[Federal Register Volume 62, Number 50 (Friday, March 14, 1997)]
[Proposed Rules]
[Pages 12108-12117]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-6427]


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Proposed Rules
                                                Federal Register
________________________________________________________________________

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.

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Federal Register / Vol. 62, No. 50 / Friday, March 14, 1997 / 
Proposed Rules

[[Page 12108]]



DEPARTMENT OF AGRICULTURE

Food and Consumer Service

7 CFR Parts 250, 251, and 253

RIN 0584-AB27


Food Distribution Programs--Reduction of the Paperwork Burden

AGENCY: Food and Consumer Service, USDA.

ACTION: Proposed rule.

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

SUMMARY: This rule proposes to amend the Food Distribution Program 
regulations, the Emergency Food Assistance Program regulations, and the 
Food Distribution Program for Households on Indian Reservations 
regulations to implement the provisions of the Child Nutrition and WIC 
Reauthorization Act of 1989 regarding paperwork reduction for food 
distribution programs. The proposals contained in this rule would 
extend the maximum effective periods for agreements between Federal, 
distributing, and recipient agencies, contracts of distributing and 
subdistributing agencies with storage facilities, contracts between 
recipient agencies and food service management companies, and State 
plans of operation; remove the requirement that commodity acceptability 
information be submitted for the following program categories: 
charitable institutions, nonprofit summer camps, the Summer Food 
Service Program for Children, and the Emergency Food Assistance 
Program; relax monitoring requirements for distributing agencies with 
regard to charitable institutions and nonprofit summer camps, and the 
food service management companies under contract with them; and, amend 
regulatory language to reflect modified information collection 
requirements. The proposals would, in short, effect a substantial 
reduction in the information collection requirements imposed on 
distributing and recipient agencies, and the paperwork generated in 
fulfilling these requirements, in administering food distribution 
programs.

DATES: To be assured of consideration, comments must be postmarked on 
or before May 13, 1997.

ADDRESSES: Comments should be sent to: Lillie Ragan, Assistant Branch 
Chief, Household Programs Branch, Food Distribution Division, Food and 
Consumer Service, U.S. Department of Agriculture, Park Office Center, 
Room 502, 3101 Park Center Drive, Alexandria VA 22302-1594. Comments in 
response to this rule may be inspected at 3101 Park Center Drive, Room 
502, Alexandria VA, during normal business hours (8:30 a.m. to 5 p.m., 
Mondays through Fridays).

FOR FURTHER INFORMATION CONTACT: Lillie Ragan at the above address or 
telephone (703) 305-2662.

SUPPLEMENTARY INFORMATION:

Executive Order 12866

    This proposed rule has been determined to be not significant for 
purposes of Executive Order 12866, and therefore has not been reviewed 
by the Office of Management and Budget for any purpose other than 
approval of the changes in the information collection burden proposed 
in the rule.

Regulatory Flexibility Act

    This action has also been reviewed with regard to the requirements 
of the Regulatory Flexibility Act of 1980 (5 U.S.C. 601-612). The 
Administrator of the Food and Consumer Service (FCS) has certified that 
this action will not have a significant economic impact on a 
substantial number of small entities. The procedures in this rulemaking 
would primarily affect FCS Regional Offices, and the distributing and 
recipient agencies that administer food distribution programs. Private 
enterprises that enter into agreements for the storage of donated food 
or meal service management would also be affected. While some of these 
entities constitute small entities, a substantial number will not be 
affected. Further, any economic impact will not be significant.

Executive Order 12372

    These programs are listed in the Catalog of Federal Domestic 
Assistance under 10.550, 10.568, and 10.569, respectively, and are 
subject to the provisions of Executive Order 12372, which requires 
intergovernmental consultation with State and local officials (7 CFR 
part 3015, Subpart V and final rule-related notices published at 48 FR 
29114, June 24, 1983 and 49 FR 22676, May 31, 1984).

Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
3507), the Food and Consumer Service is submitting for public comment 
the changes in the information collection burden that would result from 
the adoption of the proposals in the rule.
    Comments are invited on: (a) whether the proposed collection of 
information is necessary for the proper performance of the functions of 
the agency, including whether the information will have practical 
utility; (b) the accuracy of the agency's estimate of the burden of the 
proposed collection of information, including the validity of the 
methodology and assumptions used; (c) ways to enhance the quality, 
utility, and clarity of the information to be collected; and (d) ways 
to minimize the burden of the collection of information on those who 
are to respond, including through the use of appropriate automated, 
electronic, mechanical, or other technological collection techniques or 
other forms of information technology. To be assured of consideration, 
comments must be postmarked on or before May 13, 1997. Comments may be 
sent to Wendy Taylor, Desk Officer, Office of Information and 
Regulatory Affairs, Office of Management and Budget (OMB), Washington 
DC 20503. All comments will be summarized and included in the request 
for OMB approval of the proposed changes in the information collection 
burden. All comments will become a matter of public record. For further 
information, or for copies of the information collections discussed 
below, please contact Lillie Ragan, Assistant Branch Chief, Household 
Programs Branch, Food Distribution Division, Food and Consumer Service, 
U.S. Department of Agriculture, Park Office Center, Room 502, 3101 Park 
Center Drive, Alexandria, Virginia 22302-1594, or telephone (703)305-
2662.
    Title: Food Distribution Regulations and Forms.
    OMB Number: 0584-0293.
    Expiration Date: 9/30/97.

[[Page 12109]]

    Type of Request: Revision of a currently approved collection.
    Abstract: Agreements, contracts, and plans of operation. The rule 
proposes to: (1) make agreements between distributing agencies and 
recipient agencies (food banks, soup kitchens, charitable institutions, 
emergency feeding organizations, etc.) to operate food distribution 
programs permanent, with amendments made as necessary, instead of 
annual; (2) allow distributing or subdistributing agencies to sign 
contracts with storage facilities for the storage of donated foods for 
a maximum duration of five years, instead of the present one year, with 
options for two additional years; (3) allow recipient agencies 
(charitable institutions, summer camps, and nutrition programs for the 
elderly) to sign contracts with food service management companies for 
one year, with four additional one-year options, instead of one year 
with two additional one-year options; and, (4) make the plan submitted 
by State agencies and Indian Tribal Organizations to operate the Food 
Distribution Program on Indian Reservations (FDPIR) ongoing, instead of 
annual, with amendments made as necessary.
    Submission of Inventory Reports. The rule proposes to require 
semiannual submission of the recently revised form FCS-155, the 
Inventory Management Register (the revised form has been approved by 
OMB). This form is a report of excessive commodity inventories--i.e., 
inventories exceeding a six-month supply--that helps to ensure that 
commodities will be utilized before going out of condition. Regulations 
presently require monthly submission of form FCS-155.
    Collection of Commodity Acceptability Information. The rule 
proposes to exclude certain food distribution program categories from 
those for which distributing agencies must submit commodity 
acceptability information, because of the substantial reduction in 
surplus commodities now available to these programs. The exempted 
program categories would be charitable institutions, summer camps, the 
Summer Food Service Program for Children (SFSP), and the Emergency Food 
Assistance Program (TEFAP). Commodity acceptability information is 
collected for other food distribution programs to ensure that 
commodities distributed are of the types and forms most acceptable to 
program recipients.
    Respondents: Respondents include State agencies and Indian Tribal 
Organizations administering food distribution programs, and, in some 
cases, recipient agencies responsible for local administration and 
distribution of donated commodities.
    Estimated Number of Respondents: State agencies and Indian Tribal 
Organizations administering food distribution programs number 171; 
recipient agencies number approximately 11,200.
    Estimated Number of Responses per Respondent: Frequency of response 
for the inventory reports would be semiannual, or 2 per year. Frequency 
of response for agreements between distributing and recipient agencies, 
the State plans, and the distributing and recipient agency contracts 
with storage facilities and food service management companies would 
vary, depending on necessary amendments to the agreements and plans, 
and the length of the contracts. It is estimated that, on average, both 
amendments and contracts would be completed every four years, or at a 
frequency of 0.25 per year. Frequency of response for the commodity 
acceptability reports would continue to be annual, but distributing 
agencies would not be required to submit commodity acceptability 
information for charitable institutions, summer camps, SFSP, and TEFAP, 
thus reducing the number of responses to be submitted.
    Estimate of Burden: The present and proposed estimates of the 
reporting burden for the information collections affected by this rule 
are detailed below. These estimates are based on information obtained 
from distributing and recipient agencies administering food 
distribution programs through various vehicles such as meetings and the 
review of information submitted in State plans. The information 
includes the number of respondents, frequency of responses per year for 
each respondent, number of hours per response, and the total burden 
hours for each information collection.

----------------------------------------------------------------------------------------------------------------
                                                             Respndnts.      Freq.      Hrs./Resp.    Total Hrs.
----------------------------------------------------------------------------------------------------------------
Distributing and Recipient Agency Agreement:                                                                    
    Present...............................................       11,211          1             0.33        3,700
    Proposed..............................................       11,211          0.25          0.20          561
Distributing or Subdistributing Agency Contracts w/Storage                                                      
 Facilities:                                                                                                    
    Present...............................................          250          1             0.33           83
    Proposed..............................................          250          0.25          0.33           21
Contracts w/Food Service Management Companies:                                                                  
    Present...............................................          300          1             0.33           99
    Proposed..............................................          300          0.25          0.33           25
Inventory Reports (FCS-155):                                                                                    
    Present...............................................           80         12             1.75        1,680
    Proposed..............................................           80          2             0.25           40
Commodity Acceptability Reports:                                                                                
    Present...............................................          466          1            50          23,300
    Proposed..............................................          252          1            50          12,600
FDPIR State Plan:                                                                                               
    Present...............................................           97          1            10             970
    Proposed..............................................           97          0.25          3              73
----------------------------------------------------------------------------------------------------------------

    Estimated Total Annual Burden on Respondents: The total annual 
burden under OMB Control Number 0584-0293 would be reduced from 
1,190,971 hours to 1,174,459 hours: a difference of 16,512 hours.
    Title: Federal-State Agreement, FCS-74
    OMB Number: 0584-0067
    Expiration Date: 6/30/98
    Type of Request: Revision of a currently approved collection.
    Abstract: The Federal-State Agreement, form FCS-74, is used to 
ensure that distributing agencies administering child nutrition and 
food distribution programs comply with Federal regulations applicable 
to the programs. This rule proposes to make

[[Page 12110]]

permanent, instead of annual, the agreement that distributing agencies 
administering food distribution programs (and not child nutrition 
programs) sign with the Food and Consumer Service (FCS). Amendments 
would be made as necessary, at the request of FCS.
    Respondents: State agencies and Indian Tribal Organizations 
administering food distribution programs.
    Estimated Number of Respondents: 147 State agencies and Indian 
Tribal Organizations would be affected.
    Estimated Number of Responses per Respondent: The agreements would 
be permanent for the affected State agencies, with amendments to the 
agreement submitted as necessary. It is estimated that such amendments 
would be required, on average, every four years. Thus, the annual 
number of responses per respondent would be 0.25.
    Estimate of Burden: The following estimates are based on the 
anticipated frequency of need for changes. For each of the 147 affected 
State agencies and Indian Tribal Organizations, the agreement would 
take approximately 0.25 hours to complete, and would be completed, on 
average, 0.25 times per year. Thus, the annual reporting burden for 
these agencies would be 9.2 hours.
    Estimated Total Annual Burden on Respondents: The total annual 
burden under OMB Number 0584-0067 would be reduced from 34,494 hours to 
34,466 hours: a difference of 28 hours.

Executive Order 12988

    This proposed rule has been reviewed under Executive Order 12988, 
Civil Justice Reform. This rule is intended to have preemptive effect 
with respect to any State or local laws, regulations or policies which 
conflict with its provisions, or which would otherwise impede its full 
implementation. This rule is not intended to have retroactive effect 
unless so specified in the ``Effective Date'' section of the preamble 
of the final rule. There are no administrative procedures which must be 
exhausted prior to any judicial challenge to the provisions of this 
rule or the application of its provisions.

Background

    The Child Nutrition and WIC Reauthorization Act of 1989, Pub. L. 
101-147, (hereinafter referred to as ``the Act''), was enacted on 
November 10, 1989. Section 108 of the Act amended what was then Section 
19 of the National School Lunch Act (NSLA), 42 U.S.C 1769a, to include 
a requirement that the Secretary endeavor to reduce the paperwork 
burden for State and local educational agencies, schools, and other 
agencies participating in nutrition assistance programs. The Act 
required that, in determining ways to reduce the paperwork burden, the 
Secretary (1) consult with State and local administrators of nutrition 
assistance programs; (2) convene at least one meeting with the program 
administrators; and (3) solicit suggestions from the general public. 
(Section 710 of Pub. L 104-193, the Personal Responsibility and Work 
Opportunity Reconciliation Act of 1996, repealed Section 49 of the 
NSLA.)
    Accordingly, on April 9, 1990, a Notice was published in the 
Federal Register (55 FR 13156) soliciting comments regarding the 
reduction of the paperwork burden associated with the administration of 
the child nutrition and food distribution programs. One hundred and 
sixty-five comments addressing issues associated with paperwork 
reduction for food distribution programs were received. Comments were 
received from 105 schools, 49 State agencies, five food processors, 
four professional associations (including the American Commodity 
Distribution Association and the American School Food Service 
Association), one Indian Tribal Organization, and one consultant. 
Following the receipt of comments, on July 30, 1990, a Paperwork 
Reduction Task Force (hereinafter referred to as the ``Task Force''), 
comprised of representatives from two commodity distribution 
associations, 13 school or food distribution program administrators, 
and two FCS Regional Office directors, was convened to review the 
comments received in response to the Notice. The actions taken to date 
by the Department in response to Congress' directive in Section 108 of 
Pub. L. 101-147 are discussed in detail below.
    Five commenters recommended that the amount of information a State 
is required to submit to the Department before a commodity complaint 
can be investigated be reduced. In response to these recommendations, 
through consultation with FCS Regional Office and State agency 
representatives, a list of data that must be provided prior to FCS 
taking any action regarding a complaint was developed and made 
available to all Regional Offices for dissemination to State agencies. 
While other information may subsequently be requested, submission of 
all required basic data at the time the complaint is reported permits 
FCS to begin taking appropriate action in a much more timely manner.
    FCS has also taken steps to simplify the process of transmitting 
the data needed to act on commodity complaints by revising the Special 
Nutrition Programs Integrated Information System (SNPIIS) to allow FCS 
Regional Offices to submit complaint data electronically. An 
informational booklet containing instructions as to how to input 
complaint data into the system has been disseminated to all FCS 
Regional Offices.
    In order to streamline the process of reporting commodity 
complaints, FCS has set up a telephone ``hot line'' for use on a pilot 
basis. Under the pilot project, selected distributing or recipient 
agencies within certain States may report commodity complaints to FCS 
Headquarters directly, via a toll-free 800 number or facsimile machine. 
All FDPIR State agencies, including all Indian Tribal Organizations 
acting as State agencies pursuant to 7 CFR 253.2(h), may report 
commodity complaints to FCS Headquarters directly via the hot line 
also. While those agencies utilizing the hot line must still provide 
certain basic information before the problem can be resolved, they have 
more flexibility in the format used to report the information than 
those agencies reporting commodity complaints through State and FCS 
Regional offices, and receive a more immediate response to their 
concerns. If the pilot project, the initial phase of which concluded on 
September 30, 1996, indicates that direct reporting of commodity 
complaints to the national office provides better service to the 
recipients utilizing USDA commodities, by reducing the amount of time 
required to resolve complaints, then access to the hot line will be 
extended to all States.
    Five commenters suggested that the Department allow distributing 
agencies to waive commodity losses of $100 or less. Since this was 
already the Department's policy, the Department has considered how to 
provide clarification of the policy. In addition, FCS has consulted 
with Regional Offices to resolve various issues relating to losses 
resulting from the improper storage or distribution of commodities, 
including the responsibility for initiating claims, and the cost 
efficiency of the claims process. This consultation has resulted in the 
development of draft guidance material which was disseminated to FCS 
Regional Offices for comment on April 15, 1994. The guidance material 
establishes the Department's position on issues relative to: (1) what 
entity is responsible for pursuing the various types of claims; (2) 
conditions under which storage facilities can offset shortages with

[[Page 12111]]

overages; (3) allowable uses of funds derived from salvage and 
recycling; (4) what funds should be deposited into the distributing 
agency's general salvage account and the allowable uses of such funds; 
(5) the handling of losses of ``bonus'' commodities; and (6) the 
thresholds that have been established for use in determining what 
entity has the authority to make a claim determination, and to 
compromise, waive, or suspend claims. Several of the changes discussed 
in the guidance material have been implemented through policy 
memoranda. However, some changes can only be effectuated by revising 
``Non-Audit Claims--Food Distribution Program,'' FCS Instruction 410-1, 
and/or through the rulemaking process. The issue of increasing the 
limit under which State agencies can waive a claim is one that must be 
addressed through the rulemaking process for the Emergency Food 
Assistance Program (TEFAP) and by revision of the FCS instruction for 
all other food distribution programs.
    Twenty-one commenters suggested that forms FCS-155 (Monthly Report 
of Receipt and Distribution of Donated Foods) and FCS-155A (Shipment of 
Commodities by Delivery Order) be eliminated, or that these inventory 
reports be required less frequently. After a review of the usefulness 
of the forms in 1991 and 1992, FCS concluded that it would not be 
feasible to eliminate them, but that they could be modified to reduce 
the paperwork burden for State agencies. Accordingly, forms FCS-155 and 
FCS-155A were modified by removing some columns that collected 
duplicate information.
    With full implementation of the Processed Commodities Inventory 
Management System (PCIMS), FCS decided to reexplore the usefulness of 
forms FCS-155 and FCS-155A, and initiated a pilot project in 1994 to 
determine if information entered in PCIMS would make the collection of 
information in the reports redundant. After identifying relevant 
information that can be accessed through this system, an alternate, 
less time-consuming inventory reporting form was developed for use by 
those State agencies participating in the pilot project. After 
evaluating the results of the pilot project, this form--the revised 
FCS-155--was further refined to collect information on excessive 
commodity inventories only, and not the detailed information on receipt 
and distribution of commodities currently reported. Excessive commodity 
inventories are defined in 7 CFR 250.14(f) as those that exceed a six-
month supply. The revised FCS-155--renamed the Inventory Management 
Register--was submitted for approval to the Office of Management and 
Budget (OMB), and was approved by OMB on September 13, 1995, as part of 
OMB #0584-0293. Also resulting from the pilot project, submittal of 
form FCS-155A, which served to verify receipt of shipments of commodity 
delivery orders, was found to be unnecessary. Distributing agencies 
report receipts for foods delivered to the Kansas City Commodity 
Office, utilizing form KC-269A, the Distributing Agency Consignee 
Receipt, as directed in FCS Instruction 709-5, Shipment and Receipt of 
Foods. Thus, distributing agencies administering child nutrition and 
food distribution programs--except for FDPIR and the Commodity 
Supplemental Food Program (CSFP)--now submit the revised FCS-155, the 
Inventory Management Register, to FCS regional offices, and no longer 
submit form FCS-155A. State agencies and Indian Tribal Organizations 
administering FDPIR and CSFP submit more detailed information on 
program participation, inventories of donated foods, and distribution 
of donated foods to households, on a monthly basis, utilizing forms 
FCS-152 (for FDPIR) and FCS-153 (for CSFP). Unlike other programs, the 
information reported on these inventory forms is not currently 
available through automated systems. Thus, State agencies and Indian 
Tribal Organizations must continue to submit forms FCS-152 and FCS-153 
for FDPIR and CSFP, respectively. As with other programs, however, the 
submittal of form FCS-155A to verify the shipment of commodities by 
delivery order is no longer required. This form was discontinued in 
October 1995 for FDPIR, and in November 1995 for CSFP.
    Twenty-eight commenters to the 1990 Notice suggested that commodity 
acceptability reports be submitted annually, rather than semi-annually, 
as was then required by law. Subsequent to the publication of the 
Notice, however, Section 1773(d) of Pub. L. 101-624, the Food, 
Agriculture, Conservation, and Trade Act of 1990, subsequently amended 
Section 3(f)(2) of the Commodity Distribution Reform Act and WIC 
Amendments of 1987 (Pub. L. 100-237; 7 U.S.C. 612c note) to require the 
collection of commodity acceptability information annually. In order to 
further reduce the paperwork burden, however, we are proposing to amend 
regulations to exempt certain program categories from the annual 
reporting requirement, while still conforming to the mandate of Pub. L. 
100-237. This proposal is described below, in the section of this 
preamble entitled ``Food Distribution Program Regulations (7 CFR Part 
250).''
    Additionally, a revision of form FCS-663, Commodity Acceptability 
Report, has been developed with input from FCS Regional Offices and 
State agencies. This revised form will substantially decrease the 
paperwork burden for distributing and recipient agencies in reporting 
commodity acceptability information, while still providing valuable 
information on the commodity preferences of program recipients. The 
revised form FCS-663 was approved by OMB on September 13, 1995, as part 
of OMB #0584-0293.
    Five commenters recommended that the State plan describing the 
operation and administration of TEFAP, presently submitted annually, be 
considered permanent, with amendments submitted as specific changes in 
the administration of the program are made. However, on August 22, 
1996, President Clinton signed into law the Personal Responsibility and 
Work Opportunity Reconciliation Act of 1996, Pub. L. 104-193, which, in 
Section 871(b) amended Section 202A of the Emergency Food Assistance 
Act of 1983, Pub. L. 98-8 (7 U.S.C. 7503(a)), to require State agencies 
to submit a TEFAP State plan every four years, with amendments 
submitted as necessary, for the Department's approval. The four-year 
requirement for submission of the TEFAP State Plan, instead of annual 
submission, became effective on August 22, 1996. The Department will 
address these, as well as other changes in the administration of TEFAP 
resulting from passage of Pub. L. 104-193, through a separate 
rulemaking.
    Four commenters recommended that the distributing agency evaluation 
of the cost efficiency of storage facilities be discontinued, or 
required less frequently. The requirement that distributing agencies 
periodically evaluate the cost-effectiveness of their current storage 
systems (7 CFR 250.14) will be addressed in a separate rule.
    Comments relative to commodity processing have been addressed in a 
final rule which was published in the Federal Register on December 7, 
1994 (59 FR 62973).
    In addition to the policy and regulatory changes discussed above, 
the Department is proposing to amend several regulatory requirements 
contained in Parts 250, 251, and 253, based on comments received in 
response to the Notice. The proposed regulatory amendments contained in 
this rule are discussed in detail below.

[[Page 12112]]

Food Distribution Program Regulations (7 CFR Part 250)

Duration Requirements for Agreements and Contracts

    Currently, Section 250.12(a) of the regulations requires that 
distributing agencies enter into agreements with the Department that 
are effective for only one year. In addition, Section 250.12(b) limits 
agreements between State and recipient entities to only one year, with 
the possibility of two one-year extensions. Sections 250.12(b) and 
250.14(d) limit the length of contracts of distributing and 
subdistributing agencies with storage facilities to only one year, with 
the possibility of two one-year extensions. These regulations also 
restrict the length of contracts between distributing agencies and 
carriers to the same duration limits. Agreements between State agencies 
and subdistributing or recipient agencies must establish (1) the 
conditions under which donated foods will be made available, and (2) 
responsibility for loss, damage, or improper use of donated foods. 
Agreements of State or subdistributing agencies with storage facilities 
must contain provisions designed to ensure that storage facilities 
properly identify, store, and account for donated commodities.
    Numerous commenters suggested that the one-year limit on agreements 
be removed. Thirty-one commenters suggested that agreements between 
State and recipient agencies be made permanent with provision for 
amendments as necessary. Eleven commenters also suggested that the 
annual agreement between the Department and State agencies be made 
permanent. Eighteen commenters also recommended extending the duration 
of contracts between distributing and subdistributing agencies and 
storage facilities for the storage of donated foods.
    The Department agrees that requiring Federal-State agreements to be 
completed anew each year is burdensome and unnecessary. Accordingly, 
this rule proposes to amend Sec. 250.12(a) to provide for permanent 
agreements between the Department and State agencies, with amendments 
to be made at the request of FCS. In addition, distributing agencies 
would be required to notify FCS of the information as the agreement 
changes. The Department's authority under Secs. 3015.124(a) and 3016.43 
to terminate agreements for cause would not be affected by this 
proposed change. Furthermore, the availability of funds and commodities 
beyond those amounts available at the time the ``permanent'' agreements 
are signed is dependent upon future Congressional appropriations and 
FCS's annual decision to continue the agreement.
    With regard to annual agreements between distributing and recipient 
agencies, the Department recognizes the need for a relaxation of the 
paperwork burden, and proposes to amend Sec. 250.12(b) to provide for 
permanent agreements between distributing agencies and recipient 
agencies, with amendments to be made as necessary. Distributing 
agencies must ensure that recipient agencies provide, on a timely 
basis, by amendment to the agreement, any information on changes in 
program administration, including, but not limited to, changes in site 
locations, number of meals or needy persons to be served, or changes 
resulting from amendments to Federal regulatory requirements and 
policy. Because of the nature of, and volatility in costs of, services 
provided by carriers, and by subdistributing agencies that are not 
recipient agencies (i.e., do not distribute donated foods to eligible 
recipients or utilize foods to provide services to those eligible), the 
Department believes that agreements between distributing agencies and 
these entities should remain one year, with an option for two one-year 
extensions. The proposed restructuring of Sec. 250.12 to detail the 
different duration requirements for agreements between distributing 
agencies and the various types of local entities is described below.
    The Department agrees that contracts of longer duration between 
State agencies and storage facilities would reduce the paperwork 
burden. Such contracts would also be attractive to storage facilities, 
as they would not have to bid so frequently for a new contract. 
Furthermore, longer contracts would provide more time to amortize 
expenses incurred in ensuring a high quality of service. Therefore, to 
provide distributing agencies with maximum flexibility in contracting 
for storage facilities, the Department proposes to amend Sec. 250.14(d) 
to extend the contract period to be effective for no longer than five 
years, including option years. Thus, distributing agencies may choose 
to negotiate contracts for a five-year, or three-year, period, or for 
one year with option years not exceeding four, etc. This flexibility 
will enable State agencies to enter into contracts of whatever duration 
in their estimation will yield the best combination of quality service 
and cost, subject only to the five-year maximum. This rule also 
proposes to make some technical changes in paragraphs (d) and (e) of 
Sec. 250.14 by revising some incorrect references.
    Under current regulations, food service management companies may be 
employed to conduct the food service operations of charitable 
institutions, nonprofit summer camps for children, nutrition programs 
for the elderly, schools, nonresidential child care institutions, and 
service institutions receiving donated foods. The duration of contracts 
between these companies and charitable institutions, nonprofit summer 
camps for children, and nutrition programs for the elderly is limited, 
in Sec. 250.12(c), to one year, with an option for two additional one-
year periods. Section 210.16(d) sets the duration of contracts between 
school food authorities, which administer school nutrition programs, 
and food service management companies at one year, with an option for 
four additional one-year periods. Although the commenters to the 1990 
Notice did not address agreements with food service management 
companies, this rule proposes, in the interest of reducing the 
paperwork burden, to revise Sec. 250.12(c) to make contracts between 
these companies and charitable institutions, nonprofit summer camps for 
children, and nutrition programs for the elderly, of the same maximum 
duration as those between food service management companies and school 
food authorities. As part of the proposed revision of this section, 
paragraph (2), addressing the length of time that records shall remain 
available, would be removed, as recordkeeping requirements will be 
established for all entities contracting with distributing, 
subdistributing, or recipient agencies in Sec. 250.16.
    This rule proposes to restructure Sec. 250.12 so as to more clearly 
state the duration requirements for all food distribution program 
agreements, as described above. The restructuring entails the revision 
of Sec. 250.12(b) to describe the terms and conditions of distributing 
agency agreements with recipient agencies, subdistributing agencies, 
carriers, and other entities, and the creation of a new Sec. 250.12(c) 
to address the duration of such agreements. Secs. 250.12(c), 250.12(d), 
and 250.12(e) would be redesignated as Secs. 250.12(d), 250.12(e), and 
250.12(f), respectively. In conformance with the restructuring of 
Sec. 250.12, this rule proposes to delete reference to Sec. 250.12(c) 
and insert instead reference to Sec. 250.12(d) in the following 
Secs. 250.3, in the definition of ``food service management company''; 
250.19(b)(1)(iv); 250.40(a)(4); 250.41(a)(3); 250.42(a); 250.48(a)(1); 
and, 250.49(a). Additionally, this rule

[[Page 12113]]

proposes to make a technical change in the redesignated Sec. 250.12(e), 
which addresses storage facility contracts, by replacing the incorrect 
reference to Sec. 250.14(c) (``Reviews'') with a reference to Sec.  
250.14(d) (``Contracts'').

Collection and Submission of Commodity Acceptability Information

    7 CFR 250.13(k)(1) currently requires that State agencies obtain 
information from recipient agencies which reflects: (1) The types and 
forms of donated foods that are most useful to recipients; (2) 
commodity specification recommendations; and (3) requests for options 
regarding package sizes and forms of commodities. Paragraph (k)(2) of 
this Section lists the categories of recipient agencies from which 
State agencies are to obtain this information; paragraph (k)(3) 
stipulates that this information be submitted to FCS on an annual 
basis, utilizing form FCS-663.
    Historically, USDA has donated a steady, dependable supply of foods 
acquired under the Commodity Credit Corporation's price-support 
operations to a variety of outlets, including charitable institutions 
and nonprofit summer camps for children. These donated foods have 
included cereal and grain products such as flour, cornmeal, rice, 
rolled wheat and oats, bulgur, macaroni, and spaghetti; peanut and oil 
products, such as roasted peanuts, peanut butter, peanut granules, 
soybean oil, and soybean shortening; and dairy products. However, due 
to the significant amounts of these foods that were distributed to 
recipient agencies in the past, changes in price-support legislation, 
and changes in agricultural market conditions, the inventories of 
available donated foods have been greatly reduced. At the present time, 
Federal inventories of surplus commodities are insufficient to supply 
food distribution programs on a regular basis.
    While donated foods may also become available to charitable 
institutions and nonprofit summer camps for children through surplus-
removal actions, their availability cannot be assured, and the types of 
commodities available can be expected to vary significantly over time.
    Because of the variety in the types and forms of donated foods 
previously available on an ongoing basis to charitable institutions and 
nonprofit summer camps for children, the Department applied to these 
institutions the regulatory requirement for annual collection and 
reporting of commodity acceptability information. However, since 
surplus commodities are not currently available to these institutions 
on a regular basis, the Department has determined that collection of 
commodity acceptability information from them no longer serves a useful 
purpose.
    For the same reasons, surplus commodities are also no longer 
available in TEFAP on a regular basis. Although, since 1989, 
commodities have been purchased, under authority of the Emergency Food 
Assistance Act of 1983 (Pub. L. 98-8; 7 U.S.C. 7501-16), to supplement 
the distribution of the dwindling surplus foods to needy households, 
the amount of funds appropriated for commodity purchases in TEFAP has 
been greatly reduced in recent years. Since the foods from which States 
may select for distribution to TEFAP households are the same as those 
available for distribution to eligible households in CSFP or FDPIR, the 
Department believes that it is not necessary to require State agencies 
to submit separate commodity acceptability reports for TEFAP.
    USDA regulations (7 CFR 250.13(k)) also presently require that 
commodity acceptability information for SFSP be submitted. However, 
because the target group is the same as that for the National School 
Lunch and School Breakfast Programs (which are included in the 
legislative requirement), and because the donated foods provided are 
the same, or similar, to donated foods provided in those programs, the 
Department considers the collection and submission of commodity 
acceptability information for recipient agencies participating in SFSP 
to be redundant.
    The Commodity Distribution Reform Act and WIC Amendments of 1987 
(Pub. L. 100-237; 7 U.S.C. 612c note) provides the basis for the 
Department's regulations requiring the collection of commodity 
acceptability information from recipient agencies. Section 3(a)(1)(B) 
of Pub. L. 100-237 provides that this data must be utilized by the 
Department in determining the types and forms of foods to be purchased 
for certain food distribution programs. The law does not, however, 
specifically include SFSP or nonprofit summer camps for children among 
those recipient agencies from which such information must be obtained. 
Additionally, the law requires the collection and use of commodity 
acceptability information only to the extent practicable for TEFAP, and 
for the donation of foods to charitable institutions. Therefore, as 
part of the Department's effort to reduce the paperwork burden, and for 
the reasons discussed above, this rule proposes to revise 
Sec. 250.13(k)(2) to exclude SFSP, summer camp, TEFAP, and charitable 
institution recipient agencies from those for which distributing 
agencies are required to submit commodity acceptability information. 
Such distributing agencies may still choose to collect and submit to 
FCS information on commodity acceptability from these categories of 
recipient agencies, and all such submissions would be carefully 
reviewed by FCS.
    In conformance with the above proposals, this rule also proposes to 
amend Sec. 250.13(k)(3) to delete reference to the annual submission by 
November 30th of commodity acceptability reports for summer camps and 
SFSP (for which reports would not be required), and to clarify that 
distributing agencies must submit commodity acceptability reports (for 
those programs for which reports would be required, as stipulated in 
Sec. 250.13(k)(2)) to FCS Regional Offices by April 30th each year. 
Additionally, this rule proposes to make a technical change to 
Sec. 250.24(d)(1) by removing the word ``semi-annual'' to reflect the 
current requirement contained in section 3(f)(2) of Pub. L. 100-237, as 
amended, which mandates the annual collection of commodity 
acceptability information. This statutory change was addressed in a 
final rule published in the Federal Register on July 22, 1993 (58 CFR 
39113).

Submission of Inventory Reports

    As previously described in this Preamble, most distributing 
agencies report excessive inventories of donated foods on the revised 
FCS-155, the Inventory Management Register, while distributing agencies 
administering FDPIR and CSFP use the more detailed inventory reports, 
forms FCS-152 (FDPIR) and FCS-153 (CSFP), to submit data on program 
participation, commodity distribution to households, and inventory 
levels. This rule proposes to revise the language in Sec. 250.17(a) to 
accurately describe the reporting function of FCS-155, which now 
requires reporting of excessive inventories only, and to require 
semiannual submission of this form, instead of monthly submissions, 
unless FCS determines that (a) more frequent reporting is necessary to 
maintain program accountability, or (b) less frequent reporting is 
sufficient to meet program needs. Reference would continue to be made 
to the submission of the FCS-155, or ``other format approved by FCS''--
the other currently approved formats being, of course, forms FCS-152 
and FCS-153, utilized in FDPIR and CSFP, respectively. Lastly, we 
propose to delete reference to a list of individual food orders 
received for each food item delivered (the function

[[Page 12114]]

of the FCS-155A, which has been found to be unnecessary, as discussed 
above).

Monitoring Requirements for Charitable Institutions and Summer Camps

    7 CFR 250.19(b) requires State agencies to establish review 
procedures to ensure compliance with Federal regulations addressing 
household eligibility, food ordering and storage, inventory controls, 
reporting and recordkeeping requirements, and civil rights provisions. 
Section 250.19(b)(1)(i) presently requires State agencies to conduct 
on-site reviews of each participating charitable institution, nonprofit 
summer camp for children, and nutrition program for the elderly at 
least once every four years, with at least 25 percent of the total 
number of such institutions reviewed each year. Section 
250.19(b)(1)(iv) requires biennial reviews of all food service 
management companies under contract with recipient agencies that have 
agreements with distributing agencies. Because of the reduced 
availability of USDA commodities for charitable institutions and 
nonprofit summer camps for children, as discussed in detail above, the 
Department believes that the requirements governing monitoring reviews 
for these recipient agencies, as well as the food service management 
companies under contract with them, are excessive. Thus, the Department 
proposes in this rule to revise Sec. 250.19(b)(1)(i) to require that 
State agencies perform on-site reviews of charitable institutions, 
nonprofit summer camps for children, and the food service management 
companies under contract with them, at a minimum: (1) whenever the 
State agency identifies actual or probable deficiencies in program 
administration through audits, investigations of complaints, reports 
submitted by recipient agencies, or any other information available to 
the State agency which, at the discretion of the State agency, warrants 
an on-site review; or, (2) at the request of FCS. State agencies are 
encouraged to conduct more frequent reviews as resources and work 
schedules permit. Section 250.19(b)(1)(iv) is proposed to be revised to 
note the exception of food service management companies under contract 
with charitable institutions and nonprofit summer camps for children 
from the biennial review requirement for food service management 
companies under contract with other types of recipient agencies.
    FCS Instruction 113-3, ``Civil Rights Compliance and Enforcement--
Food Distribution Programs,'' presently includes an on-site review 
requirement of recipient agencies every five years to ensure compliance 
with civil rights regulations. In accordance with the above proposed 
change in on-site review requirements for charitable institutions and 
nonprofit summer camps for children, this provision of the instruction 
would be removed. The revised instruction would require that on-site 
reviews to ensure compliance with civil rights provisions be conducted 
under conditions, and at the frequency, established by Federal 
regulations for the various types of recipient agencies. While the 
proposed rule relaxes on-site review requirements, distributing, 
subdistributing, and recipient agencies would be required to continue 
to comply with all other provisions in Federal regulations and FCS 
Instruction 113-3, including the collection of racial/ethnic 
participation data, to ensure that discrimination because of race, 
color, national origin, age, sex, or handicap does not occur in the 
operation of food distribution programs.
    This rule also proposes to restructure Sec. 250.19(b)(1) to address 
in separate subparagraphs nutrition programs for the elderly, on the 
one hand, and charitable institutions and nonprofit summer camps for 
children, on the other, because of the different monitoring 
requirements that would result from adoption of the proposal described 
above. In addition, this rule proposes to make a technical change in 
Sec. 250.19(b)(1)(i) by deleting the incorrect reference to 
Sec. 250.14(a) (``Standards for Warehousing and Distribution Systems'') 
and inserting instead reference to Sec. 250.14(b) (``Standards for 
Storage Facilities'').

The Emergency Food Assistance Program (7 CFR Part 251)

Duration Requirements for Agreements with Distributing and Recipient 
Agencies

    Section 251.2(c) of the regulations requires that distributing 
agencies enter into an agreement with the Department for the receipt of 
TEFAP foods and Federal funds for administrative costs. In addition to 
entering into agreements with the Department, distributing agencies are 
also required to enter into agreements with eligible emergency feeding 
organizations (EFOs). As stated in Sec. 251.4(a), Part 250 applies to 
the administration of TEFAP, to the extent that it is not inconsistent 
with Part 251. While the duration requirements for these types of 
agreements are not stipulated under this Part, 7 CFR 250.12(b) limits 
the length of such agreements to one year. The provisions contained in 
Sec. 251.2(c) also require that distributing agencies enter into 
agreements with EFOs that receive Federal funds and that such 
agreements be limited to one year, with an option for renewal for two 
one-year periods.
    As discussed in detail above, commenters recommended that Federal-
State agreements be made ongoing in order to reduce the paperwork 
burden. The Department concurs with this recommendation, and proposes 
to amend Sec. 251.2(c) to make TEFAP Federal-State agreements 
permanent, with amendments to be made at the request of FCS, and to 
make agreements between distributing agencies and EFOs permanent, with 
amendments to be made as necessary. In addition, distributing agencies 
must ensure that EFOs provide, on a timely basis, by amendment to the 
agreement, any changed information, including any changes resulting 
from amendments to Federal regulations or policy. Such information must 
include, but not be limited to, changes in the number of distribution 
sites and their locations, number of needy persons to be served, 
frequency of distributions, household eligibility criteria to be used 
in certifying households, and allocation of TEFAP administrative funds.

Submission of Inventory Reports

    This rule proposes to amend Sec. 251.10(d)(2) to direct State 
agencies to adhere to the inventory reporting requirements stipulated 
in Sec. 250.17(a), since State agencies administering TEFAP will also 
utilize the revised form FCS-155, the Inventory Management Register, to 
report excessive commodity inventories. Household participation data 
will also continue to be reported utilizing this form, at the same 
frequency that inventory information is reported. This rule proposes to 
include this requirement in the final sentence of Sec. 251.10(d)(2), 
and to delete Sec. 251.10(d)(3), which presently addresses this 
requirement, for both State agencies and EFOs. It will be up to each 
State agency to determine how best to collect the necessary information 
from the EFOs. Additionally, this rule proposes to amend 
Sec. 251.10(a)(1) to remove reference to the obsolete Sec. 250.6(r), 
and to refer to Sec. 250.16 instead.

Food Distribution Program on Indian Reservations (7 CFR Part 253)

Plan of Operation

    Section 253.5(a) of the regulations requires that the State agency 
(including Indian Tribal Organizations acting as the State agency) 
responsible for the

[[Page 12115]]

administration of the Food Distribution Program on Indian Reservations 
submit a plan of operation each year to FCS for approval. The 
provisions in this section require that such plans contain a 
description of the storage and distribution facilities to be utilized, 
the method of assuring that only eligible households receive benefits, 
and other information relative to the administration of the program.
    Although the commenters did not recommend a change to the 
requirement that State agencies submit a plan of operation to FCS each 
year, the Department believes that, because the plan's contents do not 
change much from year to year, the plan should be permanent, with 
amendments added as changes in program administration are made. Thus, 
this rule proposes to amend Sec. 253.5(a) to make the plan of operation 
permanent, with amendments to be added as: (a) changes in State agency 
administration of the program, as described in the plan, are made; or, 
(b) at the request of FCS, e.g., in response to changes in State agency 
plan requirements or guidance. The Department's authority under 
Secs. 3015.124(a) and 3016.43 to terminate agreements for cause would 
not be affected by this proposed change.

Application for Federal Assistance

    State agencies and Indian Tribal Organizations must continue to 
submit an application to receive Federal administrative funds on an 
annual basis, as required by Sec. 253.9(c). However, this rule proposes 
to amend this section of the regulations to reflect the fact that this 
application is now made through completion of standard form SF-424, 
which is mandated by 7 CFR Part 3016 (``Uniform Administrative 
Requirements for Grants and Cooperative Agreements to State and Local 
Governments''), instead of form AD-623. This rule also proposes to 
delete the statement in this section encouraging Indian Tribal 
Organizations which act as State agencies to first submit applications 
through the State clearinghouse, as agencies of State government are 
required to do under 7 CFR Part 3015 (Uniform Federal Assistance 
Regulations), Subpart V. The Department does not believe that this 
statement is in the spirit of the Presidential directive of April 29, 
1994 (``Government-to-Government Relations with Native American Tribal 
Governments,'' 59 FR 22951, May 4, 1994), which encourages agencies of 
the Federal government to work directly with Native American Tribal 
Governments.

List of Subjects

7 CFR Part 250

    Aged, Agricultural commodities, Business and industry, Food 
assistance programs, Food donations, Food processing, Grant programs-
social programs, Indians, Infants and children, Price support programs, 
Reporting and recordkeeping requirements, School breakfast and lunch 
programs, Surplus agricultural commodities.

7 CFR Part 251

    Aged, Agricultural commodities, Business and industry, Food 
assistance programs, Food donations, Grant programs-social programs, 
Indians, Infants and children, Price support programs, Reporting and 
recordkeeping requirements, School breakfast and lunch programs, 
Surplus agricultural commodities.

7 CFR Part 253

    Administrative practice and procedure, Food assistance programs, 
Grant programs, Social programs, Indians, Reporting and recordkeeping 
requirements, Surplus agricultural commodities.
    Accordingly, 7 CFR parts 250, 251, and 253 are proposed to be 
amended as follows.

PART 250--DONATION OF FOODS FOR USE IN THE UNITED STATES, ITS 
TERRITORIES AND POSSESSIONS AND AREAS UNDER ITS JURISDICTION

    1. The authority citation for part 250 continues to read as 
follows:

    Authority: 5 U.S.C. 301; 7 U.S.C. 612c, 612c note, 1431, 1431b, 
1431e, 1431 note, 1446a-1, 1859, 2014, 2025; 15 U.S.C. 713c; 22 
U.S.C. 1922; 42 U.S.C. 1751, 1755, 1758, 1760, 1761, 1762a, 1766, 
3030a, 5179, 5180.


Secs. 250.3, 250.19, 250.40, 250.41, 250.42, 250.48, 250.49  [Amended]

    2. In Sec. 250.3, in the definition of Food service management 
company, and in Secs. 250.19(b)(1)(iv), 250.40(a)(4), 250.41(a)(3), 
250.42(a), 250.48(a)(1), and 250.49(a), the citation ``250.12(c)'' is 
removed wherever it appears, and the citation ``250.12(d)'' is added in 
its place.
    3. In Section 250.12:
    a. The third and fourth sentences of paragraph (a) are revised;
    b. The concluding text of paragraph (b) is removed;
    c. Paragraphs (c), (d), and (e) are redesignated as paragraphs (d), 
(e) and (f), and a new paragraph (c) is added; and
    d. Newly redesignated paragraphs (d) and (e) are revised.
    The revisions and addition read as follows:


Sec. 250.12  Agreements and contracts.

    (a) Agreements with Department. * * * The agreements shall be 
considered permanent, with amendments to be made at the request of FCS. 
In addition, agreements between the Department and State Agencies on 
Aging that elect to receive cash in lieu of commodities shall also be 
considered permanent, with amendments to be made at the request of FCS.
* * * * *
    (c) Duration of distributing agency agreements.--(1) Recipient 
agencies. Distributing agency agreements with recipient agencies shall 
be considered permanent, with amendments to be made as necessary. 
Distributing agencies shall ensure that recipient agencies provide, on 
a timely basis, by amendment to the agreement, any changed information, 
including, but not limited to, any changes resulting from amendments to 
Federal regulatory requirements and policy and changes in site 
locations, and number of meals or needy persons to be served.
    (2) Subdistributing agencies, carriers, and other entities. 
Distributing agency agreements with subdistributing agencies that are 
not recipient agencies, carriers, and other entities shall be in effect 
for not longer than one year, and shall provide that they may be 
extended at the option of both parties for two additional one-year 
periods. The party contracting with the distributing agency shall 
update all pertinent information and demonstrate that all donated food 
received during the period of the previous agreement has been accounted 
for, before an agreement is extended.
    (3) Termination of agreements. Agreements may be terminated for 
cause by either party upon 30 days notice.
    (d) Food service management company contracts. Food service 
management companies may be employed to conduct the food service 
operations of nonprofit summer camps for children, charitable 
institutions, nutrition programs for the elderly, schools, 
nonresidential child care institutions, and service institutions. In 
instances when a food service management company is employed to provide 
such services, the recipient agency shall enter into a written contract 
with the food service management company. The contract shall expressly 
provide that any donated foods received by the recipient agency and 
made available to the food service management company shall be utilized

[[Page 12116]]

solely for the purpose of providing benefits for the employing agency's 
food service operation, and it shall be the responsibility of the 
recipient agency to demonstrate that the full value of all donated 
foods is used solely for the benefit of the recipient agency. All food 
service management companies shall be subject to review by the 
distributing agency for compliance with contractual requirements, in 
accordance with Sec. 250.19(b)(1). In the case of nonprofit summer 
camps for children, charitable institutions, and nutrition programs for 
the elderly, the contract shall be in effect for no longer than one 
year, and may provide that it be extended at the option of both parties 
for not more than four additional one-year periods. Contracts shall 
provide that they may be terminated for cause by either party upon 30 
days notice. Prior to extension of the contract, the nonprofit summer 
camp for children, charitable institution, or nutrition program for the 
elderly shall update all pertinent information and demonstrate that all 
donated food received during the previous contract period has been 
accounted for.
    (e) Storage facility contracts. When contracting for storage 
facilities, distributing agencies and subdistributing agencies shall 
enter into a written contract, in accordance with Sec. 250.14(d).
* * * * *
    4. In Sec. 250.13:
    a. Paragraph (k)(2) is amended by removing the words ``the Summer 
Food Service Program'', ``charitable institutions, summer camps,'' and 
``, and the Emergency Food Assistance Program''; and by adding ``and'' 
before ``the Food Distribution Program on Indian Reservations''; and
    b. Paragraph (k)(3) is revised to read as follows:


Sec. 250.13  Distribution and control of donated foods.

* * * * *
    (k) * * *
    (3) Timeframes for submission. Distributing agencies shall submit 
commodity acceptability reports to the appropriate FCSRO by April 30th 
of each year on form FCS-663.
    5. In Sec. 250.14:
    a. The introductory text of paragraph (d) is amended by removing 
the first three sentences, and adding two new sentences in their place;
    b. Paragraph (d)(1) is amended by removing the reference to 
``paragraph (a)'' and adding in its place a reference to ``paragraph 
(b)''; and
    c. Paragraph (e) is amended by removing the citation 
``Sec. 250.14(b)'' in the first sentence, and adding in its place a 
reference to ``paragraph (c) of this section''; and, by removing the 
reference to ``paragraph (e)'' in the fourth sentence, and adding in 
its place a reference to ``paragraph (f)''.
    The additions read as follows:


Sec. 250.14  Warehousing, distribution and storage of donated foods.

* * * * *
    (d) Contracts. When contracting for storage facilities, 
distributing agencies and subdistributing agencies shall enter into 
written contracts to be effective for no longer than five years, 
including option years extending a contract. Before the exercise of 
option years, the storage facility shall update all pertinent 
information and demonstrate that all donated foods received during the 
previous contract period have been accounted for. * * *
* * * * *
    6. Section 250.17 is amended by revising paragraph (a) to read as 
follows:


Sec. 250.17  Reports.

    (a) Inventory reports and receipt of donated foods. Distributing 
agencies shall complete and submit to the FCSRO semiannual reports 
regarding excessive inventories (as defined in Sec. 250.14(f)) of 
donated foods, utilizing form FCS-155, the Inventory Management 
Register, except that distributing agencies shall submit monthly 
inventory information on form FCS-152, for the Food Distribution 
Program on Indian Reservations, and on form FCS-153, for the Commodity 
Supplemental Food Program. FCS may require the use of other reporting 
formats. FCS may also require that form FCS-155 be submitted more 
frequently than semiannually if necessary to maintain program 
accountability, and that any inventory report be submitted less 
frequently if sufficient to meet program needs. Reports shall be 
submitted not later than 30 calendar days after the last month in the 
reporting period as established by FCS.
* * * * *
    7. In Sec. 250.19:
    a. Paragraph (b)(1)(i) is revised;
    b. Paragraphs (b)(1)(ii), (b)(1)(iii), and (b)(1)(iv) are 
redesignated as paragraphs (b)(1)(iii), b(1)(iv), and b(1)(v), 
respectively;
    c. A new paragraph (b)(1)(ii) is added; and,
    d. Newly redesignated paragraph (b)(1)(v) is revised.
    The revisions and addition read as follows:


Sec. 250.19  Reviews.

* * * * *
    (b) Responsibilities of distributing agencies.
    (1) * * *
    (i) An on-site review of all nutrition programs for the elderly 
under agreement in accordance with Sec. 250.12(b), at least once every 
four years, with not fewer than 25 percent of these programs being 
reviewed each year. These reviews shall also include on-site reviews of 
the storage facilities of sites receiving donated foods to ensure 
compliance with Sec. 250.14(b);
    (ii) An on-site review of all charitable institutions and nonprofit 
summer camps for children under agreement in accordance with 
Sec. 250.12(b), and the food service management companies under 
contract with these recipient agencies in accordance with 
Sec. 250.12(d), at a minimum, whenever the distributing agency 
identifies actual or probable deficiencies in program administration, 
including compliance with civil rights provisions, through audits, 
investigations of complaints, reports submitted by recipient agencies, 
or any other information available to the State agency which, at the 
discretion of the State agency, warrants an on-site review, or at the 
request of FCS;
* * * * *
    (v) A biennial review of all food service management companies 
under contract with recipient agencies in accordance with 
Sec. 250.12(d), except that:
    (A) Food service management companies under contract with 
charitable institutions and nonprofit summer camps for children shall 
be reviewed in accordance with paragraph (b)(1)(ii) of this section; 
and,
    (B) Food service management companies under contract with schools 
participating in the National School Lunch Program or commodity schools 
under part 210 of this chapter, or with schools participating in the 
School Breakfast Program under part 220 of this chapter, shall be 
reviewed in accordance with the provisions set forth in parts 210 and 
220.
* * * * *


Sec. 250.24  [Amended]

    8. In Sec. 250.24, paragraph (d)(1) is amended by removing the word 
``semi-annual''.

PART 251--THE EMERGENCY FOOD ASSISTANCE PROGRAM

    1. The authority citation for part 251 is revised to read as 
follows:

    Authority: 7 U.S.C. 7501-7516.

    2. Section 251.2 is amended by revising paragraph (c) to read as 
follows:

[[Page 12117]]

Sec. 251.2  Administration.

* * * * *
    (c) Each State agency that distributes donated foods to emergency 
feeding organizations or receives payments for storage and distribution 
costs in accordance with Sec. 251.8 shall perform those functions 
pursuant to an agreement entered into with the Department. This 
agreement shall be considered permanent, with amendments to be made at 
the request of FCS. Such State agencies shall enter into a written 
agreement with eligible emergency feeding organizations. This agreement 
shall provide that emergency feeding organizations agree to operate the 
program in accordance with the requirements of this part, and, as 
applicable, Part 250 of this chapter. The agreement shall be considered 
permanent, with amendments to be made as necessary. State agencies 
shall ensure that emergency feeding organizations provide, on a timely 
basis, by amendment to the agreement, any information on changes in 
program administration, including, but not limited to, any changes 
resulting from amendments to Federal regulations or policy.
    3. In Sec. 251.10:
    a. Paragraph (a)(1) is amended by removing the citation 
``Sec. 250.6(r)'' and adding in its place the citation ``Sec. 250.16'';
    b. Paragraph (d)(2) is revised to read as follows; and
    c. Paragraph (d)(3) is removed.


Sec. 251.10  Miscellaneous provisions.

* * * * *
    (d) Reports. * * *
    (2) Each State agency shall complete and submit to the FCSRO 
reports to ensure that excessive inventories of donated foods are not 
maintained, in accordance with the requirements of Sec. 250.17(a) of 
this chapter. Such reports shall also include the total number of 
households served in the State since the previous report submittal, 
based upon current information received from emergency feeding 
organizations.
* * * * *

PART 253--ADMINISTRATION OF THE FOOD DISTRIBUTION PROGRAM FOR 
HOUSEHOLDS ON INDIAN RESERVATIONS

    1. The authority citation for part 253 continues to read as 
follows:

    Authority: 91 Stat. 958 (7 U.S.C. 2011-2027), unless otherwise 
noted.

    2. Section 253.5 is amended by removing the first two sentences of 
the introductory text of paragraph (a)(1) and adding, in their place, 
three new sentences to read as follows:


Sec. 253.5  State agency requirements.

    (a) Plan of operation. (1) The State agency that assumes 
responsibility for the Food Distribution Program shall submit a plan of 
operation for approval by FCS. Approval of the plan shall be a 
prerequisite to the donation of commodities available for use by 
households under Sec. 253.9. The approved plan shall be considered 
permanent, with amendments to be added as changes in State agency 
administration or management of the program, as described in the plan, 
are made, or at the request of FCS. * * *
* * * * *
    3. Section 253.9 is amended by revising paragraph (c)(1) to read as 
follows:


Sec. 253.9  Administrative funds for State agencies.

* * * * *
    (c) Application for funds. (1) Any State agency administering a 
Food Distribution Program that desires to receive administrative funds 
under this section shall submit form SF-424, ``Application for Federal 
Assistance,'' to the appropriate FCS Regional Office at least three 
months prior to the beginning of a Federal fiscal year. The application 
shall include budget information, reflecting by category of expenditure 
the State agency's best estimate of the total amount to be expended in 
the administration of the program during the fiscal year. FCS may 
require that detailed information be submitted by the State agency to 
support or explain the total estimated amounts shown for each budget 
cost category. As required by 7 CFR 3015, Subpart V, agencies of State 
government shall submit the application for Federal assistance to the 
State clearinghouse before submitting it to the FCSRO. ITOs shall not 
be subject to this requirement.
* * * * *

    Dated: March 10, 1997.
William E. Ludwig,
Administrator.
[FR Doc. 97-6427 Filed 3-13-97; 8:45 am]
BILLING CODE 3410-30-U