This section of the FEDERAL REGISTER

contains notices to the public of the proposed

issuance of rules and regulations. The

purpose of these notices is to give interested

persons an opportunity to participate in the

rule making prior to the adoption of the final

rules.

Proposed Rules Federal Register

21018 

Vol. 77, No. 68 

Monday, April 9, 2012 

DEPARTMENT OF AGRICULTURE 

Food and Nutrition Service 

7 CFR Part 226 

RIN 0584–AE12 

Child and Adult Care Food Program: 

Amendments Related to the Healthy, 

Hunger-Free Kids Act of 2010 

AGENCY: Food and Nutrition Service, 

USDA. 

ACTION: Proposed rule. 

SUMMARY: This rule proposes to codify 

several provisions of the Healthy, 

Hunger-Free Kids Act of 2010 affecting 

the management of the Child and Adult 

Care Food Program (CACFP). The 

Department is proposing to require 

institutions to submit an initial CACFP 

application to the State agency and, in 

subsequent years, periodically update 

the information in lieu of submitting a 

new application; require sponsoring 

organizations to vary the timing of 

reviews of sponsored facilities; require 

State agencies to develop and provide 

for the use of a standard permanent 

agreement between sponsoring 

organizations and day care centers; 

allow tier II day care homes to collect 

household income information and 

transmit it to the sponsoring 

organization; modify the method of 

determining administrative payments to 

sponsoring organizations of day care 

homes by basing payments on a 

formula; and allow sponsoring 

organizations of day care homes to carry 

over up to 10 percent of their 

administrative funding from the 

previous fiscal year into the next fiscal 

year. This rule also proposes to 

incorporate several changes to the 

application and renewal process which 

are expected to improve the 

management of CACFP and to make a 

number of miscellaneous technical 

changes. 

DATES: To be assured of consideration, 

comments must be received on or before 

June 8, 2012. 

ADDRESSES: The Food and Nutrition 

Service, USDA, invites interested 

persons to submit comments on this 

proposed rule. Comments may be 

submitted through one of the following 

methods: 

• Preferred method: Federal 

eRulemaking Portal at http:// 

www.regulations.gov. Follow the online 

instructions for submitting comments. 

• Mail: Comments should be 

addressed to Julie Brewer, Chief, Policy 

and Program Development Branch, 

Child Nutrition Division, Food and 

Nutrition Service, Department of 

Agriculture, 3101 Park Center Drive, 

Room 640, Alexandria, Virginia 22302– 

1594. 

• Hand Delivery or Courier: Deliver 

comments to the Food and Nutrition 

Service, Child Nutrition Division, 3101 

Park Center Drive, Room 640, 

Alexandria, Virginia 22302–1594, 

during normal business hours of 8:30 

a.m.–5 p.m. 

Comments submitted in response to 

this proposed rule will be included in 

the record and will be made available to 

the public. Please be advised that the 

substance of the comments and the 

identity of the individuals or entities 

submitting the comments will be subject 

to public disclosure. The Department 

will make the comments publicly 

available on the Internet via http:// 

www.regulations.gov. 

FOR FURTHER INFORMATION CONTACT: Julie 

Brewer at the above address or 

telephone (703) 305–2590. 

SUPPLEMENTARY INFORMATION: 

I. Public Comment Procedures 

II. Executive Summary 

III. Background and Discussion of the 

Proposed Rule 

IV. Procedural Matters 

I. Public Comment Procedures 

Your written comments on the 

proposed rule should be specific, 

should be confined to issues pertinent 

to the proposed rule, and should 

explain the reason(s) for any change you 

recommend or proposal(s) you oppose. 

Where possible, you should reference 

the specific section or paragraph of the 

proposal you are addressing. Comments 

received after the close of the comment 

period (refer to DATES) will not be 

considered or included in the 

Administrative Record for the final rule. 

Executive Order 12866 requires each 

agency to write regulations that are 

simple and easy to understand. We 

invite your comments on how to make 

these proposed regulations easier to 

understand, including answers to 

questions such as the following: 

(1) Are the requirements in the 

proposed regulations clearly stated? 

(2) Does the rule contain technical 

language or jargon that interferes with 

its clarity? 

(3) Does the format of the rule (e.g., 

grouping and order of sections, use of 

headings, and paragraphing) make it 

clearer or less clear? 

(4) Would the rule be easier to 

understand if it was divided into more 

(but shorter) sections? 

(5) Is the description of the rule in the 

preamble section entitled ‘‘Background 

and Discussion of the Proposed Rule’’ 

helpful in understanding the rule? How 

could this description be more helpful 

in making the rule easier to understand? 

II. Executive Summary 

Purpose of the Regulatory Action 

The Department is proposing to 

amend the regulations for CACFP at 7 

CFR part 226 to codify several of the 

provisions of the Healthy, Hunger-Free 

Kids Act of 2010 (HHFKA). This 

proposed rule would affect the 

management and administration of 

CACFP for State agencies, new and 

renewing institutions, sponsoring 

organizations, and sponsored facilities. 

This rule also proposes to incorporate 

several changes to the application and 

renewal process which are expected to 

improve the management of CACFP and 

to make a number of miscellaneous 

technical changes to the organization of 

7 CFR part 226. 

Summary of the Major Provisions of the 

Regulatory Action 

CACFP Initial Application Submission 

and Renewal Requirements 

Current regulations require 

institutions to submit an initial 

application for CACFP participation and 

then to reapply to the CACFP on a 

schedule determined by the State 

agency, but not less than every one to 

three years. Section 331(b) of the Act 

amended section 17(d) of the Richard B. 

Russell National School Lunch Act 

(NSLA) (42 U.S.C. 1766(d)) to require, in 

lieu of submitting a renewal application, 

that renewing institutions need only 

annually confirm that the institution is 

in compliance with the licensing 


pmangrum on DSK3VPTVN1PROD with PROPOSALS-1
Federal Register / Vol. 77, No. 68 / Monday, April 9, 2012 / Proposed Rules 21019 

requirements of subsection 17(a)(5) of 

the NSLA (42 U.S.C. 1766(a)(5)) and 

submit to the State agency any 

additional necessary information, as 

specified by the Department. 

This proposal would eliminate a 

renewal application for renewing 

institutions; however, such institutions 

would be required to annually certify 

that they still meet the program 

requirements for continued 

participation and to provide an update 

of the information provided on the 

initial application if the State agency 

has not already been notified of the 

changes. The exception to this is the 

budget submission for sponsoring 

organizations, which as in current 

regulations, must be submitted annually 

rather than through the certification 

process. 

Varied Timing of Reviews Conducted by 

Sponsoring Organizations 

Section 331(b) of the Act amended 

section 17(d)(2) of the NSLA (42 U.S.C. 

1766(d)(2)) to require that sponsoring 

organizations vary the timing of 

unannounced reviews so they are 

unpredictable to sponsored facilities. 

We anticipate unannounced reviews 

will be more effective in detecting 

CACFP integrity issues. This proposed 

rule would require sponsoring 

organizations to ensure that the timing 

of unannounced reviews is varied in a 

way that would ensure they are 

unpredictable to the facility under 

review. 

Permanent Agreements Between 

Sponsoring Organizations and 

Sponsored Centers 

Section 331(c) of the Act amended 

section 17(j)(1) of the NSLA (42 U.S.C. 

1766(j)(1)) to require State agencies to 

develop and provide for the use of a 

standard permanent operating 

agreement between sponsoring 

organizations of centers and their 

sponsored centers. This rule proposes to 

require State agencies to develop 

standard permanent agreements that 

sponsors of child care centers, adult day 

care centers, emergency shelters, at-risk 

afterschool care centers, or outside 

school hours care centers will enter into 

with their unaffiliated sponsored 

centers. 

Transmission of Income Information by 

Sponsored Day Care Homes 

Current regulations require a 

sponsoring organization, upon the 

request of a tier II day care home 

provider, to collect income eligibility 

applications from households (7 CFR 

226.18(b)(12)). Section 333 of the Act 

amended section 17(f)(3)(A)(iii)(III) of 

the NSLA (42 U.S.C. 

1766(f)(3)(A)(iii)(III)) to require 

sponsoring organizations to allow 

providers of tier II day care homes to 

assist in the transmission of household 

income information with the written 

consent of the parents or guardians of 

children in their care. This rule 

proposes to allow the tier II day care 

home to assist in collecting income 

eligibility applications from households 

and transmitting the applications to the 

sponsoring organization. The addition 

would limit the provider’s assistance to 

collecting applications and transmitting 

them to the sponsoring organization, 

and prohibits tier II day care home 

providers from reviewing the 

applications. 

Administrative Payment Rates to 

Sponsoring Organizations for Day Care 

Homes 

Current regulations found at 7 CFR 

226.12(a) require that administrative 

cost payments to a sponsoring 

organization of day care homes may not 

exceed the lesser of: (1) Actual 

expenditures for the costs of 

administering the CACFP less income to 

the CACFP, or (2) the amount of 

administrative costs approved by the 

State agency in the sponsoring 

organization’s budget, or (3) the sum of 

the products obtained by multiplying 

each month the sponsoring 

organization’s number of participating 

homes by the current administrative 

payment rate for day care home 

sponsors. In addition, current 

regulations specify that administrative 

payments to a sponsoring organization 

may not exceed 30 percent of the total 

amount of administrative payments and 

food service payments for day care 

home operations. 

Section 334 of the HHFKA amended 

section 17(f)(3) of the NSLA (42 U.S.C. 

1766(f)(3)) to eliminate the ‘‘lesser of’’ 

cost and budget comparisons for 

calculating administrative payments to 

day care home sponsoring 

organizations. Instead, effective October 

1, 2010, administrative reimbursements 

are determined only by multiplying the 

number of day care homes under the 

oversight of each sponsoring 

organization by the appropriate 

annually adjusted administrative 

reimbursement rate(s). This rule 

proposes to modify the method of 

determining administrative payments to 

sponsoring organizations of day care 

homes by basing payments on the 

formula specified in Section 17 of the 

NSLA. 

Carryover of Family or Group Day Care 

Home Sponsoring Organization 

Administrative Payments 

Section 334 of the HHFKA amended 

section 17(f)(3) of the NSLA (42 U.S.C. 

1766(f)(3)) to permit day care home 

sponsors to carry over and obligate a 

maximum of 10 percent of 

administrative payments into the 

succeeding fiscal year. Under this 

proposal, the Department would require 

the State agency to ensure that 

sponsoring organizations of day care 

homes seeking to carryover 

administrative funds include, in their 

annual budget submission for State 

agency review and approval, estimates 

of the amount of administrative funds 

that will be carried over and a 

description of the proposed purpose(s) 

for which those funds will be used. 

Miscellaneous Changes 

This proposal would make a number 

of changes that complement the 

requirements of the NSLA as amended 

by the HHFKA. Chief amongst these 

changes is a proposed re-organization of 

§ 226.6, State agency administrative 

responsibilities. The re-organization is 

expected to improve the clarity of the 

regulations and to provide more 

uniformity to application and renewal 

requirements. The proposal moves the 

existing initial application requirements 

and the proposed renewal requirements 

to new §§ 226.6a and 226.6b, 

respectively. 

Costs and Benefits 

While CACFP institutions and State 

agencies administering CACFP will be 

affected by this rulemaking, the 

economic effect will not be significant. 

III. Background and Discussion of the 

Proposed Rule 

The Department is proposing to 

amend the regulations for CACFP at 7 

CFR part 226. These changes are 

intended to implement several of the 

provisions of the HHFKA affecting the 

management and administration of 

CACFP for State agencies, new and 

renewing institutions, sponsoring 

organizations, and sponsored facilities. 

The Department is proposing to 

require institutions to submit an initial 

CACFP application to the State agency 

and, in subsequent years, periodically 

update the information in lieu of 

submitting a new application; require 

sponsoring organizations to vary the 

timing of reviews of sponsored facilities; 

require State agencies to develop and 

provide for the use of a standard 

permanent agreement between 

sponsoring organizations and day care 

centers; allow tier II day care homes to 


pmangrum on DSK3VPTVN1PROD with PROPOSALS-1
21020 Federal Register / Vol. 77, No. 68 / Monday, April 9, 2012 / Proposed Rules 

collect household income information 

and transmit it to the sponsoring 

organization; modify the method of 

determining administrative payments to 

sponsoring organizations of day care 

homes by basing payments on a 

formula; and, allow sponsoring 

organizations of day care homes to carry 

over up to 10 percent of their 

administrative funding from the 

previous fiscal year into the next fiscal 

year. This rule also proposes to 

incorporate several changes to the 

application and renewal process which 

are expected to improve the 

management of CACFP and to make a 

number of miscellaneous technical 

changes. The proposed amendments are 

discussed in more detail below. 

CACFP Initial Application Submission 

and Renewal Requirements 

Current regulations require 

institutions to submit an initial 

application for CACFP participation 

then reapply to the Program on a 

schedule determined by the State 

agency, but not less than every one to 

three years. As a result, the State agency 

must periodically re-determine if an 

institution is eligible to participate in 

the CACFP based on a renewal 

application process. Most of the 

requirements for the initial application 

process are currently found at 

§§ 226.6(b)(1) and 226.6(f) and most of 

the requirements for the renewal 

application process are found at 

§§ 226.6(b)(2) and 226.6(f). 

Section 331(b) of the HHFKA amends 

section 17(d) of the NSLA (42 U.S.C. 

1766(d)) to require, in lieu of submitting 

a renewal application, that renewing 

institutions need only annually confirm 

that the institution is in compliance 

with the licensing requirements of 

subsection 17(a)(5) of the NSLA (42 

U.S.C. 1766(a)(5)) and submit to the 

State agency any additional necessary 

information, as specified by the 

Department. State agencies were 

advised of these requirements in a 

memorandum issued April 8, 2011, 

Child Nutrition Reauthorization 2010: 

Child and Adult Care Food Program 

Applications (CACFP 19–2011). 

This provision enables the 

Department to determine the new 

renewal process and the information 

that annually must be submitted to the 

State agency. Reflecting the intent of the 

HHFKA, this provision to eliminate the 

renewal application, this proposal 

would require participating institutions 

to annually certify that they still meet 

the CACFP requirements for continued 

participation and to provide an update 

of the information provided on the 

initial application, if the State agency 

has not already been notified of the 

changes. Thus, even though 

management plans would be annually 

certified, the plans must be updated as 

necessary to ensure they provide a 

current reflection of CACFP operations. 

The exception to this is the budget 

submission for sponsoring 

organizations, which must still be 

submitted annually rather than through 

the certification process. These changes 

are expected to reduce current 

application process burden, because 

renewing institutions will no longer 

need to submit documentation 

demonstrating they meet CACFP 

requirements, but simply provide 

certification that they are still in 

compliance instead. 

This proposed rule outlines the 

complete list of information that 

institutions would need to certify as 

unchanged or indicate that it has 

already updated with the State agency. 

All institutions would be required to 

annually certify that they are not on the 

National disqualified list; they are not 

ineligible for other publicly funded 

programs; the institution’s principals 

have not been convicted of a crime in 

the past seven years indicating a lack of 

business integrity; they are still 

compliant with performance standards; 

and, they are licensed or approved or, 

if a sponsoring organization, that all of 

their facilities are licensed or otherwise 

approved. Sponsoring organizations 

would continue to submit an annual 

budget and would also certify that: their 

management plan is up-to-date; their 

outside employment policy is current; 

and their training has been provided for 

all facilities. In addition this rule 

proposes to require renewing 

institutions to certify that they have no 

unreported less-than-arms-length 

transactions or other potential conflicts 

of interest have occurred in the past 

year and that any anticipated less-thanarms-length transactions or other 

potential conflicts of interest in the 

upcoming year have been disclosed to 

the State agency—both of which would 

be new requirements. If the institution 

cannot certify that all of this required 

information is unchanged or has already 

been updated, the institution would be 

required to submit any information 

necessary to notify the State agency of 

the change at that time. 

As noted above, two changes to the 

application and renewal process are 

being added to this proposed rule in 

order to improve CACFP management. 

In accordance with the Food and 

Nutrition Service (FNS) Instruction 

796–2 Financial Management—Child 

and Adult Care Food Program, 

sponsoring organizations must disclose 

less-than-arms-length transactions and 

potential conflicts of interest. 

Nevertheless, the Department has found 

that this existing requirement has not 

adequately addressed the continued 

problems associated with these types of 

transactions. The Department’s 

monitoring activities continue to find a 

number of sponsoring organizations that 

have not properly disclosed less-thanarms-length transactions and potential 

conflicts of interest, and that have not 

received the required prior approval 

from their State agencies. As a result, in 

many cases, CACFP funds have been 

used improperly, resulting in large 

overclaims against sponsoring 

organizations. 

To better address this issue, this rule 

proposes to specifically require the 

disclosure of anticipated less-than-armslength transactions and potential 

conflicts of interest in both the initial 

application submitted by a new 

sponsoring organization and, for 

renewing sponsors, in the annual 

information submission process. 

Accordingly, §§ 226.2, new 226.6a and 

226.6b would incorporate this addition. 

The second addition would require 

that institutions provide State agencies 

with the full legal names and any other 

names previously used, for all 

principals in the initial application and 

whenever the institution adds new 

principals. This change would also 

require a sponsoring organization to 

provide the full legal names, and any 

other names previously used, for all day 

care home providers and by the 

principals of its sponsored centers. The 

proposal adds this change to the 

regulations in every instance where 

institutions were previously required to 

report the full names of their principals, 

and the principals of their sponsored 

facilities, to the State agency. Thus, the 

proposed language would require ‘‘full 

legal names and any other names 

previously used’’ where it currently 

requires ‘‘full names.’’ This will ensure 

better identification of any individuals 

who may be later placed on the National 

disqualified list. Accordingly, §§ 226.2, 

226.6a and 226.6b would incorporate 

this addition. 

Another provision necessitated by 

these changes to the application process 

is the addition of a serious deficiency 

dealing with institutions that fail to 

submit acceptable or complete renewal 

information. The amendments made to 

NSLA by the HHFKA significantly 

modifying the current renewal 

application process means that 

renewing institutions would continue to 

be considered ‘‘participating 

institutions.’’ Under § 226.6(c)(2) of this 

proposal, an institution’s failure to 


pmangrum on DSK3VPTVN1PROD with PROPOSALS-1
Federal Register / Vol. 77, No. 68 / Monday, April 9, 2012 / Proposed Rules 21021 

properly submit renewal information 

would be considered a serious 

deficiency and the State agency would 

be required to follow the normal serious 

deficiency process for participating 

institutions. The corrective action in 

this case would be for the institution to 

submit the proper or corrected renewal 

information to the State agency in 

accordance with established procedures. 

As is true under the current renewal 

application process, State agencies 

would continue to have discretion in 

declaring renewing institutions 

seriously deficient, based on the type 

and magnitude of the missing 

information and the institution’s 

willingness to quickly submit any 

missing information. 

While reviewing the current 

regulations relating to application 

requirements, it became evident that the 

application and reapplication 

requirements for institutions are found 

in various places throughout 7 CFR part 

226. To clearly articulate the new 

renewal process and distinguish it from 

the initial application process, the 

Department undertook a re-organization 

of the application and renewal 

requirements throughout 7 CFR part 

226. Because the Department has 

received complaints about the length of 

§ 226.6, the section in which the current 

application and reapplication 

requirements are found, the proposal 

moves the existing initial application 

requirements and the proposed renewal 

requirements to new §§ 226.6a and 

226.6b, respectively. New § 226.6a is 

proposed to be titled ‘‘State agency 

application requirements for new 

institutions’’ and § 226.6b is proposed to 

be titled ‘‘State agency annual 

information submission requirements 

for renewing institutions.’’ This means 

that though §§ 226.6a and 226.6b do not 

look identical to current §§ 226.6(b)(1) 

and (b)(2), respectively, no requirements 

have been changed except for those 

outlined in this preamble. 

With this new re-organization, the 

proposal would move the application or 

renewal requirements from the other 

sections in which they are currently 

located (namely §§ 226.6(b), 226.6(f), 

226.16(b) and 226.17a(e)) to the relevant 

new sections. All application 

requirements contained in these 

sections would be deleted and, where 

necessary, would instead contain only 

cross references to §§ 226.6a and 226.6b. 

To assist the reader, distribution and 

derivation tables are posted on 

www.regs.gov and accompany this 

proposed rule. The distribution table 

identifies each existing section and 

where it would appear in the proposed 

amendatory language. The derivation 

table identifies each proposed new 

section and where it appears in the 

existing regulations. 

Two additional proposed changes are 

included to provide a more uniform 

application process for day care homes 

and other facilities. Proposed 

§§ 226.6a(c)(5) and § 226.6b(d)(3) would 

require the State agency to collect from 

each sponsoring organization a list of all 

applicant day care homes, child care 

centers, outside-school-hours-care 

centers, at-risk afterschool care centers, 

and adult day care centers. Previously, 

this requirement appeared only in 

§ 226.17a, although it is standard 

operating practice. Proposed 

§ 226.6a(c)(9) would include 

requirements for facility applications for 

new institutions, these requirements are 

not new requirements but are proposed 

to be codified so that all application 

requirements are available in one place. 

Currently, facility application 

requirements are found at § 226.16(b). 

Additionally, CACFP 01–2008, Facility 

Applications and Agreements in the 

Child and Adult Care Food Program 

(CACFP), published November 15, 2007 

discusses CACFP application 

requirements. These two proposed 

changes seek to provide a more uniform 

application process. 

Finally, this rule proposes a change 

outside of the CACFP application 

process. In the proposed re-organization 

of § 226.6, paragraph (f)(4) restates 

existing regulations found at 

§ 226.6(f)(1)(viii) that require State 

agencies to obtain from the State agency 

that administers the NSLP, a list of 

‘‘elementary’’ schools in the State in 

which at least one-half of the children 

enrolled are certified to receive free or 

reduced-price meals. The State agency 

must provide the list of ‘‘elementary’’ 

schools to sponsoring organizations of 

day care homes. However, section 121 

of the HHFKA amended section 

17(f)(3)(A)(ii)(I)(bb) of the NSLA, to 

remove the word ‘‘elementary’’ from the 

definition of tier I day care homes. Since 

the proposed re-organization at 

§ 226.6(f)(4) includes this provision, the 

Department is proposing to remove the 

term ‘‘elementary’’ from the regulatory 

text. The Department intends to issue a 

final rule that will make this change 

permanent in the near future. 

We encourage commenters to limit 

their comments to the new changes 

proposed in this rule and to the 

proposed re-organization of §§ 226.6, 

226.6a, and 226.6b. We are interested in 

whether the re-organization improves 

the clarity of the regulations. 

Varied Timing of Reviews Conducted by 

Sponsoring Organizations 

Current regulations require 

sponsoring organizations to conduct 

three reviews per year per sponsored 

facility, two of which must be 

unannounced. One of the unannounced 

reviews must include observation of a 

meal service. No more than six months 

may elapse between reviews (7 CFR 

226.16(d)(4)(iii)). 

Unannounced reviews are an effective 

tool in ensuring CACFP integrity. An 

unannounced review gives sponsoring 

organizations the opportunity to 

document how the facility operates on 

any given day and to offer technical 

assistance. In addition, unannounced 

reviews offer a first-hand opportunity to 

detect and identify areas of 

mismanagement (such as inaccurate 

meal counts, problems with 

recordkeeping, and menu and 

enrollment discrepancies) and allow 

sponsoring organizations to initiate 

immediate corrective action, up to and 

including declaring a facility seriously 

deficient. 

However, unannounced reviews that 

follow a consistent pattern are 

predictable and, therefore, undermine 

the intent of the CACFP’s unannounced 

review requirements. Examples of 

consistent patterns are unannounced 

reviews that always occur during the 

third week of January, the third week of 

May, and the third week of September; 

reviews that never occur during the first 

week of the month when claims are 

being processed; meal service 

observations that always occur during 

the lunch meal service or never occur 

on weekends or evenings. Such patterns 

hinder the sponsoring organization’s 

ability to uncover management 

deficiencies and CACFP abuse by 

enabling facilities to predict when the 

sponsor review will occur. 

Section 331(b) of the HHFKA 

amended section 17(d)(2) of the NSLA 

(42 U.S.C. 1766(d)(2)) to require that 

sponsoring organizations vary the 

timing of unannounced reviews so they 

are unpredictable to sponsored 

facilities. The expectation is that 

unannounced reviews would be more 

effective in detecting CACFP integrity 

issues. State agencies were advised of 

this requirement in a memorandum 

issued April 7, 2011, Child Nutrition 

Reauthorization 2010: Varied Timing of 

Unannounced Reviews in the Child and 

Adult Care Food Program (CACFP 16– 

2011). 

The Department appreciates that it 

may be difficult for a sponsoring 

organization to create separate review 

schedules for each facility. However, as 


pmangrum on DSK3VPTVN1PROD with PROPOSALS-1
21022 Federal Register / Vol. 77, No. 68 / Monday, April 9, 2012 / Proposed Rules 

required by the HHFKA amendments, 

sponsoring organizations can and 

should vary the scheduling of reviews 

within each month and each year and 

frequently change the intervals between 

reviews (e.g., 90, 105, 120, 135 days 

between reviews of facilities). Similarly, 

sponsoring organizations should 

alternate reviews of the breakfast, lunch, 

and supper meal service in facilities 

being reviewed. 

To effect these changes, the proposal 

would revise § 226.16, Sponsoring 

organization provisions, by expanding 

the requirements relating to the 

frequency and type of required facility 

reviews in paragraph (d)(4)(iii) of that 

section. The additions would require 

sponsoring organizations to ensure that 

the timing of unannounced reviews is 

varied in a way that would ensure they 

are unpredictable to the facility. The 

proposed language also makes it clear 

that always reviewing the same meal 

service would be considered predictable 

and would be inconsistent with the 

CACFP requirements. 

In addition, § 226.6, State agency 

administrative responsibilities, would 

be amended at paragraph (m)(3) of that 

section to expand the scope of the State 

agency review of sponsoring 

organizations’ monitoring of facilities. 

Under the proposal, State agencies 

would be required to assess whether the 

timing of the sponsoring organization’s 

facility reviews are varied and 

unpredictable, as required by 

§ 226.16(d)(4)(iii). This addition ensures 

that State agencies, as part of their 

reviews of sponsoring organizations, 

would evaluate the timing and pattern 

of the facility reviews conducted by the 

sponsor to ensure that they are not 

predictable, and are in compliance with 

this requirement. As is currently the 

case, a sponsor’s failure to comply with 

all of the requirements of § 226.16(d) 

could lead to a determination of a 

serious deficiency. 

Permanent Agreements Between 

Sponsoring Organizations and 

Sponsored Centers 

Current regulations require State 

agencies to develop and provide for the 

use of permanent agreements between 

sponsoring organizations and day care 

homes, but do not require such 

agreements for sponsoring organizations 

of centers and their sponsored centers. 

Section 331(c) of the HHFKA 

amended section 17(j)(1) of the NSLA 

(42 U.S.C. 1766(j)(1)) to require State 

agencies to develop and provide for the 

use of permanent operating agreements 

between sponsoring organizations of 

centers and their sponsored centers and 

day care homes. To effect these changes, 

§ 226.2, Definitions, would be amended 

by adding a definition of sponsored 

center. The definition would distinguish 

between affiliated and unaffiliated 

centers. Differentiating between 

affiliated and unaffiliated centers is 

necessary because only unaffiliated 

centers would be required to have an 

agreement with their sponsoring 

organization. 

Unlike affiliated sponsored day care 

centers, unaffiliated sponsored day care 

centers are legally distinct from their 

sponsoring organization. For this 

reason, an agreement between the 

sponsoring organization and unaffiliated 

sponsored centers is essential to a clear 

understanding of responsibilities for 

participation in the CACFP. Because 

affiliated centers are not legally distinct 

from their sponsoring organization, the 

Department deems a requirement for an 

agreement unnecessary for affiliated 

centers. However, sponsoring 

organizations may, at their discretion, 

require an agreement with their 

affiliated centers. 

Section 226.6, State agency 

administrative responsibilities, is 

proposed to be amended to include the 

requirement for State agencies to 

develop and provide for the use of a 

standard agreement between sponsoring 

organizations and unaffiliated child care 

centers. It also allows State agencies to 

approve an agreement developed by the 

sponsoring organization. 

Section 226.16, Sponsoring 

organization provisions, is proposed to 

be amended to include the requirement 

for sponsors of child care centers, adult 

day care centers, emergency shelters, atrisk afterschool care centers, or outside 

school hours care centers to enter into 

a permanent agreement with their 

unaffiliated sponsored centers. At a 

minimum, the agreement would 

embody the requirements and the rights 

and responsibilities of both parties as 

currently set forth in § 226.17, Child 

care center provisions, § 226.17a, At-risk 

afterschool care center provisions, 

§ 226.19, Outside-school-hours care 

center provisions and § 226.19a, Adult 

day care center provisions, as 

applicable. Corresponding changes were 

also made to update and align the 

requirements and responsibilities set 

forth in §§ 226.17, 226.17a, 226.19, and 

226.19a. These include: (a) Requiring 

centers to permit visits by sponsoring 

organizations or State agencies to the 

center to review meal service and 

records and inform sponsoring 

organizations about changes in licensing 

status; (b) requiring sponsored child 

care centers to promptly inform the 

sponsoring organization about any 

change in its licensing or approval 

status; (c) establishing the right of 

centers to receive in a timely manner 

reimbursement from the sponsoring 

organizations for meals served; (d) 

requiring child care centers to meet any 

State agency approved time limit for 

submission of meal records; and (e) 

requiring sponsored child care centers 

to distribute to parents a copy of the 

sponsoring organization’s notice to 

parents if directed to do so by the 

sponsoring organization. 

Transmission of Income Information by 

Sponsored Day Care Homes 

Current regulations require 

sponsoring organizations, upon the 

request of a tier II day care home 

provider, to collect income eligibility 

applications from households (7 CFR 

§ 226.18(b)(12)). To eliminate any 

concerns households may have about 

sharing their income information with 

their provider, the current regulations 

prohibit providers from collecting the 

applications directly from households. 

Section 333 of the HHFKA amended 

section 17(f)(3)(A)(iii)(III) of the NSLA 

(42 U.S.C. 1766(f)(3)(A)(iii)(III)) to 

require sponsoring organizations to 

allow providers of tier II day care homes 

to assist in the transmission of 

household income information with the 

written consent of the parents or 

guardians of children in their care. State 

agencies were advised of this 

requirement in a memorandum issued 

April 7, 2011, Child Nutrition 

Reauthorization 2010: Transmission of 

Household Income Information by Tier 

II Family Day Care Homes in the Child 

and Adult Care Food Program (CACFP 

17–2011). 

To effect these changes, the 

Department proposes to amend § 226.18, 

Day care home provisions, by revising 

paragraph (b)(12) of that section to allow 

the tier II day care home to assist in 

collecting completed income eligibility 

applications from households and 

transmitting the applications to the 

sponsoring organization. As proposed, 

the addition would limit the provider’s 

assistance to collecting applications and 

transmitting them to the sponsoring 

organization, and would prohibit tier II 

day care home providers from reviewing 

the completed applications. 

In addition, § 226.23, Free and 

reduced-price meals, paragraph (e)(2) is 

proposed to be amended to specify the 

steps a tier II day care home must take 

when assisting in the collection and 

transmission of applications. 

Sponsoring organizations would be 

required to explain in the letter to the 

household, that the household can 

return the application to either the 

sponsoring organization or the day care 


pmangrum on DSK3VPTVN1PROD with PROPOSALS-1
Federal Register / Vol. 77, No. 68 / Monday, April 9, 2012 / Proposed Rules 21023 

home provider. Under the proposal, the 

household would give written consent 

for the provider to collect and transmit 

the household’s application to the 

sponsoring organization by signing the 

letter sent by the sponsoring 

organization and returning it, along with 

the application, to the tier II day care 

home. To ensure that tier II day care 

home providers would not be able to 

view the applications, the Department 

suggests that the sponsoring 

organization’s letter to the household 

encourage households to place their 

applications in a sealed envelope prior 

to giving it to their provider. 

Administrative Payment Rates to 

Sponsoring Organizations for Day Care 

Homes 

Current regulations found at 7 CFR 

226.12(a) require that administrative 

cost payments to a sponsoring 

organization of day care homes may not 

exceed the lesser of: (1) Actual 

expenditures for the costs of 

administering the CACFP less income to 

the CACFP, or (2) the amount of 

administrative costs approved by the 

State agency in the sponsoring 

organization’s budget, or (3) the sum of 

the products obtained by multiplying 

each month the sponsoring 

organization’s number of participating 

homes by the current administrative 

payment rate for day care home 

sponsors. In addition, current 

regulations specify that administrative 

payments to a sponsoring organization 

may not exceed 30 percent of the total 

amount of administrative payments and 

food service payments for day care 

home operations. 

Section 334 of the HHFKA amended 

section 17(f)(3) of the NSLA (42 U.S.C. 

1766(f)(3)) to eliminate the ‘‘lesser of’’ 

cost and budget comparisons for 

calculating administrative payments to 

day care home sponsoring 

organizations. Instead, effective October 

1, 2010, administrative reimbursements 

are determined only by multiplying the 

number of day care homes under the 

oversight of each sponsoring 

organization by the appropriate 

annually adjusted administrative 

reimbursement rate(s). As a result of this 

change, the expenditures for cost, the 

amount of costs approved in the 

administrative budget, or the 30 percent 

restriction no longer apply. 

State agencies were advised of this 

change in a memorandum issued 

December 22, 2010, Child Nutrition 

Reauthorization 2010: Administrative 

Payments to Family Day Care Home 

Sponsoring Organizations (CACFP 06– 

2011). While this new provision will 

help streamline administrative 

payments to day care home sponsoring 

organizations and reduce reporting 

requirements, State agencies and 

sponsoring organizations are reminded 

that sponsoring organizations must 

continue to submit annual budgets that 

must be approved by the State agency. 

Further, sponsoring organizations 

remain responsible for correctly 

accounting for costs and for maintaining 

records and sufficient supporting 

documentation to demonstrate that costs 

charged to the Program: have actually 

been incurred; are allowable and 

allocable to the Program; and comply 

with applicable Program regulations and 

policies. State agencies must continue to 

recover reimbursements received for 

unallowable costs. 

To effect this provision, paragraph (a) 

of § 226.12, Administrative payments to 

sponsoring organizations for day care 

homes, would be proposed to be revised 

to reflect the new formula. The proposal 

would also make technical changes to 

the administrative payment rates 

formula to reflect annual adjustments. 

These changes are intended only to 

clarify the base administrative payment 

rates without making any substantive 

changes to the adjustment process. In 

accordance with NSLA, the base 

reimbursement rates, which were 

published in the Federal Register on 

January 26, 1982 at 47 FR 3539, are the 

sum of the products obtained by 

multiplying each month the sponsoring 

organization’s: Initial 50 day care homes 

by 42 dollars; Next 150 day care homes 

by 32 dollars; Next 800 day care homes 

by 25 dollars; and Additional day care 

homes by 22 dollars. The administrative 

payment rates will continue to be 

adjusted annually to reflect changes in 

the series for all items of the Consumer 

Price Index for All Urban Consumers, 

published by the Department of Labor. 

Carryover of Family or Group Day Care 

Home Sponsoring Organization 

Administrative Payments 

Section 334 of the HHFKA amends 

section 17(f)(3) of the NSLA (42 U.S.C. 

1766(f)(3)) to permit day care home 

sponsors to carry over a maximum of 10 

percent of administrative payments into 

the succeeding fiscal year. In 

accordance with the HHFKA, the 10 

percent maximum on the amount of 

administrative funds that may be carried 

over must be based on the 

administrative payments received by the 

day care home sponsoring organization 

for the fiscal year. Administrative funds 

remaining at the end of the fiscal year 

that exceed 10 percent of that fiscal 

year’s administrative payments must be 

returned to the State agency. If any 

remaining carryover funds are not 

obligated or expended by the sponsoring 

organization in the succeeding fiscal 

year, the sponsor is required to return 

the remaining funds to the State agency. 

State agencies were advised of this 

new authority in a memorandum issued 

April 8, 2011, Child Nutrition 

Reauthorization 2010: Carry Over of 

Unused Child and Adult Care Food 

Program Administrative Payments 

(CACFP 18–2011). In that 

memorandum, State agencies were 

reminded that day care home 

sponsoring organizations continue to 

remain responsible for annual budget 

submissions, budget amendments, 

correctly accounting for costs, and 

maintaining records and sufficient 

supporting documentation to 

demonstrate that costs charged to the 

CACFP have actually been incurred, are 

allowable and allocable, and comply 

with all applicable CACFP regulations 

and policies. 

Under this proposal, § 226.6b(c) 

proposes to require the State agency to 

ensure that sponsoring organizations of 

day care homes seeking to carryover 

administrative funds include, in their 

annual budget submission for State 

agency review and approval, estimates 

of the amount of administrative funds 

that will be carried over and a 

description of the proposed purpose(s) 

for which those funds will be used. 

Because the final administrative claims 

will often not be known when the 

annual budget is submitted to the State 

agency, the sponsor should use its best 

estimate of the carryover amount when 

preparing the annual budget. Thus, 

when the budget is being prepared and 

submitted, the carryover estimate would 

be based on a comparison of the 

administrative payments the sponsoring 

organization expects to receive under 

the homes-times-rates formula with the 

amount of anticipated allowable 

administrative costs incurred in the 

current fiscal year. 

Much of the current regulatory budget 

approval process remains the same. 

However, this proposed rule would 

provide that as soon as possible after 

fiscal year closeout, the sponsoring 

organization would be required to 

submit an amended budget to the State 

agency for review and approval. The 

amended budget would identify the 

amount of administrative funds actually 

carried over and a description of the 

purpose(s) for which those funds have 

been or will be used. The sponsoring 

organization would be required to 

maintain documentation of obligations 

and expenditures associated with 

approved administrative carryover 

funds for review by the State agency. 

Consistent with current regulations, it is 


pmangrum on DSK3VPTVN1PROD with PROPOSALS-1
21024 Federal Register / Vol. 77, No. 68 / Monday, April 9, 2012 / Proposed Rules 

still necessary for sponsoring 

organizations to use accrual accounting 

for the final claim of each fiscal year so 

that the end-of-year reconciliation and 

close-out can be performed. 

Under proposed amendments to 

§ 226.7, State agency responsibilities for 

financial management, paragraphs (g) 

and (j) of that section, State agencies 

would require the annual budget 

submission to include an estimate of the 

requested administrative fund carryover 

amounts and a description of the 

proposed purpose(s) for which those 

funds would be obligated or expended. 

In approving a sponsoring 

organization’s carryover request, a State 

agency would be required to take into 

consideration whether the day care 

home sponsoring organization has a 

financial management system that meets 

all CACFP requirements and whether 

the State agency is satisfied that the 

system is capable of controlling the 

custody, documentation and 

disbursement of carryover funds. The 

State agency would require a sponsoring 

organization carrying over 

administrative funds to submit an 

amended budget for State agency review 

and approval as soon as possible after 

fiscal year close-out. The amended 

budget would identify the amount of 

administrative funds actually carried 

over and describe the purpose(s) for 

which the carryover funds have been or 

will be used. 

In addition, this rule proposes to 

require each State agency to establish 

procedures to recover administrative 

funds from sponsoring organizations of 

day care homes which are in excess of 

the 10 percent maximum carryover 

amount at the end of each fiscal year. 

Additionally, each State agency would 

also be required to establish procedures 

to recover any carryover amount not 

expended or obligated by the end of the 

fiscal year following the fiscal year in 

which the administrative funds were 

earned. As a result, State agencies 

would include a review of the 

documentation supporting carryover 

requests, obligations and expenditures 

when conducting a review of a 

sponsoring organization’s 

administrative costs as currently 

required under § 226.6(m)(3)(iii). In 

addition, in implementing this proposed 

provision, State agencies would 

maintain a system that monitors the 

sponsoring organization’s 

documentation of nonprofit status, and 

ensures that CACFP administrative 

funds are used principally for the 

benefit of participants. The 

accumulation of excessive balances in 

the sponsor’s nonprofit food service 

account remains inconsistent with 

CACFP requirements, as described in 

FNS Instruction 796–2, Rev. 3, Section 

VI. 

Finally, State agencies and sponsoring 

organizations are reminded that day 

care home sponsoring organizations are 

not required to carry over administrative 

funds. Any unexpended funds 

remaining at the end of the fiscal year, 

which could be carried over into the 

succeeding fiscal year, may be returned 

to the State agency at the sponsoring 

organization’s option. In addition, 

nothing in this provision in any way 

limits or changes the requirements that 

a State agency: determine that all 

institutions are financially viable; 

establish an overclaim if the sponsor has 

used CACFP administrative funds 

improperly; or declare an institution 

seriously deficient on the basis of its 

improper use of CACFP administrative 

funds. 

IV. Procedural Matters 

A. Executive Order 12866 and Executive 

Order 13563 

Executive Orders 12866 and 13563 

direct agencies to assess all costs and 

benefits of available regulatory 

alternatives and, if regulation is 

necessary, to select regulatory 

approaches that maximize net benefits 

(including potential economic, 

environmental, public health and safety 

effects, distributive impacts, and 

equity). Executive Order 13563 

emphasizes the importance of 

quantifying both costs and benefits, of 

reducing costs, of harmonizing rules, 

and of promoting flexibility. 

This rule has been determined to be 

not significant and was not reviewed by 

the Office Management and Budget 

(OMB) in conformance with Executive 

Order 12866. 

B. Regulatory Flexibility Act 

This proposed rule has been reviewed 

with regard to the requirements of the 

Regulatory Flexibility Act of 1980 (5 

U.S.C. 601–612). It has been certified 

that this rule will not have a significant 

impact on a substantial number of small 

entities. While CACFP institutions and 

State agencies administering CACFP 

will be affected by this rulemaking, the 

economic effect will not be significant. 

This rule is expected to reduce 

administrative burdens and provide 

additional flexibility. 

C. Unfunded Mandates Reform Act 

Title II of the Unfunded Mandates 

Reform Act of 1995 (UMRA), Public 

Law 104–4, establishes requirements for 

Federal agencies to assess the effects of 

their regulatory actions on State, local, 

and Tribal governments and the private 

sector. Under section 202 of the UMRA, 

the Department generally must prepare 

a written statement, including a cost/ 

benefit analysis, for proposed and final 

rules with Federal mandates that may 

result in expenditures by State, local, or 

Tribal governments, in the aggregate, or 

by the private sector, of $100 million or 

more in any one year. When such a 

statement is needed for a rule, section 

205 of the UMRA generally requires the 

Department to identify and consider a 

reasonable number of regulatory 

alternatives and adopt the least costly, 

more cost-effective, or least burdensome 

alternative that achieves the objectives 

of the rule. 

This rule contains no Federal 

mandates (under the regulatory 

provisions of Title II of the UMRA) that 

impose on State, local and Tribal 

governments or the private sector of 

$100 million or more in any one year. 

This rule is, therefore, not subject to the 

requirements of sections 202 and 205 of 

the UMRA. 

D. Executive Order 12372 

The Program addressed in this action 

is listed in the Catalog of Federal 

Domestic Assistance under No. 10.558. 

For the reasons set forth in the final rule 

in 7 CFR part 3015, Subpart V, and 

related Notice published at 48 FR 

29115, June 24, 1983, this is included in 

the scope of Executive Order 12372, 

which requires intergovernmental 

consultation with State and local 

officials. 

E. Executive Order 13132 

Executive Order 13132 requires 

Federal agencies to consider the impact 

of their regulatory actions on State and 

local governments. Where such actions 

have federalism implications, agencies 

are directed to provide a statement for 

inclusion in the preamble to the 

regulations describing the agency’s 

considerations in terms of the three 

categories called for under section 

(6)(b)(2)(B) of Executive Order 13132. 

USDA has considered the impact of this 

rule on State and local governments and 

has determined that this rule does not 

have federalism implications. This rule 

does not impose substantial or direct 

compliance costs on State and local 

governments. Therefore, under Section 

6(b) of the Executive Order, a federalism 

summary impact statement is not 

required. 

F. Executive Order 12988 

This proposed rule has been reviewed 

under Executive Order 12988, ‘‘Civil 

Justice Reform.’’ Although the 

provisions of this rule are not expected 


pmangrum on DSK3VPTVN1PROD with PROPOSALS-1
Federal Register / Vol. 77, No. 68 / Monday, April 9, 2012 / Proposed Rules 21025 

to conflict with any State or local law, 

regulations, or policies, the rule is 

intended to have preemptive effect with 

respect to any State or local laws, 

regulations, or policies that conflict 

with its provisions or that would 

otherwise impede its full 

implementation. This rule is not 

intended to have retroactive effect. Prior 

to any judicial challenge to the 

provisions of this rule or the 

applications of its provisions, all 

applicable administrative procedures 

must be exhausted. 

G. Civil Rights Impact Analysis 

This proposed rule has been reviewed 

in accordance with Department 

Regulation 4300–4, ‘‘Civil Rights Impact 

Analysis,’’ to identify any major civil 

rights impacts this rule might have on 

children on the basis of age, race, color, 

national origin, sex, or disability. A 

careful review of the rule revealed that 

the rule’s intent does not affect the 

participation of protected individuals in 

CACFP. 

H. Paperwork Reduction Act 

The Paperwork Reduction Act of 1995 

(44 U.S.C. Chap. 35; see 5 CFR 1320), 

requires that OMB approve all 

collections of information by a Federal 

agency from the public before they can 

be implemented. Respondents are not 

required to respond to any collection of 

information unless it displays a current, 

valid OMB control number. This is a 

new collection. The new provisions in 

this rule, which decreases current 

burden hours, by 595 will be merged 

into CACFP, OMB Control Number 

#0584–0055, expiration date 8/31/2013. 

The current collection burden inventory 

for CACFP is 7,006,434. These changes 

are contingent upon OMB approval 

under the Paperwork Reduction Act of 

1995. When the information collection 

requirements have been approved, the 

Department will publish a separate 

action in the Federal Register 

announcing OMB’s approval. 

Comments on the information 

collection in this proposed rule must be 

received by June 8, 2012. Send 

comments to the Office of Information 

and Regulatory Affairs, OMB, Attention: 

Desk Officer for FNS, Washington, DC 

20503. Please also send a copy of your 

comments to Lynn Rodgers-Kuperman, 

Program Analysis and Monitoring 

Branch, Child Nutrition Division, 3101 

Park Center Drive, Alexandria, VA 

22302. For further information, or for 

copies of the information collection 

requirements, please contact Lynn 

Rodgers-Kuperman at the address 

indicated above. Comments are invited 

on: (1) Whether the proposed collection 

of information is necessary for the 

proper performance of the Agency’s 

functions, including whether the 

information will have practical utility; 

(2) the accuracy of the Agency’s 

estimate of the proposed information 

collection burden, including the validity 

of the methodology and assumptions 

used; (3) ways to enhance the quality, 

utility and clarity of the information to 

be collected; and (4) ways to minimize 

the burden of the collection of 

information on those who are to 

respond, including use of appropriate 

automated, electronic, mechanical, or 

other technological collection 

techniques or other forms of information 

technology. 

All responses to this request for 

comments will be summarized and 

included in the request for OMB 

approval. All comments will also 

become a matter of public record. 

Title: Child and Adult Care Food 

Program: Amendments Related to the 

Healthy Hunger-Free Kids Act of 2010. 

OMB Number: 0584–New. 

Expiration Date: Not Yet Determined. 

Type of Request: New Collection. 

Abstract: This rule proposes to codify 

several provisions of the Healthy, 

Hunger-Free Kids Act of 2010 (HHFKA) 

affecting the management of CACFP. 

The Department is proposing to: require 

institutions to submit an initial CACFP 

application to the State agency and, in 

subsequent years, periodically update 

the information in lieu of submitting a 

new application; require sponsoring 

organizations to vary the timing of 

reviews of sponsored facilities; require 

State agencies to develop and provide 

for the use of a standard permanent 

agreement between sponsoring 

organizations and day care centers; 

allow tier II day care homes to collect 

household income information and 

transmit it to the sponsoring 

organization; modify the method of 

determining administrative payments to 

sponsoring organizations of day care 

homes by basing payments on a 

formula; and allow sponsoring 

organizations of day care homes to carry 

over up to 10 percent of their 

administrative funding from the 

previous fiscal year into the next fiscal 

year. These changes were effective 

October 1, 2010. This rule also proposes 

to incorporate several changes to the 

application and renewal process which 

are expected to improve the 

management of CACFP and to make a 

number of miscellaneous technical 

changes. 

The average burden per response and 

the annual burden hours are explained 

below and summarized in the charts 

which follow. 

Respondents for this Proposed Rule: 

(Business’ for and not-for-profit) 

Institutions. 

Estimated Number of Respondents for 

this Proposed Rule: 250. 

Estimated Number of Responses per 

Respondent for this Proposed Rule: (1). 

Estimated Total Annual Responses: 

250. 

Estimated Total Annual Burden on 

Respondents for this Proposed Rule: 

(595)*. 

*This represents an overall decrease 

from the existing burden for institutions. 

ESTIMATED ANNUAL BURDEN FOR 0584—NEW, CHILD AND ADULT CARE FOOD PROGRAM 7 CFR 226 

Reporting 

Section 

Estimated 

number of 

respondents 

Frequency of 

response 

Average 

annual 

responses 

Average 

burden per 

response 

Annual burden hours 

Each new institution must 

submit to the State 

agency with its application all information required for its approval. 

Renewing institutions 

must certify that they 

are capable of operating the Program.

7 CFR 226.15(b) 250 1 250 8 2000 

*Approved in OMB# 0584– 

0055, remains unchanged 


pmangrum on DSK3VPTVN1PROD with PROPOSALS-1
21026 Federal Register / Vol. 77, No. 68 / Monday, April 9, 2012 / Proposed Rules 

ESTIMATED ANNUAL BURDEN FOR 0584—NEW, CHILD AND ADULT CARE FOOD PROGRAM 7 CFR 226—Continued 

Reporting 

Section 

Estimated 

number of 

respondents 

Frequency of 

response 

Average 

annual 

responses 

Average 

burden per 

response 

Annual burden hours 

(119) (1) (119) (5) (595) 

**decrease of 595 from existing burden as a result 

of eliminating burden associated with renewing 

institutions.) 

Total Reporting for Proposed Rule............................ (119) 1 (119) (5) (595) 

Total Existing Reporting 

Burden for 0584–0055, 

Part 226.

........................... ........................ ........................ ........................ ........................ 6,274,964 

Total Reporting Burden 

Decrease with Proposed Rule.

........................... ........................ ........................ ........................ ........................ ¥595 

Total Reporting Burden 

for 0584–0055, Part 

226 with Proposed Rule.

........................... ........................ ........................ ........................ ........................ 6,274,369 

Prior to the issuance of this Rule 

entitled ‘‘Child and Adult Care Food 

Program: Amendments Related to the 

Healthy Hunger-Free Kids Act of 2010,’’ 

7 CFR 226.15(b) required that, all 

institutions submit to the State agency 

with its application all information 

required for its approval as set forth in 

226.6(b) and 226.6(f). This rule 

eliminates the requirement for renewing 

institutions to submit an annual 

application for renewal; however, these 

institutions must demonstrate that they 

are capable of operating the Program in 

accordance with this part as set forth in 

§ 226.6b(b). 

Therefore, the burden associated with 

the renewing institutions to submit an 

annual application has been removed as 

a result of this Rule. A program 

adjustment will be made to the 7 CFR 

Part 226 Child and Adult Care Food 

Program information collection package 

(OMB control number 0584–0055) prior 

to its renewal date of August 31, 2013. 

RECORDKEEPING

Section 

Estimated 

number of 

respondents 

Frequency of 

response 

Average 

annual 

responses 

Average 

burden per 

response 

Annual burden 

hours 

Sponsoring organizations maintain 

agreements with unaffiliated sponsored centers.

7 CFR 

226.16(h)(1).

200 1 200 *0 *0 

Total Recordkeeping for Proposed 

Rule.

.............................. 200 1 200 *0 *0 

Total Existing Recordkeeping Burden 

for 0584–0055, Part 226.

.............................. ........................ ........................ ........................ ........................ 731,470 

Total Recordkeeping Burden for 

0584–0055, Part 226 with Proposed Rule.

.............................. ........................ ........................ ........................ ........................ 731,470 

* The amount of additional burden is negligible. 

7 CFR 226.6, 226.15 and 226.16 

require that, in order to participate in 

CACFP, State agencies and institutions 

must maintain records to demonstrate 

compliance with Program requirements. 

The regulations further require that 

State agencies and institutions maintain 

records for a period of three years. 

SUMMARY OF BURDEN (OMB #0584– 

NEW) 

Total number of respondents ..... 250 

Average number of responses 

per respondent ........................ (1) 

Total annual responses .............. 250 

SUMMARY OF BURDEN (OMB #0584– 

NEW)—Continued 

Average hours per response ...... 8 

Total burden hours for part 226 

with proposed rule .................. 7,005,839 

Current OMB inventory for part 

226 .......................................... 7,006,434 

Difference (new burden decrease requested with proposed rule) .............................. *(595) 

*Burden is decreased from existing burden 

(595) due to the elimination of burden associated with renewing institutions. 

I. E-Government Act Compliance 

The Department 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. 

J. Executive Order 13175 

Executive Order 13175 requires 

Federal agencies to consult and 

coordinate with Tribes on a 

government-to-government basis on 

policies that have Tribal implications, 


pmangrum on DSK3VPTVN1PROD with PROPOSALS-1
Federal Register / Vol. 77, No. 68 / Monday, April 9, 2012 / Proposed Rules 21027 

including regulations, legislative 

comments or proposed legislation, and 

other policy statements or actions that 

have substantial direct effects on one or 

more Indian Tribes, on the relationship 

between the Federal Government and 

Indian Tribes, or on the distribution of 

power and responsibilities between the 

Federal Government and Indian Tribes. 

In the spring of 2011, FNS offered 

opportunities for consultation with 

Tribal officials or their designees to 

discuss the impact of the HHFKA on 

tribes or Indian Tribal governments. The 

consultation sessions were coordinated 

by FNS and held on the following dates 

and locations: 

1. HHFKA Consultation Webinar & 

Conference Call—April 12, 2011 

2. HHFKA Consultation In-Person—Rapid 

City, SD—March 23, 2011 

3. HHFKA Consultation Webinar & 

Conference Call—June, 22, 2011 

4. Tribal Self-Governance Annual Conference 

In-Person Consultation in Palm Springs, 

CA—May 2, 2011 

5. National Congress of American Indians 

Mid-Year Conference In-Person 

Consultation, Milwaukee, WI—June 14, 

2011 

The five consultation sessions in total 

provided the opportunity to address 

Tribal concerns related to school meals. 

There were no comments about this 

regulation during any of the 

aforementioned Tribal Consultation 

sessions. Reports from these 

consultations are part of the USDA 

annual reporting on Tribal consultation 

and collaboration. FNS will respond in 

a timely and meaningful manner to 

Tribal government requests for 

consultation concerning this rule. 

Currently, FNS provides regularly 

scheduled quarterly consultation 

sessions through the end of FY2012 as 

a venue for collaborative conversations 

with Tribal officials or their designees. 

List of Subjects in 7 CFR Part 226 

Accounting, Aged, Day care, Food 

assistance programs, Grant programs, 

Grant programs—health, American 

Indians, Individuals with disabilities, 

Infants and children, Intergovernmental 

relations, Loan programs, Reporting and 

recordkeeping requirements, Surplus 

agricultural commodities. 

Accordingly, 7 CFR part 226 is 

proposed to be amended as follows: 

PART 226—CHILD AND ADULT CARE 

FOOD PROGRAM 

1. The authority citation for 7 CFR 

Part 226 continues to read as follows: 

Authority: Secs. 9, 11, 14, 16, and 17, 

Richard B. Russell National School Lunch 

Act, as amended (42 U.S.C. 1758, 1759a, 

1762a, 1765 and 1766). 

2. In § 226.2, 

a. Revise definitions of ‘‘For-profit 

center’’, ‘‘New institution’’, ‘‘Renewing 

institution’’, and ‘‘State agency list’’; 

and 

b. Add new definitions ‘‘Less-thanarms-length transaction’’, ‘‘Participating 

institution’’, and ‘‘Sponsored center’’. 

The additions and revisions read as 

follows: 

§ 226.2 Definitions. 

* * * * * 

For-profit center means a child care 

center, outside-school-hours care center, 

or adult day care center providing 

nonresidential care to adults or children 

that does not qualify for tax-exempt 

status under the Internal Revenue Code 

of 1986. For-profit centers serving adults 

must meet the criteria described in 

paragraph (a) of this definition. Forprofit centers serving children must 

meet the criteria described in 

paragraphs (b)(1) or (b)(2) of this 

definition, except that children who 

only participate in the at-risk 

afterschool snack and/or meal 

component of the Program must not be 

considered in determining the 

percentages under paragraphs (b)(1) or 

(b)(2) of this definition. 

(a) A for-profit center serving adults 

must meet the definition of Adult day 

care center as defined in this section 

and, during the calendar month 

preceding initial application and during 

any month that it claims 

reimbursement, the center receives 

compensation from amounts granted to 

the States under title XIX or title XX and 

twenty-five percent of the adults 

enrolled in care are beneficiaries of title 

XIX, title XX, or a combination of titles 

XIX and XX of the Social Security Act. 

(b) A for-profit center serving children 

must meet the definition of Child care 

center or Outside-school-hours care 

center as defined in this section and one 

of the following conditions during the 

calendar month preceding initial 

application and during any month that 

it claims reimbursement: 

(1) Twenty-five percent of the 

children in care (enrolled or licensed 

capacity, whichever is less) are eligible 

for free or reduced-price meals; or 

(2) Twenty-five percent of the 

children in care (enrolled or licensed 

capacity, whichever is less) receive 

benefits from title XX of the Social 

Security Act and the center receives 

compensation from amounts granted to 

the States under title XX. 

* * * * * 

Less-than-arms-length transaction 

means a transaction under which one 

party to the transaction is able to control 

or substantially influence the actions of 

the other(s), as defined in FNS 

Instruction 796–2 (‘‘Financial 

Management—Child and Adult Care 

Food Program’’). 

* * * * * 

New institution means an institution 

making an initial application to 

participate in the Program or an 

institution applying to participate in the 

Program after a lapse in participation. 

* * * * * 

Participating institution means an 

institution that holds a current Program 

agreement with the State agency to 

operate the Program. This includes 

renewing institutions. 

* * * * * 

Renewing institution means an 

institution that is participating in the 

Program at the time it submits renewal 

information. 

* * * * * 

Sponsored center means a child care 

center, at-risk afterschool care center, 

adult day care center, emergency 

shelter, or outside-school-hours care 

center that operates the Program under 

the auspices of a sponsoring 

organization. The two types of 

sponsored centers are as follows: 

(a) An affiliated center is a part of the 

same legal entity as CACFP sponsoring 

organization; or 

(b) An unaffiliated center is legally 

distinct from the sponsoring 

organization. 

* * * * * 

State agency list means an actual 

paper or electronic list, or the 

retrievable paper records, maintained by 

the State agency, that includes a 

synopsis of information concerning 

seriously deficient institutions and 

providers terminated for cause in that 

State. The list must be made available 

to FNS upon request, and must include 

the following information: 

(a) Institutions determined to be 

seriously deficient by the State agency, 

including the names and mailing 

addresses of the institutions, the basis 

for each serious deficiency 

determination, and the status of the 

institutions as they move through the 

possible subsequent stages of corrective 

action, proposed termination, 

suspension, agreement termination, 

and/or disqualification, as applicable; 

(b) Responsible principals and 

responsible individuals who have been 

disqualified from participation by the 

State agency, including their full legal 

names and any other names previously 

used, mailing addresses, and dates of 

birth; and 

(c) Day care home providers whose 

agreements have been terminated for 

cause by a sponsoring organization in 


pmangrum on DSK3VPTVN1PROD with PROPOSALS-1
21028 Federal Register / Vol. 77, No. 68 / Monday, April 9, 2012 / Proposed Rules 

the State, including their full legal 

names and any other names previously 

used, mailing addresses, and dates of 

birth. 

* * * * * 

§ 226.4 [Amended] 

3. In § 226.4, amend paragraph (f) by 

revising the citation ‘‘§ 226.12(a)(3)’’ to 

read ‘‘§ 226.12(a)’’. 

4. In § 226.6: 

a. Remove paragraph (b) introductory 

text and revise paragraphs (b)(1) through 

(3) and (b)(4)(i); 

b1. Amend paragraph (b)(4)(ii) 

introductory text by removing the words 

‘‘,except that:’’ and adding a period in 

their place; and by adding a third 

sentence. 

b2. Remove paragraphs (b)(4)(ii)(A) 

through (C); 

c. Amend paragraph (c)(1)(i) by 

removing the words ‘‘paragraph (b) of 

this section and in §§ 226.15(b) and 

226.16(b)’’ in the first sentence and 

adding the citation ‘‘§ 226.6a’’ in its 

place; 

d. Amend paragraph (c)(1)(ii) 

introductory text by revising the first 

sentence; 

e. Amend paragraph (c)(1)(iii)(A)(8) 

by adding the words ‘‘full legal names 

and any other names previously used 

and’’ both after the phrase ‘‘possess the’’ 

and after the word ‘‘person’s’’; 

f. Amend paragraph (c)(1)(iii)(B)(1)(i) 

by removing the word ‘‘defer’’ and 

adding the word ‘‘deferred’’ in its place; 

g. Amend paragraphs (c)(1)(iii)(C) 

introductory text and (c)(1)(iii)(C)(1) by 

removing the words ‘‘the institution’s’’ 

each time they appear and adding the 

words ‘‘the new institution’s’’ in their 

place ; 

h. Amend paragraph (c)(1)(iii)(E) in 

the last sentence by adding the words 

‘‘full legal names and any other names 

previously used,’’ before the word 

‘‘mailing’’. 

i. Revise paragraph (c)(2); 

j. Revise paragraphs (c)(3)(ii) 

introductory text and (c)(3)(ii)(A); 

k. Redesignate paragraphs (c)(3)(ii)(B) 

through (c)(3)(ii)(U) as paragraphs 

(c)(3)(ii)(C) through (c)(3)(ii)(V) and add 

new paragraph (c)(3)(ii)(B); 

l. Amend newly redesignated 

paragraph (c)(3)(ii)(D) by removing the 

words ‘‘paragraphs (b)(1)(xviii) and 

(b)(2)(vii) of this section’’ and adding 

the citation ‘‘§ 226.6a(b)(6)’’ in its place; 

m. Amend newly redesignated 

paragraph (c)(3)(ii)(U) by removing the 

period at the end of the first sentence 

and adding ‘‘, as defined in paragraph 

(c)(1)(ii)(A) of this section; or’’ in its 

place; and by removing the second 

sentence; 

n. Amend paragraph (c)(3)(iii)(A)(7) 

by adding the words ‘‘full legal names 

and any other names previously used 

and the’’ before the word ‘‘date’’ each 

time it appears in the paragraph; 

o. Revise paragraph (c)(3)(iii)(B); 

p. Amend paragraph (c)(3)(iii)(C)(4) 

by removing the words ‘‘application 

denial’’ and adding the words 

‘‘proposed termination’’ in its place; 

q. Amend paragraph (c)(3)(iii)(D) 

introductory text by removing the 

phrase ‘‘institution must renew its 

application, or its’’ and adding the word 

‘‘institution’s’’ in its place; 

r. Revise paragraph (c)(3)(iii)(D)(2); 

s. Amend paragraph (c)(3)(iii)(D)(3) by 

removing the semicolon at the end of 

the sentence and adding a period in its 

place; 

t. Amend paragraph (c)(3)(iii)(E)(3) by 

adding the words ‘‘full legal names and 

any other names previously used,’’ 

before the word ‘‘mailing’’; 

u. Amend paragraph (c)(5)(i)(C)(3) by 

adding the words ‘‘full legal names and 

any other names previously used,’’ 

before the word ‘‘mailing’’; 

v. Amend the second sentence of 

paragraph (c)(7)(ii) by removing the 

phrase ‘‘paragraphs (b)(1)(xii) and 

(b)(2)(ii) of this section’’ and adding the 

citation ‘‘§ 226.6a(b)(2)’’ in its place; 

removing the word ‘‘must’’ the first time 

it appears; and removing the words ‘‘or 

renewing’’ between the words ‘‘new’’ 

and ‘‘institution’’; 

w. Revise the second sentence of 

paragraph (c)(7)(iii); 

x. Amend the first sentence of 

paragraph (c)(7)(iv)(A) by removing the 

phrase ‘‘paragraphs (b)(1)(xii) and 

(b)(2)(ii) of this section’’ and adding the 

citation ‘‘§ 226.6a(b)(2)’’in its place; by 

removing the word ‘‘must’’ the first time 

it appears; by removing the words ‘‘or 

renewing’’ between the words ‘‘new’’ 

and ‘‘institution’’; and by removing the 

citation ‘‘(c)(3)(ii)(B)’’ and adding the 

citation ‘‘(c)(3)(ii)(C)’’ in its place; 

y. Amend paragraph (c)(7)(iv)(B) by 

removing the phrase ‘‘§ 226.16(b) and 

paragraphs (b)(1)(xii) and (b)(2)(ii) of 

this section’’ and adding the citation 

‘‘§ 226.6a(b)(2)’’ in its place; 

z. Amend paragraph (c)(7)(C) by 

removing the phrase ‘‘§ 226.16(b) and 

paragraphs (b)(1)(xii) and (b)(2)(ii) of 

this section’’ and adding the citation 

‘‘§ 226.6a(b)(2)’’ in its place; 

aa. Amend paragraph (c)(8)(i)(B) by 

removing the word ‘‘names’’ and adding 

the words ‘‘full legal names and any 

other names previously used’’ in its 

place; 

bb. Amend paragraph (c)(8)(i)(C) by 

removing the word ‘‘names’’ and adding 

the words ‘‘full legal names and any 

other names previously used’’ in its 

place; 

cc. Amend paragraph (c)(8)(ii) by 

removing the word ‘‘name’’ and adding 

the words ‘‘full legal names and any 

other names previously used’’ in its 

place; 

dd. Revise paragraph (f); 

ee. Revise paragraph (k)(2)(i); 

ff. Amend paragraph (k)(2)(iii) by 

removing the citation ‘‘(c)(2)(iii)(C),’’ 

and removing the words ‘‘renewing 

institutions,’’; 

gg. Amend paragraph (k)(2)(iv) by 

removing the citation ‘‘(c)(2)(iii)(C),’’ 

and ‘‘, renewing,’’; 

hh. Amend paragraph (k)(3)(ii) by 

removing the citation ‘‘(c)(2)(iii)(A),’’; 

removing ‘‘, renewing,’’; and removing 

the word ‘‘participating’’ the last time it 

appears; 

ii. Amend paragraph (k)(3)(iv) by 

removing the citation ‘‘(c)(2)(iii)(E),’’ 

and removing ‘‘, renewing,’’; 

jj. Revise paragraph (k)(9); 

kk. Amend paragraph (k)(10)(iii) by 

removing the words ‘‘denial of a 

renewing institution’s application,’’ and 

removing the citation ‘‘(c)(2)(iii)(D),’’; 

ll. Amend paragraph (m)(3), by 

redesignating paragraphs (m)(3)(vii) 

through (xii) as paragraphs (viii) 

through (xiii), respectively; 

mm. Add new paragraph (m)(3)(vii); 

nn. Amend newly redesignated 

paragraph (m)(3)(ix) by removing the 

semicolon and adding at the end, the 

words ‘‘, including whether the timing 

of its facility reviews was varied and 

unpredictable, as required by 

§ 226.16(d)(4)(iii);’’; and 

oo. Revise paragraph (p). 

The revisions and additions read as 

follows: 

§ 226.6 State agency administrative 

responsibilities. 

* * * * * 

(b) Program applications and 

agreements. (1) Application 

requirements for new institutions. Each 

State agency must establish application 

review procedures, as described in 

§ 226.6a, to determine the eligibility of 

new institutions and facilities for which 

applications are submitted by 

sponsoring organizations. The State 

agency must enter into written 

agreements with institutions in 

accordance with paragraph (b)(4) of this 

section. 

(2) Information submission 

requirements for renewing institutions. 

Each State agency must establish 

renewal information review procedures, 

as described in § 226.6b, to determine 

the continued eligibility of renewing 

institutions. 

(3) State agency notification 

requirements. (i) Any new institution 

applying for participation in the 


pmangrum on DSK3VPTVN1PROD with PROPOSALS-1
Federal Register / Vol. 77, No. 68 / Monday, April 9, 2012 / Proposed Rules 21029 

Program must be notified in writing of 

approval or disapproval by the State 

agency, within 30 calendar days of the 

State agency’s receipt of a complete 

application. Whenever possible, State 

agencies should provide assistance to 

institutions that have submitted an 

incomplete application. Any 

disapproved applicant institution or day 

care home must be notified of the 

reasons for its disapproval and its right 

to appeal under paragraph (k) or (l), 

respectively, of this section. 

(ii) Any renewing institution must be 

provided written notification indicating 

whether it has completely and 

sufficiently met all renewal information 

requirements within 30 days of the 

submission of renewal information. 

(4) * * * 

(i) The State agency must require each 

institution that has been approved for 

participation in the Program to enter 

into an agreement governing the rights 

and responsibilities of each party. The 

State agency may allow a renewing 

institution to amend its existing 

Program agreement in lieu of executing 

a new agreement. The existence of a 

valid agreement, however, does not 

eliminate the need for a renewing 

institution to comply with the 

information submission requirements 

and related provisions of § 226.6b. 

(ii) * * * The State agency and an 

institution that is a school food 

authority must enter into a single 

permanent agreement for all child 

nutrition programs administered by the 

school food authority and the State 

agency. 

* * * * * 

(c) * * * 

(1) * * * 

(ii) * * * The list of serious 

deficiencies is not identical for each 

category of institution (new or 

participating) because the type of 

information likely to be available to the 

State agency is different for new and 

participating institutions.* * * 

* * * * * 

(2) Insufficient renewal information 

submissions. If an institution submits 

renewal information that is incomplete, 

deficient, unapprovable or contains 

false information, this is considered a 

serious deficiency, and the State agency 

should follow the procedures for serious 

deficiencies committed by participating 

institutions outlined in paragraph 

(c)(3)(iii) of this section. 

(3) * * * 

(ii) List of serious deficiencies for 

participating institutions. The list of 

serious deficiencies is not identical for 

each category of institution (new or 

participating) because the type of 

information likely to be available to the 

State agency is different for new and 

participating institutions. Serious 

deficiencies for participating 

institutions are: 

(A) Submission of false information 

on the institution’s application or in its 

annual renewal submission, including 

but not limited to a determination that 

the institution has concealed a 

conviction for any activity that occurred 

during the past seven years and that 

indicates a lack of business integrity, as 

defined in paragraph (c)(1)(ii)(A) of this 

section. 

(B) Failure to provide complete, 

adequate, or approvable information as 

part of the information submission 

process for renewing institutions; 

* * * * * 

(iii) * * * 

(B) Successful corrective action. (1) If 

corrective action has been taken to fully 

and permanently correct the serious 

deficiency(ies) within the allotted time 

and to the State agency’s satisfaction, 

the State agency must notify the 

institution’s executive director and 

chairman of the board of directors, and 

the responsible principals and 

responsible individuals, that the State 

agency has temporarily deferred its 

serious deficiency determination. 

(2) If corrective action is complete for 

the institution but not for all of the 

responsible principals and responsible 

individuals (or vice versa), the State 

agency must: 

(i) Continue with the actions (as set 

forth in paragraph (c)(3)(iii)(C) of this 

section) against the remaining parties; 

and 

(ii) At the same time the notice is 

issued, the State agency must also 

update the State agency list to indicate 

that the serious deficiency(ies) has(ve) 

been corrected and provide a copy of 

the notice to the appropriate FNSRO. 

(3) If the State agency initially 

determines that the institution’s 

corrective action is complete, but later 

determines that the serious 

deficiency(ies) has recurred, the State 

agency must move immediately to issue 

a notice of intent to terminate and 

disqualify the institution, in accordance 

with paragraph (c)(2)(iii)(C) of this 

section. 

* * * * * 

(D) * * * 

(2) During this period, the State 

agency must base administrative 

payments on the formula set forth in 

§ 226.12(a); and 

* * * * * 

(7) * * * 

(iii) * * * As noted in § 226.6a(b)(2), 

a State agency is prohibited from 

approving an application submitted by 

a sponsoring organization on behalf of a 

sponsored facility, and either the facility 

or any of its principals is on the 

National disqualified list. 

* * * * * 

(f) Miscellaneous responsibilities. 

State agencies must require institutions 

to comply with the applicable 

provisions of this part and must provide 

or collect the information specified in 

this paragraph. Each State agency must: 

(1) Annually inform institutions that 

are pricing programs of their 

responsibility to ensure that free and 

reduced-price meals are served to 

participants unable to pay the full price; 

(2) Annually provide to all 

institutions a copy of the income 

standards to be used by institutions for 

determining the eligibility of 

participants for free and reduced-price 

meals under the Program; 

(3) Annually require each institution 

to issue a media release, unless the State 

agency has issued a Statewide media 

release on behalf of all its institutions; 

(4) Comply with the following 

requirements for tiering of day care 

homes: 

(i) Coordinate with the State agency 

that administers the National School 

Lunch Program (the NSLP State agency) 

to ensure the receipt of a list of schools 

in the State in which at least one-half of 

the children enrolled are certified 

eligible to receive free or reduced-price 

meals. The State agency must provide 

the list of schools to sponsoring 

organizations of day care homes by 

February 15th each year unless the 

NSLP State agency has elected to base 

data for the list on a month other than 

October. In that case, the State agency 

must provide the list to sponsoring 

organizations of day care homes within 

15 calendar days of its receipt from the 

NSLP State agency. 

(ii) For tiering determinations of day 

care homes that are based on school or 

census data, the State agency must 

ensure that sponsoring organizations of 

day care homes use the most recent 

available data, as described in 

§ 226.15(f). 

(iii) For tiering determinations of day 

care homes that are based on the 

provider’s household income, the State 

agency must ensure that sponsoring 

organizations annually determine the 

eligibility of each day care home, as 

described in § 226.15(f). 

(iv) The State agency must provide all 

sponsoring organizations of day care 

homes in the State with a listing of 

State-funded programs, participation in 

which by a parent or child will qualify 

a meal served to a child in a tier II home 

for the tier I rate of reimbursement. 


pmangrum on DSK3VPTVN1PROD with PROPOSALS-1
21030 Federal Register / Vol. 77, No. 68 / Monday, April 9, 2012 / Proposed Rules 

(v) The State agency must require 

each sponsoring organization of day 

care homes to submit to the State agency 

a list of day care home providers 

receiving tier I benefits on the basis of 

their participation in the SNAP. Within 

30 days of receiving this list, the State 

agency will provide this list to the State 

agency responsible for the 

administration of the SNAP. 

(vi) As described in § 226.15(f), tiering 

determinations are valid for five years if 

based on school data. The State agency 

must ensure that the most recent 

available data are used if the 

determination of a day care home’s 

eligibility as a tier I day care home is 

made using school data. The State 

agency must not routinely require 

annual redeterminations of the tiering 

status of tier I day care homes based on 

updated school data. However, a 

sponsoring organization, the State 

agency, or FNS may change the 

determination if information becomes 

available indicating that a day care 

home is no longer in a qualified area. 

(5) Comply with the following 

requirements for determining the 

eligibility of at-risk afterschool care 

centers: 

(i) Coordinate with the NSLP State 

agency to ensure the receipt of a list of 

elementary, middle, and high schools in 

the State in which at least one-half of 

the children enrolled are certified 

eligible to receive free or reduced-price 

meals. The State agency must provide 

the list of elementary, middle, and high 

schools to independent at-risk 

afterschool care centers and sponsoring 

organizations of at-risk afterschool care 

centers upon request. The list must 

represent data from the preceding 

October, unless the NSLP State agency 

has elected to base data for the list on 

a month other than October. If the NSLP 

State agency chooses a month other than 

October, it must do so for the entire 

State. 

(ii) The State agency must determine 

the area eligibility for each independent 

at-risk afterschool care center and each 

sponsored at-risk afterschool center 

based on the documentation submitted 

by the sponsoring organization in 

accordance with § 226.15(g). The State 

agency must use the most recent data 

available, as described in paragraph 

(f)(5)(i) of this section. The State agency 

must use attendance area information 

that it has obtained, or verified with the 

appropriate school officials to be 

current, within the last school year. 

Area eligibility determinations are valid 

for five years for at-risk afterschool care 

centers that are already participating in 

the Program. The State agency may 

determine the date in the fifth year 

when the next five-year cycle of area 

eligibility will begin. The State agency 

must not routinely require annual 

redeterminations of area eligibility 

based on updated school data during the 

five-year period. However, a sponsoring 

organization, the State agency, or FNS 

may change the determination if 

information becomes available 

indicating that an at-risk afterschool 

care center is no longer area eligible. 

(iii) The State agency must determine 

whether the afterschool care programs 

of at-risk afterschool care centers meet 

the at-risk eligibility requirements of 

§ 226.17a(b) before the centers begin 

participating in the Program. 

(iv) The State agency must determine 

whether institutions already 

participating as at-risk afterschool care 

centers continue to meet the eligibility 

requirements, described in § 226.17a(b). 

(6) Upon receipt of census data from 

FNS (on a decennial basis), the State 

agency must provide each sponsoring 

organization of day care homes with 

census data showing areas in the State 

in which at least 50 percent of the 

children are from households meeting 

the income standards for free or 

reduced-price meals. 

(7) At intervals and in a manner 

specified by the State agency, but not 

more frequently than annually, the State 

agency may: 

(i) Require independent centers to 

submit a budget with sufficiently 

detailed information and documentation 

to enable the State agency to make an 

assessment of the independent center’s 

qualifications to manage Program funds. 

Such budget must demonstrate that the 

independent center will expend and 

account for funds in accordance with 

regulatory requirements, FNS 

Instruction 796–2 (‘‘Financial 

Management—Child and Adult Care 

Food Program’’), and parts 3015, 3016, 

and 3019 of this title and applicable 

Office of Management and Budget 

circulars; 

(ii) Request institutions to report their 

commodity preference; 

(iii) Require a private nonprofit 

institution to submit evidence of tax 

exempt status in accordance with 

§ 226.15(a); 

(iv) Require for-profit institutions to 

submit documentation on behalf of their 

centers of: 

(A) Eligibility of at least 25 percent of 

children in care (enrolled or licensed 

capacity, whichever is less) for free or 

reduced-price meals; or 

(B) Compensation received under title 

XX of the Social Security Act of 

nonresidential day care services and 

certification that at least 25 percent of 

children in care (enrolled or licensed 

capacity, whichever is less) were title 

XX beneficiaries during the most recent 

calendar month. 

(v) Require for-profit adult care 

centers to submit documentation that 

they are currently providing 

nonresidential day care services for 

which they receive compensation under 

title XIX or title XX of the Social 

Security Act, and certification that not 

less than 25 percent of enrolled 

participants in each such center during 

the most recent calendar month were 

title XIX or title XX beneficiaries; 

(vi) Request each institution to 

indicate its choice to receive all, part or 

none of advance payments, if the State 

agency chooses to make advance 

payments available; and 

(vii) Perform verification in 

accordance with § 226.23(h) and 

paragraph (m)(4) of this section. State 

agencies verifying the information on 

free and reduced-price applications 

must ensure that verification activities 

are conducted without regard to the 

participant’s race, color, national origin, 

sex, age, or disability. 

* * * * * 

(k) * * * 

(2) * * * 

(i) Application denial. Denial of a new 

institution’s application for 

participation (see § 226.6a, for State 

agency review of an institution’s 

application, and paragraph (c)(1) of this 

section, for State agency denial of a new 

institution’s application); 

* * * * * 

(9) Abbreviated administrative review. 

The State agency must limit the 

administrative review to a review of 

written submissions concerning the 

accuracy of the State agency’s 

determination if the application was 

denied or the State agency proposes to 

terminate the institution’s agreement 

because: 

(i) The information submitted on the 

application was false (refer to 

paragraphs (c)(1)(ii)(A) and (c)(3)(ii)(A) 

of this section); 

(ii) The institution, one of its 

sponsored facilities, or one of the 

principals of the institution or its 

facilities is on the National disqualified 

list (refer to § 226.6a(b)(2)); 

(iii) The institution, one of its 

sponsored facilities, or one of the 

principals of the institution or its 

facilities is ineligible to participate in 

any other publicly funded program by 

reason of violation of the requirements 

of the program (refer to paragraph 

(c)(3)(ii)(T) of this section and 

§ 226.6a(b)(3)); or 

(iv) The institution, one of its 

sponsored facilities, or one of the 


pmangrum on DSK3VPTVN1PROD with PROPOSALS-1
Federal Register / Vol. 77, No. 68 / Monday, April 9, 2012 / Proposed Rules 21031 

principals of the institution or its 

facilities has been convicted for any 

activity that indicates a lack of business 

integrity (refer to paragraph (c)(3)(ii)(U) 

of this section and § 226.6a(b)(4)). 

* * * * * 

(m) * * * 

(3) * * * 

(vii) Compliance with the 

requirements for submitting and 

ensuring the accuracy of the annual 

renewal information; 

* * * * * 

(p) Sponsoring organization 

agreement. (1) Each State agency shall 

develop and provide for the use of a 

standard form of written permanent 

agreement between each sponsoring 

organization and the day care homes or 

unaffiliated child care centers 

participating in the Program under such 

organization. The agreement shall 

specify the rights and responsibilities of 

both parties. The State agency may, at 

the request of the sponsor, approve an 

agreement developed by the sponsor. 

Nothing in this paragraph shall be 

construed to limit the ability of the 

sponsoring organization to suspend or 

terminate the permanent agreement in 

accordance with § 226.16(l). 

(2) The State agency must also 

include in this agreement its policy to 

restrict transfers of day care homes 

between sponsoring organizations. The 

policy must restrict the transfers to no 

more frequently than once per year, 

except under extenuating 

circumstances, such as termination of 

the sponsoring organization’s agreement 

or other circumstances defined by the 

State agency. 

* * * * * 

5. Add §§ 226.6a and 226.6b to read 

as follows: 

§ 226.6a State agency application 

requirements for new institutions. 

(a) Application procedures for new 

institutions. Each State agency must 

establish application procedures to 

determine the eligibility of new 

institutions under this part. For new 

private nonprofit and for-profit child 

care institutions, such procedures must 

also include a pre-approval visit by the 

State agency to confirm the information 

in the institution’s application and to 

further assess the institution’s ability to 

manage the Program. In addition, the 

State agency’s application review 

procedures must ensure that the 

institution complies with the provisions 

in this section. 

(b) Institution application 

requirements. The State agency’s 

application review procedures must 

ensure that the following information is 

included in a new institution’s 

application: 

(1) Budget. The State agency must 

review and approve each institution’s 

budget. The budget must demonstrate 

the institution’s ability to manage 

Program funds in accordance with 

§ 226.7, FNS Instruction 796–2, 

(‘‘Financial Management—Child and 

Adult Care Food Program’’), parts 3015, 

3016, and 3019 of this title, and 

applicable Office of Management and 

Budget circulars. If the institution does 

not intend to use non-CACFP funds to 

support any required CACFP functions, 

the institution’s budget must identify a 

source of non-Program funds that could 

be used to pay overclaims or other 

unallowable costs. If the institution 

intends to use any non-Program 

resources to meet CACFP requirements, 

these non-Program funds should be 

accounted for in the institution’s 

budget, and the institution’s budget 

must identify a source of non-Program 

funds that could be used to pay 

overclaims or other unallowable costs. 

Other information that must be in the 

budget includes: 

(i) For sponsors, projected CACFP 

administrative earnings and expenses. 

(ii) For sponsoring organizations of 

centers, all administrative costs, 

whether incurred by the sponsoring 

organization or its sponsored centers. If 

at any point a sponsoring organization 

determines that the meal 

reimbursements estimated to be earned 

during the budget year will be lower 

than that estimated in its administrative 

budget, the sponsoring organization 

must amend its administrative budget to 

stay within 15 percent of meal 

reimbursements estimated or actually 

earned during the budget year, unless 

the State agency grants a waiver in 

accordance with § 226.7(g)(1). Failure to 

do so will result in appropriate fiscal 

action in accordance with § 226.14(a). 

(2) Presence on the National 

disqualified list. If an institution or one 

of its principals is on the National 

disqualified list and submits an 

application, the State agency may not 

approve the application. If a sponsoring 

organization submits an application on 

behalf of a facility, and either the 

facility or any of its principals is on the 

National disqualified list, the State 

agency may not approve the application. 

In accordance with § 226.6(k)(3)(vii), in 

this circumstance, the State agency’s 

refusal to consider the application is not 

subject to administrative review. 

(3) Ineligibility for other publicly 

funded programs. (i) General. A State 

agency is prohibited from approving an 

institution’s application if, during the 

past seven years, the institution or any 

of its principals have been declared 

ineligible for any other publicly funded 

program by reason of violating that 

program’s requirements. However, this 

prohibition does not apply if the 

institution or the principal has been 

fully reinstated in, or determined 

eligible for, that program, including the 

payment of any debts owed. 

(ii) State agencies must collect from 

institutions: 

(A) A statement listing the publicly 

funded programs in which the 

institution and its principals have 

participated in the past seven years; and 

(B) A certification that, during the 

past seven years, neither the institution 

nor any of its principals have been 

declared ineligible to participate in any 

other publicly funded program by 

reason of violating that program’s 

requirements; or 

(C) In lieu of the certification, 

documentation that the institution or 

the principal previously declared 

ineligible was later fully reinstated in, 

or determined eligible for, the program, 

including the payment of any debts 

owed. 

(iii) Follow-up. If the State agency has 

reason to believe that the institution or 

its principals were determined 

ineligible to participate in another 

publicly funded program by reason of 

violating that program’s requirements, 

the State agency must follow up with 

the entity administering the publicly 

funded program to gather sufficient 

evidence to determine whether the 

institution or its principals were, in fact, 

determined ineligible. 

(4) Information on criminal 

convictions. (i) A State agency is 

prohibited from approving an 

institution’s application if any of the 

institution’s principals have been 

convicted of any activity during the past 

seven years that indicated a lack of 

business integrity, as defined in 

§ 226.6(c)(1)(ii)(A); and 

(ii) State agencies must collect from 

institutions a certification that neither 

the institution nor any of its principals 

have been convicted of any activity 

during the past seven years that 

indicated a lack of business integrity, as 

defined in § 226.6(c)(1)(ii)(A); 

(5) Certification of truth of 

applications and submission of names 

and addresses. State agencies must 

collect from institutions a certification 

that all information on the application 

is true and correct, along with the full 

legal names and any other names 

previously used, mailing address, and 

date of birth of the institution’s 

executive director and chairman of the 

board of directors or, in the case of a forprofit center that does not have an 


pmangrum on DSK3VPTVN1PROD with PROPOSALS-1
21032 Federal Register / Vol. 77, No. 68 / Monday, April 9, 2012 / Proposed Rules 

executive director or is not required to 

have a board of directors, the owner of 

the for-profit center; 

(6) Compliance with performance 

standards. State agencies must collect 

from each new institution, information 

sufficient to document that it is 

financially viable, is administratively 

capable of operating the Program in 

accordance with this part, and has 

internal controls in effect to ensure 

accountability. To document this, any 

new institution must demonstrate in its 

application that it is capable of 

operating in conformance with the 

following performance standards. The 

State agency must only approve the 

applications of those new institutions 

that meet these performance standards, 

and must deny the applications of those 

new institutions that do not meet the 

standards. In ensuring compliance with 

these performance standards, the State 

agency should use its discretion in 

determining whether the institution’s 

application, in conjunction with its past 

performance in CACFP, establishes to 

the State agency’s satisfaction that the 

institution meets the following 

performance standards. 

(i) Performance Standard 1— 

Financial viability and financial 

management. The new institution must 

be financially viable. Program funds 

must be expended and accounted for in 

accordance with the requirements of 

this part, FNS Instruction 796–2 

(‘‘Financial Management—Child and 

Adult Care Food Program’’), and parts 

3015, 3016, and 3019 of this title. To 

demonstrate financial viability, the new 

institution must document that it meets 

the following criteria: 

(A) Description of need and 

recruitment. A new sponsoring 

organization must demonstrate in its 

management plan that its participation 

will help ensure the delivery of Program 

benefits to otherwise unserved facilities 

or participants, in accordance with 

criteria developed by the State agency 

pursuant to paragraph (c)(6) of this 

section. A new sponsoring organization 

must demonstrate that it will use 

appropriate practices for recruiting 

facilities, consistent with § 226.6(p) and 

any State agency requirements; 

(B) Fiscal resources and financial 

history. A new institution must 

demonstrate that it has adequate 

financial resources to operate CACFP on 

a daily basis, has adequate sources of 

funds to continue to pay employees and 

suppliers during periods of temporary 

interruptions in Program payments and/ 

or to pay debts when fiscal claims have 

been assessed against the institution, 

and can document financial viability 

(for example, through audits, financial 

statements, etc.); and 

(C) Budgets. Costs in the institution’s 

budget must be necessary, reasonable, 

allowable, and appropriately 

documented; 

(ii) Performance Standard 2— 

Administrative capability. The new 

institution must be administratively 

capable. Appropriate and effective 

management practices must be in effect 

to ensure that the Program operates in 

accordance with this part. To 

demonstrate administrative capability, 

the new institution must document that 

it meets the following criteria: 

(A) Has an adequate number and type 

of qualified staff to ensure the operation 

of the Program in accordance with this 

part; 

(B) If a sponsoring organization, 

documents in its management plan that 

it employs staff sufficient to meet the 

ratio of monitors to facilities, taking into 

account the factors that the State agency 

will consider in determining a 

sponsoring organization’s staffing needs, 

as set forth in (c)(1) of this section; and 

(C) If a sponsoring organization has 

Program policies and procedures in 

writing that assign Program 

responsibilities and duties, and ensure 

compliance with civil rights 

requirements; and 

(iii) Performance Standard 3— 

Program accountability. The new 

institution must have internal controls 

and other management systems in effect 

to ensure fiscal accountability and to 

ensure that the Program will operate in 

accordance with the requirements of 

this part. To demonstrate Program 

accountability, the new institution must 

document that it meets the following 

criteria: 

(A) Governing board of directors. Has 

adequate oversight of the Program by an 

independent governing board of 

directors as defined at § 226.2; 

(B) Fiscal accountability. Has a 

financial system with management 

controls specified in writing. For new 

sponsoring organizations, these written 

operational policies must assure: 

(1) Fiscal integrity and accountability 

for all funds and property received, 

held, and disbursed; 

(2) The integrity and accountability of 

all expenses incurred; 

(3) That claims will be processed 

accurately, and in a timely manner; 

(4) That funds and property are 

properly safeguarded and used, and 

expenses incurred, for authorized 

Program purposes; and 

(5) That a system of safeguards and 

controls is in place to prevent and 

detect improper financial activities by 

employees; 

(C) Recordkeeping. Maintains 

appropriate records to document 

compliance with Program requirements, 

including budgets, accounting records, 

approved budget amendments, and, if a 

sponsoring organization, management 

plans and appropriate records on 

facility operations; 

(D) Sponsoring organization 

operations. If a new sponsoring 

organization, documents in its 

management plan that it will: 

(1) Provide adequate and regular 

training of sponsoring organization staff 

and sponsored facilities in accordance 

with §§ 226.15(e)(12) and (e)(14) and 

226.16(d)(2) and (d)(3); 

(2) Perform monitoring in accordance 

with § 226.16(d)(4), to ensure that 

sponsored facilities accountably and 

appropriately operate the Program; 

(3) If a sponsor of day care homes, 

accurately classify day care homes as 

tier I or tier II in accordance with 

§ 226.15(f); and 

(4) Have a system in place to ensure 

that administrative costs funded from 

Program reimbursements do not exceed 

regulatory limits set forth in 

§§ 226.6a(b)(1) and 226.12(a). 

(E) Meal service and other operational 

requirements. Independent centers and 

facilities will follow practices that result 

in the operation of the Program in 

accordance with the meal service, 

recordkeeping, and other operational 

requirements of this part. These 

practices must be documented in the 

independent center’s application or in 

the sponsoring organization’s 

management plan and must demonstrate 

that independent centers or sponsored 

facilities will: 

(1) Provide meals that meet the meal 

patterns set forth in § 226.20; 

(2) Comply with licensing or approval 

requirements set forth in § 226.6(d); 

(3) Have a food service that complies 

with applicable State and local health 

and sanitation requirements; 

(4) Comply with civil rights 

requirements; 

(5) Maintain complete and 

appropriate records on file; and 

(6) Claim reimbursement only for 

eligible meals. 

(7) Nondiscrimination statement. 

Institutions must submit their 

nondiscrimination policy statement and 

a media release, unless the State agency 

has issued a Statewide media release on 

behalf of all institutions; 

(8) Documentation of tax-exempt 

status. All private nonprofit institutions 

must document their tax-exempt status; 

and 

(9) Preference for commodities or 

cash-in-lieu of commodities. Institutions 

must state their preference to receive 


pmangrum on DSK3VPTVN1PROD with PROPOSALS-1
Federal Register / Vol. 77, No. 68 / Monday, April 9, 2012 / Proposed Rules 21033 

commodities or cash-in-lieu of 

commodities. 

(c) Sponsoring organization 

application requirements. In addition to 

the application requirements contained 

in paragraph (b) of this section, the State 

agency’s application review procedures 

must ensure that the following 

information is included in a new 

sponsoring organization’s application: 

(1) Management plan. The State 

agency must establish factors, consistent 

with this section, that it will consider in 

determining whether a new sponsoring 

organization has sufficient staff to 

perform required monitoring 

responsibilities at all of its sponsored 

facilities. State agencies must collect 

from sponsoring organizations a 

complete management plan that 

includes: 

(i) Detailed information on the 

organization’s management and 

administrative structure; 

(ii) A list or description of the staff 

assigned to Program monitoring. Each 

sponsoring organization of day care 

homes must document that, to perform 

monitoring, it will employ the 

equivalent of one full-time staff person 

for each 50 to 150 day care homes it 

sponsors. A sponsoring organization of 

centers must document that, to perform 

monitoring, it will employ the 

equivalent of one full-time staff person 

for each 25 to 150 centers it sponsors. 

It is the State agency’s responsibility to 

determine the appropriate level of 

staffing for monitoring for each 

sponsoring organization, consistent with 

these specified ranges and factors that 

the State agency will use to determine 

the appropriate level of monitoring staff 

for each sponsor. The monitoring staff 

equivalent may include the employee’s 

time spent on scheduling, travel time, 

review time, follow-up activity, report 

writing, and activities related to the 

annual updating of children’s 

enrollment forms; 

(iii) The procedures to be used by the 

organization to administer the Program 

in, and disburse payments to, the child 

care facilities under its sponsorship; 

(iv) For sponsoring organizations of 

day care homes, a description of the 

system for making tier I day care home 

determinations, and a description of the 

system of notifying tier II day care 

homes of their options for 

reimbursement; and 

(v) Any additional information 

necessary to document the sponsoring 

organization’s compliance with the 

performance standards set forth at 

paragraph (b)(6) of this section. 

(2) Outside employment policy. State 

agencies must collect from sponsoring 

organizations an outside employment 

policy. The policy must restrict other 

employment by employees that 

interferes with an employee’s 

performance of Program-related duties 

and responsibilities, including outside 

employment that constitutes a real or 

apparent conflict of interest. The policy 

will be effective unless disapproved by 

the State agency; 

(3) Bond. Sponsoring organizations 

must submit a bond, if such bond is 

required by State law, regulation, or 

policy. If the State agency requires a 

bond for sponsoring organizations 

pursuant to State law, regulation, or 

policy, the State agency must submit a 

copy of that requirement and a list of 

sponsoring organizations posting a bond 

to the appropriate FNSRO on an annual 

basis; 

(4) Day care home enrollment 

information. State agencies must collect 

from sponsoring organizations of day 

care homes current information on: 

(i) The total number of children 

enrolled in all homes in the 

sponsorship; 

(ii) An assurance that day care home 

providers’ own children whose meals 

are claimed for reimbursement in the 

Program are eligible for free or reducedprice meals; 

(iii) The total number of tier I and tier 

II day care homes that it sponsors; 

(iv) The total number of children 

enrolled in tier I day care homes; 

(v) The total number of children 

enrolled in tier II day care homes; and 

(vi) The total number of children in 

tier II day care homes that have been 

identified as eligible for free or reducedprice meals; 

(5) Facility lists. The State agency 

must collect from each sponsoring 

organization a list of all their applicant 

day care homes, child care centers, 

outside-school-hours-care centers, atrisk afterschool care centers, and adult 

day care centers; 

(6) Providing benefits to unserved 

facilities or participants. (i) Criteria. The 

State agency must develop criteria for 

determining whether a new sponsoring 

organization’s participation will help 

ensure the delivery of benefits to 

otherwise unserved facilities or 

participants, and must disseminate 

these criteria to new sponsoring 

organizations when they request 

information about applying to the 

Program; and 

(ii) Documentation. The State agency 

must collect from the new sponsoring 

organization documentation that its 

participation will help ensure the 

delivery of benefits to otherwise 

unserved facilities or participants in 

accordance with the State agency’s 

criteria; 

(7) Notice to parents. The State 

agency must collect a copy of the 

sponsoring organization’s notice to 

parents, in a form and, to the maximum 

extent practicable, language easily 

understandable by the participant’s 

parents or guardians. The notice must 

inform them of their facility’s 

participation in CACFP, the Program’s 

benefits, the name and telephone 

number of the sponsoring organization, 

and the name and telephone number of 

the State agency responsible for 

administration of CACFP; 

(8) Serious deficiency procedures. If 

the sponsoring organization chooses to 

establish procedures for determining a 

day care home seriously deficient that 

supplement the procedures in paragraph 

§ 226.16(l), the State agency must collect 

a copy of those supplemental 

procedures in the application. If the 

State agency has made the sponsoring 

organization responsible for the 

administrative review of a proposed 

termination of a day care home’s 

agreement for cause, pursuant to 

§ 226.6(l)(1), the State agency must 

collect a copy of the sponsoring 

organization’s administrative review 

procedures. The sponsoring 

organization’s supplemental serious 

deficiency and administrative review 

procedures must comply with 

§§ 226.16(l) and 226.6(l); 

(9) Facility applications. The State 

agency must ensure collection and 

review of the following information for 

every sponsored facility: 

(i) An application for participation for 

each child care and adult day care 

facility accompanied by all necessary 

supporting documentation; 

(ii) Timely information concerning 

the eligibility status of child care and 

adult day care facilities (such as 

licensing or approval actions); 

(iii) For sponsoring organizations of 

day care homes, the full legal names and 

any other names previously used, 

mailing address, and date of birth of 

each provider; 

(iv) Documentation that all day care 

homes and sponsored centers meet 

Program licensing or approval 

requirements; and 

(v) The State agency must ensure that 

no facilities are participating under 

more than one sponsoring organization; 

and 

(10) Disclosure of potential conflicts 

of interest. The State agency must 

require sponsoring organizations to 

disclose any less-than-arms-length 

transactions in the operation of CACFP 

that are anticipated in the upcoming 

year. The State agency approval of such 

transactions must be consistent with 

FNS Instruction 796–2 (‘‘Financial 


pmangrum on DSK3VPTVN1PROD with PROPOSALS-1
21034 Federal Register / Vol. 77, No. 68 / Monday, April 9, 2012 / Proposed Rules 

Management—Child and Adult Care 

Food Program’’). Sponsoring 

organizations also must disclose to the 

State agency any other potential 

conflicts of interest, such as 

relationships among officers, board 

members, and employees. 

(d) Application requirements for 

independent and sponsored centers. 

State agencies must obtain and review 

the following additional information 

from centers: 

(1) Participant eligibility information. 

State agencies must collect current 

information on the number of enrolled 

participants eligible for free, reducedprice and paid meals; 

(2) Documentation of licensing/ 

approval. State agencies must collect 

documentation demonstrating that each 

center meets Program licensing or 

approval requirements; 

(3) Documentation of for-profit center 

eligibility. State agencies must collect 

documentation that each for-profit 

center meets the definition set forth in 

§ 226.2, For-profit center; and 

(4) At-risk afterschool care centers. In 

addition to the general CACFP 

application requirements, State agencies 

must collect documentation from at-risk 

institutions demonstrating that each atrisk afterschool care center meets the 

program eligibility requirements in 

§§ 226.17a(a) and 226.17a(b), and 

sponsoring organizations must submit 

documentation that each sponsored atrisk afterschool care center meets the 

area eligibility requirements in 

§ 226.17a(f). 

§ 226.6b State agency annual information 

submission requirements for renewing 

institutions. 

(a) Annual information submission 

requirements for renewing institutions. 

Each State agency must establish annual 

information submission procedures to 

confirm the continued eligibility of 

renewing institutions under this part. 

Renewing institutions must not be 

required to submit a free and reducedprice policy statement or a 

nondiscrimination statement unless 

substantive changes are made to either 

statement. In addition, the State 

agency’s review procedures must ensure 

that institutions annually submit 

information or certify that certain 

information is still true based on the 

requirements of this section. For 

information that must be certified, any 

new changes made in the past year and 

not previously reported to the State 

agency must be updated in the renewal 

information submission. Any additional 

information submitted in the renewal 

must be certified by the institution to be 

true. This section contains the 

information that must be submitted, 

certified or updated annually. 

(b) Eligibility certification for 

institutions. The State agency must 

ensure that all renewing institutions 

certify the following: 

(1) Presence on National disqualified 

list. The State agency must ensure that 

renewing institutions certify that neither 

the institution nor its principals are on 

the National disqualified list. The State 

agency must also ensure that renewing 

sponsoring organizations certify that no 

sponsored facility or facility principal is 

on the National disqualified list. The 

State agency must compare the 

institution’s certification with the 

National disqualified list to ensure its 

accuracy at the time of renewal; 

(2) Ineligibility for other publicly 

funded programs. The State agency 

must ensure that renewing institutions 

submit a list of the publicly funded 

programs in which the institution and 

its principals have participated in the 

past seven years that have not been 

previously reported to the State agency. 

Institutions must certify that the 

institution and the institution’s 

principals have not been declared 

ineligible for any other publicly funded 

program by reason of violating that 

program’s requirements in the past 

seven years. In lieu of certification, if 

not previously submitted, the institution 

may submit documentation that the 

institution or the principal previously 

declared ineligible has been fully 

reinstated in, or determined eligible for, 

that program and has repaid any debts 

owed. If the State agency has reason to 

believe that the renewing institution or 

any of its principals were determined 

ineligible to participate in another 

publicly funded program by reason of 

violating that program’s requirements, 

the State agency must follow up with 

the entity administering the publicly 

funded program to gather sufficient 

evidence to determine whether the 

institution or its principals were, in fact, 

determined ineligible; 

(3) Information on criminal 

convictions. The State agency must 

ensure that renewing institutions certify 

that the institution’s principals have not 

been convicted of any activity that 

occurred during the past seven years 

and that indicates a lack of business 

integrity, as defined in 

§ 226.6(c)(1)(ii)(A); 

(4) Submission of names and 

addresses. The State agency must 

ensure that renewing institutions submit 

a certification that the full legal names 

and any other names previously used, 

mailing address, and date of birth of the 

institution’s executive director and 

chairman of the board of directors or, in 

the case of a for-profit center that does 

not have an executive director or is not 

required to have a board of directors, the 

owner of the for-profit center; 

(5) Compliance with performance 

standards. The State agency must 

ensure that each renewing institution 

certifies that it is still in compliance 

with the performance standards 

described in § 226.6a(b)(6), meaning it is 

financially viable, is administratively 

capable of operating the Program, and 

has internal controls in effect to ensure 

accountability; 

(6) Licensing. The State agency must 

ensure that each independent center 

certifies that its licensing or approval 

status is up-to-date and that it continues 

to meet the licensing requirements 

outlined in §§ 226.6(d) and (e). 

Sponsoring organizations must certify 

that the licensing/approval status of 

their facilities is up-to-date and that 

they continue to meet the licensing 

requirements outlined in §§ 226.6(d) 

and (e). If the independent center or 

facility has a new license not previously 

on file with the State agency, a copy 

must be submitted unless the State 

agency has other means of confirming 

the licensing or approval status of any 

independent center or facility providing 

care; and 

(7) At-risk information. The State 

agency must ensure that independent atrisk afterschool care centers or 

sponsoring organizations of at-risk 

afterschool care centers certify that they 

still meet the requirements of 

§ 226.17a(b). Sponsoring organizations 

of at-risk afterschool care centers must 

provide area eligibility data in 

compliance with the provisions of 

§ 226.15(g). In accordance with 

§ 226.6(f)(5)(ii), State agencies must 

determine the area eligibility of each 

independent at-risk afterschool care 

center that is already participating in 

the Program. 

(c) Administrative budget submission 

for sponsoring organizations. The State 

agency must ensure that renewing 

sponsoring organizations submit an 

administrative budget for the upcoming 

year with sufficiently detailed 

information concerning projected 

CACFP administrative earnings and 

expenses, as well as other non-Program 

funds to be used in Program 

administration, for the State agency to 

determine the allowability, necessity, 

and reasonableness of all proposed 

expenditures, and to assess the 

sponsoring organization’s capability to 

manage Program funds. The 

administrative budget must demonstrate 

that the sponsoring organization will 

expend and account for funds in 

accordance with regulatory 


pmangrum on DSK3VPTVN1PROD with PROPOSALS-1
Federal Register / Vol. 77, No. 68 / Monday, April 9, 2012 / Proposed Rules 21035 

requirements, FNS Instruction 796–2, 

(‘‘Financial Management—Child and 

Adult Care Food Program’’), parts 3015, 

3016, and 3019 of this title, and 

applicable Office of Management and 

Budget circulars. In addition, the 

administrative budget submitted by a 

sponsor of centers must demonstrate 

that the administrative costs to be 

charged to the Program do not exceed 15 

percent of the meal reimbursements 

estimated or actually earned during the 

budget year, unless the State agency 

grants a waiver in accordance with 

§ 226.7(g)(1). For sponsoring 

organizations of day care homes seeking 

to carry over administrative funds in 

accordance with § 226.12(a)(3), the 

budget must include an estimate of 

requested administrative fund carryover 

amounts and a description of the 

proposed purpose(s) for which those 

funds will be obligated or expended. 

(d) Eligibility certification for 

sponsoring organizations. In addition to 

the certification requirements in 

paragraph (b) of this section, the State 

agency must ensure that renewing 

sponsoring organizations certify the 

following: 

(1) Management plan. The State 

agency must ensure that renewing 

sponsoring organizations certify that the 

sponsor has reviewed its current 

management plan on file with the State 

agency and that it is complete and upto-date. If the management plan has 

changed, the sponsor must submit 

updates that meet the requirements of 

§ 226.6a(c)(1). The State agency must 

establish factors, consistent with 

§ 226.6a(c)(1), that it will consider in 

determining whether a renewing 

sponsoring organization has sufficient 

staff to perform required monitoring 

responsibilities at all of its sponsored 

facilities. As part of the annual review 

of the renewing sponsoring 

organization’s management plan, the 

State agency must determine the 

appropriate level of staffing for the 

sponsoring organization, consistent with 

the staffing range of monitors set forth 

at § 226.6a(c)(1) and the factors the State 

agency has established. 

(2) Outside employment policy. The 

State agency must ensure that renewing 

sponsoring organizations certify that the 

outside employment policy most 

recently submitted to the State agency 

remains current and in effect or the 

sponsor must submit an updated 

outside employment policy at the time 

of renewal. The policy must restrict 

other employment by employees that 

interferes with an employee’s 

performance of Program-related duties 

and responsibilities, including outside 

employment that constitutes a real or 

apparent conflict of interest. 

(3) Facility lists. The State agency 

must ensure that each sponsoring 

organization certifies that the list of all 

of their applicant day care homes, child 

care centers, outside-school-hours care 

centers, at-risk afterschool care centers, 

and adult day care centers on file with 

the State agency is current and up-todate. 

(4) Facility training. The State agency 

must ensure that renewing sponsoring 

organizations certify that all facilities 

under their sponsorships have adhered 

to the training requirements set forth in 

Program regulations. 

(5) Disclosure of potential conflicts of 

interest. The State agency must ensure 

that sponsoring organizations certify 

that no unreported less-than-armslength transactions or any other 

potential conflicts of interest have 

occurred in the last year and disclose 

any that are anticipated in the upcoming 

year. The State agency approval of 

anticipated less-than-arms-length 

transactions must be consistent with 

FNS Instruction 796–2 (‘‘Financial 

Management—Child and Adult Care 

Food Program’’). 

6. In § 226.7 by revising paragraph (g) 

and adding a sentence at the end of 

paragraph (j) to read as follows: 

§ 226.7 State agency responsibilities for 

financial management. 

* * * * * 

(g) Budget approval. The State agency 

must review institution budgets as 

described in §§ 226.6a(b)(1) and 

226.6b(c) and must limit allowable 

administrative claims by each 

sponsoring organization to the 

administrative costs approved in its 

budget, except as provided in this 

section. The budget must demonstrate 

the institution’s ability to manage 

Program funds in accordance with this 

part, FNS Instruction 796–2 (‘‘Financial 

Management—Child and Adult Care 

Food Program’’), parts 3015, 3016, and 

3019 of this title, and applicable Office 

of Management and Budget circulars. 

Sponsoring organizations must submit 

an administrative budget to the State 

agency annually, and independent 

centers must submit budgets as 

frequently as required by the State 

agency. Budget levels may be adjusted 

to reflect changes in Program activities. 

If the institution does not intend to use 

non-CACFP funds to support any 

required CACFP functions, the 

institution’s budget must identify a 

source of non-Program funds that could 

be used to pay overclaims or other 

unallowable costs. If the institution 

intends to use any non-Program 

resources to meet CACFP requirements, 

these non-Program funds should be 

accounted for in the institution’s 

budget, and the institution’s budget 

must identify a source of non-Program 

funds that could be used to pay 

overclaims or other unallowable costs. 

(1) For sponsoring organizations of 

centers, the State agency is prohibited 

from approving the sponsoring 

organization’s administrative budget, or 

any amendments to the budget, if the 

administrative budget shows the 

Program will be charged for 

administrative costs in excess of 15 

percent of the meal reimbursements 

estimated to be earned during the 

budget year. However, the State agency 

may waive this limit if the sponsoring 

organization provides justification that 

it requires Program funds in excess of 15 

percent to pay its administrative costs 

and if the State agency is convinced that 

the institution will have adequate 

funding to provide meals meeting the 

requirements of § 226.20. The State 

agency must document all waiver 

approvals and denials in writing, and 

must provide a copy of all such letters 

to the appropriate FNSRO. 

(2) For sponsoring organizations of 

day care homes seeking to carry over 

administrative funds in accordance with 

§ 226.12(a)(3), the State agency must 

require the budget to include an 

estimate of the requested administrative 

fund carryover amount and a 

description of the proposed purpose(s) 

for which those funds will be obligated 

or expended by the end of the fiscal year 

following the fiscal year in which they 

were received. In approving a carryover 

request, State agencies must consider 

whether the sponsoring organization has 

a financial management system that 

meets Program requirements and is 

capable of controlling the custody, 

documentation and disbursement of 

carryover funds. As soon as possible 

after fiscal year close-out, the State 

agency must require sponsoring 

organizations carrying over 

administrative funds to submit an 

amended budget for State agency review 

and approval. The amended budget 

must identify the amount of 

administrative funds actually carried 

over and describe the purpose(s) for 

which the carryover funds have been or 

will be used. 

* * * * * 

(j) * * * In addition, each State 

agency must establish procedures to 

recover administrative funds from 

sponsoring organizations of day care 

homes which are not properly payable 

under FNS Instruction 796–2 

(‘‘Financial Management—Child and 


pmangrum on DSK3VPTVN1PROD with PROPOSALS-1
21036 Federal Register / Vol. 77, No. 68 / Monday, April 9, 2012 / Proposed Rules 

Adult Care Food Program’’), are in 

excess of the 10 percent maximum 

carryover amount, or any carryover 

amounts not expended or obligated by 

the end of the fiscal year following the 

fiscal year in which they were received. 

* * * * * 

7. In § 226.9, redesignate paragraphs 

(c) and (d) as paragraphs (d) and (e), 

respectively; and add new paragraph (c) 

to read as follows: 

§ 226.9 Assignment of rates of 

reimbursement for centers. 

* * * * * 

(c) If the State agency is allowing the 

use of claiming percentages or a blended 

per-meal rate of reimbursement as 

described in paragraph (b) of this 

section, the State agency must require 

centers to submit current eligibility 

information on enrolled participants, in 

order to calculate a blended rate or 

claiming percentage. 

* * * * * 

§ 226.10 [Amended] 

8. In § 226.10, amend paragraph (a) by 

removing the 

citation‘‘§ 226.6(f)(3)(iv)(F)’’ in the first 

sentence and adding the citation 

‘‘§ 226.6(f)(7)(vi)’’ in its place. 

9. In § 226.12, revise paragraph (a) to 

read as follows: 

§ 226.12 Administrative payments to 

sponsoring organizations for day care 

homes. 

(a) General. Sponsoring organizations 

of day care homes receive payments for 

administrative costs, subject to the 

following conditions: 

(1) Sponsoring organizations shall 

receive reimbursement for the 

administrative costs of the sponsoring 

organization in an amount that is not 

less than the product obtained each 

month by multiplying: 

(i) The number of day care homes of 

the sponsoring organization submitting 

a claim for reimbursement during the 

month, by 

(ii) The appropriate administrative 

rate(s) announced annually in the 

Federal Register. 

(2) FNS determines these 

administrative reimbursement rates by 

annually adjusting the following base 

administrative rates as set forth in 

§ 226.4(i): 

(i) Initial 50 day care homes, 42 

dollars; 

(ii) Next 150 day care homes, 32 

dollars; 

(iii) Next 800 day care homes, 25 

dollars; 

(iv) Additional day care homes, 22 

dollars. 

(3) With State agency approval, a 

sponsoring organization may carry over 

a maximum of 10 percent of 

administrative funds received under 

paragraph (a)(1) of this section for use 

in the following fiscal year. If such 

funds are not obligated or expended in 

the following fiscal year, they must be 

returned to the State agency in 

accordance with § 226.7(j). 

(4) State agencies must recover any 

administrative funds not properly 

payable in accordance with FNS 

Instruction 796–2 (‘‘Financial 

Management—Child and Adult Care 

Food Program’’). 

* * * * * 

10. In § 226.15: 

a. Revise paragraphs (b) and (e)(1); 

and 

b. Amend paragraph (g) by removing 

‘‘§ 226.6(f)(1)(ix)’’ in the last sentence 

and adding ‘‘§ 226.6(f)(5)’’ in its place. 

The revisions read as follows: 

§ 226.15 Institution provisions. 

* * * * * 

(b) New applications and renewals. 

Each new institution must submit to the 

State agency with its application all 

information required for its approval as 

set forth in § 226.6a. Such information 

must demonstrate that a new institution 

has the administrative and financial 

capability to operate the Program in 

accordance with this part and with the 

performance standards set forth in 

§ 226.6a(b)(6). Renewing institutions 

must certify that they are capable of 

operating the Program in accordance 

with this part and as set forth in 

§ 226.6b(b). 

* * * * * 

(e) * * * 

(1) Copies of the initial application, 

renewal information submissions, and 

supporting documents submitted to the 

State agency; 

* * * * * 

11. In § 226.16: 

a. Revise paragraph (b); 

b. Amend paragraph (d) introductory 

text by removing the words ‘‘paragraph 

(b)(1) of this section’’ in the second 

sentence and adding ‘‘§ 226.6a(c)(1)’’ in 

its place; 

c. Amend paragraph (d)(4)(iii)(C) by 

removing the word ‘‘and’’ from the end 

of paragraph; 

d. Amend paragraph (d)(4)(iii)(D) by 

removing the period from the end of the 

paragraph and adding a semicolon in its 

place; 

e. Add new paragraphs (d)(4)(iii)(E) 

and (F); 

f. Amend paragraph (f) by revising the 

citation ‘‘§ 226.6(b)(4)(ii)(A)’’ to read 

‘‘§ 226.6(b)(4)(ii)’’; 

g. Revise paragraph (h); and 

h. Revise paragraph (l)(2)(vii). 

The additions and revisions read as 

follows: 

§ 226.16 Sponsoring organization 

provisions. 

* * * * * 

(b) Each new sponsoring organization 

must submit to the State agency with its 

application all information required for 

its approval, and the approval of the 

facilities under its jurisdiction, as set 

forth in § 226.6a. The application must 

demonstrate that the institution has the 

administrative and financial capability 

to operate the Program in accordance 

with the Program regulations. Renewing 

sponsoring organizations must submit 

information in accordance with 

§ 226.6b. 

* * * * * 

(d) * * * 

(4) * * * 

(iii) * * * 

(E) The timing of unannounced 

reviews must be varied so that they are 

unpredictable to the facility; and 

(F) All types of meal service must be 

subject to review and sponsoring 

organizations must vary the meal 

service reviewed. 

* * * * * 

(h) Sponsoring organizations of child 

care centers, adult day care centers, 

emergency shelters, at-risk afterschool 

care centers, or outside-school-hours 

care centers shall: 

(1) Enter into a permanent agreement 

with unaffiliated sponsored centers and 

sponsored day care homes that at a 

minimum addresses the requirements 

set forth in the provisions of §§ 226.17, 

226.17a, 226.18, 226.19, and 226.19a, as 

applicable. Nothing in the preceding 

sentence shall be construed to limit the 

ability of the sponsoring organization to 

suspend or terminate the permanent 

agreement in accordance with this part; 

and 

(2) Make payments of program funds 

within five working days of receipt from 

the State agency, on the basis of the 

management plan approved by the State 

agency, and may not exceed the 

Program costs documented at each 

facility during any fiscal year; except in 

those States where the State agency has 

chosen the option to implement a meals 

times rates payment system. In those 

States which implement this optional 

method of reimbursement, such 

disbursements may not exceed the rates 

times the number of meals documented 

at each facility during any fiscal year. 

* * * * * 

(l) * * * 

(2) * * * 

(vii) A determination that the day care 

home has been convicted of any activity 


pmangrum on DSK3VPTVN1PROD with PROPOSALS-1
Federal Register / Vol. 77, No. 68 / Monday, April 9, 2012 / Proposed Rules 21037 

that occurred during the past seven 

years and that indicated a lack of 

business integrity, as defined in 

§ 226.6(c)(1)(ii)(A). 

* * * * * 

12. Section 226.17 is revised to read 

as follows: 

§ 226.17 Child care center provisions. 

(a) Child care centers may participate 

in the Program either as independent 

centers or under the auspices of a 

sponsoring organization; provided, 

however, public and private nonprofit 

centers shall not be eligible to 

participate in the Program under the 

auspices of a for-profit sponsoring 

organization. Child care centers 

participating as independent centers 

shall comply with the provisions of 

§ 226.15. 

(b) All child care centers, 

independent or sponsored, shall meet 

the following requirements: 

(1) Child care centers must have 

Federal, State, or local licensing or 

approval to provide day care services to 

children. Child care centers, which are 

complying with applicable procedures 

to renew licensing or approval, may 

participate in the Program during the 

renewal process, unless the State agency 

has information that indicates that 

renewal will be denied. If licensing or 

approval is not available, a child care 

center may participate if it demonstrates 

compliance with CACFP child care 

standards or any applicable State or 

local child care standards to the State 

agency. At-risk afterschool care centers 

shall comply with licensing 

requirements set forth in § 226.17a(d). 

(2) Except for for-profit centers, child 

care centers shall be public, or have tax 

exempt status under the Internal 

Revenue Code of 1986. 

(3) Each child care center 

participating in the Program must serve 

one or more of the following meal 

types—breakfast; lunch; supper; and 

snack. Reimbursement must not be 

claimed for more than two meals and 

one snack or one meal and two snacks 

provided daily to each child. At-risk 

afterschool care centers shall comply 

with limits on daily reimbursement set 

forth in § 226.17a(h). 

(4) Each child care center 

participating in the Program shall claim 

only the meal types specified in its 

approved application in accordance 

with the meal pattern requirements 

specified in § 226.20. For-profit child 

care centers may not claim 

reimbursement for meals served to 

children in any month in which less 

than 25 percent of the children in care 

(enrolled or licensed capacity, 

whichever is less) were eligible for free 

or reduced-price meals or were title XX 

beneficiaries. However, children who 

only receive at-risk afterschool snacks 

and/or at-risk afterschool meals must 

not be included in this percentage. 

Menus and any other nutritional records 

required by the State agency shall be 

maintained to document compliance 

with such requirements. 

(5) A child care center with preschool 

children may also be approved to serve 

a breakfast, snack, and supper to schoolage children participating in an outsideschool-hours care program meeting the 

criteria of § 226.19(b) that is distinct 

from its day care program for preschoolage children. The State agency may 

authorize the service of lunch to such 

participating children who attend a 

school that does not offer a lunch 

program, provided that the limit of two 

meals and one snack, or one meal and 

two snacks, per child per day is not 

exceeded. 

(6) A child care center with preschool 

children may also be approved to serve 

a snack or meal to school-age children 

participating in an at-risk afterschool 

care program meeting the requirements 

of § 226.17a that is distinct from its day 

care program for preschool children, 

provided that the limit of two meals, 

and one snack, or one meal and two 

snacks, per child per day is not 

exceeded. 

(7) A child care center may utilize 

existing school food service facilities or 

obtain meals from a school food service 

facility, and the pertinent requirements 

of this part must be addressed in a 

written agreement between the child 

care center and school. The center shall 

maintain responsibility for all Program 

requirements set forth in this part. 

(8) Each child care center, except atrisk afterschool care centers, shall 

collect and maintain documentation of 

the enrollment of each child, including 

information used to determine 

eligibility for free and reduced-price 

meals in accordance with § 226.23(e)(1). 

In addition, Head Start participants 

need only have a Head Start statement 

of income eligibility, or a statement of 

Head Start enrollment from an 

authorized Head Start representative, to 

be eligible for free meal benefits under 

CACFP. Such documentation of 

enrollment must be updated annually, 

signed by a parent or legal guardian, and 

include information on each child’s 

normal days and hours of care and the 

meals normally received while in care. 

(9) Each child care center, except atrisk afterschool care centers, must 

maintain daily records of time of service 

meal counts by type (breakfast, lunch, 

supper, and snacks) served to enrolled 

children, and to adults performing labor 

necessary to the food service. At-risk 

afterschool care centers must maintain 

records as required by § 226.17a(k). 

(10) Each child care center must 

require key staff, as defined by the State 

agency, to attend Program training prior 

to the center’s participation in the 

Program, and at least annually 

thereafter, on content areas established 

by the State agency. 

(11) Each child care center must 

permit the Department, the State 

agency, and the sponsoring 

organization, if applicable, to visit the 

child care center and review its meal 

service and records during its hours of 

child care operations. 

(12) Sponsored child care centers 

must promptly inform the sponsoring 

organization about any change in its 

licensing or approval status. 

(13) Unaffiliated sponsored child care 

centers have the right to receive in a 

timely manner reimbursement for meals 

served to eligible children for which the 

sponsoring organization has received 

payment from the State agency. 

However, if, with the child care center’s 

consent, the sponsoring organization 

will incur costs for the provision of 

program foodstuffs or meals on behalf of 

the center, and subtract such costs from 

Program payments to the center, the 

particulars of this arrangement shall be 

specified in the agreement. The 

sponsoring organization must not 

withhold Program payments to any 

child care center for any other reason, 

except that the sponsoring organization 

may withhold from the child care center 

any amounts that the sponsoring 

organization has reason to believe are 

invalid, due to the child care center 

having submitted a false or erroneous 

meal count. 

(14) The State agency and an 

independent child care center have the 

right to terminate the agreement for 

cause or, subject to § 226.6(c), 

convenience. Sponsoring organizations 

and unaffiliated sponsored centers have 

the right to terminate the agreement for 

cause or convenience. 

(15) If the State agency has approved 

a time limit for submission of meal 

records by child care centers, child care 

centers must be in compliance. 

(16) If so instructed by its sponsoring 

organization, sponsored child care 

centers must distribute a copy of the 

sponsoring organization’s notice to 

parents. 

(c) Unaffiliated sponsored child care 

centers shall enter into a written 

permanent agreement with the 

sponsoring organization which specifies 

the rights and responsibilities of both 

parties. At a minimum, the agreement 


pmangrum on DSK3VPTVN1PROD with PROPOSALS-1
21038 Federal Register / Vol. 77, No. 68 / Monday, April 9, 2012 / Proposed Rules 

shall embody the provisions set forth in 

paragraph (b) of this section. 

(d) Independent child care centers 

shall enter into a written permanent 

agreement with the State agency which 

specifies the rights and responsibilities 

of both parties as required by 

§ 226.6(b)(4). At a minimum, the 

agreement shall embody the applicable 

provisions set forth in paragraph (b) of 

this section. 

(e) Each child care center shall 

comply with the recordkeeping 

requirements established in § 226.10(d), 

paragraph (b) of this section and, if 

applicable, § 226.15(e). Failure to 

maintain such records shall be grounds 

for the denial of reimbursement. 

(f) Nothing in this section shall be 

construed to limit the ability to 

terminate the permanent agreement 

with an independent or unaffiliated 

sponsored center in accordance with 

this part. 

13. In § 226.17a: 

a. Revise paragraph (a)(1) introductory 

text; 

b. Remove paragraphs (a)(1)(v), (e), (f), 

(g), and (l), redesignate paragraphs (h) 

through (k) as paragraphs (e) through 

(h), respectively, and redesignate 

paragraphs (m) through (q) as 

paragraphs (i) through (m) respectively; 

c. Amend paragraph (b)(1)(iv) by 

removing the words ‘‘paragraph (i)’’ and 

adding ‘‘paragraph (f)’’ in their place; 

d. Amend newly redesignated 

paragraph (f)(3) by removing the words 

‘‘, except in cases where the State 

agency has determined it is most 

efficient to incorporate area eligibility 

decisions into the three-year application 

cycle’’ from the third sentence; and 

e. Add new paragraph (n). 

The addition and revision read as 

follows: 

§ 226.17a At-risk afterschool care center 

provisions. 

(a) * * * 

(1) Eligible organizations. To receive 

reimbursement for at-risk afterschool 

snacks and at-risk afterschool meals, 

organizations must meet the criteria 

below. 

* * * * * 

(n) Permanent agreements. 

Unaffiliated sponsored at-risk 

afterschool care centers shall enter into 

a written permanent agreement with the 

sponsoring organization which specifies 

the rights and responsibilities of both 

parties. At a minimum, the agreement 

shall embody the provisions set forth in 

§ 226.17(b). 

14. In § 226.18, revise paragraph 

(b)(12) as follows: 

§ 226.18 Day care home provisions. 

* * * * * 

(b) * * * 

(12) The responsibility of the 

sponsoring organization, upon the 

request of a tier II day care home, to 

collect applications and determine the 

eligibility of enrolled children for free or 

reduced-price meals and the ability of 

the tier II day care home to assist in 

collecting applications from households 

and transmitting the applications to the 

sponsoring organization. However a tier 

II day care home may not review the 

collected applications and sponsoring 

organizations may prohibit a tier II day 

care home from assisting in collection 

and transmittal of applications if the 

day care home does not comply with the 

process as described in 

§ 226.23(e)(2)(viii); 

* * * * * 

15. In § 226.19, add paragraph (d) as 

follows: 

§ 226.19 Outside-school-hours care center 

provisions. 

* * * * * 

(d) Unaffiliated sponsored outsideschool-hours-care centers shall enter 

into a written permanent agreement 

with the sponsoring organization which 

specifies the rights and responsibilities 

of both parties. At a minimum, the 

agreement must address the provisions 

set forth in § 226.17(b). 

16. In § 226.19a, add paragraph (d) as 

follows: 

§ 226.19a Adult day care center 

provisions. 

* * * * * 

(d) Unaffiliated sponsored adult day 

care centers shall enter into a written 

permanent agreement with the 

sponsoring organization which specifies 

the rights and responsibilities of both 

parties. At a minimum, the agreement 

must address the provisions set forth in 

§ 226.17(b). 

17. In § 226.23, 

a. Amend paragraph (e)(2)(vi), by 

removing the word ‘‘and’’ from the end 

of the paragraph; 

b. Amend paragraph (e)(2)(vii)(B), by 

removing the period and adding ‘‘; and’’ 

in its place; and 

c. Add paragraph (e)(2)(viii). 

The addition reads as follows: 

§ 226.23 Free and reduced-price meals. 

* * * * * 

(e) * * * 

(2) * * * 

(viii) If a tier II day care home elects 

to assist in collecting and transmitting 

the applications to the sponsoring 

organization, it is the responsibility of 

the sponsoring organization to establish 

procedures to ensure the provider does 

not review or alter the application. The 

household consent form must explain 

that: 

(A) The household is not required to 

complete the income eligibility form in 

order for their children to participate in 

CACFP; 

(B) The household may return the 

application to either the sponsoring 

organization or the day care home 

provider; 

(C) By signing the letter and giving it 

the day care home provider, the 

household has given the day care home 

provider written consent to collect and 

transmit the household’s application to 

the sponsoring organization; and 

(D) The application will not be 

reviewed by the day care home 

provider. 

* * * * * 

Dated: April 2, 2012. 

Robin D. Bailey, Jr., 

Acting Administrator, Food and Nutrition 

Service. 

[FR Doc. 2012–8332 Filed 4–6–12; 8:45 am] 

BILLING CODE 3410–30–P 

DEPARTMENT OF ENERGY 

10 CFR Parts 429 and 430 

[Docket No. EERE–2011–BT–TP–0071] 

RIN 1904–AC67 

Energy Conservation Program: Test 

Procedures for Light-Emitting Diode 

Lamps 

AGENCY: Office of Energy Efficiency and 

Renewable Energy, Department of 

Energy. 

ACTION: Notice of proposed rulemaking. 

SUMMARY: The U.S. Department of 

Energy (DOE) proposes to establish test 

procedures for light-emitting diode 

(LED) lamps to support implementation 

of labeling provisions by the Federal 

Trade Commission (FTC) established 

under the Energy Policy and 

Conservation Act (EPCA). The proposed 

test procedures define methods for 

measuring the lumen output, input 

power, and relative spectral distribution 

(to determine correlated color 

temperature, or CCT) of LED lamps. 

Further, the proposed test procedures 

define methods for measuring the lumen 

maintenance of the LED source (the 

component of the LED lamp that 

produces light) to project the rated 

lifetime of LED lamps. The rated 

lifetime of the LED lamp is the time 

required for the LED source component 

of the lamp to reach lumen maintenance 

of 70 percent (that is, 70 percent of 

initial light output). After reviewing 


pmangrum on DSK3VPTVN1PROD with PROPOSALS-1