to 
facilitate successful implementation of the final rule at the State and 
local levels:
    <bullet> Reduce the proposed grains quantities at lunch to reduce 
food cost,
    <bullet> Remove the proposed starchy vegetable restrictions at 
lunch and breakfast as required by the FY 2012 Agriculture 
Appropriations Act,
    <bullet> Allow students to select \1/2\ cup of a fruit or a 
vegetable to reduce food waste,
    <bullet> Allow more time to comply with the second intermediate 
sodium targets,
    <bullet> Remove the daily meat/meat alternate requirement at 
breakfast to reduce food cost,
    <bullet> Provide additional time for implementation of the 
breakfast requirements, and
    <bullet> Reduce the administrative burden by requiring State 
agencies to conduct a nutrient analysis of school meals using one week 
of menus, rather than two weeks as proposed.

Executive Order 12988

    This final rule has been reviewed under Executive Order 12988, 
``Civil Justice Reform.'' This final rule is intended to have 
preemptive effect with respect to any State or local laws, regulations 
or policies which conflict with its provisions or which would otherwise 
impede its full and timely implementation. This rule 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 offered. Likewise, 
State or local agencies could accelerate implementation of the 
breakfast requirements in an effort to improve all school meals 
promptly. 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 final rule in accordance with USDA Regulation 
4300-4, ``Civil Rights Impact Analysis,'' to identify and address 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 final rule is not expected to affect the 
participation of protected individuals in the NSLP and SBP. This final 
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 is unaware of any current Tribal laws that could be in 
conflict with the requirements of this final rule. However, we have 
made special efforts to reach out to Tribal communities. We held five 
consultations (webinars and conference calls) with Indian Tribal 
Organizations in 2011 to discuss implementation of the Healthy, Hunger-
Free Kids Act of 2010. These sessions provided the opportunity to 
address Tribal concerns related to school meals, clarify that 
traditional foods and local products can be incorporated into the 
school meals, and highlight the proposed changes to the meal pattern 
(increase in whole grains, fruits and vegetables) that are expected to 
support Tribal efforts to reduce diabetes in the community.
    In addition, USDA will undertake, within 6 months after this final 
rule implementation, 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 final 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.

Paperwork Reduction Act

    The Paperwork Reduction Act of 1995 (44 U.S.C. chap. 35; see 5 CFR 
1320) requires the Office of Management and Budget (OMB) approve all 
collections of information by a Federal agency before they can be 
implemented. Respondents are not required to respond to any collection 
of information unless it displays a current valid OMB control number. 
This rule contains information

[[Page 4106]]

collection requirements subject to approval by OMB under the Paperwork 
Reduction Act of 1995. FNS will merge these burden hours into National 
School Lunch Program, OMB <greek-i> 0584-0006 which is currently under 
review. A 60-day notice was published in the Federal Register at 76 FR 
2509 on January 13, 2011 which provided the public an opportunity to 
submit comments on the information collection burden resulting from 
this rule. This information collection burden has not yet been approved 
by OMB. FNS will publish a document in the Federal Register once these 
requirements have been approved. The current total estimated annual 
burden for OMB No. 0584-0006 is now 11,880,415 hours, rather than the 
11,882,408 indicated in the proposed rule.
    The average burden per response and the annual burden hours are 
explained below and summarized in the chart which follows:
    Respondents for this rule: State Education Agencies (57) and School 
Food Authorities (6,983).
    Estimated Number of Respondents for this rule: 7040.
    Estimated Number of Responses per Respondent for this rule: 
3.87217.
    Estimated Total Annual Responses: 27,260.
    Estimated Total Annual Burden on Respondents for this rule: 73,849 
hours.

                                     Estimated Annual Burden For 0584-New, National School Lunch Program, 7 CFR 210
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                      Estimated                    Average       Average
                                                              Section                 number of   Frequency of     annual      burden per      Annual
                                                                                     respondents    response      responses     response    burden hours
--------------------------------------------------------------------------------------------------------------------------------------------------------
Reporting:
    SA shall verify compliance with critical     7 CFR 210.18(g) & 210.18(h)......            57             1            57            33         1,881
     and general areas of review.
    SFA shall submit to SA documented            7 CFR 210.18(k)(2)...............         6,983             1         6,983             6        41,898
     corrective action, no later than 30 days
     from the deadline for completion, for
     violations of critical or general area
     identified on administrative follow-up
     review.
                                                --------------------------------------------------------------------------------------------------------
        Total Reporting for DGA rule...........  .................................         7,040  ............         7,040        6.2186        43,779
                                                --------------------------------------------------------------------------------------------------------
        Total Existing Reporting Burden for      .................................  ............  ............  ............  ............     2,912,745
         Part 210.
                                                --------------------------------------------------------------------------------------------------------
        Total Reporting Burden for Part 210      .................................  ............  ............  ............  ............     2,956,524
         with DGA rule.
                                                --------------------------------------------------------------------------------------------------------
Recordkeeping:
    SA establishes guidelines and approves       7 CFR 210.10 (1).................             0             0             0             0        * (57)
     School Food Authorities menu planning
     alternatives. (Burden removed by proposed
     rule).
    SA modifies menu planning alternatives or    7 CFR 210.10 (1).................             0             0             0             0       * (100)
     develops menu planning alternatives.
     (Burden removed by proposed rule).
    SA records document the details of all       7 CFR 210.18 (k), 210.18 (p), &              57         93.23         5,314           2.0        10,628
     reviews and the degree of compliance with    210.20 (b)(6).
     the critical and general areas of review.
     To include documented action on file for
     review by FNS.
    SA documentation of fiscal action taken to   7 CFR 210.19 (c ) & 210.18 (p)...            57           139         7,923          0.50         3,962
     disallow improper claims submitted by
     SFAs, as determined through claims
     processing, CRE reviews, and USDA audits.
     Contracts awarded by SFAs to FSMCs.
    SFAs adopt menu planning alternatives,       7 CFR 210.10(1)..................             0             0             0             0    * (26,261)
     modify menu planning alternatives or
     develop menu planning alternatives and
     submit them to the State agency for
     approval at SFA level. (Burden removed by
     proposed rule.).
    SFA documentation of corrective action       7 CFR 210.18 (k)(2)..............         6,983             1         6,983             6        41,898
     taken on program disclosed by review or
     audit.
                                                --------------------------------------------------------------------------------------------------------
        Total Recordkeeping for New burden.....  .................................         7,040  ............        20,220        1.4871        30,070
                                                --------------------------------------------------------------------------------------------------------
        Total Existing Recordkeeping Burden for  .................................  ............  ............  ............  ............     8,893,821
         0584-0006, Part 210.
                                                --------------------------------------------------------------------------------------------------------
        Total Recordkeeping Burden for 0584-     .................................  ............  ............  ............  ............    8,923,891
         0006, Part 210 with proposed rule.
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Indicates reduced burden hours due to changes in proposed DGA rule.


[[Page 4107]]


                Summary of Burden (OMB <greek-i>0584-New)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Total No. Respondents...................................           7,040
Average No. Responses Per Respondent....................         3.87217
Total Annual Responses..................................          27,260
Average Hours Per Response..............................            2.70
Total Annual Burden Hours Requested.....................      11,880,415
Current OMB Inventory...................................      11,806,566
Difference..............................................          73,849
------------------------------------------------------------------------

    Reporting: Affected citation is 7 CFR 210.18(g) and 7 CFR 
210.18(h)--Based on the comments received, this final rule changed the 
requirement to analyze two weeks' worth of menus to one week. Hence, 
average burden time per response is reduced from 40 hours to 33 hours 
for this citation.
    Recordkeeping: 7 CFR 210.18 (k) and (p) and 210.20 (b)(6). As the 
record keeping time related to administrative review documents is 
reduced, average burden time per response is reduced from 2.3 hours to 
2 hours. The current total estimated annual burden for OMB No. 0584-
0006 is now 11,880,415 hours, rather than the 11,882,408 indicated in 
the proposed rule.

E-Government Act Compliance

    The Food and Nutrition Service 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 Summary

    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 final rule. The following is a summary of the 
RIA. The complete RIA appears later in this document.

Need for Action

    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 and 2010 Dietary Guidelines, provide more 
prescriptive and specific nutrition guidance than earlier releases, and 
require significant changes to school meal requirements.

Benefits

    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).
    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 final 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 also 
replaces higher fat fluid milk with low-fat and skim fluid milk in 
school meals. And it limits the levels of calories, sodium, and 
saturated fat in those meals.
    A proposed rule, published by USDA in January 2011, made only small 
changes to the IOM recommendations. The final rule makes additional 
changes. These changes respond primarily to comments received from 
school and State officials, nutrition and child advocates, industry 
groups, parents of schoolchildren, and the general public. The most 
significant of these changes reduce the immediate and long-term costs 
of implementing the rule. Additional changes respond to recommendations 
contained in the 2010 Dietary Guidelines which were released after 
development of the proposed rule.
    The linkage between poor diets and health problems such as 
childhood obesity are 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. 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. Perhaps more 
significantly, obese children and adolescents are more likely to become 
obese as adults. In 2008, medical spending on adults that was 
attributed to obesity increased to an estimated $147 billion.
    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 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 final rule 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

    This final rule will increase the amount of fruits, vegetables, and 
whole grains offered to participants in the NSLP and SBP. The final 
rule 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.
    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 will increase by 2.5 cents per 
lunch served, as compared with prior requirements, on initial 
implementation of the final rule requirements. There is no immediate 
increase in breakfast food costs. Two years after implementation, when 
the fruit requirement is phased in for breakfast, and when all grains 
served at breakfast and lunch must be whole grain rich, we estimate 
that food costs will increase by 5 cents per lunch served and 14 cents 
per breakfast, as compared with prior requirements.
    Compliance with this rule is also likely to increase labor costs. 
Serving

[[Page 4108]]

healthier school meals that are acceptable to students may require more 
on-site preparation, and less reliance on prepared foods. For purposes 
of this impact analysis, labor costs are assumed to grow so that they 
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.
    The estimated overall costs of compliance are summarized below. 
Increased food and labor costs will be incurred by the local and State 
agencies that control school food service accounts. The rule will also 
increase the administrative costs incurred by the State agencies 
responsible for reviewing school district compliance with the new meal 
patterns. The analysis estimates that total costs may increase by $3.2 
billion from fiscal year (FY) 2012 through fiscal year (FY) 2016, or 
roughly 8 percent when the rule's food group requirements are fully 
implemented in FY 2015. The estimated increases in food and labor costs 
are equivalent to about 10 cents for each reimbursable school lunch and 
about 27 cents for each reimbursable breakfast in FY 2015.
[GRAPHIC] [TIFF OMITTED] TR26JA12.000

Alternatives

    One alternative to the final rule is to retain the proposed rule 
without change. The proposed rule closely followed IOM's 
recommendations. IOM developed its recommendations to encourage student 
consumption of foods recommended by the Dietary Guidelines in 
quantities designed to provide necessary nutrients without excess 
calories. The final rule still achieves that goal. Students will still 
be presented with choices from the food groups and vegetable subgroups 
recommended by the Dietary Guidelines. In that way, the final rule, 
like the proposed rule, will help children recognize and choose foods 
consistent with a healthy diet.
    The most significant differences between the proposed and final 
rules are in the breakfast meal patterns, and those differences are 
largely a matter of timing. The final rule allows schools more time to 
phase-in key IOM recommendations on fruit and grains at breakfast. Once 
fully implemented, the most important difference between the final and 
proposed rule breakfast meal patterns is the elimination of a separate 
meat/meat alternate requirement. That change preserves current rules 
that allow the substitution of meat for grains at breakfast. It also 
responds to general public comments on cost, and on the need to 
preserve schools' flexibility to serve breakfast outside of a 
traditional cafeteria setting.
    Even with these changes, and with the less significant changes to 
the proposed lunch standards, the final rule remains consistent with 
Dietary Guidelines recommendations. The added flexibility and reduced 
cost of the final rule relative to the proposed rule should increase 
schools' ability to comply with the new meal patterns. The final rule's 
less costly breakfast patterns will make it easier for schools to 
maintain or expand current breakfast programs, and may encourage other 
schools to adopt a breakfast program. These changes reduce the 
estimated 5-year cost of the final rule, relative to the proposed rule, 
by $2.9 billion.
    A second alternative would implement the final rule's lunch meal 
pattern changes, but retain the proposed rule's breakfast meal pattern 
recommendations. Adopting all of the lunch provisions contained in the 
final rule, but retaining the proposed rule's breakfast provisions, 
would cost an estimated $5.9 billion over 5 years, or $2.7 billion more 
than the final rule. This alternative responds less effectively than 
the final rule to comments received by USDA from SFA and school 
administrators who expressed concerns about the cost of the proposed 
rule.
    An alternative that implements the final rule's breakfast meal 
pattern changes, but retains the proposed rule's lunch meal pattern 
recommendations, would cost $3.4 billion over 5 years, about $180 
million more than the final rule.

Regulatory Impact Analysis

    Title: Nutrition Standards in the National School Lunch and School 
Breakfast Programs
Action
    a. Nature: Final 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 final rule amends 
Sections 210 and 220 of the regulations that govern the National School 
Lunch Program (NSLP) and the School Breakfast Program (SBP). The rule 
implements many of the 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 final 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

[[Page 4109]]

production, distribution and service industry.

Contents

Abbreviations

I. Background
II. Summary of Final Rule Meal Requirements
III. Cost/Benefit Assessment
    A. Summary
    1. Costs
    2. Benefits
    B. Food and Labor Costs
    1. Baseline Cost Estimate
    2. Final Rule Cost Estimate
    3. Food Cost Drivers
    4. Comparison of FNS and IOM Cost Estimates
    C. Administrative Impact
    D. Food Service Equipment
    E. Comments on Proposed Rule
    F. Uncertainties
    G. Comparison of Proposed Rule and Final Rule Costs
    H. Implementation of Final Rule--SFA Resources
    I. Impact on Participation
    J. Benefits
IV. Alternatives
V. Accounting Statement
VI. References
VII. 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 31.7 million children 
per day ate a reimbursable lunch in fiscal year (FY) 2010. The School 
Breakfast Program (SBP) served an average of 11.7 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 $13.7 billion in FY 2010. FNS projections of the number of 
meals served and Federal program costs are summarized in Table 1.\1\
---------------------------------------------------------------------------

    \1\ 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 2012. 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..............      5,386.7      5,465.3      5,530.9      5,586.2      5,630.9      5,675.9
    --Program Cost................    $11,822.8    $12,373.0    $12,499.8    $12,584.9    $12,679.3    $12,782.4
SBP:
    --Breakfasts Served...........      2,090.9      2,187.0      2,252.7      2,297.7      2,332.2      2,367.2
    --Program Cost................     $3,115.3     $3,337.7     $3,469.8     $3,556.7     $3,628.6     $3,721.0
----------------------------------------------------------------------------------------------------------------

    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 [agrave] la carte 
meals or other non-program foods.\2\
---------------------------------------------------------------------------

    \2\ USDA program data.
---------------------------------------------------------------------------

    Reimbursement rates for meals served under the current meal 
patterns are established by law and are adjusted annually for 
inflation.\3\ For school year (SY) 2011-2012, the Federal reimbursement 
for a free breakfast for schools in the contiguous United States and 
``not in severe need'' is $1.51; the 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 $2.77. 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 2011-2012, 
including USDA Foods.
---------------------------------------------------------------------------

    \3\ Reimbursement rates and annual inflation adjustments are set 
by statute, not regulation. The final 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 U.S.C. 1753(b)(2) and 42 U.S.C. 
1759a(a)(2)). Breakfast reimbursement rates are specified in Section 
4(b)(1)(B) of the Child Nutrition Act (42 U.S.C. 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 U.S.C. 1759a(a)(3)).

[[Page 4110]]



                                Table 2--Federal Per-Meal Reimbursement and Minimum Value of USDA Foods, SY 2011-2012 \4\
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                      Breakfast reimbursement               Lunch reimbursement         Minimum value of
                                                               ------------------------------------------------------------------------   donated foods
                                                                                                                                       -----------------
                                                                                                     SFAs that serve   SFAs that serve     Additional
                                                                   Schools in      Schools not in    at least 60% of   fewer than 60%        Federal
                                                                 ``severe need''   ``severe need''   lunches free or   of lunches free   assistance for
                                                                                                    at reduced price    or at reduced    each NSLP lunch
                                                                                                                            price            served
--------------------------------------------------------------------------------------------------------------------------------------------------------
Contiguous States:
    --Free....................................................             $1.80             $1.51             $2.79             $2.77           $0.2225
    --Reduced Price...........................................              1.50              1.21              2.39              2.37            0.2225
     --Paid...................................................              0.27              0.27              0.28              0.26            0.2225
Alaska:
    --Free....................................................              2.88              2.41              4.52              4.50            0.2225
    --Reduced Price...........................................              2.58              2.11              4.12              4.10            0.2225
    --Paid....................................................              0.40              0.40              0.45              0.43            0.2225
Hawaii:
    --Free....................................................              2.10              1.76              3.27              3.25            0.2225
    --Reduced Price...........................................              1.80              1.46              2.87              2.85            0.2225
    --Paid....................................................              0.30              0.30              0.33              0.31            0.2225
--------------------------------------------------------------------------------------------------------------------------------------------------------

    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 and 2010 Dietary Guidelines, provide more 
prescriptive and specific nutrition guidance than earlier releases, and 
require significant changes to school meal requirements.
---------------------------------------------------------------------------

    \4\ School year 2011-2012 NSLP and SBP reimbursement rates, and 
the minimum value of donated foods, can be found in the July 20, 
2011 Federal Register, Vol. 76, No. 139, pp. 43256 and 43258.
---------------------------------------------------------------------------

    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.\5\
---------------------------------------------------------------------------

    \5\ Federal Register, Vol. 76, No. 9, pp. 2494-2570.
---------------------------------------------------------------------------

II. Summary of Final Rule Meal Requirements

    The proposed rule, published in January 2011, made only minor 
changes to the IOM recommendations. This final rule makes more 
significant changes. These changes respond primarily to comments 
received from school and State officials, nutrition and child 
advocates, industry groups, parents of schoolchildren, and the general 
public. Additional changes respond to recommendations contained in the 
2010 Dietary Guidelines which were released after development of the 
proposed rule. As a group, these changes reduce program costs relative 
to the proposed rule. The final rule is effective at the start of SY 
2012-2013.
    The final rule, like the proposed rule, makes the following changes 
to current NSLP and SBP meal standards:
    <bullet> Increases the amount and variety of fruits, vegetables, 
and whole grains;
    <bullet> Sets minimum and maximum levels of calories; and
    <bullet> Increases the focus on reducing the amounts of saturated 
fat and sodium provided in school meals.
    Table 3 summarizes the breakfast and lunch meal standards with all 
provisions fully phased in. The following provisions are subject to a 
phased implementation; all other provisions are effective July 1, 2012:
    <bullet> Minimum breakfast fruit requirement is effective July 1, 
2014,
    <bullet> Minimum breakfast grain requirement is effective July 1, 
2013,
    <bullet> Intermediate sodium targets take effect on July 1, 2014 
and July 1, 2017; the final sodium target (in Table 3) takes effect on 
July 1, 2022. (See Table 3a.)
---------------------------------------------------------------------------

    \6\ Table taken from preamble to the final rule.

                              Table 3--Summary of Final Rule Meal Requirements \6\
----------------------------------------------------------------------------------------------------------------
                                            Breakfast meal pattern                   Lunch meal pattern
                                   -----------------------------------------------------------------------------
           Meal pattern              Grades K-5   Grades 6-8  Grades 9-12
                                        \a\          \a\          \a\       Grades K-5   Grades 6-8  Grades 9-12
----------------------------------------------------------------------------------------------------------------
                                                    Amount of food \b\ per week (minimum per day)
----------------------------------------------------------------------------------------------------------------
Fruits (cups) c d.................    5 (1) \e\    5 (1) \e\    5 (1) \e\  2\1/2\ (\1/  2\1/2\ (\1/        5 (1)
                                                                                   2\)          2\)
Vegetables (cups) c d.............            0            0            0  3\3/4\ (\3/  3\3/4\ (\3/        5 (1)
                                                                                   4\)          4\)
    Dark green \f\................            0            0            0        \1/2\        \1/2\        \1/2\

[[Page 4111]]

 
    Red/Orange \f\................            0            0            0        \3/4\        \3/4\       1\1/4\
    Beans/Peas (Legumes) \f\......            0            0            0        \1/2\        \1/2\        \1/2\
    Starchy \f\...................            0            0            0        \1/2\        \1/2\        \1/2\
    Other f g.....................            0            0            0        \1/2\        \1/2\        \3/4\
Additional Veg to Reach Total \h\.            0            0            0            1            1       1\1/2\
Grains (oz eq) \i\................     7-10 (1)     8-10 (1)     9-10 (1)      8-9 (1)     8-10 (1)    10-12 (2)
                                            \j\          \j\          \j\
Means/Meat Alternates (oz eq).....          0 k          0 k          0 k     8-10 (1)     9-10 (1)    10-12 (2)
Fluid milk (cups) \l\.............        5 (1)        5 (1)        5 (1)        5 (1)        5 (1)        5 (1)
----------------------------------------------------------------------------------------------------------------
                    Other Specifications: Daily Amount Based on the Average for a 5-Day Week
----------------------------------------------------------------------------------------------------------------
Min-max calories (kcal) m n o.....      350-500      400-500      450-600      550-650      600-700      750-850
Saturated fat (% of total                  < 10         < 10         < 10         < 10         < 10         < 10
 calories) n o....................
Sodium (mg) n p...................       <= 430       <= 470       <= 500       <= 640       <= 710       <= 740
----------------------------------------------------------------------------------------------------------------
Trans fat \o\.....................   Nutrition label or manufacturer specifications must indicate zero grams of
                                                               trans fat per serving.
----------------------------------------------------------------------------------------------------------------
\a\ In the SBP, the above age-grade groups are required beginning July 1, 2013 (SY 2013-14). In SY 2012-2013
  only, schools may continue to use the meal pattern for grades K-12 (See Sec.   220.23).
\b\ Food items included in each food group and subgroup and amount equivalents. Minimum creditable serving is \1/
  8\ cup.
\c\ One quarter-cup of dried fruit counts as \1/2\ cup of fruit; 1 cup of leafy greens counts as \1/2\ cup of
  vegetables. No more than half of the fruit or vegetable offerings may be in the form of juice. All juice must
  be 100% full-strength.
\d\ For breakfast, vegetables may be substituted for fruits, but the first two cups per week of any such
  substitution must be from the dark green, red/orange, beans and peas (legumes) or ``Other vegetables''
  subgroups, as defined in 210.10(c)(2)(iii).
\e\ The fruit quantity requirement for the SBP (5 cups/week or a minimum of 1 cup/day) is effective July 1, 2014
  (SY 2014-2015).
\f\ Larger amounts of these vegetables may be served.
\g\ This category consists of ``Other vegetables'' as defined in Section 210.10(c)(2)(iii)(E). For the purposes
  of the NSLP, the ``Other vegetables'' requirement may be met with any additional this category also includes
  any additional amounts from the dark green, red/orange, and beans/peas (legumes) as defined in
  210.10(c)(2)(iii) vegetable subgroups.
\h\ Any vegetable subgroup may be offered to meet the total weekly vegetable requirement.
\i\ At least half of the grains offered must be whole grain-rich in the NSLP beginning July 1, 2012 (SY 2012-
  2013), and in the SBP beginning July 1, 2013 (SY 2013-2014). All grains must be whole grain-rich in both the
  NSLP and the SBP beginning July 1, 2014 (SY 2014-15).
\j\ In the SBP, the grain ranges must be offered beginning July 1, 2013 (SY 2013-2014).
\k\ There is no separate meat/meat alternate component in the SBP. Beginning July 1, 2013 (SY 2013-2014),
  schools may substitute 1 oz. eq. of meat/meat alternate for 1 oz. eq. of grains after the minimum daily grains
  requirement is met.
\l\ Fluid milk must be low-fat (1 percent milk fat or less, unflavored) or fat-free (unflavored or flavored).
\m\ The average daily amount of calories for a 5-day school week must be within the range (at least the minimum
  and no more than the maximum values).
\n\ 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. Foods of minimal nutritional value and
  fluid milk with fat content greater than 1 percent milk fat are not allowed.
\o\ In the SBP, calories and trans fat specifications take effect beginning July 1, 2013 (SY 2013-2014).
\p\ Final sodium specifications are to be reached by SY 2022-2023 or July 1, 2022. Intermediate sodium
  specifications are established for SY 2014-2015 and 2017-2018. See required intermediate specifications in
  Sec.   210.10(f)(3) for lunches and Sec.   220.8(f)(3) for breakfasts.


                                                     Table 3a--Intermediate and Final Sodium Targets
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                           Sodium reduction: timeline and amount
                                                                  --------------------------------------------------------------------------------------
                         Age/grade group                           Target 1: July 1, 2014  (SY  Target 2: July 1, 2017  (SY   Final target: July 1, 2022
                                                                         2014-2015) (mg)              2017-2018) (mg)            (SY 2022-2023) (mg)
--------------------------------------------------------------------------------------------------------------------------------------------------------
K-5..............................................................                     <= 1,230                       <= 935                       <= 640
6-8..............................................................                     <= 1,360                     <= 1,035                       <= 710
9-12.............................................................                     <= 1,420                     <= 1,080                       <= 740
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Key differences between current meal pattern requirements and the 
final rule include:
    <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 5 vegetable subgroups. The proposed rule included tomatoes 
in the ``other'' vegetable category, consistent with the 2005 Dietary 
Guidelines. The 2010 Dietary Guidelines and this final rule create a 
new ``red/orange'' group that combines tomatoes with all of the 
vegetables in the previous ``orange'' category.
    <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 fat 
free milk for higher fat content milk. This is a separate requirement 
of the Healthy Hunger-Free Kids Act of 2010 (HHFKA).

[[Page 4112]]

Section 202 of HHFKA requires schools to offer a variety of fluid milk 
consistent with the recommendations of the most recent Dietary 
Guidelines for Americans. The 2010 Dietary Guidelines recommends fat 
free or low fat milk (1 percent milkfat) for children ages 2 and older.

[[Page 4113]]

[GRAPHIC] [TIFF OMITTED] TR26JA12.001


[[Page 4114]]



III. Cost/Benefit Assessment

A. Summary

1. Costs
    The final rule will more closely align school meal pattern 
requirements with the science-based recommendations of the 2005 and 
2010 Dietary Guidelines. These changes will increase the amount of 
fruits, vegetables, and whole grains offered to participants in the 
NSLP and SBP.\7\ The final rule 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.
---------------------------------------------------------------------------

    \7\ Although a separate rulemaking will propose changes to the 
meal patterns for preschoolers, this rule makes one significant 
change for that age/grade group. Section 202 of the Healthy Hunger-
Free Kids Act (Pub. L. 11-296) requires that schools offer a variety 
of milk, and that the milk offered comply with the recommendations 
of the most recent Dietary Guidelines. Consistent with that 
statutory requirement, this rule requires that schools serve only 
fat-free and low-fat milk in school lunches and breakfasts. That 
requirement applies to meals served by schools to children ages 3-4 
as well as to older children in grades K-12. Because low-fat and 
fat-free milk tend to cost less than milk with higher fat content, 
that change will have a small negative effect on the cost of meals 
served to pre-K children. In addition to that change, the rule 
requires 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 switch 
to FBMP, where necessary, makes no substantive change to the pre-K 
meal requirements, our analysis assumes that this provision of 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 will increase by 2.5 cents per 
lunch served, as compared with prior requirements, on initial 
implementation of the final rule requirements. There is no immediate 
increase in breakfast food costs. Two years after implementation, when 
the fruit requirement is phased in for breakfast, and when all grains 
served at breakfast and lunch must be whole grain rich, we estimate 
that food costs will increase by 5 cents per lunch served and 14 cents 
per breakfast, as compared with prior requirements.\8\ In aggregate, we 
estimate that the rule may increase SFA food costs by $1.6 billion from 
FY 2012 through FY 2016. The annual increase in food costs relative to 
current standards is estimated to be about $0.6 billion by FY 2015.
---------------------------------------------------------------------------

    \8\ The 2.5 cent per lunch figure is an estimate for the end of 
FY 2012 (the start of SY 2012-2013). The higher numbers are for FY 
2015.
---------------------------------------------------------------------------

    The rule sets sodium targets that will not be fully implemented in 
the five year period covered by this analysis. The rule's initial 
sodium targets take effect in SY 2014-2015. Our cost estimate does not 
include an explicit adjustment to meet those targets. The rule's 
initial sodium targets impose relatively modest reductions from levels 
observed in SY 2004-2005.\9\ Our estimate assumes that schools will 
meet the rule's initial targets as they reformulate recipes to meet the 
rule's food group requirements; that cost is contained in our 
estimate's food group and labor components.
---------------------------------------------------------------------------

    \9\ USDA 2008, volume 1, pp. 162 and 196.
---------------------------------------------------------------------------

    Compliance with this rule is 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.\10\.
---------------------------------------------------------------------------

    \10\ IOM 2009, p. 148.
---------------------------------------------------------------------------

    For purposes of this impact analysis, labor costs are assumed to 
grow so that they 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.\11\
---------------------------------------------------------------------------

    \11\ 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 $3.2 
billion through fiscal year (FY) 2016, or roughly 8 percent when the 
rule's food group requirements are fully implemented in FY 2015. The 
estimated increases in food and labor costs are equivalent to about 10 
cents for each reimbursable school lunch and about 27 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 Final Rule
                                                                  [Dollars in Millions]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                        Fiscal year
                                  ----------------------------------------------------------------------------------------------------------------------
                                          2012                2013                2014                2015                2016               Total
--------------------------------------------------------------------------------------------------------------------------------------------------------
Food Costs.......................  $20.8               $135.4              $178.7              $612.8              $642.8              $1,590.5
Labor Costs......................  20.7                141.9               174.4               598.0               627.2               1,562.3
State Agency Administrative Costs  0.1                 8.9                 9.1                 9.4                 9.7                 37.1
                                  ----------------------------------------------------------------------------------------------------------------------
    Total........................  $41.6               $286.2              $362.1              $1,220.2            $1,279.7            $3,189.9
--------------------------------------------------------------------------------------------------------------------------------------------------------
Percent Change Over Baseline.....  2.0%                2.0%                2.5%                8.0%                8.1%                5.2%
--------------------------------------------------------------------------------------------------------------------------------------------------------


[[Page 4115]]

2. Benefits
    The primary benefit of this 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 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 rule.
Figure 1: Baseline Food Cost Estimate Under Current Requirements and 
Practices
    Objective: Use price and quantity data collected from schools to 
compute the total cost of NSLP and SBP meals served under current 
program rules.
[GRAPHIC] [TIFF OMITTED] TR26JA12.003

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

                               Table 7--Summary of Food Cost Estimate Data Sources
----------------------------------------------------------------------------------------------------------------
                 Data source                                  Contribution to food cost estimate
----------------------------------------------------------------------------------------------------------------
School Nutrition Dietary Assessment Study     <bullet> Food codes and descriptions and food quantities served to
 III (USDA 2007).                              students in SY 2004-05. Prices are applied to these food
                                               quantities to determine baseline food costs.
                                              <bullet> Meals served, quantities served, and quantities offered
                                               (``offer weights'') by food type, by school type (elementary,
                                               middle, and high). Used to determine students' inclinations to
                                               take an offered menu item (``take rates''). Take rates are
                                               applied to the types and quantities of food that must be offered
                                               to students under the rule to estimate quantities served.
School Lunch and Breakfast Cost Study II      <bullet> Food codes and descriptions, number of servings, average
 (USDA 2008).                                  gram weight per serving, total grams served, cost per serving.
                                               These are used, along with other data sources, to estimate the
                                               cost per cup or ounce equivalent of each of the rule's required
                                               food types and combination entr[eacute]es.
                                              <bullet> Also used to estimate the relative cost of food group
                                               subtypes: whole versus refined grain products, and the various
                                               vegetable varieties with separate serving requirements under the
                                               rule.

[[Page 4116]]

 
USDA Child Nutrition Food Labels............  <bullet> USDA food labels contain information on food group
                                               crediting for child nutrition program administrators. USDA
                                               maintains a collection of food labels for thousands of
                                               commercially-prepared entrees. Food group crediting information
                                               is used to determine the cup or ounce equivalents of meat, meat
                                               alternate, grain, vegetable, and fruit that may be credited by
                                               schools for a particular entr[eacute]e.
                                              <bullet> Food group crediting is used to determine how much of the
                                               rule's food group requirements are satisfied by prepared foods
                                               offered by schools, and how much remains to be met with single
                                               food or non-entr[eacute]e items.
USDA, National Food Service Management        <bullet> The recipe database is used to supplement the information
 Institute, Recipe Database.                   from USDA food labels. The recipe records, like the food labels,
                                               contain food group crediting information used to determine how
                                               much of the rule's food group requirements are satisfied by
                                               particular food items.
USDA Food Buying Guide......................  <bullet> The Food Buying Guide also contains information on food
                                               group crediting. The crediting information for various grain
                                               products is used in this estimate.
USDA, Agricultural Research Service,          <bullet> The SR22 is used to supplement the other food group
 National Nutrient Database for Standard       crediting resources listed above. SR22 information was used to
 Reference, SR22.                              estimate food credits for food items without a CN food label, or
                                               a USDA recipe. SR22 provides protein and fiber content per given
                                               volume of a particular food. That information is used to estimate
                                               the food group credits for foods that are similar, but not
                                               identical, to foods with CN labels or USDA recipe records.
                                              <bullet> SR22 data is also used to compute the proper conversion
                                               factor from grams to cups for various school foods.
USDA, Agricultural Research Service,          <bullet> Used to determine the relative share of vegetables in
 MyPyramid Equivalents Database for USDA       combination foods and entr[eacute]es by each of the varieties
 Food Codes, Version 1.0.                      with separate serving requirements under the rule.
School Nutrition Dietary Assessment Study II  <bullet> Average food group crediting information for school salad
 (USDA 2001).                                  bars is taken from SNDA-II.
----------------------------------------------------------------------------------------------------------------

    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.\12\ 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.
---------------------------------------------------------------------------

    \12\ If patterns of student selection of foods are different in 
private schools than they are 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. 
Through August 2011, these inflators are constructed with actual CPI 
values.\13\ For years after 2011, the food group inflators rely on 
historic 7-year averages.
---------------------------------------------------------------------------

    \13\ We used index values for the 11 months ending in August 
2011 to estimate average index values for all of FY 2011.
---------------------------------------------------------------------------

    Our proposed rule analysis computed 5-year historic averages 
through FY 2009. Price inflation for most major food groups in the two 
years since FY 2009 was lower than inflation in the 5 years ending in 
September 2009. For our final rule cost analysis we use a 7-year 
average to project future prices. This 7-year average adds the most 
recent 2 years of price data to the 5 years used in the proposed rule 
methodology. We use a 7-year average, retaining all of the 5 years used 
in the proposed rule methodology, to avoid giving too much weight to 
the reduction in price inflation observed during the most recent two 
years, a period of weak economic growth and consumer demand. Use of a 
5-year average ending in FY 2011 would produce a lower cost estimate 
than the one presented here.\14\
---------------------------------------------------------------------------

    \14\ If, instead, we entirely discount the most recent two years 
of inflation, and instead used a 5-year average ending in FY 2009 to 
project future food prices, then our cost estimate would be higher. 
That scenario is discussed in Section F.
---------------------------------------------------------------------------

    Food group inflation factors are summarized in Table 8.

[[Page 4117]]



                Table 8--Food Group Price Inflators \15\
------------------------------------------------------------------------
                                                              7-year
                                            Cumulative       Historic
                                           increase 2006   average (for
                                              to 2011       years after
                                             (percent)         2011)
                                                             (percent)
------------------------------------------------------------------------
Lunch inflators:
    --Milk..............................           12.33            2.03
    --Meat or Meat Alternate............           17.54            2.75
    --Fruit Juice.......................           19.18            2.82
    --Fruit (non-juice).................           12.39            2.82
    --Vegetables........................           18.52            3.97
    --Refined and Whole Grains..........           25.16            3.85
    --Combination Foods/Entrees.........           15.62            2.67
Breakfast inflators:
    --Milk..............................           12.33            2.03
    --Meat or Meat Alternate............           16.52            2.63
    --Fruit Juice.......................           19.18            2.82
    --Fruit (non-juice).................           10.38            2.66
    --Vegetables........................           19.81            4.83
    --Refined and Whole Grains..........           17.39            2.50
    --Combination Foods/Entrees.........           15.62            2.67
------------------------------------------------------------------------

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

    \15\ 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.
---------------------------------------------------------------------------

    The value of USDA Foods and the value of cash in lieu of such food 
donations enters into both our baseline and final 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.
    We assume in the analysis that the types of commodities offered to 
schools in future years may satisfy the food group requirements of the 
final rule as effectively as they do now. USDA's annual commodity 
purchase plan, developed by FNS in consultation with the Agricultural 
Marketing Service and the Farm Service Agency, is driven by school 
demand for particular products as well as by current prices, available 
funds, and the variable nature of agricultural surpluses.\16\
---------------------------------------------------------------------------

    \16\ For more information see http://www.commodityfoods.usda.gov/fd_purchasing.htm.
---------------------------------------------------------------------------

    In large measure, USDA Foods offered to schools are already well 
positioned to support the final rule's 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 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 rule is shown in Table 9.

                      Table 9--Projected Baseline Growth in Reimbursable Meals Served \17\
----------------------------------------------------------------------------------------------------------------
                                                                           Fiscal year
                                               -----------------------------------------------------------------
                                                   2011       2012       2013       2014       2015       2016
----------------------------------------------------------------------------------------------------------------
Lunches:
    Meals (billions)..........................        5.4        5.5        5.5        5.6        5.6        5.7
    Percent change............................       2.4%       1.5%       1.2%       1.0%       0.8%       0.8%
Breakfasts:
    Meals (billions)..........................        2.1        2.2        2.3        2.3        2.3        2.4
    Percent change............................       6.8%       4.6%       3.0%       2.0%       1.5%       1.5%
----------------------------------------------------------------------------------------------------------------

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

    \17\ The projected growth above in meals served through FY 2011 
reflects the difference between FNS estimates for FY 2011 prepared 
for the 2012 President's Budget and actual meals served in FY 2010. 
The remaining percentages are FNS projections prepared for the FY 
2012 President's Budget.
---------------------------------------------------------------------------

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

[[Page 4118]]

2. Final Rule Cost Estimate
    Food Costs: Both our baseline and final 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 final rule cost estimate 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.\18\ 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.
---------------------------------------------------------------------------

    \18\ 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.
---------------------------------------------------------------------------

    A basic assumption underlying the estimated cost of reimbursable 
meals under the final 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 after implementation of the rule.
Figure 2: Food Costs Under Final Rule
    Objective: Use price data collected from schools and new meal 
pattern requirements to estimate the cost of serving meals under the 
final rule.

[[Page 4119]]

[GRAPHIC] [TIFF OMITTED] TR26JA12.004

    We separated combination foods from single food items in the SNDA-
III and SLBCS-II datasets.\19\ 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).
---------------------------------------------------------------------------

    \19\ As with the baseline estimate, we prepared separate 
estimates of meals served under the final 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 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.\20\ We averaged the 
crediting information for several varieties within each combination 
food category to generate representative food credits for the category.
---------------------------------------------------------------------------

    \20\ 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.

[[Page 4120]]

    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.\21\
---------------------------------------------------------------------------

    \21\ 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 rule after adjustment for student selection. Under the final 
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 final rule's food group requirements 
from Tables 4 and 5.\22\
    These adjusted requirements are estimates of what elementary, 
middle, and high schools are likely to serve to students after 
implementation of the rule. The unadjusted requirements are what 
schools must offer to their students to be in compliance.
---------------------------------------------------------------------------

    \22\ Our take rates are weighted averages computed from all 
school level records on SNDA-III. SNDA data allows the computation 
of take rates for single food items and combination entrees. We use 
estimates of the component foods contained in combination entrees to 
estimate overall take rates for each of the final rule's food 
groups, whether those foods are served separately or as part of a 
combination entr[eacute]e. We cap individual school take rates for 
any food group at 100%. We assume that these take rates remain 
unchanged after implementation of the rule for two primary reasons: 
lack of an evidence-based alternative, and to avoid understating the 
costs of the rule.
---------------------------------------------------------------------------

    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 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 final rule cost estimates; we do 
not attempt to construct a reformulated set of combination foods to 
satisfy the 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.\23\ As a result, the cost per unit 
of combination foods served is unchanged in the baseline and under the 
final rule, and the entire cost of meeting the new rule's requirements 
is reflected in the cost of single foods.
---------------------------------------------------------------------------

    \23\ The amount of refined grains in combination foods in excess 
of final rule requirements are offset by subtracting the value of an 
equivalent amount of single food refined grain products from the 
rule's per-meal cost.
---------------------------------------------------------------------------

    In practice, we expect manufacturers will offer reformulated 
versions of popular combination foods, and that schools will 
incorporate more whole grains and vegetable varieties in their entree 
recipes, so that students will 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.\24\
---------------------------------------------------------------------------

    \24\ 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 
final rule's meal patterns.
---------------------------------------------------------------------------

    The final rule requires that no more than half of the fruit 
requirement be met with fruit juice because juice lacks fiber and may 
contribute to excessive calorie 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 rule's entire increase in the fruit group requirement 
will be satisfied with additional servings of whole or cut-up fruit; 
the estimate assumes that schools will serve no more fruit juice to 
students under the final 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 final 
rule. Like our baseline estimates, these are multiplied by weighted 
food group 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 this rule, illustrates the 
need for additional labor hours by school kitchen staff.
    More 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.\25\
---------------------------------------------------------------------------

    \25\ IOM 2009, p. 110.
---------------------------------------------------------------------------

    In addition to the implied need for new kitchen equipment, IOM 
notes that

[[Page 4121]]

``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.'' \26\
---------------------------------------------------------------------------

    \26\ 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.'' \27\ At the same time, lesser 
reliance on prepared foods offers some opportunity for offsetting 
savings.
---------------------------------------------------------------------------

    \27\ 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).\28\
---------------------------------------------------------------------------

    \28\ Ibid.
---------------------------------------------------------------------------

    The effect of the final rule's meal requirements on the mix of food 
and labor costs is unclear. The 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 possible that the cost 
of installing and maintaining a salad bar could increase the overall 
cost of school meal production. Similarly, to meet the 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.'' \29\ 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.\30\ 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.
---------------------------------------------------------------------------

    \29\ USDA 2008, p. 3-5
    \30\ 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.\31\ We 
estimate that the rule may increase schools' food costs by about 8 
percent by FY 2015. Although labor costs relative to food costs have 
held steady over many years,\32\ this approach may overstate labor 
costs. We explore the potential effect of labor costs growing at a 
somewhat lower rate in section F.
---------------------------------------------------------------------------

    \31\ 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.
    \32\ 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 final rule through 
FY 2016.\33\ (The final two rows of Table 10 also include the estimated 
administrative costs to State agencies.) Overall, we estimate that the 
rule may increase the total cost of reimbursable school meals by $3.2 
billion over five years; the cost of food would increase by $1.6 
billion, and the cost of labor would increase by $1.6 billion. In the 
first year of full implementation (FY 2015),\34\ the combined cost of 
food and labor is expected to be about 8 percent higher under the final 
rule than under existing requirements. The estimated additional cost of 
food for a reimbursable lunch increases from about 2.5 cents in FY 2012 
to 5.4 cents in FY 2016; food costs for a reimbursable breakfast grow 
to 14.1 cents in FY 2016. These per meal increases roughly double--to 
11 cents and 28 cents by FY 2016--when the estimated cost of labor is 
included.
---------------------------------------------------------------------------

    \33\ The new standards will 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 rule on student participation in section III.F. We 
examine the effect of alternate participation assumptions in section 
F.
    \34\ Two years after implementation of the rule, in SY 2014-
2015, all grains servings offered to meet meal pattern requirements 
must be whole grain rich. The new minimum fruit requirement at 
breakfast also takes effect in SY 2014-2015; this is the last of the 
rule's major changes to the breakfast meal patterns.

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

[[Page 4122]]

[GRAPHIC] [TIFF OMITTED] TR26JA12.005

3. Food Cost Drivers
    Table 11 provides a breakdown in the estimated food costs of the 
final rule by seven broad food categories. Consistent with the Dietary 
Guidelines, the 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 rule may 
not be shared equally by producer groups.

[[Page 4123]]

[GRAPHIC] [TIFF OMITTED] TR26JA12.006

    Milk: This impact analysis estimates that the amount of milk served 
to students will not change after implementation of the rule.\35\ 
However, the rule does require schools to serve only low-fat or fat-
free milk in the school meals programs.\36\ 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 estimated cost of 
serving milk under the rule is reduced. Some comments on the proposed 
rule noted that schools had already made the transition to fat-free and 
low-fat milk, and that there would be no savings as a result of this 
provision. We discuss this and other comments in Section E.
---------------------------------------------------------------------------

    \35\ See section F. for an examination of the cost implications 
of altering this assumption.
    \36\ This provision is required by Section 202 of the HHFKA and 
has already taken effect. Through implementation memo SP-29--2011, 
dated April 14, 2011, schools were required to offer a variety of 
milk that meets Dietary Guidelines recommendations. The USDA 
implementation memo clarifies that schools must offer at least two 
fat-free or low-fat (1 percent milkfat) varieties effective with the 
start of SY 2011-2012. This final rule includes the additional 
requirement that flavored milk be offered in fat-free form only.
---------------------------------------------------------------------------

    Fruit Juice: The estimate assumes that schools will satisfy the 
rule's increased fruit requirement entirely through additional servings 
of whole or cut-up fruit, not fruit juice. We expect that schools will 
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 will 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 will increase after implementation of the rule.
    Grains: The 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 transition is 
reflected in the large changes in both the whole grain and refined 
grain figures between FY 2014 and FY 2016.
    This analysis estimates that the total amount of grain products 
served will be less after implementation of the final rule than the 
amount served in our baseline (the per-meal amount taken by students 
according to 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 is substantially greater 
than 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 
added cost of serving higher priced whole grain products about equals 
the savings from a reduction in grains 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.\37\ 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. 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 final rule.\38\ 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

[[Page 4124]]

vegetables, refined grains, and higher fat milk on current school 
menus.\39\ IOM modified observed take rates from SNDA-III where the 
expert judgment of committee members and school meal practitioners 
deemed it appropriate.\40\ 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.
---------------------------------------------------------------------------

    \37\ 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
    \38\ FNS caps individual school take rates at the food group 
category to 100 percent. We also attempt to include the contribution 
of component foods in combination entrees in our estimates of take 
rates for the major food groups (fruit, milk, vegetables, grains, 
and meat/meat alternates).
    \39\ As discussed elsewhere in this impact analysis, our take 
rate assumptions are intended to avoid understating the cost of the 
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 F.
    \40\ IOM 2009, p. 136.
---------------------------------------------------------------------------

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 rule's requirements;
    <bullet> Forging new relationships with local farmers to supply 
fresh produce 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 rule also increases the scope of State Agency administrative 
reviews of SFAs by combining the current Coordinated Review Effort 
(CRE) with 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 State Agency administrative 
review every three years, rather than two reviews (one CRE and one SMI) 
every five years.
    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 rule, and to remove barriers that may hinder 
compliance.
    Many changes associated with implementation of the rule may result 
in an increased burden and additional required level of effort from 
States, such as:
    <bullet> Training and technical assistance: SAs will 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 final 
rule 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 new meal patterns. SAs may also review SFA 
contracts with food service management companies (FSMCs). We have not 
estimated this cost, but expect that it will be small.
    <bullet> Monitoring and compliance: SAs will be required to conduct 
administrative reviews (formerly CREs and SMIs) more frequently, once 
every 3 years for each SFA beginning in SY 2013-2014. Nutrient analysis 
will be required for all SFAs and will become an additional component 
of each review (separate SMIs will be eliminated). Nutrient-based menus 
will be eliminated and only food-based menu planning will be permitted. 
The final rule drops the proposed rule requirement to require 
administrative reviews to cover two weeks of menus and production 
records; instead, the final rule keeps the current one week review 
requirement. The final rule, like the proposed rule, would include 
breakfast in SA administrative reviews.\41\
---------------------------------------------------------------------------

    \41\ 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 consolidated 
administrative review. That may help offset some of the cost of 
increased review frequency. A mid-sized State that now conducts 100 CRE 
reviews might incur annual

[[Page 4125]]

expenses of $200,000. Under the final rule, that SA could expect to 
conduct \2/3\ more administrative 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 rule because of the need to provide additional training and 
technical assistance to SAs, and to support their role in the 
administrative review process, this may largely be met by adapting 
existing efforts to the new requirements.

D. Food Service Equipment

    Changes in meal pattern requirements may require some SFAs to 
replace or purchase additional foodservice equipment. 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. In 
response to its solicitation, FNS received a total of approximately 
$600 million in grant requests from SFAs. FNS awarded grants for such 
purposes totaling $125 million, using $100 million from funds provided 
by the 2009 American Recovery and Reinvestment Act (ARRA) and $25 
million provided by the FY 2010 Agriculture Appropriations Act. The 
strong response to these grant programs indicates that schools could 
make productive use of an even greater investment in kitchen equipment. 
FNS awarded grants for such purposes totaling $125 million, using $100 
million from funds provided by the 2009 American Recovery and 
Reinvestment Act (ARRA) and $25 million provided by the FY 2010 
Agriculture Appropriations Act. 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 new 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 in our final rule estimate.
    Our decision not to include an additional equipment cost in our 
proposed rule estimate generated comments from school officials and 
foodservice industry representatives. Those comments do not provide 
enough information on which to base a reliable estimate of the need for 
additional kitchen equipment as a result of the rule. The comments 
confirm that the need, where it exists, will vary significantly. 
Although we cannot reliably estimate the aggregate cost of meeting the 
need for additional equipment, we provide one estimate in the Section F 
below. Additional detail on the comments received from schools and the 
foodservice industry on this point is discussed in Section E.

E. Comments on Proposed Rule

    As noted in the preamble to the final rule, USDA received more than 
130,000 comments on the proposed rule. Comments on the content of the 
rule itself are discussed in the preamble. Other comments, addressed 
specifically to the proposed rule's impact analysis, are discussed 
here.
a. Proposed Rule is Too Costly
    Many commenters expressed concern that the proposed rule was too 
costly. Schools and school districts would not be able to meet the 
proposed rule's meal standards without additional resources from 
Federal, State, or local governments. Some of these commenters noted 
that the cost of the proposed rule exceeded the 6 cents per lunch that 
would follow adoption of the new meal requirements. Many also noted 
that State and local governments were not in a position to provide 
school districts with additional funding. The result, some commenters 
warned, was that schools might stop serving reimbursable breakfasts 
under the SBP. Other commenters suggested that schools might even stop 
serving reimbursable NSLP lunches.
    In response to these comments, the final rule modifies the proposed 
rule's meal pattern requirements. The effect of those modifications is 
to reduce the cost to schools and SFAs of implementing the rule. The 
modifications are discussed in detail in the rule, and summarized in 
Section II of this impact analysis. The modifications offer schools 
short term savings, relative to the proposed rule, by phasing in the 
rule's breakfast fruit and grain requirements. As a result of 
elimination of the proposed rule's breakfast meat requirement, the 
ongoing cost of the final rule after full implementation is also 
reduced.
    Eliminating the proposed limit on the amount of starchy vegetables 
that schools may offer at lunch has little effect on the cost of the 
final rule relative to the proposed rule. Significant savings are 
realized through a reduction in the lunch pattern's grain requirement.
    Part of the difference in the estimated 5-year costs of the 
proposed and final rules is due to lower projected food cost inflation 
and increased student participation since preparation of the proposed 
rule estimate. To facilitate comparison of the estimated costs of the 
proposed and final rules, we prepared two estimates of the final rule's 
provisions. The first uses the most current food inflation and student 
participation figures; this is our primary estimate summarized in Table 
6. The second applies the same food inflation and student participation 
estimates that we used in our proposed rule cost estimate. That is, we 
use the projections of food inflation for years after FY 2009 that we 
developed for the proposed rule. (Our primary estimate for the final 
rule uses actual inflation through August 2011, and an updated 
projection for years after FY 2011.) The difference between this second 
estimate and the estimated cost of the proposed rule provides a more 
direct measure of the reduction in cost due to changes in the content 
of the proposed and final rules. Using that difference as our basis of 
comparison, the final rule reduces costs over the first 5 years by 
almost $3 billion, or 44 percent, as compared to the proposed rule.

[[Page 4126]]



                  Table 12--Reduction in Estimated Cost of Final Rule Relative to Proposed Rule
----------------------------------------------------------------------------------------------------------------
                                                                     Fiscal year
                                   -----------------------------------------------------------------------------
                                        2012         2013         2014         2015         2016        Total
----------------------------------------------------------------------------------------------------------------
Proposed rule.....................       $181.5     $1,246.8     $1,401.9     $1,923.8     $2,041.3     $6,795.2
Final rule--primary estimate......         41.6        286.2        362.1      1,220.2      1,279.7      3,189.9
                                   -----------------------------------------------------------------------------
    Difference....................       -139.8       -960.6     -1,039.7       -703.6       -761.6     -3,605.3
Proposed rule.....................       $181.5     $1,246.8     $1,401.9     $1,923.8     $2,041.3     $6,795.2
Final rule--with proposed rule             53.5        376.0        474.8      1,419.0      1,511.1      3,834.5
 inflation and participation
 estimates........................
                                   -----------------------------------------------------------------------------
    Difference....................       -127.9       -870.6      - 927.0       -504.8       -530.2     -2,960.7
----------------------------------------------------------------------------------------------------------------

    In response to comments that an additional 6 cents per reimbursable 
lunch \42\ falls short of our estimated per meal cost of the proposed 
rule, we point out that the HHFKA contains a comprehensive package of 
school lunch and breakfast reforms. These reforms are intended to both 
increase the quality of school meals and competitive school foods 
offered to students, and to address financial and funding issues. These 
latter provisions are expected to increase the amount of revenue 
generated by SFAs while eliminating the subsidization of paid lunches 
and non-program foods with Federal funds meant to support reimbursable 
meals generally, and meals served to free and reduced-price eligible 
children in particular. The impact analysis contained in the interim 
final rule prepared for Sections 205 and 206 of HHFKA estimates that 
those provisions will increase SFA revenues by $7.5 billion through FY 
2015.\43\ HHFKA section 205 is designed to gradually reduce the 
disparity in per-meal school revenue from reimbursable paid lunches 
relative to the per-meal Federal reimbursement for free lunches. 
Section 206 requires schools to increase the share of SFA revenue 
generated by nonprogram foods to a level at least as great as 
nonprogram food's contribution to total SFA food costs.
---------------------------------------------------------------------------

    \42\ Section 201 of HHFKA provides an additional 6 cents to 
schools for each NSLP lunch that meets this rule's meal pattern 
requirements.
    \43\ Federal Register, Vol. 76, No. 117, pp. 35301-35318.
---------------------------------------------------------------------------

b. Costs Are Understated
    Some commenters felt that the cost estimate presented in the 
proposed rule is understated. As we describe in Section III.B.2., our 
methodology relies primarily on data collected by USDA in SNDA-III to 
estimate the types and quantities of food offered by schools to program 
participants. SNDA-III collected information from schools in SY 2004-
2005. We believe that our use of the data from that study, which is 
several years old, presents a greater risk of overstatement than 
understatement of the cost of the rule, holding other factors constant. 
The Dietary Guidelines Advisory Committee completed its 2005 report in 
August 2004, just as SY 2004-2005 began. The 2005 Dietary Guidelines 
policy document was released by the U.S. Department of Health and Human 
Services and USDA in January 2005. These documents were released as 
SNDA-III data was being collected--too soon for substantial changes 
prompted by the Dietary Guidelines to be reflected in meals offered to 
students.
    In the years since data was collected for SNDA-III, schools and 
USDA have taken steps to bring school meals into closer compliance with 
the 2005 Dietary Guidelines. One example, cited by IOM, is the recent 
improvement in USDA Foods offered to schools through the USDA's 
commodity programs.\44\ These changes provide schools with an increased 
variety of whole grain, low fat, and low sodium products for use in 
healthier school meals. Other changes have been initiated by schools. 
The School Nutrition Association's 2010 ``Back to School Trends 
Report'' highlights some of the most recent changes that schools are 
making in anticipation of new Federal standards: \45\
---------------------------------------------------------------------------

    \44\ ``The [USDA] Commodity Program has made substantial 
improvements in its offerings in recent years to become better 
aligned with Dietary Guidelines for Americans and to be more 
responsive to its `customers.' '' (IOM 2009, p. 188)
    \45\ This is just a summary of recent changes adopted by 
schools. Schools have been moving toward 2005 Dietary Guidelines 
standards over several years.
---------------------------------------------------------------------------

    95% of schools districts are increasing offerings of whole grain 
products.
    90.5% are increasing availability of fresh fruits/vegetables.
    69% of districts are reducing or eliminating sodium in foods.
    66% of districts are reducing or limiting added sugar.
    51% of districts are increasing vegetarian options.\46\
---------------------------------------------------------------------------

    \46\ Figures taken from the SNA's Web site (http://www.schoolnutrition.org/Content.aspx?id=6926, accessed 10/10/11).
---------------------------------------------------------------------------

    Our use of SNDA-III data means that our cost estimate does not 
reflect the most recent progress that schools have made toward adoption 
of Dietary Guidelines recommendations. At least one non-profit 
organization offered a comment on the proposed rule that concurs with 
that assessment. The commenter's primary point was that we overstate 
the savings from replacing more expensive high fat milk with less 
expensive low fat and fat free varieties; the commenter notes that many 
schools have already made that transition. We acknowledge that the 
potential savings of the final rule's milk provision may be overstated 
in our cost estimate. But that savings is potentially overstated for 
the same reason that the costs of meeting the rule's other food group 
requirements may be overstated. Schools have taken recent steps to 
adopt Dietary Guidelines recommendations on vegetables, fruit, whole 
grains, and sodium; schools' gradual adoption of Dietary Guidelines 
recommendations has not been limited to milk. Because our projected 
savings from the rule's milk provision is much lower than our projected 
cost of the rule's vegetable, fruit, and whole grains provisions, we 
believe that the risk that we overstate the cost of the rule exceeds 
the risk that we understate its cost.
c. Analysis Does Not Capture Full Effect of Recent Food Inflation
    Some commenters argued that we understated or did not adequately 
account for food inflation in our proposed rule cost estimate. Both our 
proposed and final rule cost estimates use food group specific 
inflation figures from the BLS to estimate current year prices (FY 2011 
prices for the final rule analysis) from a set of baseline prices paid 
by schools in SY 2005-2006 (taken from the SLBCS-II). Both analyses use

[[Page 4127]]

those current year estimates to project prices through FY 2016.
    In our final rule estimate we use a 7-year historic average of food 
inflation, by food group, to project prices. Our proposed rule estimate 
used a 5-year historic average to inflate food costs. In developing our 
final rule estimate we recognized that actual food price inflation 
since we prepared our proposed rule estimate was substantially lower 
than inflation over the previous 5 years. We adopted a 7-year historic 
average in our final rule cost projections in order to temper the 
effects of relatively low recent food price inflation. This yields a 
slightly higher estimate for our final rule than we would have gotten 
had we used an updated 5-year average projection factor. We do this to 
avoid the risk of understating the cost of the final rule.
d. Analysis Does Not Account for Higher Costs of Healthier Foods
    Some commenters referred specifically to the higher costs of whole 
grains and vegetables emphasized by the rule. Others referred to the 
additional costs necessary to produce low-sodium school meals. We 
address these separately.
Higher Prices for Food Groups Emphasized by the Rule
    Our proposed rule and final rule cost estimates develop separate 
prices for each of the food subgroups with specific standards in the 
rule. For example, we estimate separate prices for whole grains and 
refined grains, for whole fruit and fruit juice, and for the dark 
green, red-orange, starchy, and ``other'' vegetable subgroups. In each 
of these cases, we estimate higher unit prices for the food subgroups 
emphasized by the rule. In some cases the price premium for these food 
subgroups may reflect lower supply in the school food marketplace. As 
industry increases the supply of these products in response to higher 
school demand, economies of scale may reduce their cost. Our cost 
estimates for both the proposed and final rules discount the 
possibility that prices for these foods may moderate over time. Again, 
we do this to avoid understating the cost of the rule.
Added Cost of Producing Meals With Less Sodium
    The proposed rule's first intermediate sodium targets were designed 
to be met by schools through menu and recipe changes using currently 
available foods. The proposed rule's second intermediate target was 
designed to be met with the help of the food industry through changes 
that can be met with current food processing technology. The proposed 
rule analysis stated that ``a reduction in sodium can be achieved at 
minimal cost, at least over the short term, when sodium requirements 
are only partially phased-in.'' But the analysis also noted that 
meeting the rule's sodium targets would likely require replacing some 
packaged foods with foods prepared from scratch. To clarify, we 
recognize that meeting even the first sodium target has some cost; 
however, we do not estimate that as a separate component cost in either 
the proposed or final rule analyses. Much of the cost of meeting the 
proposed and final rules' short term sodium targets is contained in the 
cost of substituting prepared foods for foods cooked from scratch in 
schools or central kitchens. We account for this in our labor cost 
estimate. Our proposed and final rule analyses estimate that labor 
costs will rise nearly dollar for dollar with food costs. Over 5 years, 
the final rule estimates that labor costs will increase by $1.6 
billion.
    Our cost estimate extends only through FY 2016, two years before 
the final rule's second sodium target takes effect. As a result, we do 
not estimate the cost of meeting that target in SY 2017-2018, or the 
rule's final sodium target in SY 2022-2023. However, two provisions in 
the final rule respond to the challenge of meeting those targets. The 
first is a delay in the second intermediate target from 4 years post-
implementation in the proposed rule to 5 years in the final rule. 
Lengthening the transition to lower sodium foods is intended, in part, 
to facilitate student acceptance. But it also gives industry more time 
to develop products that meet the rule's standards. To the extent that 
limited supply is a school cost issue, delaying the second intermediate 
target to 5 years should help reduce costs. The final rule also 
promises USDA review of schools' progress toward the rule's final 
sodium target, and allows for modifications to the sodium targets if 
necessary.
e. Analysis Understates Need for Additional Equipment and 
Infrastructure
    School officials and others commented that our proposed rule 
analysis understated the need for additional investment in food 
preparation and storage equipment as schools move away from a ``heat 
and hold'' foodservice model, to a model that relies more on on-site 
preparation. Our proposed rule analysis discussed the $125 million for 
school foodservice equipment provided to schools through the 2009 
American Recovery and Reinvestment Act (ARRA) and the FY 2010 
Agriculture Appropriations Act. Although the proposed rule analysis 
recognized that the demand for ARRA grants greatly exceeded the amount 
available, the analysis noted that much of that demand was driven by 
the routine need to replace aging equipment, costs that are 
appropriately covered by USDA meal reimbursements and other sources of 
food service revenue. The proposed rule analysis did not include an 
additional cost tied specifically to meeting the proposed rule meal 
patterns.
    Some commenters offered estimates of the cost required to equip 
schools to produce more foods on site. These costs ranged from $4,000 
per school for new equipment, to $500,000 or more for a full kitchen 
and serving site renovation (an estimate given by a foodservice 
industry representative). Commenters indicated that preparing more 
meals on-site would require investment in additional refrigeration 
equipment, microwaves and combination ovens, storage space, sinks, 
cutting boards and knives. What these comments cannot tell us is the 
percent of schools in need of new equipment, or the average per-school 
cost to meet that need. If fully half of all schools require 
investments averaging $5,000, then the total cost of new equipment 
necessary to prepare meals that meet the final rule standards would be 
$250 million. In the end, we do not have the data necessary to develop 
a reliable estimate of need in excess of the routine costs of replacing 
outdated equipment. In Section F we present an alternate cost estimate 
of the final rule under a different assumption about the need for 
additional investment in school kitchen equipment.

F. 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 13. In most cases, 
our primary estimate reflects conservative assumptions, to avoid 
understating the costs of the rule. 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 4128]]



                    Table 13--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 new
                                             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 our final rule
                                             cost estimate. Different
                                             take rate assumptions could
                                             produce higher or lower
                                             cost estimates. Take rates
                                             higher than the ones used
                                             in our estimate imply that
                                             students will select more
                                             foods from menus that meet
                                             final rule standards than
                                             they now select from more
                                             familiar current school
                                             menus; we believe that risk
                                             is reasonably low, at least
                                             in the short term. It may
                                             be more likely that actual
                                             take rates will fall below
                                             our estimates. However, the
                                             possibility of lower take
                                             rates is constrained by the
                                             requirement that students
                                             select enough components to
                                             constitute a reimbursable
                                             meal.
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 will incorporate
                                             new foods into their menus,
                                             and what changes schools
                                             will 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 final rule
                                             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 rules and
                                             under the new rule. We
                                             believe it is reasonable to
                                             ignore the value of USDA
                                             Foods in computing the
                                             estimated cost increase of
                                             the rule.
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 will 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.
                                             Nevertheless, USDA received
                                             comments from some
                                             individuals and
                                             organizations indicating
                                             that our proposed rule
                                             understates the likely
                                             increase in labor costs. To
                                             respond to these comments,
                                             we re-estimate the cost of
                                             the proposed rule assuming
                                             a bigger increase in labor
                                             costs in Section F. 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, fat free and low
                                             fat milk compared to 2
                                             percent or whole milk,
                                             whole fruit compared to
                                             fruit juice, and vegetables
                                             by subgroup. 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 final
                                             rule would limit this to 10
                                             percent--a relatively
                                             modest reduction.
Macronutrient Requirements and Calories...  Our cost estimate does take
                                             into account the added cost
                                             of more fruits and
                                             vegetables. It also takes
                                             into account the cost of
                                             shifting to a wider variety
                                             of vegetables.
                                            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
                                             mention above that that the
                                             first intermediate sodium
                                             target can be achieved with
                                             changes to school menus and
                                             preparation methods using
                                             foods already available in
                                             the marketplace. To the
                                             extent that the rule's
                                             first sodium target
                                             requires more on-site
                                             preparation of meals, we
                                             account for that in our
                                             labor cost estimate. We
                                             estimate that the
                                             additional cost of
                                             acquiring lower sodium
                                             versions of processed foods
                                             to meet the rule's initial
                                             sodium target will be
                                             minimal. This is one of the
                                             very few assumptions that,
                                             if wrong, tends to
                                             understate the cost of the
                                             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.
------------------------------------------------------------------------

a. Change in Participation--2 Percent Increase
    As discussed in Table 13 above, we assumed that student 
participation would not change following the introduction of new meal 
requirements. Table 14 Sections A and B model the effects of altering 
that assumption.
    Section A 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 A are the estimated 
cost to schools of preparing all meals served under our baseline 
assumption plus an additional 2 percent; the costs are not just limited 
to the incremental per-meal costs of the final rule. The additional 
meals are eligible for USDA reimbursement at the appropriate free, 
reduced price, or paid rates. However, the figures shown in

[[Page 4129]]

Section A 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 $1.3 billion increase over the cost of our 
primary estimate.
b. Change in Participation--2 Percent Decrease
    Table 14, Section B 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.\47\ 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. This reduction in cost is a reduction in the 
entire cost of serving 2 percent fewer meals, not just the incremental 
per-meal cost of complying with the final rule. Schools would realize a 
partially offsetting decrease in Federal meal reimbursements; that 
offset is not shown in Table 14. The effect of a 2 percent decrease in 
student participation would be to decrease the cost of implementing the 
final rule by $1.3 billion.
---------------------------------------------------------------------------

    \47\ This reduction in cost comes at the expense of reduced 
federal meal reimbursements.
---------------------------------------------------------------------------

c. Higher 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.
    At least one change reflected in the final rule is intended, in 
part, to help reduce labor costs relative to the proposed rule. The 
proposed rule included a separate meat standard for breakfast. The 
final rule drops that requirement, preserving schools' ability to serve 
meat as a substitute for grains at breakfast, but not requiring schools 
to offer meat. USDA expects that this change will support schools that 
serve breakfast in the classroom, a model that may require less labor 
cost than breakfast served in the school cafeteria.
    Although we believe that the risk that we overstate the labor costs 
necessary to implement the rule is as likely as the risk that we 
understate labor costs, comments received from school officials and 
foodservice and nutrition professionals argue that our labor cost 
estimate may be too low. Commenters cited the need to hire new kitchen 
staff to prepare more meals from scratch as a factor that might change 
the current ratio of labor to food costs.
    Our primary labor cost estimate relies on the observation that the 
ratio of labor to food costs was about the same at two points measured 
13 years apart. We acknowledge the uncertainty inherent in the 
assumption that this ratio will remain unchanged even as substantial 
changes to the meal patterns are implemented by schools. And we 
therefore recognize the risk that the absolute dollar cost for labor in 
our final rule estimate is too low. If the cost of labor needed to 
implement the final rule exceeds the amount in our primary estimate by 
10 percent, then the cost of the final rule would rise by $160 million.
d. Higher Food Inflation
    The final rule estimate's food inflation methodology in described 
section III.B.1. That discussion notes that inflation over the most 
recent 2 years was lower for most food subgroups than inflation over 
the five years prior to those two. Our proposed rule estimate used a 5-
year historic average to project food costs through FY 2016. In an 
effort to limit the effects of low recent inflation on our cost 
estimate, our final rule methodology uses a 7-year average to project 
food costs, rather than a revised 5-year estimate using only the most 
recent food inflation figures. This methodology retains all of the 5 
years of relatively high food inflation that we used in our proposed 
rule methodology. We took this step to minimize the risk of 
understating the cost of the final rule. It is possible, nevertheless, 
that food inflation will accelerate in the short term. If food prices 
from fiscal years 2012 through 2016 match the rate of inflation over 
the five years that ended in FY 2009, then the cost of the final rule 
would increase by $240 million.\48\
---------------------------------------------------------------------------

    \48\ This estimate includes a proportionate increase in labor 
costs to remain consistent with our labor cost methodology.
---------------------------------------------------------------------------

e. Additional Need for Foodservice Equipment
    The cost estimate in our proposed rule (and the primary estimate in 
this final rule analysis) does not include an additional cost for new 
foodservice equipment. As we discuss in section E above, commenters 
offer much different estimates of the need for new kitchen equipment to 
prepare more foods on site as a means of complying with the rule. These 
figures do not allow us to estimate the dollar value of that need with 
any certainty. Table 14 includes a revised final rule estimate that 
assumes half of all schools will need to invest $5,000 in new kitchen 
equipment soon after implementation of the rule. We show half of this 
$250 million cost as an upfront expense, and the other half as an 
expense incurred in the first full year of implementation of the rule.
    Table 14 below assumes that State administrative costs are not 
impacted by any of the alternate assumptions (a-e) listed above.

[[Page 4130]]

[GRAPHIC] [TIFF OMITTED] TR26JA12.007

G. Comparison of Proposed Rule and Final Rule Costs

    The key differences between our proposed rule and final rule cost 
estimates are discussed in previous sections of this RIA. Most of the 
estimated reduction in cost is due to policy changes, but a significant 
reduction is also realized by lower food inflation since preparation of 
the proposed rule cost estimate.
Inflation and Other Economic Assumptions
    The proposed rule used actual food price inflation through the end 
of FY 2009. The final rule incorporates nearly two additional years of 
actual food price inflation. Inflation over the two years ending in 
August 2011 was lower for most of the food groups affected by the rule 
than it was in the five previous years. This reduces our baseline cost 
of food as well as our projection of food prices through the RIA's 
forecast period. The final rule also uses USDA projections of school 
meal participation contained in the 2012 President's budget. The 
proposed rule relied on data in the 2011 President's budget. The more 
recent participation projections slightly increase the cost of the 
breakfast meal patterns and reduce the cost of the lunch meal patterns 
relative to the proposed rule. The net effect of changes to our food 
inflation and student participation projections is a 5-year $730 
million reduction in the cost of the final rule relative to the 
proposal.
Breakfast Meal Patterns
    The most significant reduction in the estimated cost of the final 
rule relative to the proposed rule is due to changes in the final 
rule's breakfast provisions. The final rule's phased implementation of 
the meal pattern's fruit and grain requirements, and elimination of the 
proposed rule's separate meat and meat alternate requirement reduce the 
cost of the rule by $2.7 billion over 5 years.
Lunch Meal Patterns
    Additional savings are realized through a reduction in the final 
rule's lunch meal pattern grain requirement relative to the proposed 
rule. The final

[[Page 4131]]

rule also includes changes to the vegetable component of the proposed 
rule's lunch meal pattern. The final rule eliminates the proposed 
rule's 1 cup per week limit on starchy vegetables, and it replaces the 
proposed rule's orange vegetable subgroup with a red/orange group that 
now includes tomatoes. Replacement of the orange vegetable subgroup 
with a red/orange subgroup was prompted by the 2010 Dietary Guidelines. 
The final rule reduces the weekly requirement for ``other'' vegetables, 
which previously included tomatoes, and increases the requirement for 
red/orange vegetables relative to the proposed rule requirement for 
orange vegetables. The net effect of changes to the vegetable and grain 
requirements at lunch is a relatively modest $150 million reduction in 
cost over 5 years.

                    Table 15--Changes in Cost of the Final Rule Relative to the Proposed Rule
----------------------------------------------------------------------------------------------------------------
                                                                     Fiscal year
                                   -----------------------------------------------------------------------------
                                        2012         2013         2014         2015         2016        Total
----------------------------------------------------------------------------------------------------------------
Proposed rule.....................       $181.5     $1,246.8     $1,401.9     $1,923.8     $2,041.3     $6,795.2
    Updated economic and                  -15.9       -114.8       -141.1       -211.3       -248.2       -731.2
     participation projections....
    Changes to breakfast meal            -120.5       -822.7       -871.4       -446.4       -465.6     -2,726.7
     pattern requirements.........
    Changes to lunch meal pattern          -3.4        -23.0        -27.1        -45.8        -47.8       -147.3
     requirements.................
Final rule........................         41.6        286.2        362.1      1,220.2      1,279.7      3,189.9
----------------------------------------------------------------------------------------------------------------

H. Implementation of Final Rule--SFA Resources

    We estimate that the new meal patterns may raise the average cost 
of producing and serving school lunches by about 5 cents on initial 
implementation of the rule. By FY 2015, when the food group components 
are fully phased in, the cost per lunch may be 10 cents higher than our 
baseline estimate; the cost per breakfast may be 27 cents higher than 
our baseline.
    As we discuss in Section E, the Healthy, Hunger-Free Kids Act 
contains a comprehensive package of school meal reforms that call for 
an update to the meal patterns and provide for increased SFA revenue. 
USDA estimates that the $3.2 billion 5-year cost of this rule is more 
than offset by the impact of other HHFKA provisions on SFA revenues.
    HHFKA's meal pattern and revenue raising provisions are linked 
directly in the performance-based increase in Federal financing for 
school lunches. Schools that successfully implement the final rule 
standards will receive an additional 6 cent reimbursement for each 
lunch served. The Congressional Budget Office estimates that an 
additional 6 cents per lunch would raise $1.5 billion for SFAs in the 
first 5 years after implementation of the rule.\49\
---------------------------------------------------------------------------

    \49\ $1.5 billion is CBO's estimate of additional budget 
authority for HHFKA's ``Performance-Based Rate Increase'' through FY 
2016, less $100 million ($50 million for administrative expenses in 
fiscal years 2012 and 2013) . See Table 2 in CBO's April 20, 2010 
cost estimate for HHFKA. http://www.cbo.gov/ftpdocs/114xx/doc11451/HealthyHungerFreeKidsAct.pdf (accessed 11/06/11).
---------------------------------------------------------------------------

    HHFKA contains two additional provisions to ensure that Federal 
reimbursements are used as intended to provide quality meals to program 
participants. The first requires schools to gradually raise the per-
meal revenue generated from paid lunches to an amount equal to the 
Federal reimbursement for free lunches. That revenue could come from 
student payments or State or local sources. The second requires that 
the revenue generated from non-program foods as a percent of food costs 
match the revenue to food cost ratio of program meals. USDA estimates 
that these two provisions will raise a combined $7.5 billion in the 5 
years following their July 1, 2011 effective date.\50\
---------------------------------------------------------------------------

    \50\ See the interim final rule and regulatory impact analysis 
for ``School Food Service Account Revenue Amendments Related to the 
Healthy, Hunger-Free Kids Act of 2010'', Federal Register, Vol. 76, 
No. 117, pp. 35301-35318.
---------------------------------------------------------------------------

    Schools will face different costs to implement this final rule. 
Schools with menus that already emphasize fruits, a variety of 
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 new 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.
    Schools will also benefit differently from HHFKA's revenue 
provisions. Schools with relatively few students who pay full price for 
program meals stand to gain little from HHFKA's paid lunch provision. 
Similarly, schools that sell few [agrave] la carte items will realize 
little revenue from an increase in [agrave] la carte prices. At the 
same time, schools that serve mostly free and reduced-price students 
and sell little [agrave] la carte can rely on significant Federal 
funding for each SFA dollar spent to purchase and prepare school foods.
    The experience of some schools suggests that substantial progress 
toward implementation of the rule can even be achieved with existing 
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 
2,161 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 final 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. Like 
other service businesses, schools may need to consider changes to their 
operations to increase efficiency and meet the requirements of the 
rule. HUSSC schools have demonstrated an ability to operate cost-
effective school meals programs that meet many of the final rule's 
requirements. These schools may offer models for others as 
implementation moves forward.

I. Impact on Participation

    As noted in Table 13, 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

[[Page 4132]]

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.'' \51\ 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.
---------------------------------------------------------------------------

    \51\ 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 all school districts to establish 
local wellness policies. Through these policies schools have made 
changes to their school nutrition environments and improved the quality 
of foods offered to students. In the context of these initiatives, 
implementation of the final rule is only the next step in a process 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 and serving school 
meals may increase by 8 percent by FY 2015. Some SFAs may raise student 
prices for paid meals (above the paid lunch revenue target required by 
HHFKA) to compensate for some of this increase in cost. We recognize 
that 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.\52\ 
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.\53\ For breakfast, the model estimates a 0.12 
percent decrease in participation per 1 cent increase in price.
---------------------------------------------------------------------------

    \52\ USDA 2007, vol. II, pp. 116-117, 123-124.
    \53\ 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.
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    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.

J. Benefits

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

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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.\54\
---------------------------------------------------------------------------

    \54\ 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.\55\ 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.\56\
---------------------------------------------------------------------------

    \55\ See, for example, Smith-Spangler, 2010; Bibbins-Domingo, 
2010.
    \56\ 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.\57\ 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.
---------------------------------------------------------------------------

    \57\ 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 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.'' \58\ 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.'' 
\59\
---------------------------------------------------------------------------

    \58\ Dietary Guidelines Advisory Committee, p. B1-2.
    \59\ 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.'' \60\
---------------------------------------------------------------------------

    \60\ 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.\61\ 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.\62\ Perhaps more 
significantly, obese children and adolescents are more likely to become 
obese as adults.\63\ In 2008, medical spending on adults that was 
attributed to obesity increased to an estimated $147 billion.\64\
---------------------------------------------------------------------------

    \61\ Ogden et al., 2010.
    \62\ Trasande et al., 2009.
    \63\ Whitaker et al., 1997; Serdula et al., May 1993.
    \64\ 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 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 final rule 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

1. Make No Changes to Proposed Rule

    The proposed rule closely followed the recommendations contained in 
the 2010 report of the IOM committee commissioned by USDA to propose 
changes to the NSLP and SBP meal patterns. Those recommendations were 
designed to reflect current nutrition science, the Dietary Guidelines, 
and IOM's Dietary Reference Intakes. The reforms contained in the 
proposed rule were well received by health and nutrition professionals, 
child advocates, academics, and parents. But, as summarized in the 
preamble to the final rule and in this analysis, school and SFA 
officials, other public sector officials, and the food industry 
expressed concern about the cost and feasibility of the proposed rule. 
The final rule reflects those concerns by scaling back the quantity of 
food contained in the proposal, especially at breakfast, eliminating 
the proposed rule's limitations on starchy vegetables, phasing in some 
provisions, and extending target dates for meeting the proposed rule's 
sodium standards. Those changes result in a significantly less costly 
final rule.
    One alternative to the final rule is to retain the proposed rule 
without change. The proposed rule closely

[[Page 4134]]

followed IOM's recommendations. IOM developed its recommendations to 
encourage student consumption of foods recommended by the Dietary 
Guidelines in quantities designed to provide necessary nutrients 
without excess calories. The final rule still achieves that goal. 
Students will still be presented with choices from the food groups and 
vegetable subgroups recommended by the Dietary Guidelines. In that way, 
the final rule, like the proposed rule, will help children recognize 
and choose foods consistent with a healthy diet.
    The most significant differences between the proposed and final 
rules are in the breakfast meal patterns, and those differences are 
largely a matter of timing. The final rule allows schools more time to 
phase-in key IOM recommendations on fruit and grains at breakfast. Once 
fully implemented, the most important difference between the final and 
proposed rule breakfast meal patterns is the elimination of a separate 
meat/meat alternate requirement. That change preserves current rules 
that allow the substitution of meat for grains at breakfast. It also 
responds to general public comments on cost, and on the need to 
preserve schools' flexibility to serve breakfast outside of a 
traditional cafeteria setting.
    Even with these changes, and with the less significant changes to 
the proposed lunch standards, the final rule remains consistent with 
Dietary Guidelines recommendations. The added flexibility and reduced 
cost of the final rule relative to the proposed rule should increase 
schools' ability to comply with the new meal patterns. The final rule's 
less costly breakfast patterns will make it easier for schools to 
maintain or expand current breakfast programs, and may encourage other 
schools to adopt a breakfast program.
    Table 16 estimates the cost of the proposed rule using updated 
projections of student participation and food inflation. The estimated 
5-year cost of the final rule, from Table 6, is $2.9 billion lower than 
this updated cost estimate of the proposed rule.
    [Note that the estimate in Table 16 is about 10 percent lower than 
our cost estimate for the same set of provisions in the proposed rule 
Regulatory Impact Analysis. The difference between the two estimates 
reflects lower food inflation for most food groups since preparation of 
the proposed rule estimate.\65\ As we discuss in Section III.B.1., 
lower recent inflation also reduces our projection of future price 
increases.]
---------------------------------------------------------------------------

    \65\ Table 16 also includes the effect of reclassifying tomatoes 
as a ``red/orange'' vegetable. Tomatoes were included in the 
``other'' vegetable subgroup in our proposed rule cost estimate. 
Moving tomatoes from the ``other'' vegetable subgroup to the new 
``red/orange'' subgroup is one of the changes contained in the 2010 
Dietary Guidelines. Moving tomatoes back to the ``other'' vegetable 
subgroup for school meals was not considered by USDA and is 
therefore not reflected in this alternative to the final rule.
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2. Adopt Final Rule Lunch Meal Pattern Changes; Retain Proposed Rule 
Breakfast Patterns

    From Alternative 1, above, we estimate that cost of the final rule 
is $2.9 billion lower than the cost of the proposed rule. Table 17 
makes clear that most of this reduction is due to the final rule's 
breakfast meal pattern changes. Adopting all of the lunch provisions 
contained in the final rule,\66\ but retaining the proposed rule's 
breakfast provisions, would cost an estimated $5.9 billion over 5 
years, or $2.7 billion more than final rule. This alternative responds 
less effectively than the final rule to comments received by USDA from 
SFA and school administrators who expressed concerns about the cost of 
the proposed rule.
---------------------------------------------------------------------------

    \66\ For purposes of this estimate, reclassifying tomatoes as a 
``red/orange'' vegetable is considered to be one of the final rule's 
lunch meal pattern changes.
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3. Adopt Final Rule Breakfast Meal Pattern Changes; Retain Proposed 
Rule Lunch Patterns

    This alternative highlights the relatively small difference in the 
cost of the proposed and final rule lunch provisions. The two key 
differences in the proposed and final rule lunch provisions have 
largely offsetting costs. The combined effect of moving tomatoes to the 
new red/orange vegetable subgroup, and the associated changes in the 
minimum cup requirements of the red/orange, starchy, and ``other'' 
vegetable subgroups have the effect of increasing the cost of the final 
rule relative to the proposed rule. The final rule's reduction in the 
lunch meal pattern's grain ounce equivalent requirement reduces the 
cost of the final rule relative to the proposed rule.
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V. Accounting Statement

    As required by OMB Circular A-4 (available at http://www.whitehouse.gov/sites/default/files/omb/assets/regulatory_matters_pdf/a-4.pdf), we have prepared an accounting statement showing the 
annualized estimates of benefits, costs and transfers associated with 
the provisions of this final rule.
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VI. 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.

[[Page 4136]]

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 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.
U.S. Department of Agriculture and U.S. Department of Health and 
Human Services. (USDA/HHS 2010) Dietary Guidelines for Americans, 
2010. 7th Edition. http://www.cnpp.usda.gov/Publications/DietaryGuidelines/2010/PolicyDoc/PolicyDoc.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.

VII. 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.
    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 5 columns 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 
Table A-3. 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, and shows our projection of total costs through FY 
2016.
    Table A-3 resembles Table A-2. It takes the weighted average prices 
per meal by meal component 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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    Final Regulatory Flexibility Analysis
    Final 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. In addition, Section 201 of the Healthy, Hunger-Free Kids Act 
of 2010 (HHFKA) requires the Secretary to issue regulations to update 
the school meal patterns based on recommendations of the Institute of 
Medicine. This final rule amends Sections 210 and 220 of the 
regulations that govern the National School Lunch Program (NSLP) and 
the School Breakfast Program (SBP). USDA published a proposed rule in 
the Federal Register on January 13, 2011 (76 FR 2494) that closely 
followed IOM's recommendations. USDA received and processed more than 
130,000 comments on the proposed rule. USDA considered those comments 
in developing a final rule that continues to advance the goals of the 
IOM while responding to concerns about the cost of implementation, and 
the need for flexibility in administration at the school district 
level.
Objectives of, and Legal Basis for, the Final 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 and 2010 
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 Final 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.\67\ 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.\68\
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    \67\ FNS 742 School Food Verification Survey, School Year 2009-
2010. This number is approximate, not all SFAs are required to 
submit the 742 form.
    \68\ 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.
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    <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).\69\ 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.
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    \69\ 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.\70\ Of the 2,460 firms 
categorized as ``food service contractors'' under NAICS code 72231, 96 
percent employ fewer than 500 workers.\71\
---------------------------------------------------------------------------

    \70\ 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.
    \71\ Ibid.
---------------------------------------------------------------------------

Response to Public Comments on Initial Regulatory Flexibility Analysis
    USDA received comments on the Initial Regulatory Flexibility 
Analysis from school, SFA, and State education officials, advocacy 
organizations, and foodservice industry representatives. Most of those 
individuals were concerned with the cost of complying with the rule. 
Commenters pointed to the particular cost challenges faced by small 
schools with few foodservice employees, limited space for storage and 
on-site meal preparation, and the inability to purchase food in 
quantities necessary to get the lowest prices. These comments are 
discussed in the relevant sections below.
Projected Reporting, Recordkeeping and Other Compliance Requirements
    The analysis below covers only those organizations impacted by the 
final rule that were determined to be small entities.

School Food Authorities (SFA)/Schools

Increased Cost To Produce School Meals
    USDA estimates that the proposed rule will raise the average cost 
of producing and serving school lunches by 5 cents on initial 
implementation. Phased implementation of the rule's breakfast meal 
patterns results in no first year costs. By FY 2015, when all of the 
lunch and breakfast food group requirements are in place, the cost per 
lunch will be about 10 cents higher than our baseline estimate; the 
cost per breakfast will be about 27 cents higher. Across all SFAs we 
estimate that the total cost of compliance will be $3.2 billion over 
five years. Although about 99 percent of SFAs enroll fewer than

[[Page 4141]]

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.
    With exceptions for individual schools, USDA expects that the cost 
of the rule will increase with meals served and will not be 
proportionately higher for small schools. Small schools that face 
average labor and food costs, and have menus typical of the average 
school are expected to incur per-meal costs comparable to larger 
schools. We expect that those costs will equal our estimated cost per 
meal multiplied by the number of meals served.
    The most important factors that separate schools with higher than 
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 should 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.
    Some commenters note that small districts pay more for food than 
larger districts that benefit from volume discounts. Others suggest 
that prices for whole grain and reduced fat products are higher in 
small, rural communities. USDA's School Lunch and Breakfast Cost Study 
II (SLBCS) finds that the per-meal costs of producing school breakfasts 
are higher in small districts than in large districts.\72\ But the 
study finds no statistically significant difference by SFA size in the 
cost of producing a school lunch.
---------------------------------------------------------------------------

    \72\ U.S. Department of Agriculture, Food and Nutrition Service, 
Office of Research, Nutrition and Analysis, School Lunch and 
Breakfast Cost Study-II, Final Report, by Susan Bartlett, et al., 
2008, pp. 3-2--3-5. http://www.fns.usda.gov/ora/MENU/Published/CNP/FILES/MealCostStudy.pdf.
---------------------------------------------------------------------------

    SLBCS finds that at least some of the higher cost incurred by small 
districts to produce a school breakfast is due to the fixed costs of 
operating a small program. The study does not, however, address how 
much might be due to higher food prices. USDA's School Food Purchase 
Study (SFPS) found that large districts do tend to pay less than small 
districts for food on a per-unit basis.\73\ But the study also found 
that ``the relationship [between small SFA size and higher food costs] 
is weak for districts of less than 5,000 enrollment.'' Although SFPS 
found that small districts tend to pay more for food, it also found 
that small districts charge students the least for full-price school 
meals.\74\
---------------------------------------------------------------------------

    \73\ The study could not conclude whether the price advantage of 
large districts was a result of ``an economy of scale based on the 
volume of food they are purchasing, the use of highly centralized 
procurement systems or formal procurement and pricing methods 
typically found in large school districts, the accessibility to more 
vendors leading to a more competitive marketplace, or a combination 
of factors.'' U.S. Department of Agriculture, Food and Nutrition 
Service, Office of Analysis and Evaluation, School Food Purchase 
Study Final Report (Executive Summary), by Lynn Daft, et al., 1998 
http://www.fns.usda.gov/ora/MENU/Published/CNP/FILES/SFPS-Execsum.pdf.
    \74\ School Food Purchase Study Final Report, pp. III-14--III-
15.
---------------------------------------------------------------------------

Increased Cost of Administering School Meals Programs
    USDA expects that SFAs will incur additional administrative costs 
for staff training during implementation of the new standards. The 
final rule replaces the Coordinated Review Effort (CRE) and School 
Meals Initiative (SMI) with a combined State Agency administrative 
review. The new review will be held once every 3 years, instead of once 
every 5 years. The increased frequency of the combined review will 
increase administrative costs for many SFAs. However, 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.
    USDA estimates that the proposed rule will result in an average 8.2 
hour net increase in the annual reporting and recordkeeping burden for 
each of 7,000 SFAs. That increase appears to fall below the threshold 
for recognition as a significant impact for RFA purposes.\75\
---------------------------------------------------------------------------

    \75\ 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.
    Data from the SLBCS confirm that small SFAs spend more, on average, 
to produce a school breakfast than do large SFAs.\76\ SLBCS found that 
higher per-meal breakfast costs in small SFAs are due, in part, to the 
fixed costs of operating a breakfast program. For example, schools that 
choose to offer breakfast must pay staff to serve meals, no matter how 
few students participate. As schools serve more breakfasts, SLBCS data 
show that the cost per unit decreases; this is the case for both small 
and large SFAs.\77\
---------------------------------------------------------------------------

    \76\ School Food Purchase Study Final Report, p. VII-1.
    \77\ Ibid.
---------------------------------------------------------------------------

    If the fixed costs of starting up a breakfast program were the only 
factors responsible for higher average breakfast costs in small school 
districts, then we would not expect the final rule to have a 
disproportionate effect on those districts. The main costs of the rule 
are variable rather than fixed: Schools must offer a greater variety 
and additional quantities of certain foods to each student. Some 
commenters point out, though, that the rule might require additional 
investment in food preparation and storage equipment, and that this 
imposes a special burden on smaller districts. But these costs are 
variable too; larger districts will spend more than smaller districts 
on similar types of equipment to handle a greater volume of food. Of 
course, kitchen equipment is not variable in the same sense as food. 
Small districts may have to purchase new equipment as a result of the 
final rule that they may not use

[[Page 4142]]

as intensively as districts that prepare more meals. In that way, 
expenditures on kitchen equipment may add more to per-meal costs in 
small districts than in bigger districts.
USDA Response to Public Comments on the Cost of the Proposed Rule
    USDA considered all comments submitted by the public on the 
proposed rule. Comments from school district and school officials, 
foodservice industry professionals, and others concerned with the cost 
of the proposed rule were instrumental in guiding USDA's development of 
a less costly final rule. The modifications offer schools short term 
savings, relative to the proposed rule, by phasing in the rule's 
breakfast fruit and grain requirements. As a result of elimination of 
the proposed rule's breakfast meat requirement, the ongoing cost of the 
final rule after full implementation is also reduced. Eliminating the 
proposed limit on the amount of starchy vegetables that schools may 
offer at lunch has little effect on the cost of the final rule relative 
to the proposed rule. Significant savings are realized through a 
reduction in the lunch pattern's grain requirement.
    USDA estimated that the proposed rule would increase the costs of 
preparing and serving school meals by $6.8 billion over 5 years. With 
the changes discussed above, the 5-year cost of the rule is reduced to 
$3.2 billion.\78\ The reduction in cost will benefit SFAs of any size 
that might have had difficulty implementing the proposed rule 
standards.
---------------------------------------------------------------------------

    \78\ Part of the reduction in cost is due to a recent reduction 
in food inflation. See the Regulatory Impact Analysis for additional 
detail.
---------------------------------------------------------------------------

Options for Addressing Increased Costs
    Although changes to the final rule significantly reduce the 
implementation costs faced by SFAs, the rule still requires a 
substantial investment by schools and school districts to improve the 
nutritional quality of school meals.
    The Healthy, Hunger-Free Kids Act of 2010 (HHFKA), which is one of 
the 2 statutory directives behind this rulemaking, also contains 
provisions intended to reform school meal financing. USDA estimates 
that those provisions will increase SFA revenues enough to fully offset 
the cost of this rule.
    HHFKA's meal pattern and revenue raising provisions are linked 
directly in the performance-based increase in Federal financing for 
school lunches. Schools and SFAs that successfully implement the final 
rule standards will receive an additional 6 cent reimbursement for each 
lunch served. The Congressional Budget Office estimates that an 
additional 6 cents per lunch would raise $1.5 billion for SFAs in the 
first 5 years after implementation of the rule.\79\
---------------------------------------------------------------------------

    \79\ See Table 2 in CBO's April 20, 2010 cost estimate for 
HHFKA. http://www.cbo.gov/ftpdocs/114xx/doc11451/HealthyHungerFreeKidsAct.pdf. The total increase in budget authority 
through FY 2016 includes $100 million for administrative expenses 
($50 million in each of the first 2 years).
---------------------------------------------------------------------------

    HHFKA contains two additional provisions to ensure that Federal 
reimbursements are used as intended to provide quality meals to program 
participants. The first requires SFAs to gradually raise the per-meal 
revenue generated from paid lunches to an amount equal to the Federal 
reimbursement for free lunches. That revenue could come from student 
payments or State or local sources. The second requires that the 
revenue generated from non-program foods as a percent of food costs 
match the revenue to food cost ratio of program meals. USDA estimates 
that these two provisions will raise a combined $7.5 billion in the 5 
years following their July 1, 2011 effective date.\80\
---------------------------------------------------------------------------

    \80\ See the interim final rule and regulatory impact analysis 
for ``School Food Service Account Revenue Amendments Related to the 
Healthy, Hunger-Free Kids Act of 2010'', Federal Register, Vol. 76, 
No. 117, pp. 35301-35318.
---------------------------------------------------------------------------

    SFAs will benefit differently from HHFKA's revenue provisions. SFAs 
with relatively few students who pay full price for program meals stand 
to gain little from HHFKA's paid lunch provision. Similarly, schools 
that sell few [agrave] la carte items will realize little revenue from 
an increase in [agrave] la carte prices. At the same time, schools that 
serve mostly free and reduced-price students and sell little [agrave] 
la carte can rely on significant Federal funding for each SFA dollar 
spent to purchase and prepare school foods.
    The experience of some schools suggests that substantial progress 
toward implementation of the rule can even be achieved with existing 
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 
1,600 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 final 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. Like 
other service businesses, schools may need to consider changes to their 
operations to increase efficiency and meet the requirements of the 
rule. HUSSC schools have demonstrated an ability to operate cost-
effective school meals programs that meet many of the final 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 should not be 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. Phased implementation of the final rule's breakfast 
provisions, which will reduce up-front costs of implementation, may be 
particularly valuable to small SFAs.

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. 
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'',\81\ we do not attempt to quantify the economic effect of the 
proposed rule on FSMCs.
---------------------------------------------------------------------------

    \81\ SBA, ``A Guide for Government Agencies'', p. 20.
---------------------------------------------------------------------------

Federal Rules That May Duplicate, Overlap or Conflict With the Final 
Rule
    FNS is unaware of any such Federal rules or laws.
Significant Alternatives
    One alternative to the final rule is to retain the proposed rule 
without change. The proposed rule closely

[[Page 4143]]

followed IOM's recommendations. IOM developed its recommendations to 
encourage student consumption of foods recommended by the Dietary 
Guidelines in quantities designed to provide necessary nutrients 
without excess calories. The final rule still achieves that goal. 
Students will still be presented with choices from the food groups and 
vegetable subgroups recommended by the Dietary Guidelines. In that way, 
the final rule, like the proposed rule, will help children recognize 
and choose foods consistent with a healthy diet.
    The most significant differences between the proposed and final 
rules are in the breakfast meal patterns, and those differences are 
largely a matter of timing. The final rule allows schools more time to 
phase-in key IOM recommendations on fruit and grains at breakfast. Once 
fully implemented, the most important difference between the final and 
proposed rule breakfast meal patterns is the elimination of a separate 
meat/meat alternate requirement. That change preserves current rules 
that allow the substitution of meat for grains at breakfast. It also 
responds to general public comments on cost, and on the need to 
preserve schools' flexibility to serve breakfast outside of a 
traditional cafeteria setting.
    Even with these changes, and with the less significant changes to 
the proposed lunch standards, the final rule remains consistent with 
Dietary Guidelines recommendations. The added flexibility and reduced 
cost of the final rule relative to the proposed rule should increase 
schools' ability to comply with the new meal patterns. The final rule's 
less costly breakfast patterns will make it easier for schools to 
maintain or expand current breakfast programs, and may encourage other 
schools to adopt a breakfast program.
    Implementing the proposed rule, without changes, would increase the 
cost to SFAs of implementing the new meal patterns, relative to the 
final rule, by an estimated $2.9 billion over 5 years.

List of Subjects

7 CFR Part 210

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

7 CFR Part 220

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

    Accordingly, 7 CFR parts 210 and 220 are amended as follows:

PART 210--NATIONAL SCHOOL LUNCH PROGRAM

0
1. The authority citation for 7 CFR part 210 continues to read as 
follows:

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


0
2. In Sec.  210.2:
0
a. Revise the definition of Food component;
0
b. Revise the definition of Food item;
0
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'';
0
d. Remove the definition of Menu item;
0
e. Remove the definition of Nutrient Standard Menu Planning/Assisted 
Nutrient Standard Menu Planning;
0
f. Revise the definition of School week; and
0
g. Add definitions of Tofu and 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 to be offered to students 
in grades K-5 are: Meats/meat alternates, grains, vegetables, fruits, 
and fluid milk. Meals offered to preschoolers must consist of four food 
components: 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.
* * * * *
    Tofu means a soybean-derived food, made by a process in which 
soybeans are soaked, ground, mixed with water, heated, filtered, 
coagulated, and formed into cakes. Basic ingredients are whole 
soybeans, one or more food-grade coagulants (typically a salt or an 
acid), and water. Tofu products must conform to FNS guidance to count 
toward the meats/meat alternates component.
    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.
* * * * *

0
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 Federal 
reimbursement

[[Page 4144]]

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). The price of a reimbursable lunch does not 
change if the student does not take a food item or requests smaller 
portions.
    (3) 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.
    (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) The meal 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:

----------------------------------------------------------------------------------------------------------------
                                                                             Lunch meal pattern
                       Meal pattern                        -----------------------------------------------------
                                                               Grades K-5        Grades 6-8        Grades 9-12
----------------------------------------------------------------------------------------------------------------
                                                                         Amount of food \a\ per week
                                                                              (minimum per day)
----------------------------------------------------------------------------------------------------------------
Fruits (cups) \b\.........................................    2\1/2\ (\1/2\)    2\1/2\ (\1/2\)             5 (1)
Vegetables (cups) \b\.....................................    3\3/4\ (\3/4\)    3\3/4\ (\3/4\)             5 (1)
    Dark green \c\........................................             \1/2\             \1/2\             \1/2\
    Red/Orange \c\........................................             \3/4\             \3/4\            1\1/4\
    Beans and peas (legumes) \c\..........................             \1/2\             \1/2\             \1/2\
    Starchy \c\...........................................             \1/2\             \1/2\             \1/2\
Other c d.................................................             \1/2\             \1/2\             \3/4\
Additional Veg to Reach Total \e\.........................             1 \e\             1 \e\        1\1/2\ \e\
Grains (oz eq) \f\........................................           8-9 (1)          8-10 (1)         10-12 (2)
Meats/Meat Alternates (oz eq).............................          8-10 (1)          9-10 (1)         10-12 (2)
Fluid milk (cups) \g\.....................................             5 (1)             5 (1)             5 (1)
----------------------------------------------------------------------------------------------------------------
                    Other Specifications: Daily Amount Based on the Average for a 5-Day Week
----------------------------------------------------------------------------------------------------------------
Min-max calories (kcal) \h\...............................           550-650           600-700           750-850
Saturated fat (% of total calories) \h\...................              < 10              < 10              < 10
Sodium (mg) h i...........................................            <= 640            <= 710            <= 740
                                                           -----------------------------------------------------
Trans fat \h\.............................................   Nutrition label or manufacturer specifications must
                                                                indicate zero grams of trans fat per serving.
----------------------------------------------------------------------------------------------------------------
\a\ Food items included in each group and subgroup and amount equivalents. Minimum creditable serving is \1/8\
  cup.
\b\ One quarter-cup of dried fruit counts as \1/2\ cup of fruit; 1 cup of leafy greens counts as \1/2\ cup of
  vegetables. No more than half of the fruit or vegetable offerings may be in the form of juice. All juice must
  be 100% full-strength.
\c\ Larger amounts of these vegetables may be served.
\d\ This category consists of ``Other vegetables'' as defined in Sec.   210.10(c)(2)(iii)(E). For the purposes
  of the NSLP, the ``Other vegetables'' requirement may be met with any additional amounts from the dark green,
  red/orange, and beans/peas (legumes) vegetable subgroups as defined in Sec.   210.10(c)(2)(iii).
\e\ Any vegetable subgroup may be offered to meet the total weekly vegetable requirement.
\f\ Beginning July 1, 2012 (SY 2012-2013), at least half of grains offered must be whole grain-rich. Beginning
  July 1, 2014 (SY 2014-15), all grains must be whole grain-rich.
\g\ Beginning July 1, 2012 (SY 2012-2013), all fluid milk must be low-fat (1 percent or less, unflavored) or fat-
  free (unflavored or flavored).
\h\ Discretionary sources of calories (solid fats and added sugars) may be added to the meal pattern if within
  the specifications for calories, saturated fat, trans fat, and sodium. Foods of minimal nutritional value and
  fluid milk with fat content greater than 1 percent are not allowed.
\i\ Final sodium targets must be met no later than July 1, 2022 (SY 2022-2023). The first intermediate target
  must be met no later than SY 2014-2015 and the second intermediate target must be met no later than SY 2017-
  2018. See required intermediate specifications in Sec.   210.10(f)(3).

    (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.

[[Page 4145]]

    (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 to students in grades K-8 and a minimum of two 
ounces is offered daily to students in grades 9-12, 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 of the 
meats/meat alternates component or the grains component but may not 
meet 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 FNS 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.
    (D) Tofu and soy products. Commercial tofu and soy products may be 
used to meet all or part of the meats/meat alternates component in 
accordance with FNS guidance. Noncommercial and/or non-standardized 
tofu and soy products are not creditable.
    (E) Beans and Peas (legumes). Cooked dry beans and peas (legumes) 
may be used to meet all or part of the meats/meat alternates component. 
Beans and peas (legumes) are identified in this section and include 
foods such as black beans, garbanzo beans, lentils, kidney beans, 
mature lima beans, navy beans, pinto beans, and split peas.
    (F) Other Meat Alternates. Other meat alternates, such as cheese 
and eggs, may be used to meet all or part of the meats/meat alternates 
component in accordance with FNS guidance.
    (ii) Fruits component. Schools must offer fruits daily as part of 
the lunch menu. Fruits that are fresh; frozen without added 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 dry 
beans and peas (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 and tomato paste 
and puree are credited based on calculated volume of the whole food 
equivalency. Pasteurized, full-strength vegetable juice may be used to 
meet no more than one-half of the vegetables component. Cooked dry 
beans or peas (legumes) may be counted as either a vegetable or as a 
meat alternate but not as both in the same meal. Vegetable offerings at 
lunch over the course of the week must include the following vegetable 
subgroups, as defined in this section in the quantities specified in 
the meal pattern in paragraph (c) of this section:
    (A) Dark green vegetables. This subgroup includes vegetables such 
as bok choy, broccoli, collard greens, dark green leafy lettuce, kale, 
mesclun, mustard greens, romaine lettuce, spinach, turnip greens, and 
watercress;
    (B) Red-orange vegetables. This subgroup includes vegetables such 
as acorn squash, butternut squash, carrots, pumpkin, tomatoes, tomato 
juice, and sweet potatoes;
    (C) Beans and peas (legumes). This subgroup includes vegetables 
such as black beans, black-eyed peas (mature, dry), garbanzo beans 
(chickpeas), kidney beans, lentils, navy beans pinto beans, soy beans, 
split peas, and white beans;
    (D) Starchy vegetables. This subgroup includes vegetables such as 
black-eyed peas (not dry), corn, cassava, green bananas, green peas, 
green lima beans, plantains, taro, water chestnuts, and white potatoes; 
and
    (E) Other vegetables. This subgroup includes all other fresh, 
frozen, and canned vegetables, cooked or raw, such as artichokes, 
asparagus, avocado, bean sprouts, beets, Brussels sprouts, cabbage, 
cauliflower, celery, cucumbers, eggplant, green beans, green peppers, 
iceberg lettuce, mushrooms, okra, onions, parsnips, turnips, wax beans, 
and zucchini.
    (iv) Grains component. (A) Enriched and whole grains. All grains 
must be made with enriched and whole grain meal or flour, in accordance 
with the most recent grains FNS guidance. Whole grain-rich products 
must contain at least 51 percent whole grains and the remaining grains 
in the product must be enriched.
    (B) Daily and weekly servings. The grains component is based on 
minimum daily servings plus total servings over a five-day school week. 
Beginning July 1, 2012 (SY 2012-2013), half of the grains offered 
during the school week must meet the whole grain-rich criteria 
specified in FNS guidance. Beginning July 1, 2014 (SY 2014-2015), all 
grains must meet the whole grain-rich criteria specified in FNS 
guidance. The whole grain-rich criteria provided in FNS guidance 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 (1/5) 
for each additional day. When schools operate less than 5 days per 
week, they may decrease the weekly quantity by approximately 20 percent 
(1/5) for each day less than five. The servings for biscuits, rolls, 
muffins, and other grain/bread varieties are specified in FNS guidance.
    (C) Desserts. Schools may count up to two grain-based desserts per 
week towards meeting the grains requirement as specified in FNS 
guidance.
    (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

[[Page 4146]]

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 offerings given students' 
selections and may need to modify recipes and other specifications to 
make sure that 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 (at least two different options) of fluid 
milk. All 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. Low fat or fat-
free lactose-free and reduced-lactose 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.
    (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.

------------------------------------------------------------------------
                  Nutrient                        Per cup  (8 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 must be allowed to decline 
two items at lunch, except that the students must select at least \1/2\ 
cup of either the fruit or vegetable component. Senior high schools (as 
defined by the State educational agency) must participate in offer 
versus serve. Schools below the senior high level may participate in 
offer versus serve at the discretion of the school food authority.
    (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) \ab\...........................           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. Schools lunches offered to each age/grade group must 
meet, on average over the school week, the levels of sodium specified 
in the following table within the established deadlines:

[[Page 4147]]



----------------------------------------------------------------------------------------------------------------
             National school lunch program                         Sodium reduction: Timeline & amount
----------------------------------------------------------------------------------------------------------------
                                     Baseline: Average
                                      current sodium      Target 1:  July    Target 2:  July     Final Target:
         Age/grade group            levels in meals as   1, 2014  (SY 2014- 1, 2017  (SY 2017- July 1, 2022  (SY
                                     offered \1\ (mg)       2015)  (mg)        2018)  (mg)      2022-2023)  (mg)
----------------------------------------------------------------------------------------------------------------
K-5..............................  1,377 (elementary)..           <= 1,230             <= 935             <= 640
6-8..............................  1,520 (middle)......           <= 1,360           <= 1,035             <= 710
9-12.............................  1,588 (high)........           <= 1,420           <= 1,080             <= 740
----------------------------------------------------------------------------------------------------------------
\1\ SNDA-III.

    (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 trainings, 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 weighted 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 one week of 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 
specifications 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 requirements.
    (2) Trans fat. State agencies must review product labels or 
manufacturer specifications to 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 
weighted 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 within the review period. 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 in the nutrient analysis all foods offered as 
part of the reimbursable meals during one week within the review 
period. 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 conduct the nutrient analysis and 
calculate weighting as indicated by FNS guidance.
    (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 one-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 dietary specifications.
    (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, sodium 
and trans fat, 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

[[Page 4148]]

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.
    (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 non-
disabled 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'' means 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 FNS 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. 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 served 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.

[[Page 4149]]

    (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.

                                             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 breast milk 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 
Federal 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:

 Minimum Nutrient and Calorie Levels for Lunches--Traditional Food-Based
                       Menu Planning Approach \1\
------------------------------------------------------------------------
                                                 Group II preschool ages
                                                           3-4
        Nutrients and energy allowances         ------------------------
                                                   School week averages
------------------------------------------------------------------------
Energy allowances (calories)...................                      517
Total fat (as a percentage of actual total food                      (2)
 energy).......................................
Saturated fat (as a percentage of actual total                       (2)
 food energy)..................................
RDA for protein (g)............................                        7
RDA for calcium (mg)...........................                      267
RDA for iron (mg)..............................                      3.3
RDA for Vitamin A (RE).........................                      150

[[Page 4150]]

 
RDA for Vitamin C (mg).........................                       14
------------------------------------------------------------------------
\1\ Current regulations only specify minimum nutrient and calorie levels
  for lunches for children ages 3-4.
\2\ The 1995 Dietary Guidelines recommend that after 2 years of age ``*
  * * children should gradually adopt a diet that, by about 5 years of
  age, contains no more than 30 percent of calories from fat.''

    (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:

  Traditional Food-Based Menu Planning Approach--Meal Plan for Lunches
------------------------------------------------------------------------
                                   Group I ages 1-2    Group II ages 3-4
                                       preschool           preschool
------------------------------------------------------------------------
 Food components and food items             Minimum quantities
------------------------------------------------------------------------
Fluid milk (as a beverage)......  6 fluid ounces....  6 fluid ounces.\1\
Meat or Meat Alternates:
    Lean meat, poultry, or fish.  1 ounce...........  1 \1/2\ ounces.
    Alternate Protein Products    1 ounce...........  1 \1/2\ ounces.
     \2\.
Cheese..........................  1 ounce...........  1 \1/2\ ounces.
Large egg.......................  \1/2\.............  \3/4\.
Cooked dry beans and peas.......  \1/4\ cup.........  \3/8\ cup.
Peanut butter or other nut or     2 tablespoons.....  3 tablespoons.
 seed butters.
Yogurt, plain or flavored,        4 ounces or \1/2\   6 ounces or \3/4\
 unsweetened or sweetened.         cup.                cup.
The following may be used to
 meet no more than 50% of the
 requirement and must be used in
 combination with any of the
 above:
    Peanuts, soy nuts, tree       \1/2\ ounce = 50%.  \3/4\ ounce = 50%.
     nuts, or seeds, as listed
     in program guidance, or an
     equivalent quantity of any
     combination of the above
     meat/meat alternate (1
     ounce of nuts/seeds = 1
     ounce of cooked lean meat,
     poultry or fish).
Vegetable or Fruit: 2 or more     \1/2\ cup.........  \1/2\ cup.
 servings of vegetables, fruits
 or both.
Grains/Breads (servings per       5 servings per      8 servings per
 week): Must be enriched or        week \3\--minimum   week \3\--minimum
 whole grain. A serving is a       of \1/2\ serving    of 1 serving per
 slice of bread or an equivalent   per day.            day.
 serving of biscuits, rolls,
 etc., or \1/2\ cup of cooked
 rice, macaroni, noodles, other
 pasta products or cereal grains.
------------------------------------------------------------------------
\1\ Beginning July 1, 2012 (SY 2012-2013), fluid milk for children Ages
  3-4 must be fat-free (unflavored or flavored) or low-fat (unflavored
  only).
\2\ Must meet the requirements in Appendix A of this part.
\3\ For the purposes of this table, a week equals five days.

    (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 FNS 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/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

[[Page 4151]]

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 (1/5th) 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, and other grain/bread varieties are specified in FNS guidance.
    (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 vegetables 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 fluid milk in a variety of fat contents, flavored or 
unflavored. Schools may also offer this age group lactose-free or 
reduced-lactose fluid milk. For students in age group 3-4, schools must 
offer fat-free milk (unflavored or flavored) and low-fat milk 
(unflavored only). Schools may also offer this age group lactose-free 
and reduced-lactose milk that is fat-free or low-fat. Students in age 
group 3-4 must be offered a variety (at least two different options) of 
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) through (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 part, 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. Sec.  210.18(m) and 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 served 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 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

[[Page 4152]]

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.

                        Lunch Pattern for Infants
------------------------------------------------------------------------
   Birth through 3 months      4 through 7 months    8 through 11 months
------------------------------------------------------------------------
4-6 fluid ounces of formula   4-8 fluid ounces of   6-8 fluid ounces of
 \1\ or breastmilk 2 3.        formula \1\ or        formula \1\ or
                               breastmilk 2 3; and   breastmilk 2 3; and
                              0-3 tablespoons of    2-4 tablespoons of
                               infant cereal 1 4;    infant cereal \1\;
                               and.                  and/or
                              0-3 tablespoons of    1-4 tablespoons of
                               fruits or             meat, fish,
                               vegetables or both    poultry, egg yolk,
                               \4\.                  cooked dry beans or
                                                     peas; or
                                                    \1/2\-2 ounces of
                                                     cheese, or
                                                    1-4 ounces (volume)
                                                     of cottage cheese;
                                                     or
                                                    1-4 ounces (weight)
                                                     of cheese food or
                                                     cheese spread; and
                                                    1-4 tablespoons of
                                                     fruits or
                                                     vegetables or both.
------------------------------------------------------------------------
\1\ Infant formula and dry infant cereal must be iron-fortified.
\2\ Breastmilk or formula, or portions of both, may be served; however,
  it is recommended that breastmilk be served from birth through 11
  months.
\3\ 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.
\4\ A serving of this component is required only when the infant is
  developmentally ready to accept it.



0
4. In Sec.  210.18:
0
a. Revise paragraphs (a), (b)(2)(ii), (c), (g)(2), (i)(3)(ii), and (m); 
and
0
b. Remove paragraph (h)(2) and redesignate paragraph (h)(3) through (6) 
as paragraphs (h)(2) through (5), respectively.
0
c. Amend paragraph (i)(4)(iv) by removing the words ``the School 
Breakfast Program (7 CFR part 220) and/or''.
    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) * * *
    (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. Sec.  220.8 and 220.23 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 National 
School Lunch Program and/or School Breakfast Program 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, 2013 and 
ends on June 30, 2014. 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.
* * * * *
    (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 and Sec.  220.23 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 and Sec.  220.23, 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.  Sec.  220.8 and 
220.23, 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 five 
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. Sec.  220.8 and 220.23, as 
applicable, of this chapter have been offered.
    (iv) Conduct a weighted 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. Sec.  220.8 and 220.23 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

[[Page 4153]]

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 1 violations. A State agency is required 
to take fiscal action for all violations 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) through (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 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 grain-rich 
foods 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.
* * * * *

0
5. In Sec.  210.19:
0
a. Remove paragraph (a)(1) and redesignate paragraphs (a)(2) through 
(6) as paragraph (a)(1) through (5); and
0
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]

0
6. In Sec.  210.21, amend paragraph (e) by removing the phrase 
``paragraph (m)(1)(ii) of this section'' and adding in its place the 
phrase ``Sec.  210.10(d)(4) of this chapter.''

0
7. 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 (www.fns.usda.gov/cnd).
0
8. In Appendix B to part 210:
0
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;''
0
b. Amend paragraph (b)(2) by removing the words ``as indicated under 
paragraph (b)(3) of this section'' from the last sentence.
0
c. Remove paragraph (b)(3) and redesignate paragraph (b)(4) as 
paragraph (b)(3); and
0
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 Technical Assistance Branch, Child Nutrition Division, 
FNS, USDA, 3101 Park Center Drive, Room 632, Alexandria, Virginia 
22302. * * *
* * * * *

PART 220--SCHOOL BREAKFAST PROGRAM

0
9. The authority citation for 7 CFR part 220 continues to read as 
follows:

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

0
10. In Sec.  220.2:
0
a. Amend the definition of Breakfast by removing the phrase 
``nutritional requirements set out in Sec.  220.8'' and adding in its 
place the phrase ``meal

[[Page 4154]]

requirements set out in Sec. Sec.  220.8 and 220.23'',
0
b. Amend the definition of Menu item by removing the citation ``Sec.  
220.8'' and adding in its place the citation ``Sec.  220.23'',
0
c. Remove the definition of Milk;
0
d. Amend the definition of Nutrient Standard Menu Planning/Assisted 
Nutrient Standard Menu Planning by removing the citations ``Sec.  
220.8(e)(5)'' and ``Sec.  220.8(f)'' and adding in their place the 
citations ``Sec.  220.23(e)(5)'' and ``Sec.  220.23(f)'', respectively;
0
e. Revise the definition of School week; and
0
f. Add definitions for Tofu and Whole grains.
    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 and Sec.  220.23. 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.
* * * * *
    Tofu means a soybean-derived food, made by a process in which 
soybeans are soaked, ground, mixed with water, heated, filtered, 
coagulated, and formed into cakes. Basic ingredients are whole 
soybeans, one or more food-grade coagulants (typically a salt or an 
acid), and water. Tofu products must conform to FNS guidance to count 
toward the meats/meat alternates component.
    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.
* * * * *

0
11. Revise Sec.  220.8 to read as follows:


Sec.  220.8  Meal requirements for breakfasts.

    (a) General requirements. This section contains the meal 
requirements applicable to school breakfasts for students in grades K 
to 12. With the exception of the milk component, the meal requirements 
must be implemented beginning July 1, 2013 or as otherwise specified. 
School food authorities wishing to adopt the provisions of this section 
prior to the required date of compliance may do so with the approval of 
the State agency. In 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.
    (1) General nutrition requirements. 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 (o) of this section.
    (2) Unit pricing. Schools must price each meal as a unit. The price 
of a reimbursable lunch does not change if the student does not take a 
food item or requests smaller portions. 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 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 breakfasts. School breakfasts for 
children ages 5 and older must reflect food and nutrition requirements 
specified by the Secretary. Compliance with these requirements, once 
fully implemented as specified in paragraphs (c), (d), (e), (f), (h), 
(i), and (j) of this section, 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 as specified in paragraph (f) of this 
section; and
    (iii) Meal 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 as 
specified in paragraph (f) of this section;
    (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:

----------------------------------------------------------------------------------------------------------------
                                                                           Breakfast meal pattern
                                                           -----------------------------------------------------
                                                               Grades K-5        Grades 6-8        Grades 9-12
----------------------------------------------------------------------------------------------------------------
                       Meal pattern                                       Amount of food a per week
                                                                              (Minimum per day)
----------------------------------------------------------------------------------------------------------------
Fruits (cups) b c.........................................             5 (1)             5 (1)             5 (1)
Vegetables (cups) b c.....................................                 0                 0                 0
    Dark green............................................                 0                 0                 0
    Red/Orange............................................                 0                 0                 0

[[Page 4155]]

 
    Beans and peas (legumes)..............................                 0                 0                 0
    Starchy...............................................                 0                 0                 0
    Other.................................................                 0                 0                 0
Grains (oz eq) d..........................................          7-10 (1)          8-10 (1)          9-10 (1)
Meats/Meat Alternates (oz eq) e...........................                 0                 0                 0
Fluid milk f (cups).......................................             5 (1)             5 (1)             5 (1)
----------------------------------------------------------------------------------------------------------------
                    Other Specifications: Daily Amount Based on the Average for a 5-Day Week
----------------------------------------------------------------------------------------------------------------
Min-max calories (kcal) g h...............................           350-500           400-550           450-600
Saturated fat (% of total calories) h.....................              < 10              < 10              < 10
Sodium (mg) h i...........................................            <= 430            <= 470            <= 500
                                                           -----------------------------------------------------
Trans fat h j.............................................   Nutrition label or manufacturer specifications must
                                                                indicate zero grams of trans fat per serving.
----------------------------------------------------------------------------------------------------------------
 a Food items included in each group and subgroup and amount equivalents. Minimum creditable serving is \1/8\
  cup.
 b One quarter cup of dried fruit counts as \1/2\ cup of fruit; 1 cup of leafy greens counts as \1/2\ cup of
  vegetables. No more than half of the fruit or vegetable offerings may be in the form of juice. All juice must
  be 100% full-strength.
 c Beginning July 1, 2014 (SY 2014-2015) schools must offer 1 cup of fruit daily and 5 cups of fruit weekly.
  Vegetables may be substituted for fruits, but the first two cups per week of any such substitution must be
  from the dark green, red/orange, beans and peas (legumes) or ``Other vegetables'' subgroups, as defined in
  210.10(c)(2)(iii).
 d Beginning July 1, 2013 (SY 2013-2014), at least half of grains offered must be whole-grain-rich and schools
  must meet the grain ranges. Schools may substitute 1 oz. eq. of meat/meat alternate for 1 oz. eq. of grains
  after the minimum daily grains requirement is met. By July 1, 2014 (SY 2014-15) all grains must be whole-grain-
  rich.
 e There is no meat/meat alternate requirement.
 f Beginning July 1, 2012 (SY 2012-2013) all fluid milk must be low-fat (1 percent milk fat or less, unflavored)
  or fat-free (unflavored or flavored).
 g Beginning July 1, 2013 (SY 2013-2014), the average daily calories for a 5-day school week must be within the
  range (at least the minimum and no more than the maximum values).
 h Discretionary sources of calories (solid fats and added sugars) may be added to the meal pattern if within
  the specifications for calories, saturated fat, trans fat, and sodium. Foods of minimal nutritional value and
  fluid milk with fat content greater than 1 percent milk fat are not allowed.
 i Final sodium targets must be met no later than July 1, 2022 (SY 2022-2023). The first intermediate targets
  must be met no later than July 1, 2014 (SY 2014-2015) and the second intermediate targets must be met no later
  than July 1, 2017 (SY 2017-2018).
 j Trans fat restrictions must be implemented on July 1, 2013 (SY 2013-14).

    (1) Age/grade groups. Effective July 1, 2013 (SY 2013-2014), 
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.
    (i) Meats/meat alternates component. Schools are not required to 
offer meats/meat alternates as part of the breakfast menu. Effective 
July 1, 2013 (SY 2013-2014), schools may substitute meats/meat 
alternates for grains, after the daily grains requirement is met, to 
meet the weekly grains requirement. One ounce equivalent of meat/meat 
alternate is equivalent to one ounce equivalent of grains.
    (A) Enriched macaroni. Enriched macaroni with fortified protein as 
defined in Appendix A to Part 210 may be used to meet part of the 
meats/meat alternates requirement when used as specified in Appendix A 
to Part 210. An enriched macaroni product with fortified protein as 
defined in Appendix A to Part 210 may be used to meet part of the 
meats/meat alternates component or the grains component but may not 
meet both food components in the same lunch.
    (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 Part 220. Nuts or seeds may be used to meet no more than one-half 
(50 percent) of the meats/meat alternates component with another meats/
meat alternates to meet the full requirement.
    (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.
    (D) Tofu and soy products. Commercial tofu and soy products may be 
used to meet all or part of the meats/meat alternates component in 
accordance with FNS guidance. Noncommercial and/or non-standardized 
tofu and products are not creditable.
    (E) Beans and peas (legumes). Cooked dry beans and peas (legumes) 
may be used to meet all or part of the meats/meat alternates component. 
Beans and peas (legumes) are identified in this section and include 
foods such as black beans, garbanzo beans, lentils, kidney beans, 
mature lima beans, navy beans, pinto beans, and split peas.
    (F) Other meat alternates. Other meat alternates, such as cheese 
and eggs, may be used to meet all or part of the meats/meat alternates 
component in accordance with FNS guidance.
    (ii) Fruits component. Effective July 1, 2014 (SY 2014-2015), 
schools must

[[Page 4156]]

offer daily the fruit quantities specified in the breakfast meal 
pattern in paragraph (c) of this section. Fruits that are fresh; frozen 
without added sugar; canned in light syrup, water or fruit juice; or 
dried may be offered to meet the fruits component requirements. 
Vegetables may be offered in place of all or part of the required 
fruits at breakfast, but the first two cups per week of any such 
substitution must be from the dark green, red/orange, beans and peas 
(legumes) or other vegetable subgroups, as defined in this section. 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 fruit component.
    (iii) Vegetables component. Schools are not required to offer 
vegetables as part of the breakfast menu but may, effective July 1, 
2014 (SY 2014-2015), offer vegetables to meet part or all of the fruit 
requirement. Fresh, frozen, or canned vegetables and dry beans and peas 
(legumes) may be offered to meet the fruit 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 and tomato paste and 
tomato puree are credited based on calculated volume of the whole food 
equivalency. Pasteurized, full-strength vegetable juice may be used to 
meet no more than one-half of the vegetable component. Cooked dry beans 
or peas (legumes) may be counted as either a vegetable or as a meat 
alternate but not as both in the same meal.
    (iv) Grains component. (A) Enriched and whole grains. All grains 
must be made with enriched and whole grain meal or flour, in accordance 
with the most recent FNS guidance on grains. Whole grain-rich products 
must contain at least 50 percent whole grains and the remaining grains 
in the product must be enriched. Effective July 1, 2013 (SY 2013-2014), 
schools may substitute meats/meat alternates for grains, after the 
daily grains requirement is met, to meet the weekly grains requirement. 
One ounce equivalent of meat/meat alternate is equivalent to one ounce 
equivalent of grains.
    (B) Daily and weekly servings. Effective July 1, 2013 (SY 2013-
2014), the grains component is based on minimum daily servings plus 
total servings over a five-day school week. Beginning July 1, 2013 (SY 
2013-2014), half of the grains offered during the school week must meet 
the whole grain-rich criteria specified in FNS guidance. Beginning July 
1, 2014 (SY 2014-2015), all grains must meet the whole grain-rich 
criteria specified in FNS guidance. The whole grain-rich criteria 
provided in FNS guidance 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 breakfast 6 or 7 days per week must increase the weekly grains 
quantity by approximately 20 percent (\1/5\) for each additional day. 
When schools operate less than 5 days per week, they may decrease the 
weekly quantity by approximately 20 percent (\1/5\) for each day less 
than five. The servings for biscuits, rolls, muffins, and other grain/
bread varieties are specified in FNS guidance.
    (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.
    (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 (at least two 
different options) of fluid milk. Effective July 1, 2012 (SY 2012-
2013), all 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. Low fat or fat-
free lactose-free and reduced-lactose fluid milk may also be offered. 
Schools must also comply with other applicable fluid milk requirements 
in Sec.  210.10(d)(1) through (4) of this chapter.
    (e) Offer versus serve. School breakfast must offer daily at least 
the three food components required in the meal pattern in paragraph (c) 
of this section. To exercise the offer versus serve option at 
breakfast, a school food authority or school must offer a minimum of 
four food items daily as part of the required components. Under offer 
versus serve, students are allowed to decline one of the four food 
items, provided that students select at least \1/2\ cup of the fruit 
component for a reimbursable meal beginning July 1, 2014 (SY 2014-
2015). If only three food items are offered at breakfast, school food 
authorities or schools may not exercise the offer versus serve option.
    (f) Dietary specifications. (1) Calories. Effective July 1, 2013 
(SY 2013-2014), 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--Effective SY 2013-2014
----------------------------------------------------------------------------------------------------------------
                                                             Grades K-5         Grades 6-8        Grades 9-12
----------------------------------------------------------------------------------------------------------------
Minimum-maximum calories (kcal) a b....................           350-500            400-550            450-600
----------------------------------------------------------------------------------------------------------------
\a\ The average daily amount for a 5-day school must fall within the minimum and maximum levels.
\b\ Discretionary sources of calories (solid fats and added sugars) may be added to the meal pattern if within
  the specifications for calories, saturated fat, trans fat, and sodium.

    (2) Saturated fat. Effective July 1, 2012 (SY 2012-2013), 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 within the specified deadlines:

[[Page 4157]]



                                       Sodium Reduction: Timeline & Amount
----------------------------------------------------------------------------------------------------------------
                                       Baseline: average     Target 1: July    Target 2: July     Final Target:
          Age/grade group            current sodium levels  1, 2014 SY 2014-  1, 2017 SY 2017-   July 1, 2022 SY
                                      as offered \1\ (mg)       2015 (mg)         2018 (mg)      2022-2023 (mg)
----------------------------------------------------------------------------------------------------------------
                                            School Breakfast Program
----------------------------------------------------------------------------------------------------------------
K-5................................  573 (elementary).....            <= 540            <= 485            <= 430
6-8................................  629 (middle).........            <= 600            <= 535            <= 470
9-12...............................  686 (high)...........            <= 640            <= 570            <= 500
----------------------------------------------------------------------------------------------------------------
\1\ SNDA-III.

    (4) Trans fat. Effective July 1, 2013 (SY 2013-2014), 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 dietary specifications for calorie, 
saturated fat, sodium, and trans fat established in paragraph (f) of 
this section. Compliance assistance may be offered during training, 
onsite visits, and/or administrative reviews.
    (h) State agency responsibilities for monitoring dietary 
specifications. (1) Calories, saturated fat, and sodium. Effective July 
1, 2013 (SY 2013-2014), as part of the administrative review authorized 
under Sec.  210.18 of this chapter, State agencies must conduct a 
weighted 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 one week within the review period. The 
nutrient analysis must be conducted in accordance with the procedures 
established in Sec.  210.10(i) of this chapter. If the results of the 
review indicate that the school breakfasts are not meeting the 
standards for calories, saturated fat, or 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 requirements.
    (2) Trans fat. Effective SY 2013-2014, State agencies conducting an 
administrative review must review product labels of manufacturer 
specifications to 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 weighted 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 within the review 
period. 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. 
Effective SY 2013-2014, compliance with the applicable 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 also apply to this Program.
    (l) Requirements for breakfast period. (1) Timing. Schools must 
offer breakfasts meeting the requirements of this section at or near 
the beginning of the school day.
    (2) [Reserved].
    (m) Exceptions and variations allowed in reimbursable meals. The 
requirements in Sec.  210.10(m) of this chapter also apply to this 
Program.
    (n) Nutrition disclosure. The requirements in Sec.  210.10(n) of 
this chapter also apply to this Program.
    (o) 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 (o)(2) of this section);
    (ii) Provision of the breakfast energy allowances (calories) for 
children in the appropriate levels (see paragraph (o)(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 (o)(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 (o)(1) of this 
section and the appropriate calorie and nutrient levels in paragraph 
(o)(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:

[[Page 4158]]



        Minimum Nutrient and Calorie Levels for School Breakfasts
             [Traditional Food-Based Menu Planning Approach]
------------------------------------------------------------------------
                                          Age 2 \1\         Ages 3-4
------------------------------------------------------------------------
   Nutrients and energy allowances           School week averages
------------------------------------------------------------------------
Energy allowances (calories)........               325               388
Total fat (as a percentage of actual               (2)               (2)
 total food energy).................
Saturated fat (as a percentage of                  (2)               (2)
 actual total food energy)..........
RDA for protein (g).................                 4                 5
RDA for calcium (mg)................               200               200
RDA for iron (mg)...................               2.5               2.5
RDA for Vitamin A (RE)..............               100               113
RDA for Vitamin C (mg)..............                10                11
------------------------------------------------------------------------
\1\ Nutrient and calorie levels start at age 2 because the ``Dietary
  Guidelines for Americans'' apply to ages 2 and older.
\2\ The 1995 ``Dietary Guidelines for Americans'' recommend that after 2
  years of age ``children should gradually adopt a diet that, by about 5
  years of age, contains no more than 30 percent of calories from fat.''

    (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.
    (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:

 Traditional Food-Based Menu Planning Approach Meal Plan for Breakfasts
------------------------------------------------------------------------
                                       Ages 1-2            Ages 3-4
------------------------------------------------------------------------
 Food components and food items            School week averages
------------------------------------------------------------------------
Fluid milk (as a beverage, on     4 fluid ounces....  6 fluid ounces\1\.
 cereal, or both).
Juice/Fruit/Vegetable: Fruit and/ \1/4\ cup.........  \1/2\ cup.
 or vegetable; or full-strength
 fruit or vegetable juice.
------------------------------------------------------------------------
 Select one serving from each of the following components, two from one
                component, or an equivalent combination:
------------------------------------------------------------------------
Grains/Breads:
Whole grain or enriched bread...  \1/2\ slice.......  \1/2\ slice.
    Whole grain or enriched       \1/2\ serving.....  \1/2\ serving.
     bread product, such as
     biscuit, roll, muffin.
    Whole grain, enriched or      \1/4\ cup or \1/3\  \1/3\ cup or \1/2\
     fortified cereal.             ounce.              ounce.
Meat or Meat Alternates:
    Meat/poultry or fish........  \1/2\ ounce.......  \1/2\ ounce.
    Alternate protein products    \1/2\ ounce.......  \1/2\ ounce
     \2\.
    Cheese......................  \1/2\ ounce.......  \1/2\ ounce.
    Large egg...................  \1/2\.............  \1/2\
    Peanut butter or other nut    1 tablespoon......  1 tablespoon.
     or seed butters.
    Cooked dry beans and peas...  2 tablespoons.....  2 tablespoons.
    Nuts and/or seeds (as listed  \1/2\ ounce.......  \1/2\ ounce.
     in program guidance) \3\.
    Yogurt, plain or flavored,    2 ounces or \1/4\   2 ounces or \1/4\
     unsweetened or sweetened.     cup.                cup.
------------------------------------------------------------------------
\1\ Fluild milk for children ages 3-4 must be fat-free (unflavored or
  flavored) or low-fat (unflavored only)
\2\ Must meet the requirements in appendix A of this part.
\3\ No more than 1 ounce of nuts and/or seeds may be served in any one
  breakfast.

    (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 fluid milk in 
a variety of fat contents, flavored or unflavored. Schools may also 
offer this age group lactose-free or reduced-lactose fluid milk. For 
students in age group 3-4, schools must offer fat-free milk (unflavored 
or flavored) and low-fat milk (unflavored only). Schools may also offer 
this age group lactose-free and reduced-lactose milk that is fat-free 
or low-fat. Students in age group 3-4 must be offered a variety (at 
least two different options) of 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

[[Page 4159]]

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 
(o)(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 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 (o)(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 (o)(11)(iv) 
of this section, are:

                                          Breakfast Pattern for Infants
----------------------------------------------------------------------------------------------------------------
       Birth through 3 months                  4 through 7 months                    8 through 11 months
----------------------------------------------------------------------------------------------------------------
4-6 fluid ounces of formula \1\ or    4-8 fluid ounces of formula\1\ or     6-8 fluid ounces of formula \1\ or
 breastmilk 2 3                        breastmilk;2 3 and                    breastmilk;2 3 and
                                      0-3 tablespoons of infant cereal 1 4  2-4 tablespoons of infant cereal;\1\
                                                                             and
                                                                            1-4 tablespoons of fruit or
                                                                             vegetable or both.
----------------------------------------------------------------------------------------------------------------
\1\ Infant formula and dry infant cereal must be iron-fortified.
\2\ Breastmilk or formula, or portions of both, may be served; however, it is recommended that breastmilk be
  served from birth through 11 months.
\3\ 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.
\4\ A serving of this component is required only when the infant is developmentally ready to accept it.



0
12. Paragraph 220.13(f) is amended as follows:
0
a. Amend paragraph (f)(2) by removing the words ``Sec.  210.30(d)'' 
wherever it appears and adding in its place the words ``Sec.  210.29''; 
and
0
b. Revise paragraph (f)(3) to read as follows:


Sec.  220.13  Special responsibilities of State agencies.

    (f) * * *
    (3) For the purposes of compliance with the meal requirements in 
Sec.  220.8 and Sec.  220.23, the State agency must follow the 
provisions specified in Sec.  210.18(g)(2) of this chapter, as 
applicable.
* * * * *

0
13. Add Sec.  220.23 to read as follows:


Sec.  220.23  Nutrition standards and menu planning approaches for 
breakfasts.

    (a) What are the nutrition standards for breakfasts for children 
age 2 and

[[Page 4160]]

over? This section contains the requirements applicable to school 
breakfasts for children age 2 and over in school years 2012-2013 
through 2013-14. All of the requirements of this section will be 
superseded by the requirements in Sec.  220.8 beginning July 1, 2013 
(school year 2013-14), with the exceptions noted in paragraph (n) of 
this section. School food authorities must ensure that participating 
schools provide nutritious and well-balanced breakfasts. For children 
age 2 and over, breakfasts, 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:
    (1) Provision of one-fourth of the Recommended Dietary Allowances 
(RDA) for protein, calcium, iron, vitamin A and vitamin C in the 
appropriate levels (see paragraphs (b), (c), (e)(1), or (h) of this 
section);
    (2) Provision of the breakfast energy allowances (calories) for 
children in the appropriate levels (see paragraphs (b), (c), (e)(1), or 
(h) of this section);
    (3) These applicable recommendations of the 1995 Dietary Guidelines 
for Americans:
    (i) Eat a variety of foods;
    (ii) Limit total fat to 30 percent of total calories;
    (iii) Limit saturated fat to less than 10 percent of total 
calories;
    (iv) Choose a diet low in cholesterol;
    (v) Choose a diet with plenty of grain products, vegetables, and 
fruits; and
    (vi) Choose a diet moderate in salt and sodium.
    (4) These measures of compliance with the applicable 
recommendations of the 1995 Dietary Guidelines for Americans:
    (i) Limit the percent of calories from total fat to 30 percent of 
the actual number of calories offered;
    (ii) Limit the percent of calories from saturated fat to less than 
10 percent of the actual number of calories offered;
    (iii) Reduce sodium and cholesterol levels; and
    (iv) Increase the level of dietary fiber.
    (5) School food authorities have several ways to plan menus. The 
minimum levels of nutrients and calories that breakfasts must offer 
depends on the menu planning approach used and the age/grades served. 
The menu planning approaches are:
    (i) Nutrient standard menu planning (see paragraphs (b) and (e) of 
this section);
    (ii) Assisted nutrient standard menu planning (see paragraphs (b) 
and (f) of this section);
    (iii) Traditional food-based menu planning (see paragraphs (c) and 
(g)(1) of this section);
    (iv) Enhanced food-based menu planning (see paragraphs (c) and 
(g)(2) of this section); or
    (v) Alternate menu planning as provided for in paragraph (h) of 
this section.
    (6) 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, food items or menu items 
every day. In addition, these records must show how the breakfasts 
contribute to the nutrition standards in paragraph (a) of this section 
and the appropriate calorie and nutrient levels (see paragraphs (c), 
(d), or (h) of this section, depending on the menu planning approach 
used) over the school week. If applicable, schools or school food 
authorities must maintain nutritional analysis records to demonstrate 
that breakfasts, when averaged over each school week, meet:
    (i) The nutrition standards provided in paragraph (a) of this 
section; and
    (ii) The nutrient and calorie levels for children for each age or 
grade group in accordance with paragraphs (b) and (e)(1) of this 
section or developed under paragraph (h) of this section.
    (b) What are the levels for nutrients and calories for breakfasts 
planned under the nutrient standard or assisted nutrient standard menu 
planning approaches? (1) The required levels are:

  Minimum Nutrient and Calorie Levels for School Breakfasts Nutrient Standard Meal Planning Approaches (School
                                                 Week Averages)
----------------------------------------------------------------------------------------------------------------
                                                                       Minimum requirements          Optional
                 Nutrients and energy allowances                 -----------------------------------------------
                                                                     Preschool      Grades K-12     Grades 7-12
----------------------------------------------------------------------------------------------------------------
Calories (kcal).................................................             388             554             618
Total fat (as % of total kcals).................................             (1)          (1, 2)             (2)
Saturated fat (as % of total kcals).............................             (1)          (1, 3)             (3)
RDA for protein (g).............................................               5              10              12
RDA for calcium (mg)............................................             200             257             300
RDA for iron (mg)...............................................             2.5               3             3.4
RDA for Vitamin A (RE)..........................................             113             197             225
RDA for Vitamin C (mg)..........................................              11              13             14
----------------------------------------------------------------------------------------------------------------
\1\ The Dietary Guidelines recommend that after 2 years of age `` * * * children should gradually adopt a diet
  that, by about 5 years of age, contains no more than 30 percent of calories from fat.''
\2\ Not to exceed 30 percent over a school week.
\3\ Less than 10 percent over a school week.

    (2) Optional levels are:

  Optional Minimum Nutrient and Calorie Levels for School Breakfasts Nutrient Standard Meal Planning Approaches
                                             (School Week Averages)
----------------------------------------------------------------------------------------------------------------
                                                                                                    Ages 14 and
         Nutrients and energy allowances             Ages 3-6        Ages 7-10      Ages 11-13         above
----------------------------------------------------------------------------------------------------------------
Calories (kcal).................................             419             500             588             625
Total fat (as % of total kcals).................          (1, 2)             (2)             (2)             (2)
Saturated fat (as % of total kcals).............          (1, 3)             (3)             (3)             (3)
RDA for protein (g).............................             5.5               7           11.25            12.5
RDA for calcium (mg)............................             200             200             300             300

[[Page 4161]]

 
RDA for iron (mg)...............................             2.5             2.5             3.4             3.4
RDA for Vitamin A (RE)..........................             119             175             225             225
RDA for Vitamin C (mg)..........................           11.00           11.25            12.5           14.4
----------------------------------------------------------------------------------------------------------------
\1\ The Dietary Guidelines recommend that after 2 years of age `` * * * children should gradually adopt a diet
  that, by about 5 years of age, contains no more than 30 percent of calories from fat.''
\2\ Not to exceed 30 percent over a school week.
\3\ Less than 10 percent over a school week.

    (3) Schools may also develop a set of nutrient and calorie levels 
for a school week. These levels are customized for the age groups of 
the children in the particular school.
    (c) What are the nutrient and calorie levels for breakfasts planned 
under the food-based menu planning approaches?--(1) Traditional 
approach. For the traditional food-based menu planning approach, the 
required levels are:

 Minimum Nutrient and Calorie Levels for School Breakfasts Traditional Food-Based Menu Planning Approach (School
                                                 Week Averages)
----------------------------------------------------------------------------------------------------------------
                 Nutrients and energy allowances                       Age 2       Ages 3, 4, 5     Grades K-12
----------------------------------------------------------------------------------------------------------------
Calories (kcal).................................................             325             388             554
Total fat (as % of total kcals).................................             (1)             (1)          (1, 2)
Saturated fat (as % of total kcals).............................             (1)             (1)          (1, 3)
RDA for protein (g).............................................               4               5              10
RDA for calcium (mg)............................................             200             200             257
RDA for iron (mg)...............................................             2.5             2.5               3
RDA for Vitamin A (RE)..........................................             100             113             197
RDA for Vitamin C (mg)..........................................              10              11             13
----------------------------------------------------------------------------------------------------------------
\1\ The Dietary Guidelines recommend that after 2 years of age `` * * * children should gradually adopt a diet
  that, by about 5 years of age, contains no more than 30 percent of calories from fat.''
\2\ Not to exceed 30 percent over a school week.
\3\ Less than 10 percent over a school week.

    (2) Enhanced approach. For the enhanced food-based menu planning 
approach, the required levels are:

  Minimum Nutrient and Calorie Levels for School Breakfasts Enhanced Food-Based Menu Planning Approach (School
                                                 Week Averages)
----------------------------------------------------------------------------------------------------------------
                                                                           Required for             Option for
                 Nutrients and energy allowances                 -----------------------------------------------
                                                                     Preschool      Grades K-12     Grades 7-12
----------------------------------------------------------------------------------------------------------------
Calories (kcal).................................................             388             554             618
Total fat (as % of total kcals).................................             (1)          (1, 2)             (2)
Saturated fat (as % of total kcals).............................             (1)          (1, 3)             (3)
RDA for protein (g).............................................               5              10              12
RDA for calcium (mg)............................................             200             257             300
RDA for iron (mg)...............................................             2.5               3             3.4
RDA for Vitamin A (RE)..........................................             113             197             225
RDA for Vitamin C (mg)..........................................              11              13             14
----------------------------------------------------------------------------------------------------------------
\1\ The Dietary Guidelines recommend that after 2 years of age `` * * * children should gradually adopt a diet
  that, by about 5 years of age, contains no more than 30 percent of calories from fat.''
\2\ Not to exceed 30 percent over a school week.
\3\ Less than 10 percent over a school week.

    (d) Exceptions and variations allowed in reimbursable breakfasts. 
(1) Exceptions for disability reasons. Schools must make substitutions 
in breakfasts for students who are considered to have a disability 
under 7 CFR part 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 substitutions 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 
breakfast because of medical or other

[[Page 4162]]

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 statement must be signed by a recognized medical 
authority.
    (i) 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) meet the nutritional standards 
established in paragraph (i)(3) of this section. Expenses incurred in 
providing substitutions for fluid milk that exceed program 
reimbursements must be paid by the school food authority.
    (ii) Requisites for 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 non-
disabled students.
    (3) Variations for ethnic, religious, or economic reasons. Schools 
should consider ethnic and religious preferences when planning and 
preparing breakfasts. Variations on an experimental or continuing basis 
in the food components for the food-based menu planning approaches in 
paragraph (g) of this section may be allowed by FNS. Any variations 
must be nutritionally sound 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 breakfasts for reimbursement that do not meet the requirements in 
this section.
    (e) What are the requirements for the nutrient standard menu 
planning approach? (1) Nutrient levels--(i) Adjusting nutrient levels 
for young children. Schools with children who are age 2 must at least 
meet the nutrition standards in paragraph (a) of this section and the 
preschool nutrient and calorie levels in paragraph (b)(1) of this 
section over a school week. Schools may also use the preschool nutrient 
and calorie levels in paragraph (b)(2) of this section or may calculate 
nutrient and calorie levels for two year olds. FNS has a method for 
calculating these levels in menu planning guidance materials.
    (ii) Minimum levels for nutrients. Breakfasts must at least offer 
the nutrient and calorie levels for the required grade groups in the 
table in paragraph (b)(1) of this section. Schools may also offer 
breakfasts meeting the nutrient and calorie levels for the age groups 
in paragraph (b)(2) of this section. If only one grade or age group is 
outside the established levels, schools may follow the levels for the 
majority of the children. Schools may also customize the nutrient and 
calorie levels for the children they serve. FNS has a method for 
calculating these levels in guidance materials for menu planning.
    (2) Reimbursable breakfasts--(i) Contents of a reimbursable 
breakfast. A reimbursable breakfast must include at least three menu 
items. All menu items or foods offered in a reimbursable breakfast 
contribute to the nutrition standards in paragraph (a) of this section 
and to the levels of nutrients and calories that must be met in 
paragraphs (c) or (e)(1) of this section. Unless offered as part of a 
menu item in a reimbursable breakfast, foods of minimal nutritional 
value (see appendix B to part 220) are not included in the nutrient 
analysis. Reimbursable breakfasts planned under the nutrient standard 
menu planning approach must meet the nutrition standards in paragraph 
(a) of this section and the appropriate nutrient and calorie levels in 
paragraph (b) or (e)(1) of this section.
    (ii) Offer versus serve. Schools must offer at least three menu 
items. At their option, school food authorities may allow students to 
select only two menu items and to decline a maximum of one menu item. 
The price of a reimbursable breakfast does not change if the student 
does not take a menu item or requests smaller portions.
    (3) Doing the analysis. Schools using nutrient standard menu 
planning must conduct the analysis on all menu items and foods offered 
in a reimbursable breakfast. The analysis is conducted over a school 
week within the review period. Unless offered as part of a menu item in 
a reimbursable breakfast, foods of minimal nutritional value (see 
appendix B to part 220) are not included in the nutrient analysis.
    (4) Software elements--(i) The Child Nutrition Database. The 
nutrient analysis is based on the 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 do all functions after the 
basic data is entered. The required functions include weighted averages 
and the optional combined analysis of the lunch and breakfast programs.
    (5) Nutrient analysis procedures--(i) Weighted averages. Schools 
must include all menu items and foods offered in reimbursable 
breakfasts in the nutrient analysis. Menu items and foods are included 
based on the portion sizes and projected serving amounts. They are also 
weighted based on their proportionate contribution to the breakfasts 
offered. This means that menu items or foods more frequently offered 
are weighted more heavily than those not offered as frequently. Schools 
calculate weighting as indicated by FNS guidance and by the guidance 
provided by the software.
    (ii) Analyzed nutrients. The analysis includes all menu items and 
foods offered over a school week. The analysis must determine the 
levels of: Calories, protein, vitamin A, vitamin C, iron, calcium, 
total fat, saturated fat, sodium, cholesterol and dietary fiber.
    (6) Comparing the results of the nutrient analysis. Once the 
procedures in paragraph (i)(5) of this section are completed, schools 
must compare the results of the analysis to the appropriate nutrient 
and calorie levels, by age/grade groups, in paragraph (b) of this 
section or those developed under paragraph (e)(1) of this section. This 
comparison determines the school week's average. Schools must also make 
comparisons to the nutrition standards in paragraph (a) of this section 
to determine how well they are meeting the nutrition standards over a 
school week.
    (7) Adjustments to the menus. Once schools know the results of the 
nutrient analysis based on the procedures in paragraphs (e)(5) and (6) 
of this section, they must adjust future menu cycles to reflect 
production and how often the menu items and foods are offered. Schools 
may need to reanalyze menus when the students' selections and,

[[Page 4163]]

consequently, production levels change. Schools may need to change the 
menu items and foods offered given the students' selections and may 
need to modify the recipes and other specifications to make sure that 
the nutrition standards in paragraph (a) and either paragraph (b) or 
(e)(1) of this section are met.
    (8) Standardized recipes. If a school follows the nutrient standard 
menu planning approach, it 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. Any standardized recipes developed 
by USDA/FNS are in the Child Nutrition Database. If a school has its 
own recipes, they must be standardized and analyzed to determine the 
levels of calories, nutrients, and dietary components listed in 
paragraph (e)(5)(ii) of this section. Schools must add any local 
recipes to their local database as outlined in FNS guidance.
    (9) Processed foods. The Child Nutrition Database includes a number 
of processed foods. Schools may use purchased processed foods and menu 
items that are not in the Child Nutrition Database. Schools or the 
State agency must add any locally purchased processed foods and menu 
items to their local database as outlined in FNS guidance. Schools or 
State agencies must obtain the levels of calories, nutrients, and 
dietary components listed in paragraph (e)(5)(ii) of this section.
    (10) Menu substitutions. Schools may need to substitute foods or 
menu items in a menu that was already analyzed. If the substitution(s) 
occurs more than two weeks before the planned menu is served, the 
school must reanalyze the revised menu. If the substitution(s) occurs 
two weeks or less before the planned menu is served, the school does 
not need to do a reanalysis. However, schools should always try to 
substitute similar foods.
    (11) Meeting the nutrition standards. The school's analysis shows 
whether their menus are meeting the nutrition standards in paragraph 
(a) of this section and the appropriate levels of nutrients and 
calories in paragraph (b) of this section or customized levels 
developed under paragraph (e)(1) of this section. If the analysis shows 
that the menu(s) are not meeting these standards, the school needs to 
take action to make sure that the breakfasts meet the nutrition 
standards and the calorie, nutrient, and dietary component levels. 
Actions may include technical assistance and training and may be taken 
by the State agency, the school food authority or by the school as 
needed.
    (12) Other Child Nutrition Programs and nutrient standard analysis 
menu planning. School food authorities that operate the Summer Food 
Service Program (part 225 of this chapter) and/or the Child and Adult 
Care Food Program (part 226 of this chapter) may, with State agency 
approval, prepare breakfasts for these programs using the nutrient 
standard menu planning approach for children age two and over. FNS has 
program guidance on the levels of nutrient and calories for adult 
breakfasts offered under the Child and Adult Care Food Program.
    (f) What are the requirements for the assisted nutrient standard 
menu planning approach?--(1) Definition of assisted nutrient standard 
menu planning. Some school food authorities may not be able to do all 
of the procedures necessary for nutrient standard menu planning. The 
assisted nutrient standard menu planning approach provides schools with 
menu cycles developed and analyzed by other sources. These sources 
include the State agency, other schools, consultants, or food service 
management companies.
    (2) Elements of assisted nutrient standard menu planning. School 
food authorities using menu cycles developed under assisted nutrient 
standard menu planning must follow the procedures in paragraphs (e)(1) 
through (10) of this section. The menu cycles must also incorporate 
local food preferences and accommodate local food service operations. 
The menu cycles must meet the nutrition standards in paragraph (a) of 
this section and meet the applicable nutrient and calorie levels for 
nutrient standard menu planning in paragraphs (b) or (e)(1) of this 
section. The supplier of the assisted nutrient standard menu planning 
approach must also develop and provide recipes, food product 
specifications, and preparation techniques. All of these components 
support the nutrient analysis results of the menu cycles used by the 
receiving school food authorities.
    (3) State agency approval. Prior to its use, the State agency must 
approve the initial menu cycle, recipes and other specifications of the 
assisted nutrient standard menu planning approach. The State agency 
needs to make sure all the steps required for nutrient analysis were 
followed. School food authorities may also ask the State agency for 
assistance with implementation of their assisted nutrient standard menu 
planning approach.
    (4) Required adjustments. After the initial service of the menu 
cycle developed under the assisted nutrient standard menu planning 
approach, the nutrient analysis must be reassessed and appropriate 
adjustments made as discussed in paragraph (e)(7) of this section.
    (5) Final responsibility for meeting the nutrition standards. The 
school food authority using the assisted nutrient standard menu 
planning approach retains final responsibility for meeting the 
nutrition standards in paragraph (a) of this section and the applicable 
calorie and nutrient levels in paragraphs (b) or (e)(1) of this 
section.
    (6) Adjustments to the menus. If the nutrient analysis shows that 
the breakfasts offered are not meeting the nutrition standards in 
paragraph (a) of this section and the applicable calorie and nutrient 
levels in paragraphs (b) or (e)(1) of this section, the State agency, 
school food authority or school must take action to make sure the 
breakfasts offered meet these requirements. Actions needed include 
technical assistance and training.
    (7) Other Child Nutrition Programs and assisted nutrient analysis 
menu planning. School food authorities that operate the Summer Food 
Service Program (part 225 of this chapter) and/or the Child and Adult 
Care Food Program (part 226 of this chapter) may, with State agency 
approval, prepare breakfasts for these programs using the assisted 
nutrient standard menu planning approach for children age two and over. 
FNS has guidance on the levels of nutrients and calories for adult 
breakfasts offered under the Child and Adult Care Food Program.
    (g) What are the requirements for the food-based menu planning 
approaches?--(1) Food items. There are two menu planning approaches 
based on meal patterns, not nutrient analysis. These approaches are the 
traditional food-based menu planning approach and the enhanced food-
based menu planning approach. Schools using one of these approaches 
must offer these food items in at least the portions required for 
various age/grade groups:
    (i) A serving of fluid milk as a beverage or on cereal or used 
partly for both;
    (ii) A serving of fruit or vegetable or both, or full-strength 
fruit or vegetable juice; and
    (iii) Two servings from one of the following components or one 
serving from each component:
    (A) Grains/breads; and/or
    (B) Meat/meat alternate.
    (2) Quantities for the traditional food-based menu planning 
approach. At a minimum, schools must offer the food items in the 
quantities specified for the

[[Page 4164]]

appropriate age/grade group in the following table:

                   Traditional Food-Based Menu Planning Approach--Meal Pattern for Breakfasts
----------------------------------------------------------------------------------------------------------------
  Food components and food items              1-2                  Ages 3, 4 and 5             Grades K-12
----------------------------------------------------------------------------------------------------------------
MILK (fluid) (as a beverage, on    4 fluid ounces...........  6 fluid ounces..........  8 fluid ounces.
 cereal, or both).
JUICE/FRUIT/VEGETABLE: Fruit and/  \1/4\ cup................  \1/2\ cup...............  \1/2\ cup.
 or vegetable; or full-strength
 fruit juice or vegetable juice.
SELECT ONE SERVING FROM EACH OF
 THE FOLLOWING COMPONENTS, TWO
 FROM ONE COMPONENT, OR AN
 EQUIVALENT COMBINATION:
 
GRAINS/BREADS:
    Whole-grain or enriched bread  \1/2\ slice..............  \1/2\ slice.............  1 slice.
    Whole-grain or enriched        \1/2\ serving............  \1/2\ serving...........  1 serving.
     biscuit, roll, muffin, etc.
    Whole-grain, enriched or       \1/4\ cup or \1/3\ ounce.  \1/3\ cup or\1/2\ ounce.  \3/4\ cup or 1 ounce.
     fortified cereal.
MEAT OR MEAT ALTERNATIVES:
    Meat/poultry or fish.........  \1/2\ ounce..............  \1/2\...................  1 ounce.
    Alternate protein products\1\  \1/2\ ounce..............  \1/2\ ounce.............  1 ounce.
    Cheese.......................  \1/2\ ounce..............  \1/2\ ounce.............  1 ounce.
    Large egg....................  \1/2\....................  \1/2\...................  \1/2\.
    Peanut butter or other nut or  1 tablespoon.............  1 tablespoon............  2 tablespoons.
     seed butters.
    Cooked dry beans and peas....  2 tablespoons............  2 tablespoons...........  4 tablespoons.
    Nuts and/or seeds (as listed   \1/2\ ounce..............  \1/2\ ounce.............  1 ounce.
     in program guidance) \2\.
    Yogurt, plain or flavored,     2 ounces or \1/4\ cup....  2 ounces or \1/4\ cup...  4 ounces or \1/2\ cup.
     unsweetened or sweetened.
----------------------------------------------------------------------------------------------------------------
\1\ Must meet the requirements in appendix A of this part.
\2\ No more than 1 ounce of nuts and/or seeds may be served in any one breakfast.

    (3) Quantities for the enhanced 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:

                     Enhanced Food-Based Menu Planning Approach-Meal Pattern for Breakfasts
----------------------------------------------------------------------------------------------------------------
                                               Required for                             Option for
 Food components and food items  -------------------------------------------------------------------------------
                                       Ages 1-2            Preschool          Grades K-12         Grades 7-12
----------------------------------------------------------------------------------------------------------------
MILK (fluid) (as a beverage, on   4 fluid ounces....  6 fluid ounces....  8 fluid ounces....  8 fluid ounces.
 cereal, or both).
JUICE/FRUIT/VEGETABLE: Fruit and/ \1/4\ cup.........  \1/2\ cup.........  \1/2\ cup.........  \1/2\ cup.
 or vegetable; or full-strength
 fruit juice or vegetable juice.
SELECT ONE SERVING FROM EACH OF
 THE FOLLOWING COMPONENTS, TWO
 FROM ONE COMPONENT, OR AN
 EQUIVALENT COMBINATION:
 
GRAINS/BREADS:
    Whole-grain or enriched       \1/2\ slice.......  \1/2\ slice.......  1 slice...........  1 slice.
     bread.
    Whole-grain or enriched       \1/2\ serving.....  \1/2\ serving.....  1 serving.........  1 serving.
     biscuit, roll, muffin, etc..
    Whole-grain, enriched or      \1/4\ cup or 1/3    \1/3\ cup or \1/2\  \3/4\ cup or 1      \3/4\ cup or 1
     fortified cereal.             ounce.              ounce.              ounce.              ounce plus an
                                                                                               additional
                                                                                               serving of one of
                                                                                               the Grains/Breads
                                                                                               above.
MEAT OR MEAT ALTERNATIVES:
    Meat/poultry or fish........  \1/2\ ounce.......  \1/2\ ounce.......  1 ounce...........  1 ounce.
    Alternate protein products    \1/2\ ounce.......  \1/2\ ounce.......  1 ounce...........  1 ounce.
     \1\.
    Cheese......................  \1/2\ ounce.......  \1/2\ ounce.......  1 ounce...........  1 ounce.
    Large egg...................  \1/2\.............  \1/2\.............  \1/2\.............  \1/2\.
    Peanut butter or other nut    1 tablespoon......  1 tablespoon......  2 tablespoons.....  2 tablespoons.
     or seed butters.
    Cooked dry beans and peas...  2 tablespoons.....  2 tablespoons.....  4 tablespoons.....  4 tablespoons.
    Nuts and/or seeds (as listed  \1/2\ ounce.......  \1/2\ ounce.......  1 ounce...........  1 ounce.
     in program guidance) \2\.
    Yogurt, plain or flavored,    2 ounces or \1/4\   2 ounces or \1/4\   4 ounces or \1/2\   4 ounces or
     unsweetened or sweetened.     cup.                cup.                cup.               \1/2\ cup.
----------------------------------------------------------------------------------------------------------------
\1\ Must meet the requirements in appendix A of this part.
\2\ No more than 1 ounce of nuts and/or seeds may be served in any one breakfast.


[[Page 4165]]

    (4) Offer versus serve. Each school must offer all four required 
food items listed in paragraph (g)(1) of this section. At the option of 
the school food authority, each school may allow students to refuse one 
food item from any component. The refused food item may be any of the 
four items offered to the student. A student's decision to accept all 
four food items or to decline one of the four food items must not 
affect the charge for a reimbursable breakfast.
    (5) 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.
    (h) What are the requirements for alternate menu planning 
approaches?--(1) Definition. Alternate menu planning approaches are 
those adopted or developed by school food authorities or State agencies 
that differ from the standard approaches established in paragraphs (e) 
through (g) of this section.
    (2) Use and approval of major changes or new alternate approaches. 
Within the guidelines established for developing alternate menu 
planning approaches, school food authorities or State agencies may 
modify one of the established menu planning approaches in paragraphs 
(e) through (g) of this section or may develop their own menu planning 
approach. The alternate menu planning approach must be available in 
writing for review and monitoring purposes. No formal plan is required; 
guidance material, a handbook or protocol is sufficient. As 
appropriate, the material must address how the guidelines in paragraph 
(h)(3) of this section are met. A State agency that develops an 
alternate approach that is exempt from FNS approval under paragraph 
(h)(2)(iii) of this section must notify FNS in writing when 
implementing the alternate approach.
    (i) Approval of local level plans. Any school food authority-
developed menu planning approach must have prior State agency review 
and approval.
    (ii) Approval of State agency plans. Unless exempt under paragraph 
(h)(2)(iii) of this section, any State agency-developed menu planning 
approach must have prior FNS approval.
    (iii) State agency plans not subject to approval. A State agency-
developed menu planning approach does not need FNS approval if:
    (A) Five or more school food authorities in the State use it; and
    (B) The State agency maintains on-going oversight of the operation 
and evaluation of the approach and makes any needed adjustments to its 
policies and procedures to ensure that the appropriate guidelines in 
paragraph (h)(3) of this section are met.
    (3) Elements for major changes or new approaches. Any alternate 
menu planning approach must:
    (i) Offer fluid milk, as provided in paragraph (i) of this section;
    (ii) Include the procedures for offer versus serve if the school 
food authority chooses to implement the offer versus serve option. 
Alternate approaches should follow the offer versus serve procedures in 
paragraphs (e)(2)(ii) and (g)(4) of this section, as appropriate. If 
these requirements are not followed, the approach must indicate:
    (A) The affected age/grade groups;
    (B) The number and type of items (and, if applicable, the 
quantities for the items) that constitute a reimbursable breakfast 
under offer versus serve;
    (C) How such procedures will reduce plate waste; and
    (D) How a reasonable level of calories and nutrients for the 
breakfast as taken is provided.
    (iii) Meet the Recommended Dietary Allowances and breakfast energy 
allowances (nutrient levels) and indicate the age/grade groups served 
and how the nutrient levels are met for those age/grade groups;
    (iv) Follow the requirements for competitive foods in the 
definition of Foods of minimal nutritional value in Sec.  220.2, in 
Sec.  220.12, and in appendix B of this part;
    (v) Follow the requirements for counting food items and products 
towards meeting the meal patterns. These requirements are found in 
paragraphs (g) and (i) of this section, in appendices A through C to 
this part, and in instructions and guidance issued by FNS. This only 
applies if the alternate approach is a food-based menu planning 
approach.
    (vi) Identify a reimbursable breakfast at the point of service.
    (A) To the extent possible, the procedures provided in paragraph 
(e)(2)(i) of this section for nutrient standard or assisted nutrient 
standard menu planning approaches or for food-based menu planning 
approaches provided in paragraph (g) of this section must be followed. 
Any instructions or guidance issued by FNS that further defines the 
elements of a reimbursable breakfast must be followed when using the 
existing regulatory provisions.
    (B) Any alternate approach that deviates from the provisions in 
paragraph (e)(2)(i) or paragraph (g) of this section must indicate what 
constitutes a reimbursable breakfast, including the number and type of 
items (and, if applicable, the quantities for the items) which comprise 
the breakfast, and how a reimbursable breakfast is to be identified at 
the point of service.
    (vii) Explain how the alternate menu planning approach can be 
monitored under the applicable provisions of Sec.  210.18 of this 
chapter, including a description of the records that will be maintained 
to document compliance with the program's administrative and 
nutritional requirements. However, if the procedures under Sec.  210.18 
of this chapter cannot be used to monitor the alternate approach, a 
description of review procedures which will enable the State agency to 
assess compliance with the nutrition standards in paragraphs (a)(1) 
through (4) of this section must be included; and
    (viii) Follow the requirements for weighted analysis and for 
approved software for nutrient standard menu planning as required by 
paragraphs (e)(4) and (5) of this section unless a State agency-
developed approach meets the criteria in paragraph (h)(2)(iii) of this 
section.
    (i) What are the requirements for offering milk?--(1) Serving milk. 
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 (at least two different options) of fluid milk 
daily. All 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. Low fat or fat-
free lactose-free and reduced-lactose fluid milk may also be offered. 
Schools must also comply with other applicable fluid milk requirements 
in Sec.  210.10(d)(1) through (4) of this chapter.
    (2) Inadequate milk supply. If a school cannot get a supply of 
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 breakfasts during 
the emergency period with an alternate form of milk or without milk.
    (ii) If a school is unable to obtain a supply of any type of fluid 
milk on a continuing basis, the State agency may allow schools to 
substitute canned or dry milk in the required quantities in the 
preparation of breakfasts. In Alaska, Hawaii, American Samoa, Guam, 
Puerto Rico, and the Virgin Islands, if a

[[Page 4166]]

sufficient supply of fluid milk cannot be obtained, ``milk'' includes 
reconstituted or recombined milk, or otherwise as allowed by FNS 
through a written exception.
    (3) 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. 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 this paragraph (i)(3).

------------------------------------------------------------------------
                  Nutrient                             Per cup
------------------------------------------------------------------------
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.
------------------------------------------------------------------------

     (j) What are the requirements for the infant breakfast pattern? 
(1) Feeding breakfasts to infants. Breakfasts served to infants ages 
birth through 11 months must meet the requirements described in 
paragraph (j)(4) 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 paragraph 
(d)(1) of this section.
    (2) 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.
    (3) 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.
    (4) 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.
    (i) 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.
    (ii) Four 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.
    (A) Four to 8 fluid ounces of breastmilk or iron-fortified infant 
formula; and
    (B) 0 to 3 tablespoons of iron-fortified dry infant cereal.
    (iii) Eight through 11 months. Breastmilk or iron-fortified formula 
and solid foods of an appropriate texture and consistency are required.
    (A) Six to 8 fluid ounces of breastmilk or iron-fortified infant 
formula; and
    (B) Two to 4 tablespoons of iron-fortified dry infant cereal; and
    (C) One to 4 tablespoons of fruit or vegetable.
    (5) Infant meal pattern table. The minimum amounts of food 
components to serve to infants, as described in paragraph (j)(4) of 
this section, are:

                                          Breakfast Pattern for Infants
----------------------------------------------------------------------------------------------------------------
       Birth through 3 months                  4 through 7 months                    8 through 11 months
----------------------------------------------------------------------------------------------------------------
4-6 fluid ounces of formula[sup1] or  4-8 fluid ounces of formula \1\ or    6-8 fluid ounces of formula \1\ or
 breastmilk \2\ \3\                    breastmilk \2\ \3\; and               breastmilk \2\ \3\; and
                                      0-3 tablespoons of infant cereal \1\  2-4 tablespoons of infant cereal
                                       \4\                                   \1\; and
                                                                            1-4 tablespoons of fruit or
                                                                             vegetable or both
----------------------------------------------------------------------------------------------------------------
\1\ Infant formula and dry infant cereal must be iron-fortified.
\2\ Breastmilk or formula, or portions of both, may be served; however, it is recommended that breastmilk be
  served in place of formula from birth through 11 months.
\3\ 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.
\4\ A serving of this component is required only when the infant is developmentally ready to accept it.

    (k) What about serving additional foods? Schools may offer 
additional foods with breakfasts to children over one year of age.
    (l) Must schools offer choices at breakfast? FNS encourages schools 
to offer children a selection of foods and menu items at breakfast. 
Choices provide variety and encourage consumption. Schools may offer 
choices of reimbursable breakfasts or foods within a reimbursable 
breakfast. When a school offers a selection of more than one type of 
breakfast or when it offers a variety of food components, menu items or 
foods and milk for choice as a reimbursable breakfast, the school must 
offer all children the same selection(s) regardless of whether the 
child is eligible for free or reduced price breakfasts or must pay the 
designated full price. The school may establish different unit prices 
for each type of breakfast offered provided that the benefits made 
available to children eligible for free or reduced price breakfasts are 
not affected.
    (m) What must schools do about nutrition disclosure? To the extent 
that school food authorities identify foods in

[[Page 4167]]

a menu, or on the serving line or through other available means of 
communicating 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 nutrition standards (see 
paragraph (a) of this section) for school breakfasts.
    (n) Implementation timeframes. All the requirements in this section 
will be superseded by the requirements in Sec.  220.8 beginning July 1, 
2013 (SY 2013-2014) with the following exceptions:
    (1) Fruits and vegetables component. The fruits and vegetables 
requirements in paragraphs (g)(1) through (3) will be superseded July 
1, 2014; and
    (2) Sodium specification. The sodium requirements in (a)(3)(vi) 
will be superseded July 1, 2014.

Appendix A to Part 220 [Amended]

0
14. 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''.

Kevin Concannon,
Under Secretary, Food, Nutrition, and Consumer Services.
[FR Doc. 2012-1010 Filed 1-25-12; 8:45 am]
BILLING CODE 3410-30-P