Requirements for the Distribution and Control of Donated Foods, 63223-63256 [2014-24613]
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Vol. 79
Wednesday,
No. 204
October 22, 2014
Part II
Department of Agriculture
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Food and Nutrition Service
7 CFR Parts 250 and 251
Requirements for the Distribution and Control of Donated Foods; Proposed
Rule
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Federal Register / Vol. 79, No. 204 / Wednesday, October 22, 2014 / Proposed Rules
DEPARTMENT OF AGRICULTURE
Food and Nutrition Service
7 CFR Parts 250 and 251
RIN 0584–AE29
Requirements for the Distribution and
Control of Donated Foods
AGENCY:
Food and Nutrition Service,
USDA.
ACTION: Proposed rule.
This rule proposes to revise
and clarify requirements to ensure that
USDA donated foods are distributed,
stored, and managed in the safest, most
efficient, and cost-effective manner, at
State and recipient agency levels. The
rule would also reduce administrative
and reporting requirements for State
distributing agencies, revise or clarify
regulatory provisions relating to
accountability for donated foods, and
rewrite much of the regulations in a
more user-friendly, ‘‘plain language,’’
format. Lastly, the rule proposes to
revise and clarify specific requirements
to conform more closely to related
requirements elsewhere in the Code of
Federal Regulations. In formulating the
proposals, the Food and Nutrition
Service (FNS) has utilized input
received from program administrators,
industry representatives, and other
organizations at national conferences
and other meetings, and through email
or other routine communications with
such parties.
DATES: To be assured of consideration,
comments must be received on or before
January 20, 2015.
ADDRESSES: The Food and Nutrition
Service invites interested persons to
submit comments on this proposed rule.
You may submit comments, identified
by RIN number 0584–AE29, by any of
the following methods:
Email: Send written comments to
Dana.Rasmussen@fns.usda.gov. Include
RIN number 0584–AE29 in the subject
line of the message.
Mail: Send written comments to Dana
Rasmussen, Branch Chief, Policy
Branch, Food Distribution Division,
Food and Nutrition Service, U.S.
Department of Agriculture, Room 500,
3101 Park Center Drive, Alexandria,
Virginia 22302–1594.
Hand Delivery or Courier: Deliver
written comments to the above address.
Federal eRulemaking Portal: Go to
https://www.regulations.gov. Follow the
online instructions for submitting
comments.
Further information on the
submission of comments or the review
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SUMMARY:
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of comments submitted may be found
under Part III, Procedural Matters, under
SUPPLEMENTARY INFORMATION.
FOR FURTHER INFORMATION CONTACT:
Dana Rasmussen at the above address or
telephone (703) 305–2662, or by email
at Dana.Rasmussen@fns.usda.gov.
SUPPLEMENTARY INFORMATION:
I. Background
The Department of Agriculture’s (the
Department or USDA) Food and
Nutrition Service (FNS) provides food to
State distributing agencies for use in
food assistance programs as authorized
in the Richard B. Russell National
School Lunch Act (42 U.S.C. 1751 et
seq.), the Emergency Food Assistance
Act of 1983 (7 U.S.C. 7501, et seq.), the
Food and Nutrition Act of 2008 (7
U.S.C. 2011, et seq.), the Agriculture
and Consumer Protection Act of 1973 (7
U.S.C. 612c note), the Older Americans
Act of 1965 (42 U.S.C. 3001, et seq.),
and the Robert T. Stafford Disaster
Relief and Emergency Assistance Act
(42 U.S.C. 5121, et seq.). State
distributing agencies, in turn, distribute
the donated foods (which are also
referred to as USDA Foods) to recipient
agencies (such as school food
authorities, food banks, and food
pantries) which provide assistance to
eligible persons or households in
specific food assistance programs, to
needy persons served by charitable
institutions, or to persons victimized by
a disaster or situation of distress. The
general regulations for the storage,
distribution, and control of donated
foods by State distributing agencies and
recipient agencies are included in 7 CFR
part 250. Other Federal regulations
include requirements specific to
particular food assistance programs that
receive donated foods—e.g., 7 CFR part
251 for The Emergency Food Assistance
Program (TEFAP) and 7 CFR part 210
for the National School Lunch Program
(NSLP).
Following the enactment of the
Commodity Distribution Reform Act
and WIC Amendments of 1987, (7
U.S.C. 612c note), hereinafter referred to
as the Commodity Distribution Reform
Act, a final rule was issued in October
1989 amending 7 CFR part 250 to
require State distributing agencies to
evaluate the efficiency and costeffectiveness of their method of
distribution of donated foods to
recipient agencies (54 FR 42476). The
amended regulations required
distributing agencies to utilize a
commercial storage and distribution
system, if such system was determined
to be more cost-effective. As a result,
most State distributing agencies
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currently procure the services of
commercial storage facilities to store
donated foods and distribute them to
recipient agencies, or permit direct
shipments from vendors of donated
foods to recipient agencies, the
contracted commercial storage facilities
of such agencies, or to processors for
processing of donated foods into end
products. However, for donated foods
distributed in NSLP, most school food
authorities must pay a charge to help
meet storage and distribution costs for
donated foods. The charge imposed on
school food authorities varies widely
from State to State. This rule proposes
to revise current requirements in 7 CFR
part 250 to ensure that State distribution
systems provide the most efficient and
cost-effective service for school food
authorities in provision of donated
foods, while reducing the administrative
burden on distributing agencies in
providing such service.
In 2002, the Department, in
collaboration with State agencies and
school food authorities, developed
procedures and instructions for
responding to donated foods subject to
a food recall. Such procedures and
instructions ensure that donated foods
subject to a food recall are isolated,
inspected, and recovered in an
expeditious manner. This rule proposes
to include a section on donated food
safety and disposition, and to require
that State distributing agency
agreements and contracts include
provisions to ensure compliance with
all applicable Federal, State or local
requirements relating to food safety and
food recalls.
In October 2002, 7 CFR part 250 was
amended to permit school food
authorities in NSLP, as well as other
recipient agencies that use donated
foods, to provide meals to recipients,
store donated foods together with
commercially purchased foods, and
maintain a single inventory record of
the donated and purchased foods (67 FR
65015). The single inventory
management option reduced the
workload for school food authorities in
control and monitoring of their food
inventories. In August 2008, 7 CFR part
250 was amended to further clarify the
single inventory management option for
school food authorities, and to revise
other requirements to ensure that such
entities receive the full benefit of the
donated foods provided in NSLP (73 FR
46189). However, some confusion still
exists regarding the application of the
single inventory management option.
This rule proposes to further clarify
storage and inventory management
requirements at the distributing and
recipient agency levels.
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Federal Register / Vol. 79, No. 204 / Wednesday, October 22, 2014 / Proposed Rules
In order to ensure compliance with
requirements for the processing of
donated foods, the State distributing
agency must currently conduct an onsite review of in-State processors at least
once every two years. This rule
proposes to remove this requirement,
which is burdensome and costly for
distributing agencies, and to require
instead that in-State processors obtain
independent Certified Public
Accountant (CPA) audits, as currently
required of multi-State processors. The
rule would also remove requirements
for the distributing agency in
verification of sales of processed end
products, and in reporting acceptability
of donated foods to FNS.
The Department has developed
instructions and guidance in areas of
donated food distribution related to
food recalls, the use of donated foods in
disaster situations, ensuring that
restitution is made for donated food
losses, shipment and receipt of donated
foods, and options in the processing of
donated foods. This rule proposes to
include references to these materials to
help the reader better understand
standards and procedures relating to
specific aspects of the distribution and
control of donated foods. This rule also
proposes to provide references to other
applicable Federal regulations to help
the reader identify Federal requirements
affecting the distribution and control of
donated foods that are beyond the scope
of this proposed rule. Lastly, the rule
proposes to rewrite and restructure
much of 7 CFR part 250 in a more userfriendly, ‘‘plain language,’’ format.
Specific proposals for change or
clarification are discussed more fully in
the next section of the preamble.
II. Discussion of the Rule’s Provisions
7 CFR Part 250
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A. Subpart A—General Purpose and
Administration
We propose to completely revise
current Subpart A of 7 CFR part 250 to
more clearly present the general
purpose and use of donated foods, the
definitions applicable to 7 CFR part 250,
the responsible administrative agencies
in the distribution and control of
donated foods at Federal and State
levels, and civil rights requirements.
Some of these requirements are located
in current Subpart B. Accordingly, we
propose to change the heading of
Subpart A to General Purpose and
Administration, with new sections as
described in the following paragraphs.
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1. Purpose and Use of Donated Foods,
§ 250.1
In § 250.1, we propose to describe the
purpose of donated foods, the general
requirements for their use, and the
legislative sanctions that apply in the
event that they are used improperly. In
§ 250.1(a), we indicate that the
Department purchases foods for
donation in specific food assistance
programs or to provide assistance to
needy persons, in accordance with
legislation authorizing such assistance
in specific programs or providing for
removal of market surpluses and
support of food prices.
In § 250.1(b), we propose to include
the stipulation, in current § 250.13(a)(1),
that donated foods must be distributed
and used in accordance with the
requirements of 7 CFR part 250. We
propose to indicate that other Federal
regulations also apply to specific
programs (e.g., 7 CFR part 251 includes
requirements for donated foods
provided in TEFAP). We propose to
include the provision, in current
§ 250.13(a)(7), that permits donated
foods to be used in activities designed
to test their effective use in specific
programs (e.g., in nutrition classes or
cooking demonstrations). However, we
propose to remove the need for prior
approval to permit such use.
In accordance with current
§ 250.13(a)(1)(ii), donated foods may not
be sold, exchanged, or otherwise
disposed of without prior approval of
the Department. And, in accordance
with current § 250.15(a)(3), recipients
may not be required to make any
payments, or perform any services, in
connection with the receipt of donated
foods. We propose to include these
requirements in § 250.1(b) of this
proposed rule, with some clarification.
We propose to prohibit the sale,
exchange, or other disposition of
donated foods, or their use to require
recipients to make any payments, or
perform any services, except as
specifically permitted in 7 CFR part 250,
or in other Federal regulations. We also
propose to include the requirement, in
current § 250.15(a)(3), that donated
foods may not be used to solicit
voluntary contributions, except for
donated foods provided in the Nutrition
Services Incentive Program (NSIP),
which was formerly called the Nutrition
Program for the Elderly.
In § 250.1(c), we propose to include,
in streamlined form, the sanctions
established under the Richard B. Russell
National School Lunch Act (42 U.S.C.
1760) and the Agriculture and
Consumer Protection Act of 1973 (7
U.S.C. 612c note) for persons who
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embezzle, willfully misapply, steal, or
obtain by fraud, donated foods, or funds
deriving from donated foods. These
sanctions are included in current
§ 250.13(i).
2. Definitions, § 250.2
In § 250.2, we propose to include the
definitions applicable to 7 CFR part 250,
which are included in current § 250.3.
Although most of the definitions are
included without change, we have
chosen to set out all definitions in this
rule, in the interest of clarity. However,
this preamble addresses only those
current definitions that we are
proposing to remove or revise and the
definitions that we are proposing to add.
We propose to remove the definitions
of ‘‘Commodities’’, ‘‘Disaster victims’’,
‘‘Discount system’’, ‘‘FNSRO’’,
‘‘Nonprofit school food service
account’’, ‘‘Refund application’’,
‘‘Refund system’’, ‘‘School’’,
‘‘Secretary’’, ‘‘State and United States’’,
‘‘Substituted food’’, and ‘‘Welfare
agency’’. The term ‘‘commodities’’ is no
longer commonly used, as it has been
replaced by ‘‘donated foods’’ or ‘‘USDA
Foods,’’ both of which are included in
§ 250.2 of this proposed rule. The
Federal Emergency Management Agency
(FEMA) now commonly refers to
survivors of a disaster or emergency,
rather than to disaster victims, and we
propose to use the same reference in 7
CFR part 250. In this proposed rule, we
refer simply to FNS actions or
requirements, without specifying
FNSRO (i.e., FNS Regional Offices) or
FNS Headquarters. FNS guidance
indicates which FNS office is
responsible for specific procedures. The
definitions of ‘‘Discount system’’,
‘‘Refund’’, ‘‘Refund application’’,
‘‘Refund system’’, and ‘‘Substituted
food’’, are unnecessary, as their meaning
is clear in current Subpart C of 7 CFR
part 250, which includes requirements
in the processing of donated foods. The
definition of ‘‘Nonprofit school food
service account’’ is included in 7 CFR
part 210, and we propose to include
references to that part, as appropriate,
rather than repeat the definition in 7
CFR part 250. Similarly, the definition
of ‘‘School’’ is included in § 210.2, and
we refer invariably to the school food
authority, rather than to individual
schools, in 7 CFR part 250. In this
proposed rule, we refer to the
Department or USDA, rather than to the
Secretary. The term ‘‘Welfare agency’’ is
no longer in use, and such agencies
would fall under the term ‘‘Recipient
agencies’’ in this proposed rule. The
current definition of ‘‘State and United
States’’ would be replaced by a new
definition of ‘‘State’’.
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Federal Register / Vol. 79, No. 204 / Wednesday, October 22, 2014 / Proposed Rules
We propose to revise current
definitions of ‘‘Adult care institution’’,
‘‘CACFP’’, ‘‘Charitable institutions’’,
‘‘Department’’, ‘‘Disaster’’, ‘‘Disaster
organizations’’, ‘‘Distributing agency’’,
‘‘Donated foods’’, ‘‘Elderly nutrition
project’’, ‘‘Household’’, ‘‘In-kind
replacement’’, ‘‘Multi-State processor’’,
‘‘National per-meal value’’, ‘‘Needy
persons’’, ‘‘NSIP’’, ‘‘NSLP’’, ‘‘Recipient
agencies’’, ‘‘SBP’’, ‘‘Section 4(a)’’,
‘‘Section 6’’, ‘‘Section 14’’, ‘‘Section 32’’,
‘‘Section 311’’, ‘‘Section 416’’, ‘‘Section
709’’, ‘‘SFSP’’, ‘‘Similar replacement’’,
‘‘Situation of distress’’, ‘‘Storage
facility’’, ‘‘State Agency on Aging’’, and
‘‘Subdistributing agency’’.
The proposed revisions of ‘‘Adult care
institution’’, ‘‘CACFP’’, ‘‘Charitable
institutions’’, ‘‘Department’’, ‘‘Donated
foods’’, ‘‘Elderly nutrition project’’,
‘‘Multi-State processor’’, ‘‘National permeal value’’, ‘‘Needy persons’’, ‘‘NSIP’’,
‘‘NSLP’’, ‘‘SBP’’, ‘‘Section 4(a)’’,
‘‘Section 6’’, ‘‘Section 14’’, ‘‘Section 32’’,
‘‘Section 311’’, ‘‘Section 416’’, ‘‘Section
709’’, ‘‘SFSP’’, ‘‘State Agency on
Aging’’, and ‘‘Storage facility’’ would
simply streamline the current
definitions.
The proposed revision of ‘‘Disaster’’
would also streamline the current
definition, and would include the
Presidential declaration of a disaster or
emergency (e.g., a pandemic), as either
event would trigger the provision of
donated foods, in accordance with
section 413 of the Robert T. Stafford
Disaster Relief and Emergency
Assistance Act, as amended (42 U.S.C.
5180). The proposed revision of
‘‘Situation of distress’’ would simply
indicate that it is a natural catastrophe
or other event that does not meet the
definition of disaster, but that, in the
determination of the distributing agency
or FNS, warrants the use of donated
foods to assist persons in need of food
assistance as a result of such catastrophe
or event. Further explanation relating to
contingencies for the provision of
donated food assistance in such an
event is included in § 250.70 of this
proposed rule. The proposed revision of
‘‘Disaster organizations’’ would include
reference to such organizations
authorized to provide assistance to
survivors of a disaster or a situation of
distress, rather than to disaster victims.
The proposed revision of
‘‘Distributing agency’’ would clarify the
current definition by indicating that it is
a State agency selected by the
appropriate authorities in the State to
distribute donated foods in the State, in
accordance with 7 CFR part 250 and
other Federal regulations, as applicable.
We also propose to clarify that Indian
Tribal Organizations may act as
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distributing agencies in the
administration of the Food Distribution
Program on Indian Reservations (FDPIR)
or other programs on, or near, Indian
reservations, as currently provided for
in Federal regulations. We propose to
remove the inclusion of a Federal
agency or private agency under the
definition. A Federal agency may
distribute donated foods in a State, but
would not do so as a distributing agency
subject to the requirements in this part.
A private nonprofit agency may
distribute donated foods in the State,
but only as a subdistributing agency,
under an agreement with the
distributing agency. A private for-profit
entity (i.e., commercial enterprise) may
also distribute donated foods in the
State, but only under contract with the
distributing agency (or subdistributing
agency), and subject to Federal
procurement requirements. The
proposed revision of ‘‘Recipient
agencies’’ would clarify their function
in providing assistance directly to needy
persons. It would also clarify that local
agencies in the Commodity
Supplemental Food Program (CSFP),
and Indian Tribal Organizations
distributing donated foods to needy
persons through FDPIR in a State in
which the State government administers
FDPIR, are considered recipient
agencies in 7 CFR part 250.
The proposed revision of
‘‘Subdistributing agency’’ would clarify
that it is a State agency, public agency,
or a nonprofit organization selected by
the distributing agency to perform one
or more donated food activities required
of the distributing agency. It would
remove the current designation of State
agencies, local agencies, and Indian
Tribal Organizations that administer
TEFAP, FDPIR, or CSFP as
subdistributing agencies. State agencies
and Indian Tribal Organizations
administering such programs meet the
definition of distributing agency. Local
agencies in CSFP may function as
subdistributing agencies if they receive
donated foods for further distribution to
other recipient agencies. However, in
most cases, they function only as
recipient agencies in that they provide
assistance directly to needy persons.
The proposed revisions of ‘‘In-kind
replacement’’ and ‘‘Similar
replacement’’ would clarify that such
replacement must be with the same (i.e.,
in-kind) or similar foods of a quality and
value at least equal to the lost donated
foods. The proposed revision of
‘‘Similar replacement’’ also clarifies that
the replacement food must be from the
same food category (e.g., meat,
vegetable, grains) as the lost donated
food. The proposed revision of
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‘‘Household’’ clarifies the individuals or
the groups of individuals which may be
considered a household in this part.
We propose to add definitions of ‘‘7
CFR Part 3052’’, ‘‘Administering
agency’’, ‘‘Carrier’’, ‘‘Consignee’’,
‘‘CSFP’’, ‘‘Distribution charge’’,
‘‘FDPIR’’, ‘‘Food recall’’, ‘‘Household
programs’’, ‘‘In-State processor’’,
‘‘Multi-food shipment’’, ‘‘Out-ofcondition donated foods’’, ‘‘SAE funds’’,
‘‘Section 27’’, ‘‘SNAP’’, ‘‘Split
shipment’’, ‘‘State’’, ‘‘TEFAP’’, ‘‘USDA
foods’’, and ‘‘Vendor’’.
The addition of ‘‘Administering
agency’’ would clarify its function in the
overall administration of a food
assistance program in the State, rather
than just the distribution of donated
foods, which is the function of the
distributing agency. While the
administering agency may also be the
distributing agency in a State, that is not
always the case. The addition of
‘‘CSFP’’, ‘‘FDPIR’’, ‘‘Household
programs’’, ‘‘SNAP’’, and ‘‘TEFAP’’
would help the reader identify food
assistance programs referred to in 7 CFR
part 250. The addition of ‘‘7 CFR Part
3052’’ would alert the reader to the
Departmental regulations relating to
audits of public and nonprofit agencies
receiving Federal grants. The additions
of ‘‘Carrier’’ and ‘‘Consignee’’ would
identify entities that transport donated
foods from one location to another, and
that receive shipments of donated foods,
respectively. The addition of
‘‘Distribution charge’’ would identify
the total charge or fee that the
distributing agency may impose on
recipient agencies in child nutrition
programs to help defray costs of storing
and distributing donated foods, and
associated administrative costs. The
addition of ‘‘Multi-food shipment’’
would identify shipments of donated
foods from a Federal storage facility,
rather than directly from a vendor.
The addition of ‘‘Food recall’’ would
identify an action necessary to protect
public health, which is further
addressed in § 250.15(c) of this
proposed rule. The addition of ‘‘In-State
processor’’ would help the reader
distinguish such an entity from a multiState processor. The addition of ‘‘Outof-condition donated foods’’ would
identify those donated foods that are no
longer fit for human consumption. The
addition of ‘‘SAE funds’’ would identify
the Federal funds provided to State
agencies to pay for administrative
expenses in NSLP and other child
nutrition programs, in accordance with
7 CFR part 235. The addition of
‘‘Section 27’’ would identify the section
of the Food and Nutrition Act of 2008
that authorizes funds for food purchases
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Federal Register / Vol. 79, No. 204 / Wednesday, October 22, 2014 / Proposed Rules
in TEFAP. The addition of ‘‘Split
shipment’’ would identify a shipment of
donated food that is divided among two
or more distributing or recipient
agencies. The addition of ‘‘State’’ would
streamline the current definition of
‘‘State and United States’’, which we are
proposing to remove. It would also
exclude the Trust Territory of the
Pacific Islands, which is no longer a
recipient of donated foods. The addition
of ‘‘USDA Foods’’ would alert the reader
to another commonly-used term for
donated foods. The addition of
‘‘Vendor’’ would identify a commercial
enterprise from which the Department
purchases food for donation.
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3. Administration at the Federal Level,
§ 250.3
In § 250.3, we propose to include the
actions that may be undertaken by FNS,
as the Federal administering agency for
USDA food assistance programs, in
ensuring the effective distribution and
control of donated foods. In § 250.3(a),
we propose to describe the role of FNS
in administering USDA food assistance
programs at the Federal level, including
the distribution of donated foods to
State distributing agencies for further
distribution and use, in accordance with
the requirements in this part.
In § 250.3(b), we propose to include
the authority, in current § 250.18(a), for
the Department, Comptroller General, or
any of their authorized representatives,
to conduct audits or inspections of any
agency, or contracted commercial entity,
in order to determine compliance with
the requirements of this part, or with
other applicable Federal regulations.
In § 250.3(c), we propose to include
FNS’s authority, in current § 250.20, to
terminate the distribution of donated
foods, or the provision of administrative
funds, to a distributing agency for its
failure to comply with the requirements
of 7 CFR part 250, or with other
applicable Federal regulations.
However, we propose to clarify that FNS
may also choose to suspend such
activities, rather than terminate them, as
provided for in 7 CFR 3016.43. We also
propose to clarify that FNS must
provide written notification to the
distributing agency of such termination
or suspension of assistance, and that
such action is subject to an appeal if
recourse to an appeal is provided for in
Federal regulations applicable to
specific programs (e.g., as provided for
in FDPIR, in accordance with 7 CFR part
253) . Lastly, we include the stipulation
that FNS may also take other actions, as
appropriate, including prosecution
under applicable Federal statutes.
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4. Administration at the State Level,
§ 250.4
In § 250.4, we propose to include the
responsibility of the distributing agency
in administering the distribution of
donated foods at the State level. In
§ 250.4(a), we propose to require the
distributing agency to ensure
compliance with requirements in 7 CFR
part 250, and in other Federal
regulations referenced in this part. We
propose to include the requirement, in
current § 250.12(a), that the distributing
agency enter into a written agreement
with FNS (i.e., the Federal-State
agreement) to receive, store, and
distribute donated foods in the State.
We propose to retain the current
provision that makes the agreement
permanent, but to permit it to be
amended or terminated with the
concurrence of both parties. We also
indicate that FNS may terminate the
Federal-State agreement for the
distributing agency’s failure to ensure
compliance with requirements. Lastly,
we propose to retain the provision, in
current § 250.2(b), that the distributing
agency may impose additional
requirements relating to the distribution
and control of donated foods in the
State, as long as such requirements are
not inconsistent with the requirements
of 7 CFR part 250 or other Federal
regulations referenced in this part. We
propose to remove the provision, in
current § 250.2(c), that the distributing
agency must provide adequate
personnel to administer the program, as
the need to comply with requirements
for effective administration would
necessitate the employment of adequate
personnel to do so.
In § 250.4(b), we propose to include
the option, in current §§ 250.3 and
250.12(b), for the distributing agency to
select a subdistributing agency (as
defined in this proposed rule) to
perform specific activities relating to
donated foods for which the distributing
agency is responsible, in accordance
with a written agreement between the
parties. We propose to retain the
provision, in current § 250.10(c), that
prohibits the distributing agency from
delegating its overall responsibility to
ensure compliance with requirements in
7 CFR part 250 to a subdistributing
agency or to any other organization. We
also propose to prohibit the distributing
agency from delegating its responsibility
to ensure compliance with the
performance standards included in
§ 250.22 of this proposed rule.
In § 250.4(c), we propose to include
the requirement, in current §§ 250.11(b)
and 250.13(d)(1), that the distributing
agency select recipient agencies to
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receive donated foods for distribution to
needy persons, or for inclusion in meals
provided to needy persons. We propose
to clarify that such selection must be in
accordance with eligibility criteria
applicable to specific programs or
outlets. We also propose to retain the
requirement, in current § 250.12(b), that
the distributing agency enter into a
written agreement with a recipient
agency prior to distribution of donated
foods to it. We propose to clarify that,
for child nutrition programs, the
distributing agency must enter into
agreements with recipient agencies
selected by the State administering
agency (which may be different from the
distributing agency) for participation in
such programs, before distribution of
donated foods to such recipient
agencies. The distributing agency must
verify such recipient agencies’
participation in child nutrition
programs with the State administering
agency. We propose to include the
requirement in current § 250.11(b) that
the distributing agency consider past
performance in selecting recipient
agencies to receive donated foods, but
specify that this requirement only
applies to household programs. We
propose to remove the current provision
that the distributing agency ensure that
welfare agencies determine the
eligibility of program participants.
Requirements relating to the
determination by recipient agencies of
participant eligibility are included in
regulations appropriate to specific
programs or outlets.
We also propose to include the
required provisions of agreements with
recipient agencies and subdistributing
agencies in § 250.4(c) of this proposed
rule. We propose to retain the provision,
in current § 250.12(b)(1), that ensures
compliance with the requirements of 7
CFR part 250, and propose to also
include assurance of compliance with
other Federal regulations, as referenced
in 7 CFR part 250 and with the
distributing agency’s written agreement
with FNS. We propose to include a
provision for compliance with all
Federal, State or local requirements
relating to food safety and food recalls.
In § 250.15(c) of this proposed rule, we
are proposing to require distributing and
recipient agencies to follow all
applicable Federal, State or local
requirements for donated foods subject
to a food recall. As discussed in Section
I of this proposed rule, in 2002, the
Department, in collaboration with State
agencies and school food authorities,
developed procedures and instructions
for responding to donated foods subject
to a food recall. These procedures and
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instructions are provided to assist
distributing and recipient agencies in
ensuring that donated foods subject to a
food recall are isolated, inspected, and
recovered in an expeditious manner.
In accordance with current
§ 250.12(c), distributing agency
agreements with recipient agencies are
permanent, with amendments to be
made as necessary. However, the
distributing agency’s agreement with a
subdistributing agency is limited to one
year, and may be extended for two
additional one-year periods. We propose
to require that the duration of
agreements with recipient agencies and
subdistributing agencies be included in
provisions of such agreements, but
propose to remove the current
durational requirements in order to
allow distributing agencies to determine
the duration that will best meet the
needs of the program. The distributing
agency may choose to enter into
permanent agreements with recipient
agencies or subdistributing agencies,
unless other regulations applicable to
specific programs limit such duration.
In accordance with current
§ 250.12(c)(3), agreements may be
terminated for cause by either party
upon 30 days notice. We propose to
revise this provision to permit
termination of the agreement by the
distributing agency for noncompliance
with its provisions or with other
applicable requirements, upon written
notification to the applicable party, but
without specifying a notification period.
This will permit the distributing agency
to take immediate action in the event
that noncompliance on the part of a
recipient agency or subdistributing
agency would result in interruption of
services to program participants or other
serious program disruptions. We also
propose to include a provision that
permits termination of the agreement by
either party, upon written notification to
the other party at least 60 days prior to
the effective date of termination. This
change will allow distributing agencies
the time needed to secure new
contracts, alter distribution schedules,
and move existing inventories, as
necessary, without negatively impacting
program operations.
We propose to remove agreement
provisions in current § 250.12(b) that
specifically address the responsibility
for donated food losses and claims
against other parties. Responsibility of
each party in such instance is provided
for in 7 CFR part 250 and FNS
instructions and guidance, and the
agreement must provide for adherence
to all such requirements. Lastly, we
propose to remove the requirement, in
current § 250.11(a), that the distributing
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agency verify registration of recipient
agencies to participate in the National
Commodity Processing Program, as this
program is no longer active.
Recipients of Federal grants must
ensure compliance with Departmental
procurement requirements in 7 CFR
parts 3016 or 3019, as applicable, in
obtaining the services of a commercial
enterprise to conduct activities under
the grant. In § 250.4(d), we propose to
clarify that such procurement
requirements are applicable to
distributing and recipient agencies in
obtaining such services. We also
propose to indicate that such
procurement must also ensure
compliance with other applicable
Departmental requirements—e.g., a
school food authority must ensure
compliance with requirements in 7 CFR
part 210, and in Subpart D of 7 CFR part
250, in obtaining the services of a food
service management company to
manage the school food service.
5. Civil Rights, § 250.5
In § 250.5, we propose to include civil
rights requirements. In accordance with
current § 250.21, distributing,
subdistributing, and recipient agencies
must comply with the Department’s
regulations pertaining to
nondiscrimination, as well as with FNS
civil rights instructions. Such
regulations and instructions ensure that
no person is discriminated against in
the receipt or distribution of donated
foods. We propose to include such
requirements in § 250.5.
B. Subpart B—Delivery, Distribution,
and Control of Donated Foods
We propose to completely revise
current Subpart B of 7 CFR part 250 to
more clearly present the specific
requirements in the ordering and
delivery of donated foods, the
distribution of donated foods to
recipient agencies, and the control of
donated foods at the distributing and
recipient agency levels. To this end, we
propose to restructure this subpart into
13 new sections, and to change the
heading to Delivery, Distribution, and
Control of Donated Foods, with new
sections as described in the following
paragraphs.
1. Availability and Ordering of Donated
Foods, § 250.10
In § 250.10, we propose to include
requirements to ensure that recipient
agencies may order donated foods that
are most useful to them, and that may
be utilized efficiently and without
waste. We also propose to assure that
recipient agencies have the information
necessary to order and utilize such
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foods effectively. FNS offers a wide
variety of donated foods and continually
updates the foods offered to ensure that
distributing and recipient agencies are
able to order the products which will
best meet the needs of their programs.
As new foods become available, and as
needs of an individual program or
recipient agency change, it is important
that distributing agencies facilitate
ordering and use of the foods which will
be most advantageous to recipient
agencies. In § 250.10(a), we propose to
require the distributing agency to utilize
a request-driven ordering system in
submitting orders for donated foods to
FNS, which must provide recipient
agencies the opportunity to provide
input at least annually in determining
the donated foods from the full list that
are made available to them for ordering.
We propose to require that the
distributing agency use the input
provided to ensure that the types and
forms of donated foods that recipient
agencies may best utilize are made
available to them for ordering. FNS has
developed guidance to assist
distributing agencies in implementing a
request-driven ordering system that
meets the requirements of this section.
Lastly, we propose to include the
requirement, in current § 250.13(a), that
the distributing agency ensure donated
foods are ordered and distributed in
quantities that may be utilized
efficiently and without waste. However,
we propose to remove the specific
stipulation, in current § 250.13(d)(2),
that Section 416 bonus foods may not be
distributed to recipient agencies if
normal food expenditures would be
reduced. The provision of donated foods
is meant, in part, to assist recipient
agencies in meeting their food
assistance needs in a cost-effective
manner.
In § 250.10(b), we propose to require
the distributing agency to ensure that
recipient agencies have information on
the types and quantities of donated
foods that may be ordered, donated food
specifications and nutritional value, and
procedures for the disposition of
donated foods that are out-of-condition
or that are subject to a food recall.
2. Delivery and Receipt of Donated Food
Shipments, § 250.11
In § 250.11, we propose to include
requirements for the receipt of donated
food shipments from USDA vendors or
from a Federal storage facility, and the
conditions for the replacement of
donated foods that have been delivered
unsafe or out-of-condition by such
entities. In § 250.11(a), we propose to
indicate that the Department arranges
for the delivery of donated foods from
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vendors or Federal storage facilities to
distributing or recipient agencies or
other entities designated by such
agencies (i.e., the consignee). However,
we propose to remove the provision, in
current § 250.13(a), that refers to the
Department’s responsibility to conform
to scheduled delivery periods. While
the Department strives to ensure timely
deliveries to distributing and recipient
agencies, such deliveries are subject to
vendor and storage facility contracts and
performance.
In § 250.11(b), we propose to require
that the distributing or recipient agency,
or other consignee, comply with all
applicable Federal requirements in the
receipt of donated food shipments.
Procedures are contained in FNS
Instruction 709–5, Shipment and
Receipt of Donated Foods, which
include those for donated foods that
have been delivered out-of-condition.
We also propose to require that the
distributing or recipient agency, or other
consignee, provide notification of
receipt of donated food shipments to
FNS through electronic means, and
retain an electronic record of receipt of
all donated food shipments.
Implementation of an electronic
donated foods ordering system has
allowed distributing or recipient
agencies to notify FNS of receipt of
donated foods more efficiently than
through previous ordering systems,
resulting in faster payment for vendors,
and more efficient tracking of donated
foods, which is important in the event
of food recalls or product complaint
investigations.
In § 250.11(c), we propose to include
requirements for the replacement of
donated foods that are delivered out-ofcondition by the vendor. In accordance
with current § 250.13(g), the Department
arranges for vendor replacement of
donated foods that are delivered out-ofcondition. Vendor responsibility for
replacement of such foods may extend
up to six months after their delivery, if
there is documentation indicating that
the foods were out-of-condition at the
time of delivery. We propose to retain
the current requirement for vendor
replacement of donated foods that are
delivered out-of-condition. However, we
propose to require that vendor
responsibility for such replacement
extend up until the time of expiration of
the product use-by or best-if-used-by
date or, if no such date is included on
the product label, until expiration of the
vendor warranty period. The warranty
period is the minimum acceptable shelf
life established in the USDA contract
with the vendor. In all cases,
responsibility for such replacement is
contingent on determination that the
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foods were out-of-condition at the time
of delivery. The proposed time periods
would be more practical than the
current ones, as they bear a closer
relationship to the actual shelf life of the
foods.
In accordance with current
§ 250.13(g)(3), the vendor must provide
for in-kind replacement of donated
foods, unless FNS approves replacement
with another type of food in the same
food category (i.e., similar replacement).
We propose to retain this requirement,
and to indicate that the terms in-kind
and similar replacement are defined in
§ 250.2 of this proposed rule. In
accordance with current § 250.13(g), if
physical replacement of donated foods
would not be cost-effective or efficient,
FNS may approve payment by the
vendor to the distributing or recipient
agency, or may credit the distributing
agency’s entitlement or assistance level.
We propose to retain these options in
§ 250.11(c).
In § 250.11(d), we propose to include
the information, in current § 250.13(b),
that the Department is responsible for
payment of the cost of delivering
donated foods from vendors or Federal
storage facilities to consignees, as well
as any processing or handling costs
incurred up to the time of delivery, as
is deemed in the best interest of the
Department. In accordance with current
§ 250.15(d), the distributing agency is
responsible for payment of any charges
accruing as a result of a delay in
unloading a donated food shipment
after arrival at the designated location,
unless the Department is responsible for
such delay. We propose to retain such
obligation, but to clarify that the
distributing agency, recipient agency, or
other consignee, as appropriate, is
responsible for the payment of any
delivery charges that accrue as a result
of such consignee’s failure to comply
with procedures in FNS instructions.
We propose to include the failure to
provide for the unloading of a shipment
of donated foods within a designated
time period as an example of such
noncompliance.
In § 250.11(e), we propose to include
the provisions, in current § 250.13(c),
relating to transfer of title to donated
foods. However, we propose to clarify
that title transfers to the distributing or
recipient agency, as appropriate (i.e.,
whichever agency receives the donated
food shipment). We also propose to
clarify that, notwithstanding transfer of
title, distributing and recipient agencies
must ensure compliance with the
requirements of 7 CFR part 250 in the
control and use of donated foods.
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3. Storage and Inventory Management at
the Distributing Agency Level, § 250.12
In § 250.12, we propose to describe
the requirements for the storage and
management of donated food
inventories at storage facilities used by
the distributing agency or
subdistributing agency, which may
include commercial storage facilities
under contract with either the
distributing or the subdistributing
agency. In § 250.12(a), we propose to
essentially retain the requirements in
current § 250.14(b), which require that
distributing agency facilities for the
storage and control of donated foods
protect against theft, spoilage, damage,
or other loss, and obtain the required
Federal, State, or local health
inspections. However, we propose to
revise this latter provision to require
that the distributing agency ensure that
storage facilities comply with all
Federal, State, or local requirements
relating to food safety and health, as
applicable, and obtain all required
health inspections.
In § 250.12(b), we propose to include
the requirement, in current § 250.14(b),
that the distributing agency ensure that
donated foods at any storage facility
used by the distributing or
subdistributing agency are stored in a
manner that permits them to be
distinguished from other foods, and
must ensure that a separate inventory
record of such donated foods is
maintained. Such requirements ensure
distribution of donated foods to the
appropriate recipient agencies. We also
propose to require that the distributing
agency’s system of inventory
management ensure that donated foods
are distributed in a timely manner and
in optimal condition. FNS offers
guidance that includes further direction
on effective inventory management
practices and the need to consider
product dates in distribution of donated
foods. We propose to retain the
requirement, in current § 250.14(e), that
the distributing agency conduct a
physical review of such donated food
inventories, and reconcile physical and
book inventories, on an annual basis.
We propose to include the requirement
in current § 250.15(c) that the
distributing agency report donated food
losses to FNS, and ensure restitution for
such losses. FNS provides guidance for
complying with these requirements in
FNS Instruction 410–1, Claims for
Losses of Donated Foods and Related
Administrative Losses—Procedures for
the State Distributing Agency, and in
FNS Instruction 420–1, Managing
Agency Debts.
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In § 250.12(c), we propose to include
the limitations on the amount of
donated food inventories on-hand. In
accordance with current § 250.14(f)(2),
donated food inventories at the
distributing agency level may not
exceed a six-month supply, unless
justification is submitted, and FNS
approval obtained, to maintain larger
inventories. The inventory amount must
be based on the amount of food that the
distributing agency can reasonably
utilize for the six-month period. We
propose to retain the current inventory
limitation for donated foods received in
NSLP or other child nutrition programs,
and in TEFAP. However, for donated
foods received in CSFP or FDPIR, which
offer defined food packages, we propose
to limit inventory on-hand for each food
category to an amount needed for a
three-month period. The more
restrictive inventory amounts would
allow for more efficient use of limited
program resources, and permit FNS to
provide, to the greatest extent practical
within available resources, a full variety
of foods needed to meet monthly food
package benefit levels in CSFP and
FDPIR. In addition, implementation of
more frequent deliveries in recent years
has allowed distributing agencies in
CSFP and FDPIR to more effectively
manage donated food inventories. We
propose to retain the option for the
distributing agency to request FNS
approval to maintain donated food
inventories in excess of the established
limits.
In § 250.12(d), we propose to require
that the distributing agency obtain
insurance to protect the value of
donated food inventories at its storage
facilities. Many distributing agencies
currently have such protection, which
better ensures that restitution can be
made for donated food losses, in the
event of a disaster or management error,
and that recipients continue to receive
program benefits. We also propose to
require the distributing agency to ensure
that subdistributing agencies, and
recipient agencies in household
programs that have agreements with the
distributing agency or subdistributing
agency, obtain such insurance for
donated foods at their storage facilities.
Lastly, we propose to require the
distributing agency to ensure that
commercial storage facilities under
contract with the distributing agency,
the subdistributing agency, or with the
recipient agencies cited above, obtain
insurance to protect the value of
donated food inventories. We propose to
require that, in all cases, the amount of
the required insurance be at least equal
to the average monthly value of donated
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food inventories at such facilities in the
previous fiscal year. These minimum
insurance requirements will help ensure
that distributing agencies and recipient
agencies receive the full benefit of the
donated foods entitled to them in the
event that donated foods are lost or
damaged. The above entities are those
that are most likely to have large
inventories of donated foods, as well as
the means to obtain protection for such
foods. Smaller recipient agencies that do
not have direct agreements with a
distributing or subdistributing agency,
but provide food packages directly to
recipients, such as food pantries or
community action agencies, would not
be required to obtain insurance.
In § 250.12(e), we propose to include
requirements for the transfer of donated
foods from the distributing agency to
another distributing agency or to
another program. In accordance with
current § 250.13(h), the distributing
agency must request FNS approval to
‘‘redonate’’ donated foods that it cannot
efficiently utilize. Additionally, current
§ 250.13(a)(1) includes requirements for
the ‘‘transfer’’ of donated foods from one
recipient agency to another. In practice,
the terms ‘‘redonation’’ and ‘‘transfer’’
are often used interchangeably. To
clarify, we propose to use the term
‘‘transfer’’ to refer to any redistribution
of donated foods from one agency to
another, or from one program to
another, at the distributing or recipient
agency level, and to cease using the
term ‘‘redonation’’. We propose to
clarify that the distributing agency may
transfer donated foods from its
inventories to another distributing
agency or to another program, in order
to ensure that such foods may be
utilized in a timely manner and while
in optimal condition. We propose to
permit the distributing agency to
transfer donated foods to another agency
within the same program without FNS
approval. However, we propose to
require that the distributing agency
request FNS approval to transfer
donated foods from one program to
another—e.g., from NSLP to TEFAP—
whether the transfer is in the same or a
different State, as these foods would be
used in a program other than the
program for which they were originally
intended. We propose to stipulate that
FNS may also require a distributing
agency to transfer donated foods at the
distributing agency’s storage facilities or
at a processor’s facility, if inventories of
donated foods are excessive or may not
be efficiently utilized, so that such foods
may be used to the benefit of recipients
receiving donated foods through another
agency or program.
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We propose to require the distributing
agency to obtain an inspection of
donated foods by State or local health
officials before transferring them, if
there is a question of food safety, or at
the direction of FNS, to ensure that only
foods that are still safe and not out-ofcondition are transferred. We also
propose to retain the requirement in
current § 250.15(e) that the distributing
agency is responsible for meeting any
transportation or inspection costs in
transferring donated foods, unless the
transfer is clearly not the result of
negligence or improper action of the
distributing agency. Lastly, we propose
to require that the distributing agency
maintain a record of all transfers and
inspections of donated foods from its
inventories. Transfer of donated foods at
the recipient agency level is discussed
in section II.B.5, Storage and Inventory
Management at the Recipient Agency
Level, § 250.14, of this preamble.
In § 250.12(f), we propose to indicate
that the distributing agency may obtain
the services of a commercial storage
facility to store and distribute donated
foods, or a carrier to transport such
foods, but must ensure compliance with
Departmental procurement
requirements in 7 CFR part 3016. We
propose to retain the requirement, in
current § 250.14(d), that the distributing
agency also enter into a written contract
with such commercial storage facility,
and that such contract not exceed five
years in duration, including option
years for extension or renewal. Because
carriers assume similar responsibility
for donated foods under their control,
we propose to include the same
requirements in contracting with a
carrier. We also propose to retain the
required contract provisions in current
§ 250.14(d) relating to safe and secure
storage conditions, inventory
management, insurance, reviews,
contract duration and extension, and
termination for noncompliance. We
propose to add provisions to assure
compliance with Federal, State or local
requirements relative to food safety and
health. We also propose to add a
provision to assure that donated foods
will be distributed to eligible recipient
agencies in a timely manner and in
optimal condition, and in amounts for
which such recipient agencies are
eligible. Lastly, we propose to revise the
current provision providing for
termination of the contract by either
party (except as a result of
noncompliance with regulatory
provisions) by requiring notification of
such termination at least 60 days in
advance, rather than the current 30
days. This change will allow
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distributing agencies the time needed to
secure new contracts, alter distribution
schedules, and move existing
inventories, as necessary, without
negatively impacting program
operations. We propose to require the
same provisions in a contract with a
carrier, as such provisions are necessary
to ensure the safe and effective transport
of foods from one location to another.
4. Efficient and Cost-Effective
Distribution of Donated Foods, § 250.13
In § 250.13, we propose to include
requirements to ensure the distribution
of donated foods to recipient agencies in
the most efficient and cost-effective
manner. In § 250.13(a), we propose to
retain the requirements, in current
§§ 250.14(a) and 250.24(e), that the
distributing agency distribute donated
foods to recipient agencies in the most
efficient and cost-effective manner, and
that such distribution is responsive to
the needs of recipient agencies, as
feasible. In meeting this requirement,
we propose to require the distributing
agency, to the extent practical, to
provide for shipment of donated foods
directly from the USDA vendor to the
recipient agency, or (at the recipient
agency’s request) directly to a processor
for processing into end products. We
also propose to require that the
distributing agency provide for split
shipments between two or more
recipient agencies, if such agencies are
unable to accept a full truckload. Split
shipments allow recipient agencies,
particularly small recipient agencies, to
receive donated foods in the forms and
quantities that are most useful to them
and on a schedule that will permit them
to store and distribute the foods in the
most efficient and cost-effective manner
possible.
In § 250.13(b), we propose to require
that, if the distributing agency
determines that direct shipments are
impractical (even after taking into
account split shipments), it must
provide for storage of donated foods at
the distributing agency level, and
subsequent distribution to recipient
agencies. Such storage and distribution
must be provided in the most efficient
and cost-effective manner possible in
order to minimize the cost to the
recipient agency of receiving donated
foods. We propose to clarify that the
distributing agency must use State
Administrative Expense (SAE) funds, as
available, to meet costs of storing and
distributing donated foods, or related
administrative costs, for school food
authorities or other recipient agencies in
child nutrition programs, or must use
other Federal or State administrative
funds received for such purpose. SAE
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funds are provided to State agencies
administering NSLP or other child
nutrition programs, in accordance with
7 CFR part 235, and distributing
agencies receive SAE funds specifically
to cover the costs of storing and
distributing donated foods and related
administrative costs for such programs.
However, as SAE funds, or State funds,
are limited, distributing agencies may
also assess fees on school food
authorities to help defray such costs.
Under 7 CFR part 250, such fees are
included under the term ‘‘Distribution
charge’’.
We propose to retain the provision, in
current § 250.15(a)(1), that permits the
distributing agency to impose a
distribution charge on school food
authorities, but with the clarification
that such charge may be imposed only
if SAE funds, or other funds available
from State or local sources, are
insufficient to fully meet the costs of
storing donated foods and distributing
them to such agencies, and of
administrative costs relating to such
activities. We also propose to clarify
that the distribution charge may cover
only allowable costs, in accordance with
7 CFR part 3016 and with OMB
guidance. The Departmental and OMB
guidance provide for allowable costs for
Federal grant expenditures. Lastly, we
propose to require that the distributing
agency maintain a record of costs
incurred in storing and distributing
donated foods and related
administrative costs, and the source of
funds used to pay such costs.
We propose to retain the requirement
in current § 250.14 that the distributing
agency use a commercial storage facility
to store and distribute donated foods, in
accordance with requirements in
§ 250.12(f) of this proposed rule, if a
commercial system is determined to be
the most efficient and cost-effective.
However, we propose to remove the
requirement, in current § 250.14(a)(2),
that a distributing agency utilizing a
noncommercial system of storage and
distribution evaluate such system by
comparing its costs with the cost of
obtaining a commercial system, at 3year intervals, and submit such cost
evaluation to FNS. State distributing
agencies performed such an evaluation
and cost comparison, as directed in the
Commodity Distribution Reform Act
and, as a result, either changed to a
commercially contracted distribution
system, or determined that other storage
and distribution options were more
cost-effective. Subsequent periodic
evaluations have been required,
however, only through the regulations.
We have determined that the use of
such evaluations is no longer necessary
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for Program integrity. Consequently, we
also propose to remove the requirement,
in current § 250.14(a)(5), that the
distributing agency request a waiver to
continue using a noncommercial
system.
In § 250.13(c), we propose to retain
the requirement, in current
§ 250.14(a)(7), that the distributing
agency obtain FNS approval to increase
the distribution charge beyond normal
inflationary adjustments or to change
the level of service provided under a
distribution charge. We also propose to
require FNS approval of the amount of
a newly established distribution charge
(some States do not currently impose a
distribution charge on school food
authorities). We propose to clarify that
such requirement also applies to any
charge imposed on school food
authorities by a distributing agency’s
commercially contracted storage facility.
We propose to retain the current
requirement that such request be
submitted for approval at least 90 days
in advance of its projected
implementation. We also propose to
retain the requirement, in current
§ 250.15(a)(1), that the request include
justification for the new or increased
amount, and the specific costs to be
covered by the distribution charge.
However, we propose to add a
requirement that the request include
justification for any change in the level
of service provided under an existing
distribution charge. Distributing
agencies may use SAE funds to meet the
costs of storing and distributing donated
foods, and other Federal or State funds
may also be available for this purpose.
The use of such funds should allow
distributing agencies to provide for
storage and distribution costs of donated
foods with minimal, if any, charge to
recipient agencies. Therefore, any new
or increased charge, or change in the
level of services associated with a
charge, must be necessary to provide
recipient agencies with donated foods in
the most efficient and cost-effective
manner possible, as determined by FNS.
In § 250.13(d), we propose to indicate
that FNS may disapprove the
distributing agency’s proposed new
distribution charge or changes to an
existing distribution charge, if FNS
determines that such amount would not
provide for the most cost-effective
distribution of donated foods, or would
otherwise impact recipient agencies
negatively. We propose to clarify that, in
such case, the distributing agency
would be required to adjust the
distribution charge or the level of
service provided under the distribution
charge, or to consider other storage and
distribution options. We also propose to
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retain the provision, in current
§ 250.14(a)(6)(ii), that FNS may, at any
time, require the distributing agency to
submit documentation to justify the
cost-effectiveness of its distribution
system, and to re-evaluate such system,
if it is determined to be out of
compliance with the requirements in
this section, as proposed. We propose to
remove the requirement, in current
§ 250.15(a), that the distributing agency
submit to FNS a description of its
system for assessing its distribution
charge every three years. However, FNS
may require the distributing agency to
submit information relating to its
assessment of the distribution charge, or
to any other aspect of its distribution
system, in accordance with § 250.18(d)
of this proposed rule.
5. Storage and Inventory Management at
the Recipient Agency Level, § 250.14
In § 250.14, we propose to include
requirements for the storage and
management of donated foods at the
recipient agency level, including
commercial storage facilities or other
entities under contract with the
recipient agency. In § 250.14(a), we
propose to require recipient agencies to
meet the same requirements for food
safety and health at their storage
facilities as those proposed for the
distributing agency in § 250.12(a) of this
rule.
In § 250.14(b), we propose to require
that recipient agencies in household
programs store donated foods in a
manner that permits them to be
distinguished from other foods at their
storage facilities, and to maintain a
separate inventory record of donated
foods. Recipient agencies in household
programs are currently subject to the
requirement to maintain storage and
inventories of donated foods separately
from other foods in accordance with
their designation as ‘‘subdistributing
agencies’’, in current § 250.3. However,
as described in section II.A.2 of the
preamble, we are proposing to remove
the current designation of such recipient
agencies as subdistributing agencies. We
also propose to require that such
recipient agencies’ system of inventory
management ensure that donated foods
are distributed to recipients in a timely
manner that permits use of such foods
while still in optimal condition. Lastly,
we propose to clarify that recipient
agencies in household programs must
notify the distributing agency of any
donated food losses, and take further
actions with respect to such donated
foods, as directed by the distributing
agency.
In § 250.14(c), we propose to clarify
the requirement in current § 250.59(c)
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that recipient agencies in child nutrition
programs, and those receiving donated
foods as charitable institutions (in
accordance with current § 250.67), are
not required to store donated foods in a
manner that distinguishes them from
purchased foods or other foods, or to
maintain a separate inventory record of
donated foods. Such recipient agencies
may utilize single inventory
management, in which donated foods
are commingled with purchased foods
or other foods in storage, and a single
inventory record is maintained. Under
single inventory management, all foods
are subject to the same safeguards
regarding food safety and health. As a
result, we propose to clarify that all
recipient agencies in child nutrition
programs, and those receiving donated
foods as charitable institutions, are not
required to separately monitor and
report donated food use, distribution, or
loss to the distributing agency, unless
there is evidence indicating that
donated food loss has occurred as a
result of theft or fraud. This is true
regardless of the inventory management
system actually utilized by such
recipient agencies.
In § 250.14(d), we propose to include
requirements in current
§ 250.13(a)(1)(iii) for the transfer of
donated foods from one recipient
agency to another recipient agency and
to clarify the types of transfers to which
these requirements apply. We propose
to clarify that a recipient agency
operating a household program request
approval from the distributing agency to
transfer donated foods to another
recipient agency in the same program.
We propose to clarify that transfer of
donated foods from such recipient
agency to a recipient agency in another
program receive FNS approval (i.e.,
through the distributing agency). We
propose to indicate that a recipient
agency operating a child nutrition
program, or one receiving donated foods
as a charitable institution (in accordance
with current § 250.67), may transfer
donated foods to another recipient
agency or charitable organization
without prior approval from the
distributing agency or FNS. This is in
accordance with single inventory
management, in which donated foods
are commingled with other foods, and
often may not be distinguished from
them.
In § 250.14(e), we propose to indicate
that recipient agencies may obtain the
services of a commercial storage facility
to store and distribute donated foods,
but must ensure compliance with
Departmental procurement
requirements in 7 CFR parts 3016 or
3019, as applicable. We also propose to
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clarify that recipient agencies must
ensure that such commercial storage
facilities comply with the applicable
requirements in 7 CFR part 250 for the
storage and inventory management of
donated foods.
6. Out-of-Condition Donated Foods,
Food Recalls, and Complaints, § 250.15
In § 250.15, we propose to include
requirements for the disposition of
donated foods that are out-of-condition,
or that are subject to a food recall, and
requirements for the resolution of
recipient complaints relating to donated
foods. In § 250.15(a), we propose to
require the distributing agency to ensure
that out-of-condition donated foods at
its storage facilities are destroyed, or
otherwise disposed of, in accordance
with State or local requirements
pertaining to food safety and health. We
propose to retain the contingency for
sale of out-of-condition donated foods
(e.g., to a salvage company) in
accordance with current § 250.13(f), if
such sale is permitted by State laws or
regulations, rather than contingent on
FNS approval. We also propose to
require the distributing agency to obtain
an inspection of donated foods by State
or local health authorities to determine
their safety and condition, as necessary,
or as directed by FNS.
In § 250.15(b), we propose to require
that recipient agencies in household
programs report out-of-condition
donated foods at their storage facilities
to the distributing agency, and ensure
that such donated foods are destroyed,
or otherwise disposed of, in accordance
with State or local requirements
pertaining to food safety and health. We
propose to require the distributing
agency to ensure that such recipient
agencies obtain an inspection of
donated foods by State or local health
authorities to determine their safety and
condition, as necessary, or as directed
by FNS. We propose to indicate that, for
recipient agencies in child nutrition
programs, and those receiving donated
foods as charitable institutions (in
accordance with § 250.67), donated
foods must be treated as other foods
when safety is in question.
Consequently, such recipient agencies
must comply with State or local
requirements in determining the safety
of donated foods and other foods, and
in their destruction or other disposition,
but are not required to report such
actions to the distributing agency.
In § 250.15(c), we propose to require
that the distributing agency or recipient
agency, as appropriate, follow all
applicable Federal, State or local
requirements for donated foods subject
to a food recall. Departmental guidance
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is also provided to assist distributing
and recipient agencies in ensuring that
donated foods subject to a food recall
are isolated, inspected, and recovered in
an expeditious manner, and that the
appropriate parties are reimbursed for
costs associated with such actions.
In § 250.15(d), we propose to indicate
that the distributing agency must inform
recipient agencies of the preferred
method for receiving donated food
complaints and resolve complaints
received from recipients, recipient
agencies, or other entities relating to
donated foods in an expeditious
manner, and in accordance with
applicable requirements in 7 CFR part
250. We propose to require the
distributing agency to submit any
complaints regarding product quality or
specifications, or suggested products
improvements, to FNS through the
established FNS donated foods
complaint system for tracking and
evaluation purposes. If resolution of the
complaint at the State level is not
feasible, we propose to indicate that the
distributing agency must provide
information regarding the complaint to
FNS for resolution. Guidance on
meeting these requirements is included
on the FNS Web site. We also propose
to prohibit the distributing agency from
disposing of any donated food that is
the subject of a complaint prior to
guidance and authorization from FNS.
Lastly, we propose to include the
requirement, in current § 250.22, that
the distributing agency maintain a
record of its investigations and other
actions with respect to any complaints
relating to donated foods. Resolving and
tracking product complaints, either at
the Federal or State level, is critical to
ensuring that recipient agencies are
receiving replacement products, as
appropriate, and that donated foods
meet the standards established by the
Department.
7. Claims and Restitution for Donated
Food Losses, § 250.16
In § 250.16, we propose to include
requirements to ensure that restitution
is made for donated food losses,
including claims against parties
responsible for such losses. In
§ 250.16(a), we propose to require that
the distributing agency ensure that
restitution is made for donated food
losses, and for the loss or improper use
of funds provided for, or obtained
incidental to donated food distribution
(e.g., in salvage of donated foods or sale
of pallets). We propose to clarify that, in
making restitution for losses, the
distributing agency must identify, and
seek restitution from, parties
responsible for the loss, and implement
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corrective actions to prevent future
losses. Guidance for distributing
agencies is included in FNS Instruction
410–1, Claims for Losses of Donated
Foods and Related Administrative
Losses—Procedures for the State
Distributing Agency.
We propose to remove the actions
required of the distributing agency in
making restitution for donated food
losses in current § 250.15(c). We also
propose to remove the provision, in
current § 250.15(c)(2), that inventory
loss of a donated food that does not
exceed one percent of the total
inventory of that food may, under
certain conditions, be exempt from
recovery through claims. Although some
losses that meet such conditions may be
exempted with FNS approval, as
indicated above, a blanket exemption
for inventory loss does not encourage
efficient inventory management. Current
provisions in § 250.15(c)(2) also exempt
losses in amounts that do not exceed
thresholds established in State laws or
regulations. We propose to remove this
exemption as well, as all distributing
agencies should be held to the same
standards with respect to accountability
for Federal resources provided.
In § 250.16(b), we propose to clarify
that FNS may initiate and pursue a
claim against the distributing agency or
other entities for the loss of donated
foods, and for the loss or improper use
of funds provided, or obtained
incidental to donated food distribution.
We also propose to clarify that FNS may
initiate and pursue a claim if the
distributing agency fails to take required
claim actions against other parties.
These requirements incorporate
requirements in current § 250.15(c). FNS
guidance on taking action on a claim is
included in FNS Instruction 420–1,
Managing Agency Debts. Lastly, we
propose to clarify that FNS may, on
behalf of the Department, compromise,
forgive, suspend, or waive a claim. Such
actions would also be taken in
accordance with FNS Instruction 420–1.
8. Use of Funds Obtained Incidental to
Donated Food Distribution, § 250.17
In § 250.17, we propose to include
requirements for the use of funds
obtained incidental to donated food
distribution—e.g., through the
distribution charge, the salvage of outof-condition donated foods, the sale of
pallets used for donated foods, or
rebates from processors for the value of
donated foods processed into end
products. In § 250.17(a), we propose to
clarify requirements in current
§ 250.15(f)(2) relating to the use of funds
obtained from the distribution charge
imposed on recipient agencies in child
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nutrition programs, in accordance with
§ 250.13(b) of this proposed rule. We
propose to require that such funds be
used to meet costs of storing and
distributing donated foods or related
administrative costs, consistent with
limitations on the use of Federal grant
funds in 7 CFR part 3016, and with
OMB guidance. We also propose to
specifically prohibit the use of such
funds to purchase foods to replace
donated food losses or to pay claims
resulting from donated food losses.
We also propose to include in
§ 250.17(a) the requirement, in current
§ 250.15(f)(3), that the distributing
agency maintain funds obtained from
the distribution charge in an operating
account, separate from other funds, as
well as the current limitation on the
amount of funds that may be maintained
in such account. We also propose to
retain the current requirement that,
unless FNS approval is requested and
granted, funds in excess of this amount
must be used to reduce the distribution
charge imposed on recipient agencies,
or to provide appropriate
reimbursement to such agencies.
However, we propose to remove the
contingency in current § 250.15(f)(2)
that such funds be returned to the
Department.
In § 250.17(b), we propose to require
that school food authorities use funds
obtained from processors in the
processing of donated foods into end
products (e.g., through rebates for the
value of such processed donated foods,
in accordance with Subpart C of 7 CFR
part 250), or from food service
management companies in crediting for
the value of donated foods (in
accordance with Subpart D of 7 CFR
part 250), in support of the nonprofit
school food service. This aligns 7 CFR
part 250 with § 210.14 which provides
that school food authorities must use
revenues received in the operation of
the nonprofit school food service, as
defined in § 210.2 and in § 250.2 of this
proposed rule, only for that food
service. We propose to require that other
recipient agencies use such funds to
meet the costs of storing and
distributing donated foods or related
administrative costs, as proposed in
§ 250.17(c) of this rule.
In § 250.17(c), we propose to clarify
requirements in current §§ 250.15(f)(1)
and (f)(2) relating to funds collected in
claims for donated food losses, and
funds obtained from other sources
incidental to donated food distribution.
Donated foods are made available to
distributing agencies to support the
participants of each respective program.
Any loss of donated foods means fewer
foods will be available through the
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affected program unless replacement
foods are purchased. Therefore, we
propose to require that funds collected
in payment of claims for donated food
losses be used to purchase replacement
foods for use in the program in which
the losses occurred unless the
distributing agencies receives FNS
approval to use the funds for other
program purposes. Guidance for use of
funds collected in payment of a claim
are included in FNS Instruction 410–1,
Claims for Losses of Donated Foods and
Related Administrative Losses—
Procedures for the State Distributing
Agency, and in FNS Instruction 420–1,
Managing Agency Debts. We propose to
require that funds obtained from other
sources, except as otherwise indicated
in this section, be used to pay
administrative costs of storing and
distributing donated foods, consistent
with the limitations on the use of funds
provided under a Federal grant in 7 CFR
parts 3016 or 3019, as applicable, and
OMB guidance, as applicable. Using
such funds in this manner will permit
distributing agencies to reduce or
eliminate the charges imposed on
recipient agencies for storage,
distribution and administration related
to donated foods. Sources of such funds
may include, for example, the sale of
donated food containers or pallets, the
salvage of out-of-condition donated
foods, or payments by processors for
failure to meet processing yields. The
Departmental and OMB regulations
provide guidance for allowable costs in
Federal grant expenditures for State and
local government entities, and for
private nonprofit organizations. We
propose to remove the contingency, in
current § 250.15(f)(2), that such funds be
returned to the Department.
We propose to retain the requirement,
in current § 250.15(f)(3), that the
distributing agency maintain funds
obtained from claims or other sources
indicated in this section in a separate
salvage account. However, we propose
to rename this account the ‘‘donated
food account.’’ We also propose to
revise upward the threshold for which
deposits into, and expenditures from,
such account must receive FNS
approval. We propose to require that the
distributing agency receive FNS
approval for a deposit into, or
expenditure from, the donated food
account in excess of $25,000, instead of
the $2,500 threshold in current
§ 250.15(f)(4). Regardless, such funds
must be used in accordance with the
requirements in proposed 250.17(c).
Lastly, we propose to require that the
distributing or recipient agency
maintain a record of all funds obtained
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and expended in accordance with this
proposed § 250.17(c).
In § 250.17(d), we propose to clarify
that the distributing agency is
prohibited from using funds obtained
incidental to donated food distribution
to meet State matching requirements for
other Federal grants received—e.g., for
FDPIR or TEFAP. We also propose to
clarify that such funds may not be used
in place of State Administrative
Expense (SAE) funds available to meet
costs relating to storage and distribution
of donated foods.
In § 250.17(e), we propose to clarify
the ‘‘Buy American’’ requirement, in
current § 250.23, for the purchase of
foods with funds obtained incidental to
donated food distribution. In
accordance with the current
requirement, recipient agencies must
use Federal funds to purchase only
foods that are produced, or processed,
in the United States, with certain
exceptions. We propose to clarify that,
when funds obtained in accordance
with this section, as proposed, are used
to purchase foods in the commercial
market, a distributing or recipient
agency in the continental United States,
and in Hawaii, must, to the maximum
extent practical, purchase only domestic
foods or food products. This
clarification of the ‘‘Buy American’’
requirement is consistent with the
requirement for school food authority
purchases in § 210.21(d), and in Section
12(n) of the Richard B. Russell National
School Lunch Act (42 U.S.C. 1760). We
also propose to include the definition of
domestic foods or food products used in
§ 210.21(d). Lastly, we propose to clarify
that the ‘‘Buy American’’ requirement is
also applicable to the cash-in-lieu-ofdonated foods provided to school food
authorities in NSLP and to child and
adult care institutions in CACFP, in
accordance with §§ 250.56(e) and
250.61(c), respectively.
9. Reporting Requirements, § 250.18
In § 250.18, we propose to include
requirements for submission of reports
relating to the distribution and control
of donated foods. In § 250.18(a), we
propose to retain the requirement, in
current § 250.17(a), that the distributing
agency submit form FNS–152, Monthly
Distribution of Donated Foods to Family
Units, to report donated food
inventories and distribution in FDPIR.
However, we propose to remove
reference to form FNS–153, Monthly
Report of the Commodity Supplemental
Food Program and Quarterly
Administrative Financial Status Report,
as the requirement for submission of
this report is included in 7 CFR part
247. We propose instead to indicate that
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the distributing agency must submit
reports included in regulations for
specific food assistance programs. We
also propose to indicate that such
reports must be submitted in accordance
with the timeframes established for each
respective report, rather than include
specific timeframes for submission in 7
CFR part 250.
We propose to retain the requirement,
in current § 250.17(a), that the
distributing agency report excessive
donated food inventories in TEFAP,
NSLP, and other child nutrition
programs to FNS, on a semiannual basis,
utilizing form FNS–155, the Inventory
Management Register. We propose to
remove the requirement, in current
§§ 250.13(k) and 250.17(d), that the
distributing agency report commodity
acceptability information to FNS,
utilizing information collected from
recipient agencies in NSLP, CACFP,
NSIP, CSFP, and FDPIR, and submitted
on form FNS–663, the Commodity
Acceptability Report. Technological
advances, including the evolution of
request-driven ordering systems, over
the last several years have made the
collection and reporting of such
information by the distributing agency
unnecessary. FNS now receives
information on donated food
acceptability from diverse parties on a
routine basis, through electronic
communication, national conferences
and other meetings with program
operators, as well as through periodic
reviews of its donated food offerings.
In § 250.18(b), we propose to include
the requirement, in current § 250.30(m),
that processors submit monthly
performance reports to the distributing
agency to report donated food
inventories, processing of donated
foods, and sale and delivery of end
products. However, we propose to
remove the requirement that the
distributing agency submit a report of
processors’ inventories to the FNS
Regional Office, in current § 250.17(b).
Processors are required to submit
monthly performance reports to FNS,
eliminating the need for distributing
agencies to submit such information to
FNS.
In § 250.18(c), we propose to include
the requirement, in §§ 250.69(f) and
250.70(f) of this proposed rule, that the
distributing agency submit to FNS a
report of the amounts of donated foods
used in disasters and situations of
distress, utilizing electronic form FNS–
292A, Report of Commodity Distribution
for Disaster Relief. This form is also
used to request replacement of donated
foods used in disasters and situations of
distress.
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In § 250.18(d), we propose to retain
the requirement, in current § 250.17(e),
that the distributing agency submit
other information relating to the
distribution of donated foods that may
be requested by FNS on a periodic basis.
For example, FNS may require that the
distributing agency provide information
relating to the distribution charge, or to
support the efficiency and costeffectiveness of its storage and
distribution system, in accordance with
§ 250.13 of this proposed rule.
10. Recordkeeping Requirements,
§ 250.19
In § 250.19, we propose to include
recordkeeping requirements relating to
the distribution and control of donated
foods. In § 250.19(a), we propose to
require that distributing and recipient
agencies, and other entities, maintain
records of agreements and contracts,
reports, audits, and claim actions, funds
obtained incidental to donated food
distribution, and other records required
in this part or in other Departmental
regulations, as applicable. In addition to
these requirements, we propose to
require distributing agencies to keep a
record of the value of donated foods
received by each of its school food
authorities in order to assist in
monitoring distributing agency
compliance with the requirement that
school food authorities in NSLP are
offered, at a minimum, the commodity
offer value of donated foods, in
accordance with § 250.58; and records
to demonstrate compliance with the
professional standards for State
directors of distributing agencies in
§ 235.11(g) of the proposed rule
Professional Standards for State and
Local School Nutrition Programs
Personnel as Required by the Healthy,
Hunger-Free Kids Act of 2010 (79 FR
6503 (Feb. 4, 2014)). We also propose to
require that processors maintain records
documenting the sale of end products to
recipient agencies, including the sale of
such end products by distributors.
Specific recordkeeping requirements
relating to the use of donated foods in
contracts with food service management
companies are included in § 250.54.
Lastly, we propose to include the
provision, in current § 250.16(a)(6), that
failure to maintain required records
must be considered prima facie
evidence of improper distribution or
loss of donated foods and may result in
a claim against the responsible party for
the loss of donated foods, or may result
in other sanctions or corrective actions.
We propose to remove the
requirement, in current § 250.16(a)(3),
that the distributing agency maintain
records of refusal of donated foods by
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school food authorities. In accordance
with a final rule published in the
Federal Register on August 8, 2008 at
73 FR 46169, the ‘‘offer and refusal’’
system of ordering donated foods was
removed. We also propose to remove the
requirement, in current § 250.16(a)(5),
that recipient agencies maintain records
of the data and method used to
determine the number of eligible
persons served. Recordkeeping
requirements relating to the
determination of eligibility, or the
number of eligible persons served, are
included in regulations applicable to
specific programs (e.g., 7 CFR part 247
for CSFP).
In § 250.19(b), we propose to retain,
without change, requirements in current
§ 250.16(b) relating to the length of time
that records must be retained.
CPA audit in each of the first two years
that it receives donated foods for
processing, regardless of the value of
donated foods received, to ensure that
new processors receive appropriate
oversight as they establish their
processing programs. After the first two
years, we propose to require a multiState processor to obtain such an audit
at a frequency determined by the
average value of donated foods received
for processing per year, as currently
required. However, we propose to revise
upward the current thresholds for
determining the required frequency of
such audits to reflect the much larger
volume of donated foods provided to
such processors for processing over the
last several years. Hence, we propose to
require a multi-State processor to obtain
an independent CPA audit:
11. Audit Requirements, § 250.20
In § 250.20, we propose to include
reference to Federal audit requirements
for distributing and recipient agencies,
and audit requirements for processors.
In § 250.20(a), we propose to reference
audit requirements in 7 CFR part 3052
for State or local government agencies
and nonprofit organizations that receive
Federal grants, as such requirements
apply to distributing and recipient
agencies. In accordance with such
requirements, the value of Federal
grants or awards expended in a fiscal
year determine if the distributing or
recipient agency must obtain an audit in
that year. We propose to clarify that the
value of donated foods must be
considered as part of the total value of
the Federal grant, and to reference FNS
guidance in valuing donated foods for
audit purposes, and in determining if an
audit is required.
In § 250.20(b), we propose to include
requirements for processors to obtain an
independent CPA audit to determine
compliance with processing
requirements for donated foods. In
accordance with current § 250.18(b),
multi-State processors must obtain an
independent CPA audit at a frequency
determined by the value of the donated
foods they receive for processing in a
year. Currently, a multi-State processor
must obtain an independent CPA audit
for any year in which it receives more
than $250,000 in donated foods; every
two years, if it receives $75,000 to
$250,000 in donated foods each year;
and every three years, if it receives less
than $75,000 in donated foods each
year. Such audits must be paid for by
the processor.
We propose to amend the current
audit requirement for multi-State
processors by requiring that a multiState processor obtain an independent
(1) Annually, if it receives, on average,
more than $5,000,000 in donated foods for
processing per year;
(2) Every two years, if it receives, on
average, between $1,000,000 and $5,000,000
in donated foods for processing per year; and
(3) Every three years, if it receives, on
average, less than $1,000,000 in donated
foods for processing per year.
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In-State processors are not currently
required to obtain an independent CPA
audit. In order to ensure compliance
with program requirements, the
distributing agency must conduct an onsite review of in-State processors at least
once every two years, in accordance
with current § 250.19(b)(1)(iii).
However, the performance of on-site
reviews is a costly and time-consuming
exercise for distributing agencies, and
we are proposing to remove this
requirement, as discussed in section
II.B.13 of the preamble. We propose,
instead, to require that an in-State
processor obtain an independent CPA
audit to determine compliance with
processing requirements for donated
foods in the first year that it receives
donated foods for processing. After the
first year, we propose to require an inState processor to obtain such an audit
at a frequency determined by the
average value of donated foods received
for processing per year, using the same
thresholds for determining such
frequency as we are proposing for multiState processors. Due to the lower
volume of donated foods received by inState processors, we expect that, after
the first year, in-State processors would
be subject to the audit requirement
every three years. As currently required
for multi-State processors, we propose
to require that in-State processors pay
the cost of the audit.
We propose to require that the
donated food value utilized must be the
contract value of the donated foods, as
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defined in § 250.2 of this proposed rule.
We also propose to clarify that audits
must determine processor compliance
with the requirements in this part, and
must be conducted in accordance with
the FNS Audit Guide for Processors.
However, we propose to remove the
current stipulation that FNS may
require auditors to attend training
sessions conducted by the Department.
Although training may still be provided,
FNS provides written guidance and
technical assistance for auditors on an
ongoing basis.
In § 250.20(c), we propose to include
the actions required of processors
resulting from the audits. We propose to
require that in-State processors submit a
copy of the audit to the distributing
agency for review by December 31 of
each year in which an audit is required.
We propose to require the distributing
agency to ensure that in-State processors
provide a corrective action plan with
timelines for correcting deficiencies
identified in the audit, and that such
deficiencies are corrected. We propose
to include the requirement in current
§ 250.18(b) that multi-State processors
submit a copy of the audit, and a
corrective action plan with timelines to
correct deficiencies identified in the
audit, as appropriate, to FNS for review
by December 31 of each year in which
an audit is required. This will permit
FNS and distributing agencies to review
audit findings, follow up on required
corrective actions, and monitor
noncompliance issues for the purpose of
identifying trends and implementing
program improvements.
In § 250.20(d), we propose to indicate
that a distributing or recipient agency is
subject to sanctions for failure to obtain
the required audit, or for failure to
correct deficiencies identified in audits.
Such sanctions may include the
withholding, suspension, or termination
of a Federal award. We propose to
indicate that, if a processor fails to
obtain the required audit, or to correct
deficiencies identified in audits, a
distributing or recipient agency may
terminate the processing contract or
agreement, and may not extend or
renew such a contract or agreement. We
also propose to include the stipulation,
in current § 250.18(b)(5), that FNS may
prohibit the further distribution of
donated foods to a processor for its
failure to comply with audit
requirements.
12. Distributing Agency Reviews,
§ 250.21
In § 250.21, we propose to include the
requirements for the distributing agency
to review subdistributing agencies,
recipient agencies, and other entities to
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ensure compliance with requirements
relating to the distribution and control
of donated foods. In § 250.21(a), we
propose to clarify and streamline review
requirements in current § 250.19. We
propose to require that the distributing
agency ensure compliance with
requirements in 7 CFR part 250, and in
other Federal regulations as applicable,
through its review of required reports,
and through on-site reviews of the
recipient agencies and other entities
indicated in § 250.21(b) of this proposed
rule. The required reports for review
may include audit reports, processors’
monthly performance reports, and
inventory reports submitted in CSFP
and FDPIR. We also propose to clarify
that the distributing agency is not
required to review school food
authorities and other recipient agencies
in child nutrition programs. The State
administering agency (which may be
different from the distributing agency) is
responsible for the review of such
recipient agencies in accordance with
review requirements of Part 210. Lastly,
we propose to remove specific review
procedures included in current
§ 250.19(b)(1), such as the review of
recipient agency eligibility and civil
rights requirements, as they do not
apply to all programs, and are included
in Federal regulations for specific
programs in which they do apply.
We propose to include current on-site
review requirements of charitable
institutions, and of storage facilities at
the distributing agency level, in
§ 250.21(b), and to add a reference to the
distributing agency’s requirement to
perform on-site reviews of
subdistributing and recipient agencies
in CSFP, TEFAP, and FDPIR, in
accordance with 7 CFR parts 247, 251,
and 253, respectively. However, we
propose to remove the requirement, in
current § 250.19(b)(1)(iii), that the
distributing agency perform on-site
reviews of in-State processors. The onsite review would be replaced by review
of the audits required of such
processors, in accordance with § 250.20
of this proposed rule.
We propose to remove the
requirement in current § 250.19(b)(2),
that the distributing agency develop a
system to verify sales of end products
when a processor delivers end products
to a distributor for sale to recipient
agencies under a discount method of
sales. Processors receive notification of
such end product sales from the
distributor, usually by electronic means,
and the processor must maintain
records of such sales, in accordance
with current § 250.30(k)(2), and with
§ 250.19(a) of this proposed rule. Such
records would be reviewed by auditors,
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in conducting the audits required in
accordance with § 250.20(b) of this
proposed rule. Consequently, all end
product sales may be verified through
the review of audit reports, as well as
through the distributing agency’s review
of the processor’s monthly performance
reports. The distributing agency may
also require, at its option, that the
processor submit documentation to
support information included in the
processor’s performance report,
including sales of end products to
recipient agencies. The State
administering agency may also review
school food authorities’ records, in
order to ensure receipt of the requisite
quantity of end products, in accordance
with the administrative review required
in 7 CFR part 210.
In § 250.21(c), we propose to include
the requirement, in current
§ 250.19(b)(3) and (b)(4), that the
distributing agency report deficiencies
identified in its review to recipient
agencies or other entities, recommend
corrective actions, and ensure that such
actions are completed. We propose to
remove the requirement in current
§ 250.19(b)(6) that the distributing
agency require that subdistributing
agencies monitor and review their own
operations. Such responsibility must
reside with the distributing agency, in
accordance with § 250.4(a) of this
proposed rule.
13. Distributing Agency Performance
Standards, § 250.22
In § 250.22, we propose to include the
performance standards that the
distributing agency must meet, most of
which are included in current § 250.24.
Performance standards are meant to
highlight the most important areas of
oversight for distributing agencies
relating to donated foods; however, the
current standards cover a wide area. In
§ 250.22(a), we propose to revise the
performance standards to include only
those relating to oversight of
requirements in the ordering,
distribution, processing, and control of
donated foods, as such requirements are
proposed in this rule. We propose to
revise the performance standard relating
to the provision for processing of
donated foods to clarify that the
distributing agency must provide for
such processing, at the request of school
food authorities, in accordance with the
processing requirements in Subpart C of
7 CFR part 250. Most distributing
agencies already provide for processing
of donated foods into end products,
which permit school food authorities to
more easily prepare and serve meals in
NSLP. We propose to include
clarification that some performance
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standards are applicable only to
distributing agencies that distribute
donated foods in NSLP or other child
nutrition programs. We propose an
additional performance standard,
ensuring distributing agencies provide
recipient agencies information regarding
the preferred method for the submission
of donated food complaints to the
distributing agency and that distributing
agencies act expeditiously to resolve
submitted complaints. Lastly, we
propose to clarify that the identification
of specific performance standards does
not relieve the distributing agency of the
responsibility to meet other
requirements in 7 CFR part 250.
In § 250.22(b), we propose to include
the requirement, in current § 250.19(c),
that the distributing agency submit a
corrective action plan to FNS if it is
found to be substantially out of
compliance with the performance
standards. We propose to retain the
current requirements that the plan
identify the corrective actions to be
taken, the timeframe for completion of
such actions, and that the distributing
agency must submit the plan to FNS
within 60 days after receiving
notification of a deficiency. Failure of a
distributing agency to submit a timely
corrective action plan to FNS may be
considered a violation of this part, and
therefore subject to suspension or
termination under § 250.3(c).
In § 250.22(c), we propose to include
the provision, in current § 250.20, that
FNS may terminate the distributing
agency’s participation in the
distribution of donated foods, or in a
food distribution program, for failure to
comply with requirements in 7 CFR part
250, with other applicable Federal
regulations, or with its written
agreement with FNS. We propose to
indicate that FNS may also choose to
suspend, rather than terminate, such
participation, or may terminate or
suspend some, but not all, activities. In
certain situations, suspending all or part
of a program rather than terminating the
program in its entirety will allow FNS
to continue serving program
participants while pursuing corrective
actions. Lastly, we propose to include
the stipulation, in current § 250.20, that
FNS may also take other actions, as
appropriate, including prosecution
under applicable Federal statutes.
C. Subpart C—Processing and Labeling
of Donated Foods
We propose to amend current Subpart
C of 7 CFR part 250 to reduce reporting
requirements relating to the processing
of donated foods, and to remove the
requirement that the processor make a
payment to the distributing agency for
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the value of excessive donated food
inventories at the annual reconciliation.
We also propose to update regulatory
references to conform to other changes
proposed in this rule, and to replace
reference to ‘‘FNSRO’’ with ‘‘FNS
Regional Office’’ given that the rule
proposes to remove the definition of
‘‘FNSRO’’ from the definitions section
of the rule, in proposed § 250.2.
We propose to remove the
requirement, in current § 250.30(k)(3),
that the processor submit copies of
requests for refunds and refund
payments to the distributing agency. We
also propose to remove the
requirements, in current § 250.30(n)(4)
and § 250.30(o), that the distributing
agency submit monthly performance
reports, or information from such
reports, to FNS on a periodic basis.
In accordance with the proposal to
remove the requirement that the
distributing agency develop a sales
verification system for end product
sales, as described in section II.B.12 of
the preamble, we propose to remove the
requirement, in current
§ 250.30(m)(1)(viii), that the processor
report sales verification findings to the
distributing agency. We also propose to
remove current § 250.30(m)(1)(vii),
which is reserved. Accordingly, we
propose to redesignate
§ 250.30(m)(1)(ix) as § 250.30(m)(1)(vii).
In accordance with current
§ 250.30(n)(3), as part of the annual
reconciliation, a processor that has
contracted with the distributing agency
for the following year must first reduce
any excessive donated food inventories
by paying the distributing agency for the
value of such donated foods. While such
cash-out of donated food inventories
may be the best option in certain
instances, in other cases a transfer of
such inventories to another distributing
agency or processor may be the better
option. Therefore, we propose to revise
current § 250.30(n)(3) to instead require
such processor to reduce excessive
donated food inventories. Policy
Memorandum FD–064, Management of
Donated Food Inventories at Processors,
which was implemented in revised form
on March 20, 2012, provides several
options for reduction of excessive
donated food inventories at processors.
We propose to remove requirements
in current § 250.30(q) that the FNS
Regional Office review processing
contracts and inventory reports, and in
current § 250.30(r), which indicates that
FNS will provide copies of contracts
upon request. Such contracts and
inventory reports are currently reviewed
by FNS Headquarters staff. In
accordance with the removal of
paragraphs (o), (q), and (r) of this
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section, paragraphs (p), (s), and (t)
would be redesignated as paragraphs
(o), (p), and (q) of this section,
respectively.
D. Subpart D—Donated Foods in
Contracts With Food Service
Management Companies
We propose to amend current Subpart
D of 7 CFR part 250 to clarify
requirements in the storage, control, and
use of donated foods in contracts with
food service management companies. In
current § 250.50(a), we propose to
clarify that the food service management
company must use all donated foods
received in the recipient agency’s food
service, or must use commercial
substitutes in place of such donated
foods only as permitted in § 250.51(d).
We propose to revise current § 250.52(a)
to clarify that the food service
management company must meet the
requirements in § 250.14(a) of this
proposed rule for the safe storage and
control of donated foods.
E. Subpart E—National School Lunch
Program (NSLP) and Other Child
Nutrition Programs
We propose to amend current Subpart
E of 7 CFR part 250 to ensure that
school food authorities are able to order
and receive the donated foods that they
may best utilize in the school food
service, and to clarify requirements for
school food authorities in the storage,
inventory management, and use of
donated foods. In order to accomplish
this, we propose to revise current
paragraphs § 250.58(a) and (e), and to
consolidate current §§ 250.59 and
250.60 into a revised § 250.59. Current
§§ 250.61 and 250.62 would be
redesignated as §§ 250.60 and 250.61,
respectively.
In § 250.58(a), we propose to remove
reference to the Electronic Commodity
Ordering System (ECOS), as donated
food orders are now placed through a
new FNS electronic donated foods
ordering system, currently named Web
Based Supply Chain Management
(WBSCM). Although all distributing
agencies currently submit orders and
other information to FNS through the
FNS electronic donated foods ordering
system, not all States have rolled down
such system to their school food
authorities. Nevertheless, we propose to
require that the distributing agency
ensure that all school food authorities
are able to submit orders for donated
foods through the FNS electronic
donated foods ordering system, or
through a comparable electronic
ordering system. Direct submission of
orders by school food authorities better
ensures that they receive the preferred
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types and forms of donated foods, and
at a time when they may best utilize
such foods in the school food service.
We propose to require that the
distributing agency ensure that all
school food authorities have the
opportunity to provide input on at least
an annual basis in determining which
donated foods, from the full list of
donated foods, will be made available to
them for ordering electronically through
the FNS electronic donated foods
ordering system or another system.
Providing school food authorities with
the opportunity to order the types and
forms of foods that they have expressed
a preference for will help them to
maximize their use of donated foods to
meet the nutrition standards in the
National School Lunch Program and to
prevent waste. Lastly, we propose to
require that the distributing agency
ensure distribution to school food
authorities of all such ordered donated
foods that may be distributed to them in
a cost-effective manner (including the
use of split shipments, as necessary),
and that they may efficiently utilize so
as to minimize the cost to school food
authorities of receiving donated foods.
In § 250.58(e), we propose to require
that the distributing agency use either
the donated food cost-per-pound prices
posted annually by USDA or the most
recently published cost-per-pound in
the USDA donated foods catalog in
offering the school food authority the
commodity offer value of donated foods,
as required in § 250.58(b). In crediting
the school food authority’s donated food
assistance level, currently the
distributing agency may choose among
three options in valuing donated foods,
including the commodity file cost as of
a specified date and the estimated costper-pound data included in commodity
survey memoranda. Instead, we propose
that the distributing agency use the
USDA purchase price (cost-per-pound)
in crediting the school food authority’s
donated food assistance level, and that
the distributing agency update this price
at least semi-annually to reflect the most
recent purchase price. This will better
reflect the actual benefit received by the
school food authority.
In § 250.59(a), we propose to reference
the storage and inventory requirements
in Subpart B of 7 CFR part 250
applicable to distributing agencies to
ensure the safe and effective storage and
control of donated foods. We propose to
indicate that the school food authority
must ensure the safe and sanitary
storage, inventory management, and use
of donated foods and purchased foods,
in accordance with requirements in
current § 210.13. In accordance with
§ 250.14(c) of this proposed rule, the
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school food authority may commingle
donated foods and purchased foods in a
single inventory management system.
We propose to remove the current
provision that permits the distributing
agency to determine if the school food
authority may exercise the single
inventory option, or must continue to
maintain and track donated food
inventories separately from its
purchased foods. Separate inventory
tracking of donated foods would be an
unnecessary burden for school food
authorities, and it is important that
single inventory management be
implemented consistently in all States.
In § 250.59(b), we propose to include
the requirements in current § 250.60(a)
for the use of donated foods in the
nonprofit school food service, with only
minor clarifications. In § 250.59(c), we
propose to include contingencies and
requirements in current § 250.60(b) for
the use of donated foods outside of the
nonprofit school food service, again
with only minor clarifications. In
§ 250.59(d), we propose to include
requirements in current § 250.60(c) for
donated foods in contracts with food
service management companies in a
more streamlined form, but without
substantive changes.
In § 250.59(e), we propose to clarify
requirements for two or more school
food authorities acting as a collective
unit in conducting activities relating to
donated foods. School food authorities
often perform activities in a
collaborative manner through school coops or consortia, in order to minimize
costs and improve efficiency of
operations. We propose to clarify that
the school collective unit is subject to
the same requirements pertaining to
such donated food activities as a single
school food authority. For example, the
school collective unit may commingle
donated foods and purchased foods in a
single inventory management system.
the following new sections in the
revised Subpart F.
F. Subpart F—Household Programs
We propose to revise current Subpart
F to streamline and clarify current
descriptions of, and requirements for,
the distribution of donated foods in
CSFP and FDPIR, and to include such
information for TEFAP. We propose to
remove reference to the Food
Distribution Program in the Trust
Territory of the Pacific Islands, as all
distribution of donated foods in this
program has been cashed out. We also
propose to remove reference to the
Special Supplemental Nutrition
Program for Women, Infants, and
Children (i.e., the WIC Program), as
donated food distribution in that
program was discontinued several years
ago. Accordingly, we propose to include
In § 250.65(a), we propose to clarify
that the Department distributes donated
foods in FDPIR to the distributing
agency for further distribution, in
accordance with 7 CFR parts 253 and
254. We also propose to clarify that the
distributing agency may be a State
agency or Indian Tribal Organization,
and must comply with the requirements
of 7 CFR part 250 in the distribution,
control, and use of donated foods in
FDPIR, to the extent that such
requirements are not inconsistent with
the requirements in 7 CFR parts 253 and
254. In § 250.65(b), we propose to clarify
the types of donated foods distributed in
FDPIR, in accordance with the
legislation authorizing the purchase of
such foods.
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1. Commodity Supplemental Food
Program (CSFP), § 250.63
In § 250.63(a), we propose to clarify
that the Department distributes donated
foods in CSFP to the distributing agency
for further distribution in the State, in
accordance with 7 CFR part 247. We
also propose to clarify that State and
recipient agencies must comply with the
requirements of 7 CFR part 250 in the
distribution, control, and use of donated
foods in CSFP, to the extent that such
requirements are not inconsistent with
the requirements in 7 CFR part 247. In
§ 250.63(b), we propose to clarify the
types of donated foods distributed in
CSFP, in accordance with the legislation
authorizing the purchase of such foods.
2. The Emergency Food Assistance
Program (TEFAP), § 250.64
In § 250.64, we propose to include a
description of the distribution of
donated foods in TEFAP. In § 250.64(a),
we propose to clarify that the
Department distributes donated foods in
TEFAP to the distributing agency for
further distribution in the State, in
accordance with 7 CFR part 251. We
also propose to clarify that State and
recipient agencies must comply with the
requirements of 7 CFR part 250 in the
distribution, control, and use of donated
foods in TEFAP, to the extent that such
requirements are not inconsistent with
the requirements in 7 CFR part 251. In
§ 250.64(b), we propose to clarify the
types of donated foods distributed in
TEFAP, in accordance with the
legislation authorizing the purchase of
such foods.
3. Food Distribution Program on Indian
Reservations (FDPIR), § 250.65
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G. Subpart G—Additional Provisions
We propose to amend current Subpart
G of 7 CFR part 250 by revising the
Subpart heading to read Additional
Provisions, by clarifying requirements
for the distribution of donated foods in
disasters and situations of distress, and
by adding a provision which identifies
the OMB assigned information
collection and recordkeeping control
numbers. In order to accomplish this,
we propose to revise the heading of
Subpart G, as well as current §§ 250.69
and 250.70, and we propose to add
§ 250.71.
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1. Disasters, § 250.69
We propose to revise current § 250.69
to clarify requirements for the
distribution and use of donated foods in
a disaster, contingencies for
replacement of such foods, and
reporting requirements. In accordance
with § 250.2 of this proposed rule, the
term ‘‘disaster’’ includes a
Presidentially declared disaster or
emergency (e.g., a pandemic); therefore,
we refer simply to a disaster in this
section. In § 250.69(a), we propose to
retain the current provision that the
distributing agency may provide
donated foods from current inventories,
at the distributing or recipient agency
level, to approved disaster organizations
for use in providing congregate meal
assistance to persons in need of food
assistance as a result of a disaster. We
propose to retain the current authority
for the distributing agency to provide
such assistance without FNS approval.
However, we propose to clarify that the
distributing agency must notify FNS
that donated foods will be provided,
and the period of time that they are
expected to be needed. If such period of
time is extended, the distributing
agency must notify FNS of the
extension.
In § 250.69(b), we propose to retain
the current provision that the
distributing agency may provide
donated foods to disaster organizations
for distribution to households in need of
food assistance once FNS approval has
been obtained for such distribution. We
propose to clarify that such assistance
may continue for the period of time that
FNS determines necessary to meet the
needs of such households. We propose
to retain the prohibition for households
to simultaneously receive disaster
Supplemental Nutrition Assistance
Program (D–SNAP) benefits (formerly
disaster food stamps) and donated food
assistance.
In § 250.69(c), we propose to retain
the current requirement that the
distributing agency review and approve
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a disaster organization’s application to
provide donated food disaster
assistance, before distributing donated
foods to such organization. We also
propose to retain the current
requirement that, for distribution of
donated foods to households, the
application must also be forwarded to
FNS for approval. We propose to retain
the current required elements of such
applications, including those additional
elements required for distribution of
donated foods to households.
In § 250.69(d), we propose to include
the current requirement that disaster
organizations collect information from
households receiving donated foods, if
issuance of D–SNAP benefits has also
been approved, in order to ensure that
households receiving D–SNAP benefits
do not also receive donated foods. We
propose to retain the current
information that must be collected from
such households. We also propose to
include the current requirements that
such household information be reported
to the distributing agency, and that the
distributing agency maintain a record of
such information.
In § 250.69(e), we propose to include
the provision, in current § 250.13(d)(1),
that permits disaster relief workers to
receive meals containing donated foods
as an incident of their service to eligible
recipients. However, we propose to
clarify that any emergency relief
workers at the congregate feeding site
who are directly engaged in providing
relief assistance may be served
congregate meals containing donated
foods.
In § 250.69(f), we propose to include
the current requirement that the
distributing agency report to FNS the
number and location of sites where
donated foods are used in congregate
meals or household distribution, as
these sites are established. We also
propose to retain the requirement that
the distributing agency provide a report
of the types and amounts of donated
foods used in disaster assistance.
However, we propose to require this
information to be reported
electronically, utilizing form FNS–
292A, Report of Commodity Distribution
for Disaster Relief.
In § 250.69(g), we propose to include
the current provision for FNS
replacement of donated foods used in
disasters, as requested by the
distributing agency. However, we
propose to require that such information
must be reported within 45 days of
termination of disaster assistance, rather
than the current 30 day period. Also, we
propose to require that such
replacement be requested electronically,
utilizing form FNS–292A, Report of
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Commodity Distribution for Disaster
Relief, along with the report of the
donated foods used in the disaster.
Lastly, we propose to clarify that, for
food diverted from inventories of
recipient agencies in child nutrition
programs, FNS will replace such food if
the recipient agency received the same
types of donated food during the year
preceding the onset of the disaster
assistance. Such recipient agencies may
commingle donated foods and
commercially purchased foods in a
single inventory management system,
which makes it difficult to ascertain
which foods are actually used. We
propose to clarify that such replacement
will be in the amount of food used, but
not to exceed the amount of like
donated food received during the
preceding year.
In § 250.69(h), we propose to indicate
that FNS will, upon receiving a
distributing agency request via public
voucher, reimburse the distributing
agency for any costs incurred in
transporting donated foods within the
State, or from one State to another, for
use in disasters.
2. Situations of Distress, § 250.70
We propose to revise current § 250.70
to clarify requirements for the
distribution and use of donated foods in
a situation of distress (as defined in
§ 250.2 of this proposed rule),
contingencies for replacement of such
foods, and reporting requirements. As in
a disaster, donated foods may be used
to provide assistance in a situation of
distress, but requirements for the use of
such foods, and conditions for their
replacement, are somewhat different. In
§ 250.70(a), we propose to retain the
current conditions for the distributing
agency to provide donated foods to
approved disaster organizations for use
in providing congregate meals to
persons in need of food assistance as a
result of a situation of distress. In
accordance with current requirements,
FNS approval is not required for such
use if the situation of distress is the
result of a natural event—e.g., a
hurricane, flood, or snowstorm—and if
its duration will not exceed 30 days.
However, we propose to clarify that the
distributing agency must notify FNS
that donated food assistance is to be
provided. FNS approval is required to
permit such donated food assistance for
a period exceeding 30 days. We propose
to clarify that FNS approval is required
to permit donated food assistance in
providing congregate meals in a
situation of distress that is not the result
of a natural event (e.g., an explosion),
for any period of time. As with
disasters, the distributing agency may
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use donated foods from current
inventories at the distributing or
recipient agency level.
In § 250.70(b), we propose to retain
the current requirement that the
distributing agency obtain FNS approval
to provide donated foods to approved
disaster organizations for distribution to
households in a situation of distress. We
propose to clarify that such assistance
may continue for the period of time that
FNS determines necessary to meet the
needs of such households. In
accordance with current restrictions,
households receiving D–SNAP benefits
are not eligible to also receive donated
foods.
In § 250.70(c), we propose to retain
the current requirement that the disaster
organization submit an application to
the distributing agency, for its review
and approval, to receive donated foods
to provide assistance in a situation of
distress. For distribution of donated
foods in a situation of distress that is not
the result of a natural event, or for any
distribution of donated foods to
households, we propose to clarify that,
once the distributing agency approves
the application, it must submit the
application to FNS for approval. We
propose to require the same elements for
all such applications as we propose to
be included for applications in a
disaster, in accordance with § 250.69(c)
of this proposed rule.
In § 250.70(d), we propose to retain
the current requirement that disaster
organizations collect specific
information from households receiving
donated foods in a situation of distress,
if issuance of D–SNAP benefits has also
been approved. We propose to include
the same information that is required to
be collected from households in a
disaster, to require that such
information be reported to the
distributing agency, and that the
distributing agency maintain a record of
such information. In § 250.70(e), we
propose to clarify that emergency relief
workers may receive meals containing
donated foods at a congregate feeding
site in a situation of distress in
accordance with the same conditions
that apply in a disaster in § 250.69(e) of
this proposed rule.
In § 250.70(f), we propose to include
the current requirement that the
distributing agency report to FNS the
number and location of sites where
donated foods are used in congregate
meals or household distribution, as
these sites are established. We also
propose to require the distributing
agency to report the types and amounts
of donated foods used in the situation
of distress electronically, utilizing form
FNS–292A, Report of Commodity
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Distribution for Disaster Relief, within
the same 45-day time period as required
for disasters.
In § 250.70(g), we propose to include
the current contingencies for the
replacement of donated foods used in
situations of distress. FNS will replace
such foods to the extent that funds are
available to purchase replacement
foods, and if the distributing agency
requests such replacement within 45
days following the termination of such
assistance. This is longer than the 30
days that distributing agencies currently
have to request replacement of these
foods. However, we propose to require
that such replacement be requested
electronically, utilizing form FNS–
292A, Report of Commodity Distribution
for Disaster Relief, along with the report
of the donated foods used in the
situation of distress. We also propose to
clarify that, subject to the above
conditions, FNS will replace foods
diverted from inventories of recipient
agencies in child nutrition programs if
the recipient agency received the same
types of donated food during the year
preceding the onset of the assistance.
Such replacement will be in the amount
of food used, but not to exceed the
amount of like donated food received
during the preceding year.
In § 250.70(h), we propose to indicate
that FNS will, upon receiving a
distributing agency request via public
voucher, reimburse the distributing
agency, to the extent that funds are
available, for any costs incurred in
transporting donated foods within the
State, or from one State to another, for
use in a situation of distress.
In § 250.71 we propose to add a
provision providing the current OMB
assigned control numbers for the
information collection and
recordkeeping provisions in 7 CFR part
250.
7 CFR Part 251
We propose to amend 7 CFR part 251
to conform certain requirements for
distribution of donated foods in TEFAP
to requirements for such distribution in
other programs, or with changes to 7
CFR part 250 proposed in this rule. We
propose to remove current § 251.4(f)(4),
which requires that the external
shipping containers and product labels
of processed end products distributed in
TEFAP identify them as USDA donated
food products. The removal of this
requirement would conform to
requirements for unprocessed donated
foods distributed in TEFAP, as well as
other programs, which do not require
such identification. In accordance with
this proposal, we propose to redesignate
current § 251.4(f)(5) as § 251.4(f)(4).
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We propose to revise current
§ 251.4(g) to require TEFAP donated
foods to be distributed and used in
accordance with the requirements in 7
CFR part 251, and with the
requirements in 7 CFR part 250, to the
extent that such requirements are not
inconsistent with the requirements in 7
CFR part 251. We propose to align
requirements in the transfer of TEFAP
foods, and in ensuring restitution for
losses of TEFAP foods, with such
requirements for other donated foods, as
proposed in this rule.
We propose to require that transfers of
TEFAP donated foods comply with
requirements in §§ 250.12(d) and
250.14(d) of this proposed rule, as
applicable. We propose to clarify that
the State agency must ensure that
restitution is made for the loss of TEFAP
donated foods, or for the loss or
improper use of funds provided for, or
obtained as an incident of, the
distribution of such foods, in
accordance with § 250.16 of this
proposed rule. Lastly, we propose to
indicate that the State agency is subject
to claims for such losses for which it is
responsible, as well as for its failure to
initiate or pursue claims against other
parties responsible for such losses. We
propose to remove current § 251.4(l), as
the requirements for ensuring restitution
for losses of donated foods are included
in proposed § 250.16.
III. Procedural Matters
A. Public Comment Procedures
Your written comments on this
proposed rule should be specific,
confined to issues pertinent to the
proposed rule, and should explain your
reasons for any change recommended.
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 (see DATES) will not be
considered or included in the
Administrative Record for the final rule.
The comments, including names,
street addresses, and other contact
information of commenters, will be
available for public review at FNS,
Room 500, 3101 Park Center Drive,
Alexandria, Virginia, during regular
business hours (8:30 a.m. to 5 p.m.),
Mondays through Fridays, except
Federal holidays.
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 regulations easier to understand,
including answers to questions such as
the following:
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(1) Are the requirements in the rule
clearly stated?
(2) Does the rule contain technical
language or jargon that interferes with
its clarity?
(3) Does the format of the rule
(grouping and order of sections, use of
headings, paragraphs, etc.) make it more
or less clear?
(4) Would the rule be easier to
understand if it were 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?
B. Executive Order 12866 and 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
proposed rule has been determined to
be not significant and was not reviewed
by the Office of Management and
Budget (OMB) under Executive Order
12866.
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C. Regulatory Flexibility Act
This proposed rule has been reviewed
with regard to the requirements of the
Regulatory Flexibility Act (5 U.S.C.
601–612). Pursuant to that review, it has
been certified that this action will not
have a significant impact on a
substantial number of small entities.
Although the rule would require
specific procedures for distributing and
recipient agencies to follow in the
distribution and control of donated
foods, USDA does not expect them to
have a significant impact on such
entities.
D. Public Law 104–4, Unfunded
Mandates Reform Act of 1995
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,
FNS generally must prepare a written
statement, including a cost-benefit
analysis, for proposed and final rules
with ‘‘Federal mandates’’ that may
result in expenditures to State, local, or
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Tribal governments, in the aggregate, or
to the private sector, of $100 million or
more in any one year. When such a
statement is needed for a rule, section
205 of the UMRA generally requires
FNS 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) for
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.
E. Executive Order 12372
The donation of foods in USDA food
distribution and child nutrition
programs is included in the Catalog of
Federal Domestic Assistance under
10.555, 10.558, 10.559, 10.565, 10.567,
and 10.569. For the reasons set forth in
the final rule in 7 CFR part 3015,
Subpart V and related Notice (48 FR
29115, June 24, 1983), the donation of
foods in such programs is included in
the scope of Executive Order 12372,
which requires intergovernmental
consultation with State and local
officials.
F. 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.
FNS has considered the impact of this
rule on State and local governments and
has determined that this rule does have
Federalism implications.
1. Prior Consultation With State
Officials
The programs affected by the
regulatory proposals in this rule are all
State-administered, Federally-funded
programs. Hence, our national
headquarters office has formal and
informal discussions with State and
local officials, as well as commercial
contractors, on an ongoing basis
regarding issues relating to the
distribution and control of donated
foods. FNS attends annual conferences
of the American Commodity
Distribution Association, a national
group with State, local, and industry
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63241
representation, and the School Nutrition
Association, as well as other
conferences.
2. Nature of Concerns and the Need to
Issue This Rule
The rule addresses the concerns of
program operators that distribute and
use donated foods in food distribution
and child nutrition programs. The rule
would reduce the reporting and
administrative workload for distributing
and recipient agencies involved in the
distribution and control of donated
foods.
3. Extent to Which We Meet Those
Concerns
FNS has considered the impact of the
proposed rule on State and local
agencies. The overall effect of this rule
is to ensure that such agencies are able
to utilize and distribute donated foods
safely and efficiently, with a minimal
reporting and recordkeeping burden.
FNS is not aware of any case in which
the provisions of the rule would
preempt State law.
G. Executive Order 12988
This proposed rule has been reviewed
under Executive Order 12988, Civil
Justice Reform. This proposed rule,
when finalized, would 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 proposed rule
would not have retroactive effect. Prior
to any judicial challenge to the
provisions of this rule or the application
of its provisions, all applicable
administrative procedures must be
exhausted.
H. Civil Rights Impact Analysis
FNS has reviewed this rule in
accordance with the Department
Regulation 4300–4, ‘‘Civil Rights Impact
Analysis’’, to identify and address any
major civil rights impacts the rule might
have on minorities, women, and persons
with disabilities. After a careful review
of the rule’s intent and provisions, FNS
has determined that this rule will not in
any way limit or reduce the ability of
participants to receive the benefits of
donated foods in food distribution or
child nutrition programs on the basis of
an individual’s or group’s race, color,
national origin, sex, age, or disability.
FNS found no factors that would
negatively and disproportionately affect
any group of individuals.
I. Paperwork Reduction Act
In accordance with the Paperwork
Reduction Act of 1995, this notice
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invites the general public and other
public agencies to comment on this
proposed information collection. This
collection is a revision of a currently
approved collection, OMB#0584–0293.
Written comments must be received
on or before January 20, 2015.
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 shall 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 that were
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 use of appropriate
automated, electronic, mechanical, or
other technological collection
techniques or other forms of information
technology.
Comments may be sent to Dana
Rasmussen, at the address listed in the
ADDRESSES section of this preamble.
Comments may also be submitted via
email to Dana.Rasmussen@fns.usda.gov.
Comments will also be accepted through
the Federal eRulemaking Portal. Go to
https://www.regulations.gov, and follow
the online instructions for submitting
comments electronically. Commenters
are asked to separate their comments on
the information collection requirements
from their comments on the remainder
of the proposed rule.
Title: Food Distribution Forms.
OMB Number: 0584–0293.
Expiration Date: 09/30/2016.
Type of Request: Revision of a
currently approved collection.
Abstract: This is a revision of an
existing information collection based on
a proposed rule titled Proposed Changes
to the Requirements for the Distribution
and Control of Donated Foods, which
substantially re-writes 7 CFR part 250.
The rule proposes to revise and clarify
requirements in 7 CFR part 250 to
ensure that USDA donated foods are
distributed, stored, and managed in the
safest, most efficient, and cost-effective
manner, at State and recipient agency
levels. The rule would also reduce
administrative and reporting
requirements for State distributing
agencies, revise or clarify regulatory
provisions relating to accountability for
donated foods, and rewrite much of 7
CFR part 250 in a more user-friendly,
‘‘plain language,’’ format. Lastly, the
rule proposes to revise and clarify
specific requirements in 7 CFR part 251
to conform more closely to related
requirements in 7 CFR part 250. This
Estimated number
of respondents
Affected public
Number of
responses per
respondent
revision also includes provisions
inadvertently omitted in the currently
approved information collection,
substantially revises other provisions
which were inaccurate, and updates all
relevant aspects of information
collection requirements in the package.
Affected Public: Respondent groups
include: (1) Individuals and households;
(2) businesses or other for-profit
agencies; (3) not for profit organizations;
and (4) State, local, and Tribal
governments.
Estimated Number of Respondents:
The total estimated number of
respondents is 636,478. This includes
611,200 individuals and households,
2,812 businesses and other for-profit
companies, 1,600 private not-for-profit
organizations, and 20,866 State, Local,
and Tribal governments.
Estimated Number of Responses per
Respondent: The total estimated average
number of responses is 6.10 per
respondent.
Estimated Total Annual Responses:
3,879,952.
Estimated Time per Response: The
average response time is 0.30 hours per
response.
Estimated Total Annual Burden on
Respondents: See the table below for
estimated total annual burden for each
type of respondent.
Total annual
responses
Estimated total
hours per
response
Estimated total
burden
Reporting
State, Local, and Tribal Governments ...........
Private for Profit .............................................
Private Not for Profit ......................................
Individual ........................................................
20,866
2,812
1,600
611,200.00
11.16
305.10
2.03
1.96
232,774.24
857,949.00
3,240.00
1,199,200.00
0.26
0.03
0.19
0.25
59,589.50
24,566.72
614.50
304,400.00
Total Estimated Reporting Burden .........
636,478.00
3.60
2,293,163.24
0.17
389,170.72
20,866.00
2,812
1,600
0
24.22
367.99
29.19
0.00
505,305.46
1,034,786.00
46,697.00
0.00
0.07
0.06
14.44
0.00
37,129.57
62,790.72
674,358.04
0.00
25,278.00
62.77
1,586,788.46
0.49
774,278.33
0.17
0.49
0.30
389,170.72
774,278.33
1,163,449.05
Recordkeeping
State, Local, and Tribal Governments ...........
Private for Profit .............................................
Private Not for Profit ......................................
Individual ........................................................
Total Estimated Recordkeeping Burden
Total of Reporting and Recordkeeping
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Reporting ........................................................
Recordkeeping ...............................................
Total ........................................................
636,478.00
25,278.00
636,478.00
3.60
62.77
6.10
2,293,163.24
1,586,788.46
3,879,951.70
Note: A detailed table is included in the supplemental documents to this rule.
J. Regulatory Impact Analysis
This rule has been designated as Not
Significant by the Office of Management
and Budget, therefore, no Regulatory
Impact Analysis is required.
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K. Executive Order 13175—Consultation
and Coordination With Indian Tribal
Governments
Executive Order 13175 requires
Federal agencies to consult and
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coordinate with Tribes on a
government-to-government basis on
policies that have Tribal implications,
including regulations, legislative
comments or proposed legislation, and
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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.
On February 13, 2013, as part of its
regular quarterly Tribal consultation
schedule, USDA engaged in a
consultative session to obtain input by
Tribal officials, or their designees, and
Tribal members concerning the effect of
this and other rules on the Tribes or
Indian Tribal governments. In regard to
the provisions of this rule, at the
consultative session a Tribal member
requested, and FNS provided,
clarification regarding the purpose of
this rule. No concerns regarding the
provisions of the rule were expressed.
We are unaware of any current Tribal
laws that could be in conflict with the
proposed rule.
L. E-Government Act Compliance
The Department is committed to
complying with the E-Government Act,
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.
List of Subjects
7 CFR Part 250
Disaster assistance, Food assistance
programs, Grant programs-social
programs, Reporting and recordkeeping
requirements.
7 CFR Part 251
Food assistance programs, Grant
programs-social programs, Reporting
and recordkeeping requirements,
Surplus agricultural commodities.
Accordingly, 7 CFR parts 250 and 251
are proposed to be amended as follows:
PART 250—DONATION OF FOODS
FOR USE IN THE UNITED STATES, ITS
TERRITIORIES AND POSSESSIONS
AND AREAS UNDER ITS
JURISDICTION
1. The authority citation for part 250
continues to read as follows:
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■
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.
■
2. Revise Subpart A to read as follows:
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Subpart A—General Purpose and
Administration
Sec.
250.1 Purpose and use of donated foods.
250.2 Definitions.
250.3 Administration at the Federal level.
250.4 Administration at the State level.
250.5 Civil rights.
§ 250.1
Purpose and use of donated foods.
(a) Purpose. The Department
purchases foods and donates them to
State distributing agencies for further
distribution and use in food assistance
programs, or to provide assistance to
needy persons, in accordance with
legislation:
(1) Authorizing donated food
assistance in specific programs (e.g., the
Richard B. Russell National School
Lunch Act for the National School
Lunch Program (NSLP)); or
(2) Authorizing the removal of surplus
foods from the market or the support of
food prices (i.e., in accordance with
Section 32, Section 416, and Section
709, as defined in § 250.2).
(b) Use of donated foods. Donated
foods must be used in accordance with
the requirements of this part and with
other Federal regulations applicable to
specific food assistance programs (e.g., 7
CFR part 251 includes requirements for
the use of donated foods in The
Emergency Food Assistance Program
(TEFAP)). Such use may include
activities designed to demonstrate or
test the effective use of donated foods
(e.g., in nutrition classes or cooking
demonstrations) in any programs.
However, donated foods may not be:
(1) Sold or exchanged, or otherwise
disposed of, unless approved by FNS, or
specifically permitted elsewhere in this
part or in other Federal regulations (e.g.,
donated foods may be used in meals
sold in NSLP);
(2) Used to require recipients to make
any payments or perform any services in
exchange for their receipt, unless
approved by FNS, or specifically
permitted elsewhere in this part or in
other Federal regulations; or
(3) Used to solicit voluntary
contributions in connection with their
receipt, except for donated foods
provided in the Nutrition Services
Incentive Program (NSIP).
(c) Legislative sanctions. In
accordance with the Richard B. Russell
National School Lunch Act (42 U.S.C.
1760) and the Agriculture and
Consumer Protection Act of 1973 (7
U.S.C. 612c note), any person who
embezzles, willfully misapplies, steals,
or obtains by fraud any donated foods
(or funds, assets, or property deriving
from such donated foods) will be subject
to Federal criminal prosecution and
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63243
other penalties. Any person who
receives, conceals, or retains such
donated foods or funds, assets, or
property deriving from such foods, with
the knowledge that they were
embezzled, willfully misapplied, stolen,
or obtained by fraud, will also be subject
to Federal criminal prosecution and
other penalties. The distributing agency,
or other parties, as applicable, must
immediately notify FNS of any such
violations.
§ 250.2
Definitions.
7 CFR Part 3016 means the
Department’s regulations establishing
uniform administrative requirements for
Federal grants and cooperative
agreements and subawards to State,
local, and Indian Tribal governments.
7 CFR Part 3019 means the
Department’s regulations establishing
uniform administrative requirements for
Federal grants and cooperative
agreements awarded to institutions of
higher education, hospitals, and other
nonprofit organizations.
7 CFR Part 3052 means the
Department’s regulations establishing
audit requirements for State and local
governments and nonprofit
organizations that receive Federal
grants.
Administering agency means a State
agency that has been approved by the
Department to administer a food
assistance program. If such agency is
also responsible for the distribution of
donated foods, it is referred to as the
distributing agency in this part.
Adult care institution means a
nonresidential adult day care center that
participates independently in CACFP,
or that participates as a sponsoring
organization, and that may receive
donated foods or cash-in-lieu of donated
foods, in accordance with an agreement
with the distributing agency.
AoA means the Administration on
Aging, which is the DHHS agency that
administers NSIP.
Bonus foods means Section 32,
Section 416, and Section 709 donated
foods, as defined in this section, which
are purchased under surplus removal or
price support authority, and provided to
distributing agencies in addition to
legislatively authorized levels of
assistance.
CACFP means the Child and Adult
Care Food Program.
Carrier means a commercial
enterprise that transports donated foods
from one location to another, but does
not store such foods.
Charitable institutions means public
institutions or private nonprofit
organizations that provide a meal
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service on a regular basis to
predominantly needy persons in the
same place without marked changes.
Some types of charitable institutions are
included in § 250.67.
Child care institution means a
nonresidential child care center that
participates independently in CACFP,
or that participates as a sponsoring
organization, in accordance with an
agreement with the distributing agency.
Child nutrition program means NSLP,
CACFP, SFSP, or SBP.
Commodity offer value means the
minimum value of donated foods that
the distributing agency must offer to a
school food authority participating in
NSLP each school year. The commodity
offer value is equal to the national permeal value of donated food assistance
multiplied by the number of
reimbursable lunches served by the
school food authority in the previous
school year.
Commodity school means a school
that operates a nonprofit food service, in
accordance with 7 CFR part 210, but
that receives additional donated food
assistance rather than the cash
assistance available to it under Section
4 of the Richard B. Russell National
School Lunch Act (42 U.S.C. 1753).
Consignee means an entity (e.g., the
distributing or recipient agency, a
commercial storage facility, or a
processor) that receives a shipment of
donated foods from a vendor or Federal
storage facility.
Contract value of the donated foods
means the price assigned by the
Department to a donated food which
shall reflect the Department’s current
acquisition price, transportation and, if
applicable, processing costs related to
the food.
Contracting agency means the
distributing agency, subdistributing
agency, or recipient agency which
enters into a processing contract.
CSFP means the Commodity
Supplemental Food Program.
Department means the United States
Department of Agriculture (USDA).
DHHS means the United States
Department of Health and Human
Services.
Disaster means a Presidentially
declared disaster or emergency, in
accordance with the Robert T. Stafford
Disaster Relief and Emergency
Assistance Act, in which Federal
assistance, including donated food
assistance, may be provided to persons
in need of such assistance as a result of
the disaster or emergency.
Disaster organization means an
organization authorized by FNS or a
distributing agency, when appropriate,
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to provide assistance to survivors of a
disaster or a situation of distress.
Distributing agency means a State
agency selected by the Governor of the
State or the State legislature to
distribute donated foods in the State, in
accordance with an agreement with
FNS, and with the requirements in this
part and other Federal regulations, as
applicable (e.g., a State agency
distributing donated foods in CSFP
must comply with requirements in 7
CFR part 247). Indian Tribal
Organizations may act as a distributing
agency in the distribution of donated
foods on, or near, Indian reservations, as
provided for in applicable Federal
regulations (e.g., 7 CFR parts 253 or 254
for FDPIR).
Distribution charge means the
cumulative charge imposed by
distributing agencies on school food
authorities to help meet the costs of
storing and distributing donated foods,
and administrative costs related to such
activities.
Distributor means a commercial food
purveyor or handler who is independent
of a processor and both sells and bills
for the end products delivered to
recipient agencies.
Donated foods means foods
purchased by USDA for donation in
food assistance programs, or for
donation to entities assisting needy
persons, in accordance with legislation
authorizing such purchase and
donation. Donated foods are also
referred to as USDA Foods.
Elderly nutrition project means a
recipient agency selected by the State or
Area Agency on Aging to receive
assistance in NSIP, which may include
donated food assistance.
End product means a food product
that contains processed donated foods.
Entitlement means the value of
donated foods a distributing agency is
authorized to receive in a specific
program, in accordance with program
legislation.
Entitlement foods means donated
foods that USDA purchases and
provides in accordance with levels of
assistance mandated by program
legislation.
FDPIR means the Food Distribution
Program on Indian Reservations and the
Food Distribution Program for Indian
Households in Oklahoma.
Federal acceptance service means the
acceptance service provided by:
(1) The applicable grading branches of
the Department’s Agricultural Marketing
Service (AMS);
(2) The Department’s Federal Grain
Inspection Service; and
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(3) The National Marine Fisheries
Service of the U.S. Department of
Commerce.
Fee-for-service means the price by
pound or case representing a processor’s
cost of ingredients (other than donated
foods), labor, packaging, overhead, and
other costs incurred in the conversion of
the donated food into the specified end
product.
Fiscal year means the period of 12
months beginning October 1 of any
calendar year and ending September 30
of the following calendar year.
FNS means the Food and Nutrition
Service of the Department of
Agriculture.
Food recall means an action to
remove food products from commerce
when there is reason to believe the
products may be unsafe, adulterated, or
mislabeled. The action is taken to
protect the public from products that
may cause health problems or possible
death.
Food service management company
means a commercial enterprise,
nonprofit organization, or public
institution that is, or may be, contracted
with by a recipient agency to manage
any aspect of a recipient agency’s food
service, in accordance with 7 CFR parts
210, 225, or 226, or, with respect to
charitable institutions, in accordance
with this part. To the extent that such
management includes the use of
donated foods, the food service
management company is subject to the
applicable requirements in this part.
However, a school food authority
participating in NSLP that performs
such functions is not considered a food
service management company. Also, a
commercial enterprise that uses donated
foods to prepare meals at a commercial
facility, or to perform other activities
that meet the definition of processing in
this section, is considered a processor in
this part, and is subject to the
requirements in subpart C, and not
subpart D, of this part.
Household means any of the
following individuals or groups of
individuals, exclusive of boarders or
residents of an institution:
(1) An individual living alone;
(2) An individual living with others,
but customarily purchasing food and
preparing meals for home consumption
separate and apart from the others;
(3) A group of individuals living
together who customarily purchase and
prepare meals in common for home
consumption; and
(4) Other individuals or groups of
individuals, as provided in FNS
regulations specific to particular food
assistance programs.
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Household programs means CSFP,
FDPIR, and TEFAP.
In-kind replacement means the
replacement of a loss of donated food
with the same type of food of U.S.
origin, of equal or better quality as the
donated food, and at least equal in value
to the lost donated food.
In-State processor means a processor
that has entered into agreements with
distributing or recipient agencies that
are located only in the State in which
all of the processor’s processing
facilities are located.
Multi-food shipment means a
shipment from a Federal storage facility
that usually includes more than one
type of donated food.
Multi-State processor means a
processor that has entered into
agreements with distributing or
recipient agencies in more than one
State, or that has entered into one or
more agreements with distributing or
recipient agencies that are located in a
State other than the State in which the
processor’s processing facilities or
business office is located.
National per-meal value means the
value of donated foods provided for
each reimbursable lunch served in
NSLP in the previous school year, and
for each reimbursable lunch and supper
served in CACFP in the previous school
year, as established in section 6(c) of the
Richard B. Russell National School
Lunch Act (42 U.S.C. 1755(c)).
Needy persons means persons in need
of food assistance as a result of their:
(1) Economic status;
(2) Eligibility for a specific food
assistance program; or
(3) Eligibility as survivors of a disaster
or a situation of distress.
Nonprofit organization means a
private organization with tax-exempt
status under the Internal Revenue Code.
Nonprofit organizations operated
exclusively for religious purposes are
automatically tax-exempt under the
Internal Revenue Code.
Nonprofit school food service means
all food service operations conducted by
the school food authority principally for
the benefit of schoolchildren, all of the
revenue from which is used solely for
the operation or improvement of such
food services.
NSIP means the Nutrition Services
Incentive Program.
NSLP means the National School
Lunch Program.
Out-of-condition donated foods
means donated foods that are no longer
fit for human consumption as a result of
spoilage, contamination, infestation,
adulteration, or damage.
Performance supply and surety bond
means a written instrument issued by a
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surety company which guarantees
performance and supply of end
products by a processor under the terms
of a processing contract.
Processing means a commercial
enterprise’s use of a commercial facility
to:
(1) Convert donated foods into an end
product;
(2) Repackage donated foods; or
(3) Use donated foods in the
preparation of meals.
Processor means a commercial
enterprise that processes donated foods
at a commercial facility.
Recipient agencies means agencies or
organizations that receive donated foods
for distribution to needy persons or for
use in meals provided to needy persons,
in accordance with agreements with a
distributing or subdistributing agency,
or with another recipient agency. Local
agencies in CSFP, and Indian Tribal
Organizations distributing donated
foods to needy persons through FDPIR
in a State in which the State government
administers FDPIR, are considered
recipient agencies in this part.
Recipients means persons receiving
donated foods, or a meal containing
donated foods, provided by recipient
agencies.
Reimbursable meals means meals that
meet the nutritional standards
established in Federal regulations
pertaining to NSLP, SFSP, or CACFP,
and that are served to eligible recipients.
SAE funds means Federal funds
provided to State agencies for State
administrative expenses, in accordance
with 7 CFR part 235.
SBP means the School Breakfast
Program.
School food authority means the
governing body responsible for the
administration of one or more schools,
and that has the legal authority to
operate NSLP or be otherwise approved
by FNS to operate NSLP.
School year means the period of 12
months beginning July 1 of any calendar
year and ending June 30 of the following
calendar year.
Section 4(a) means section 4(a) of the
Agriculture and Consumer Protection
Act of 1973, as amended (7 U.S.C. 612c
note), which authorizes the Department
to purchase donated foods to maintain
the traditional level of assistance for
food assistance programs authorized by
law, including, but not limited to, CSFP,
FDPIR, and disaster assistance.
Section 6 means section 6 of the
Richard B. Russell National School
Lunch Act, as amended (42 U.S.C.
1755), which authorizes the Department
to provide a specified value of donated
food assistance in NSLP.
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Section 14 means section 14 of the
Richard B. Russell National School
Lunch Act, as amended (42 U.S.C.
1762a), which authorizes the
Department to use Section 32 or Section
416 funds to maintain the annually
programmed levels of donated food
assistance in child nutrition programs.
Section 27 means section 27 of the
Food and Nutrition Act of 2008, as
amended (7 U.S.C. 2036), which
authorizes the purchase of donated
foods for distribution in TEFAP.
Section 32 means section 32 of Public
Law 74–320, as amended (7 U.S.C.
612c), which authorizes the Department
to purchase primarily perishable foods
to remove market surpluses, and to
donate them for use in domestic food
assistance programs or by charitable
institutions.
Section 311 means section 311 of the
Older Americans Act of 1965, as
amended (42 U.S.C. 3030a), which
permits State Agencies on Aging to
receive all or part of their NSIP grant as
USDA donated foods.
Section 416 means section 416 of the
Agricultural Act of 1949, as amended (7
U.S.C. 1431), which authorizes the
Department to purchase nonperishable
foods to support market prices, and to
donate them for use in domestic food
assistance programs or by charitable
institutions.
Section 709 means section 709 of the
Food and Agricultural Act of 1965, as
amended (7 U.S.C. 1446a-1), which
authorizes the Department to purchase
dairy products to meet authorized levels
of assistance in domestic food assistance
programs when such assistance cannot
be met by Section 416 food purchases.
Service institution means recipient
agencies that participate in SFSP.
SFSP means the Summer Food
Service Program.
Similar replacement means the
replacement of a loss of donated food
with another type of food from the same
food category (i.e., dairy, grain, meat/
meat alternate, vegetable, fruit, etc.) that
is of U.S. origin, of equal or better
quality than that type of donated food,
and at least equal in value to the lost
donated food.
Single inventory management means
the commingling in storage of donated
foods and foods from other sources, and
the maintenance of a single inventory
record of such commingled foods.
Situation of distress means a natural
catastrophe or other event that does not
meet the definition of disaster in this
section, but that, in the determination of
the distributing agency, or of FNS, as
applicable, warrants the use of donated
foods to assist survivors of such
catastrophe or other event. A situation
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of distress may include, for example, a
hurricane, flood, snowstorm, or
explosion.
SNAP means the Supplemental
Nutrition Assistance Program.
Split shipment means a shipment of
donated foods from a vendor that is split
between two or more distributing or
recipient agencies, and that usually
includes more than one stop-off or
delivery location.
State means any State of the United
States, the District of Columbia, Puerto
Rico, the Virgin Islands, Guam, and
American Samoa.
State Agency on Aging means:
(1) The State agency that has been
approved by DHHS to administer NSIP;
or
(2) The Indian Tribal Organization
that has been approved by DHHS to
administer NSIP.
Storage facility means a publiclyowned or nonprofit facility or a
commercial enterprise that stores
donated foods or end products, and that
may also transport such foods to another
location.
Subdistributing agency means a State
agency, a public agency, or a nonprofit
organization selected by the distributing
agency to perform one or more activities
required of the distributing agency in
this part, in accordance with a written
agreement between the parties. A
subdistributing agency may also be a
recipient agency.
Substitution means:
(1) The replacement of donated foods
with like quantities of domestically
produced commercial foods of the same
generic identity and of equal or better
quality (i.e., cheddar cheese for cheddar
cheese, nonfat dry milk for nonfat dry
milk, etc.).
(2) In the case of donated nonfat dry
milk, substitution as defined under
paragraph (1) of this definition or
replacement with an equivalent amount,
based on milk solids content, of
domestically produced concentrated
skim milk.
(3) A processor can substitute
commercial product for donated
commodity, as described in paragraph
(1) of this definition, without
restrictions under full substitution. The
processor must return to the contracting
agency, in finished end products, the
same number of pounds of commodity
that the processor originally received for
processing under full substitution. This
is the 100-percent yield requirement.
(4) A processor can substitute
commercial product for donated
commodity product, as described in
paragraph (1) of this definition, with
some restrictions under limited
substitution. Restrictions include, but
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are not limited to, the prohibition
against substituting for backhauled
poultry commodity product. FNS may
also prohibit substitution of certain
types of the same generic commodity.
(For example, FNS may decide to permit
substitution for bulk chicken but not for
canned chicken.)
Summer camp means a nonprofit or
public camp for children aged 18 and
under.
TEFAP means The Emergency Food
Assistance Program.
USDA Foods means donated foods.
Vendor means a commercial food
company from which the Department
purchases foods for donation.
§ 250.3
Administration at the Federal level.
(a) Food and Nutrition Service.
Within the Department, the Food and
Nutrition Service (FNS) shall act on
behalf of the Department to administer
the distribution of donated foods to
distributing agencies for further
distribution and use at the State level,
in accordance with the requirements of
this part.
(b) Audits or inspections. The
Department, the Comptroller General of
the United States, or any of their
authorized representatives, may conduct
audits or inspections of distributing,
subdistributing, or recipient agencies, or
the commercial enterprises with which
they have contracts or agreements, in
order to determine compliance with the
requirements of this part, or with other
applicable Federal regulations.
(c) Suspension or termination.
Whenever it is determined that a
distributing agency has materially failed
to comply with the provisions of this
part, or with other applicable Federal
regulations, FNS may suspend or
terminate the distribution of donated
foods, or the provision of administrative
funds, to the distributing agency. FNS
must provide written notification of
such suspension or termination of
assistance, including the reasons for the
action and the effective date. The
distributing agency may appeal a
suspension or termination of assistance
if such appeal is provided for in Federal
regulations applicable to a specific food
assistance program (e.g., as provided for
in § 253.5(l) for FDPIR). FNS may also
take other actions, as appropriate,
including prosecution under applicable
Federal statutes.
§ 250.4
Administration at the State level.
(a) Distributing agency. The
distributing agency, as defined in
§ 250.2, is responsible for ensuring
compliance with the requirements in
this part, and in other Federal
regulations referenced in this part, in
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the distribution and control of donated
foods. In order to receive, store, and
distribute donated foods, the
distributing agency shall enter into a
written agreement with FNS (the
Federal-State Agreement, form FNS–74)
for the distribution of donated foods in
accordance with the provisions of this
part and other applicable Federal
regulations. The Federal-State
agreement is permanent, but may be
amended with the concurrence of both
parties. FNS may terminate the FederalState agreement if the distributing
agency fails to meet its obligations, in
accordance with § 250.3(c). The
distributing agency may impose
additional requirements relating to the
distribution and control of donated
foods in the State, as long as such
requirements are not inconsistent with
the requirements in this part or other
Federal regulations referenced in this
part.
(b) Subdistributing agency. The
distributing agency may enter into a
written agreement with a
subdistributing agency, as defined in
§ 250.2, to perform specific activities
required of the distributing agency in
this part. However, the distributing
agency may not assign its overall
responsibility for donated food
distribution and control to a
subdistributing agency or to any other
organization, and may not delegate its
responsibility to ensure compliance
with the performance standards in
§ 250.22. The agreement entered into
with the subdistributing agency must
include the provisions in paragraph (c)
of this section, and must indicate the
specific activities for which the
subdistributing agency is responsible.
(c) Recipient agencies. The
distributing agency must select recipient
agencies, as defined in § 250.2, to
receive donated foods for distribution to
needy persons, or for use in meals
provided to needy persons, in
accordance with eligibility criteria for
specific programs or outlets, and must
enter into a written agreement with a
recipient agency prior to distribution of
donated foods to it. However, for child
nutrition programs, the distributing
agency must enter into agreements with
those recipient agencies selected by the
State administering agency to
participate in such programs, prior to
distribution of donated foods to such
recipient agencies. The distributing
agency must confirm such recipient
agencies’ approval for participation in
the appropriate child nutrition program
with the State administering agency. For
household programs, distributing
agencies must consider the past
performance of recipient agencies when
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approving applications for participation.
Agreements with recipient agencies
must include the provisions in this
paragraph (c), as well as provisions
required in Federal regulations
applicable to specific programs (e.g.,
agreements with local agencies in CSFP
must include the provisions in
§ 247.4(b)). The agreements with
recipient agencies and subdistributing
agencies must:
(1) Ensure compliance with the
applicable requirements in this part,
with other Federal regulations
referenced in this part, and with the
distributing agency’s written agreement
with FNS;
(2) Ensure compliance with all
requirements relating to food safety and
food recalls;
(3) Establish the duration of the
agreement;
(4) Permit termination of the
agreement by the distributing agency for
failure of the recipient agency (or
subdistributing agency, as applicable) to
comply with its provisions or applicable
requirements, upon written notification
to the applicable party; and
(5) Permit termination of the
agreement by either party, upon written
notification to the other party, at least
60 days prior to the effective date of
termination.
(d) Procurement of services of
commercial enterprises. The
distributing agency, or a recipient
agency, must ensure compliance with
Departmental procurement
requirements in 7 CFR part 3016 or
3019, as applicable, to obtain the
services of a commercial enterprise to
conduct activities relating to donated
foods. The distributing agency, or a
recipient agency, must also ensure
compliance with other applicable
Departmental regulations in such
procurements—for example, a school
food authority must ensure compliance
with requirements in §§ 210.16 and
210.21, and in subpart D of this part, in
procuring the services of a food service
management company.
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§ 250.5
Civil rights.
Distributing agencies, subdistributing
agencies and recipient agencies shall
comply with the Department’s
nondiscrimination regulations (7 CFR
parts 15, 15a, and 15b) and the FNS
civil rights instructions to ensure that in
the operation of the program no person
is discriminated against on a protected
bases as it applies to each program.
■ 3. Revise Subpart B to read as follows:
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Subpart B—Delivery, Distribution, and
Control of Donated Foods
Sec.
250.10 Availability and ordering of donated
foods.
250.11 Delivery and receipt of donated food
shipments.
250.12 Storage and inventory management
at the distributing agency level.
250.13 Efficient and cost-effective
distribution of donated foods.
250.14 Storage and inventory management
at the recipient agency level.
250.15 Out-of-condition donated foods,
food recalls, and complaints.
250.16 Claims and restitution for donated
food losses.
250.17 Use of funds obtained incidental to
donated food distribution.
250.18 Reporting requirements.
250.19 Recordkeeping requirements.
250.20 Audit requirements.
250.21 Distributing agency reviews.
250.22 Distributing agency performance
standards.
§ 250.10 Availability and ordering of
donated foods.
(a) Ordering donated foods. The
distributing agency must utilize a
request-driven ordering system in
submitting orders for donated foods to
FNS. As part of such system, the
distributing agency must provide
recipient agencies with the opportunity
to submit input, on at least an annual
basis, in determining the donated foods
from the full list that are made available
to them for ordering. Based on the input
received, the distributing agency must
ensure that the types and forms of
donated foods that recipient agencies
may best utilize are made available to
them for ordering. The distributing
agency must also ensure that donated
foods are ordered and distributed only
in amounts that may be utilized
efficiently and without waste.
(b) Provision of information on
donated foods. The distributing agency
must provide recipient agencies, at their
request, information that will assist
them in ordering or utilization of
donated foods, including:
(1) The types and quantities of
donated foods that they may order;
(2) Donated food specifications and
nutritional value; and
(3) Procedures for the disposition of
donated foods that are out-of-condition
or that are subject to a food recall.
§ 250.11 Delivery and receipt of donated
food shipments.
(a) Delivery. The Department arranges
for delivery of donated foods from the
vendor or Federal storage facility to the
distributing agency’s storage facility, or
to a processor with which the
distributing agency has entered into a
contract or agreement. The Department
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may also deliver donated foods directly
to a recipient agency, or to a storage
facility or processor with which the
recipient agency has entered into a
contract or agreement, with the approval
of the distributing agency. In accordance
with § 250.2, an entity that receives a
shipment of donated foods directly from
a USDA vendor or a Federal storage
facility is referred to as the consignee.
Consignees must provide a delivery
address, and other information as
required by FNS, as well as update this
information as necessary, to ensure
foods are delivered to the correct
location.
(b) Receipt of shipments. The
distributing or recipient agency, or other
consignee, must comply with all
applicable Federal requirements in
receiving shipments of donated foods,
including procedures for the disposition
of any donated foods in a shipment that
are out-of-condition (as this term is
defined in § 250.2), or are not in
accordance with ordered amounts. The
distributing or recipient agency, or other
consignee, must provide notification of
the receipt of donated food shipments to
FNS, through electronic means, and
must maintain an electronic record of
receipt of all donated food shipments.
(c) Replacement of donated foods.
The vendor is responsible for the
replacement of donated foods that are
delivered out-of-condition. Such
responsibility extends until expiration
of the use-by or best-if-used-by date on
the food label, or, if no such date is
included on the food label, until
expiration of the vendor warranty
period included in the vendor contract
with USDA. In all cases, responsibility
for replacement is contingent on the
determination that the foods were outof-condition at the time of delivery.
Replacement must be in-kind, unless
FNS approves similar replacement (the
terms in-kind and similar replacement
are defined in § 250.2). If FNS
determines that physical replacement of
donated foods is not cost-effective or
efficient, FNS may:
(1) Approve payment by the vendor to
the distributing or recipient agency, as
appropriate, for the value of the donated
foods at time of delivery (or at another
value determined by FNS); or
(2) Credit the distributing agency’s
entitlement, as feasible.
(d) Payment of costs relating to
shipments. The Department is
responsible for payment of processing,
transportation, handling, or other costs
incurred up to the time of delivery of
donated foods to a distributing or
recipient agency, or other consignee, as
the Department deems in its best
interest. However, the distributing or
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recipient agency, or other consignee, is
responsible for payment of any delivery
charges that accrue as a result of such
consignee’s failure to comply with
procedures in FNS instructions—e.g.,
failure to provide for the unloading of
a shipment of donated foods within a
designated time period.
(e) Transfer of title. Title to donated
foods transfers to the distributing or
recipient agency, as appropriate, upon
acceptance of the donated foods at the
time and place of delivery.
Notwithstanding transfer of title,
distributing and recipient agencies must
ensure compliance with the
requirements of this part in the
distribution, control, and use of donated
foods.
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§ 250.12 Storage and inventory
management at the distributing agency
level.
(a) Safe storage and control. The
distributing agency (or subdistributing
agency, as applicable) must provide
facilities for the storage and control of
donated foods that protect against theft,
spoilage, damage, or other loss.
Accordingly, such storage facilities must
maintain donated foods in sanitary
conditions, at the proper temperature
and humidity, and with adequate air
circulation. The distributing agency
must ensure that storage facilities
comply with all Federal, State, or local
requirements relative to food safety and
health, as applicable, and obtain all
required health inspections.
(b) Inventory management. The
distributing agency must ensure that
donated foods at all storage facilities
used by the distributing agency (or by a
subdistributing agency) are stored in a
manner that permits them to be
distinguished from other foods, and
must ensure that a separate inventory
record of donated foods is maintained.
The distributing agency’s system of
inventory management must ensure that
donated foods are distributed in a
timely manner and in optimal
condition. On an annual basis, the
distributing agency must conduct a
physical review of donated food
inventories at all storage facilities used
by the distributing agency (or by a
subdistributing agency), and must
reconcile physical and book inventories
of donated foods. The distributing
agency must report donated food losses
to FNS, and ensure that restitution is
made for such losses.
(c) Inventory limitations. The
distributing agency is subject to the
following limitations in the amount of
donated food inventories on-hand,
unless FNS approval is obtained to
maintain larger inventories:
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(1) For TEFAP, NSLP and other child
nutrition programs, inventories may not
exceed an amount needed for a sixmonth period, based on an average
amount of donated foods utilized in that
period; and
(2) For CSFP and FDPIR, inventories
of each category of donated food in the
food package may not exceed an amount
needed for a three-month period, based
on an average amount of donated food
that the distributing agency can
reasonably utilize in that period to meet
CSFP caseload or FDPIR average
participation.
(d) Inventory protection. The
distributing agency must obtain
insurance to protect the value of
donated foods at its storage facilities.
The amount of such insurance must be
at least equal to the average monthly
value of donated food inventories at
such facilities in the previous fiscal
year. The distributing agency must also
ensure that the following entities obtain
insurance to protect the value of their
donated food inventories, in the same
amount required of the distributing
agency in this paragraph (d):
(1) Subdistributing agencies;
(2) Recipient agencies in household
programs that have an agreement with
the distributing agency or
subdistributing agency to store and
distribute foods; and
(3) Commercial storage facilities
under contract with the distributing
agency or with an agency identified in
paragraph (d)(1) or (2) of this section.
(e) Transfer of donated foods. The
distributing agency may transfer
donated foods from its inventories to
another distributing agency, or to
another program, in order to ensure that
such foods may be utilized in a timely
manner and in optimal condition, in
accordance with this part. However, the
distributing agency must request FNS
approval to transfer donated foods from
one program to another (e.g., from NSLP
to TEFAP). FNS may also require a
distributing agency to transfer donated
foods at the distributing agency’s storage
facilities or at a processor’s facility, if
inventories of donated foods are
excessive or may not be efficiently
utilized. If there is a question of food
safety, or if directed by FNS, the
distributing agency must obtain an
inspection of donated foods by State or
local health authorities to ensure that
the donated foods are still safe and not
out-of-condition before transferring
them. The distributing agency is
responsible for meeting any
transportation or inspection costs
incurred, unless it is determined by FNS
that the transfer is not the result of
negligence or improper action on the
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part of the distributing agency. The
distributing agency must maintain a
record of all transfers from its
inventories, and of any inspections
related to such transfers.
(f) Commercial storage facilities or
carriers. The distributing agency may
obtain the services of a commercial
storage facility to store and distribute
donated foods, or a carrier to transport
donated foods, but must ensure
compliance with Departmental
procurement requirements in 7 CFR part
3016. The distributing agency must
enter into a written contract with a
commercial storage facility or carrier,
which may not exceed five years in
duration, including any extensions or
renewals. The contract must include
applicable provisions required by
Federal statutes and executive orders
listed in 7 CFR 3016.36(i). The contract
must also include, as applicable to a
storage facility or carrier, provisions
that:
(1) Assure storage, management, and
transportation of donated foods in a
manner that properly safeguards them
against theft, spoilage, damage, or other
loss, in accordance with the
requirements in this part;
(2) Assure compliance with all
Federal, State, or local requirements
relative to food safety and health,
including required health inspections,
and procedures for responding to a food
recall;
(3) Assure storage of donated foods in
a manner that distinguishes them from
other foods, and assure separate
inventory recordkeeping of donated
foods;
(4) Assure distribution of donated
foods to eligible recipient agencies in a
timely manner, in optimal condition,
and in amounts for which such
recipient agencies are eligible;
(5) Include the amount of insurance
coverage obtained to protect the value of
donated foods;
(6) Permit the performance of on-site
reviews of the storage facility by the
distributing agency, the Comptroller
General, the Department of Agriculture,
or any of its duly authorized
representatives, in order to determine
compliance with requirements in this
part;
(7) Establish the duration of the
contract, and provide for extension or
renewal of the contract only upon
fulfillment of all contract provisions;
(8) Provide for expeditious
termination of the contract for
noncompliance with its provisions; and
(9) Provide for termination of the
contract by either party for other cause,
after written notification of such intent
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at least 60 days prior to the effective
date of such action.
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§ 250.13 Efficient and cost-effective
distribution of donated foods.
(a) Direct shipments. The distributing
agency must ensure that the distribution
of donated foods is conducted in the
most efficient and cost-effective manner,
and, to the extent practical, in
accordance with the specific needs and
preferences of recipient agencies. In
meeting this requirement, the
distributing agency must, to the extent
practical, provide for:
(1) Shipments of donated foods
directly from USDA vendors to recipient
agencies, including two or more
recipient agencies acting as a collective
unit (such as a school co-op), or to the
commercial storage facilities of such
agencies;
(2) Shipments of donated foods
directly from USDA vendors to
processors for processing of donated
foods and sale of end products to
recipient agencies, in accordance with
Subpart C of this part; and
(3) The use of split shipments, as
defined in § 250.2, in arranging for
delivery of donated foods to recipient
agencies that cannot accept a full
truckload.
(b) Distributing agency storage and
distribution charge. If a distributing
agency determines that direct shipments
of donated foods, as described in
paragraph (a) of this section, are
impractical, it must provide for the
storage of donated foods at the
distributing agency level, and
subsequent distribution to recipient
agencies, in the most efficient and costeffective manner. The distributing
agency must use a commercial storage
facility, in accordance with § 250.12(f),
if such system is determined to be more
efficient and cost-effective. The
distributing agency must utilize State
Administrative Expense (SAE) funds, as
available, to meet the costs of storing
and distributing donated foods for
school food authorities or other
recipient agencies in child nutrition
programs, and administrative costs
related to such activities, in accordance
with 7 CFR part 235. If SAE funds, or
any other Federal or State funds
received for such purpose, are
insufficient to fully meet the
distributing agency’s costs of storing
and distributing donated foods, and
related administrative costs (e.g.,
salaries of employees engaged in such
activities), the distributing agency may
require school food authorities or other
recipient agencies in child nutrition
programs to pay a distribution charge, as
defined in § 250.2, to help meet such
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costs. The distribution charge may cover
only allowable costs, in accordance with
7 CFR part 3016 and with OMB
guidance. The distributing agency must
maintain a record of costs incurred in
storing and distributing donated foods
and related administrative costs, and the
source of funds used to pay such costs.
(c) FNS approval of amount of
distribution charge. In determining the
amount of a new distribution charge, or
in increasing the amount (except for
normal inflationary adjustments) or
reducing the level of service provided
once a distribution charge is
established, the distributing agency
must request FNS approval prior to
implementation. Such requirement also
applies to the distribution charge
imposed by a commercial storage
facility under contract with the
distributing agency. The request for
approval must be submitted to FNS at
least 90 days in advance of its projected
implementation, and must include
justification of the newly established
amount, or any increased charge or
reduction in the level of service
provided under an established
distribution charge, and the specific
costs covered under the distribution
charge (e.g., storage, delivery, or
administrative costs).
(d) FNS review authority. FNS may
reject the distributing agency’s proposed
new, or changes to an existing,
distribution charge if it determines that
the charge would not provide for
distribution of donated foods in the
most efficient and cost-effective manner,
or may otherwise impact recipient
agencies negatively. In such case, the
distributing agency would be required
to adjust the proposed amount or the
level of service provided in its
distribution charge, or consider other
distribution options. FNS may also
require the distributing agency to
submit documentation to justify the
efficiency and cost-effectiveness of its
storage and distribution system at other
times, and may require the distributing
agency to re-evaluate such system in
order to ensure compliance with the
requirements in this part.
§ 250.14 Storage and inventory
management at the recipient agency level.
(a) Safe storage and control. Recipient
agencies must provide facilities for the
storage and control of donated foods
that protect against theft, spoilage,
damage, or other loss. Accordingly, such
storage facilities must maintain donated
foods in sanitary conditions, at the
proper temperature and humidity, and
with adequate air circulation. Recipient
agencies must ensure that storage
facilities comply with all Federal, State,
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63249
or local requirements relative to food
safety and health, as applicable, and
obtain all required health inspections.
(b) Inventory management—
household programs. Recipient agencies
in household programs must store
donated foods in a manner that permits
them to be distinguished from other
foods in storage, and must maintain a
separate inventory record of donated
foods. Such recipient agencies’ system
of inventory management must ensure
that donated foods are distributed to
recipients in a timely manner that
permits use of such foods while still in
optimal condition. Such recipient
agencies must notify the distributing
agency of donated food losses and take
further actions with respect to such food
losses, as directed by the distributing
agency.
(c) Inventory management—child
nutrition programs and charitable
institutions. Recipient agencies in child
nutrition programs, and those receiving
donated foods as charitable institutions,
in accordance with § 250.67, are not
required to store donated foods in a
manner that distinguishes them from
purchased foods or other foods, or to
maintain a separate inventory record of
donated foods—i.e., they may utilize
single inventory management, as
defined in § 250.2. For such recipient
agencies, donated foods are subject to
the same safeguards and effective
management practices as other foods.
Accordingly, recipient agencies in child
nutrition programs and those receiving
donated foods as charitable institutions
(regardless of the inventory management
system utilized), are not required to
separately monitor and report donated
food use, distribution, or loss to the
distributing agency, unless there is
evidence indicating that donated food
loss has occurred as a result of theft or
fraud.
(d) Transfer of donated foods to
another recipient agency. A recipient
agency operating a household program
must request approval from the
distributing agency to transfer donated
foods at its storage facilities to another
recipient agency. The distributing
agency may approve such transfer to
another recipient agency in the same
household program (e.g., the transfer of
TEFAP foods from one food pantry to
another) without FNS approval.
However, the distributing agency must
receive FNS approval to permit a
recipient agency in a household
program to transfer donated foods to a
recipient agency in a different program
(e.g., the transfer of TEFAP foods from
a food pantry to a CSFP local agency),
even if the same recipient agency
administers both programs. A recipient
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agency operating a child nutrition
program, or receiving donated foods as
a charitable institution, in accordance
with § 250.67, may transfer donated
foods to another recipient agency or
charitable organization without
approval from the distributing agency or
FNS.
(e) Commercial storage facilities.
Recipient agencies may obtain the
services of commercial storage facilities
to store and distribute donated foods,
but must ensure compliance with
Departmental procurement
requirements in 7 CFR parts 3016 or
3019, as applicable. Recipient agencies
must ensure that commercial storage
facilities comply with all of the
applicable requirements in this section
regarding the storage and inventory
management of donated foods.
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§ 250.15 Out-of-condition donated foods,
food recalls, and complaints.
(a) Out-of-condition donated foods at
the distributing agency level. The
distributing agency must ensure that
donated foods that are out-of-condition,
as defined in § 250.2, at any of its
storage facilities are destroyed, or
otherwise disposed of, in accordance
with State or local requirements
pertaining to food safety and health. The
distributing agency must obtain an
inspection of donated foods by State or
local health authorities to determine
their safety and condition, as necessary,
or as directed by FNS. Out-of-condition
donated foods may be sold (e.g., to a
salvage company), if permitted by State
or local laws or regulations.
(b) Out-of-condition donated foods at
the recipient agency level. Recipient
agencies in household programs must
report out-of-condition donated foods at
their storage facilities to the distributing
agency, in accordance with § 250.14(b),
and must ensure that such donated
foods are destroyed, or otherwise
disposed of, in accordance with State or
local requirements pertaining to food
safety and health. The distributing
agency must ensure that such recipient
agencies obtain an inspection of
donated foods by State or local health
authorities to determine their safety and
condition, as necessary, or as directed
by FNS. For charitable institutions, in
accordance with § 250.67, and recipient
agencies in child nutrition programs,
donated foods must be treated as other
foods when safety is in question.
Consequently, such recipient agencies
must comply with State or local
requirements in determining the safety
of foods (including donated foods), and
in their destruction or other disposition.
However, they are not required to report
such actions to the distributing agency.
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(c) Food recalls. The distributing or
recipient agency, as appropriate, must
follow all applicable Federal, State or
local requirements for donated foods
subject to a food recall, as this term is
defined in § 250.2. Further, in the event
of a recall, Departmental guidance is
provided, including procedures or
instructions for all parties in responding
to a food recall, replacement of recalled
donated foods, and reimbursement of
specific costs incurred as a result of
such actions.
(d) Complaints relating to donated
foods. The distributing agency must
inform recipient agencies of the
preferred method of receiving
complaints regarding donated foods.
Complaints received from recipients,
recipient agencies, or other entities
relating to donated foods must be
resolved in an expeditious manner, and
in accordance with applicable
requirements in this part. However, the
distributing agency may not dispose of
any donated food that is the subject of
a complaint prior to guidance and
authorization from FNS. Any
complaints regarding product quality or
specifications, or suggested product
improvements, must be submitted to
FNS through the established FNS
donated foods complaint system for
tracking purposes. If complaints may
not be resolved at the State level, the
distributing agency must provide
information regarding the complaint to
FNS. The distributing agency must
maintain a record of its investigations
and other actions with respect to
complaints relating to donated foods.
§ 250.16 Claims and restitution for
donated food losses.
(a) Distributing agency
responsibilities. The distributing agency
must ensure that restitution is made for
the loss of donated foods, or for the loss
or improper use of funds provided for,
or obtained as an incident of, the
distribution of donated foods. The
distributing agency must identify, and
seek restitution from, parties
responsible for the loss, and implement
corrective actions to prevent future
losses.
(b) FNS claim actions. FNS may
initiate and pursue claims against the
distributing agency or other entities for
the loss of donated foods, or for the loss
or improper use of funds provided for,
or obtained as an incident of, the
distribution of donated foods. FNS may
also initiate and pursue claims against
the distributing agency for failure to
take required claim actions against other
parties. FNS may, on behalf of the
Department, compromise, forgive,
suspend, or waive a claim. FNS may, at
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its option, require assignment to it of
any claim arising from the distribution
of donated foods.
§ 250.17 Use of funds obtained incidental
to donated food distribution.
(a) Distribution charge. The
distributing agency must use funds
obtained from the distribution charge
imposed on recipient agencies in child
nutrition programs, in accordance with
§ 250.13(b), to meet the costs of storing
and distributing donated foods or
related administrative costs, consistent
with the limitations on the use of funds
provided under a Federal grant in 7 CFR
part 3016 and OMB guidance. The
distributing agency must maintain such
funds in an operating account, separate
from other funds obtained incidental to
donated food distribution. The amount
of funds maintained at any time in the
operating account may not exceed the
distributing agency’s highest
expenditure from that account over any
three-month period in the previous
school or fiscal year, unless the
distributing agency receives FNS
approval to maintain a larger amount of
funds in such account. Unless such
approval is granted, funds in excess of
the established limit must be used to
reduce the distribution charge imposed
on recipient agencies, or to provide
appropriate reimbursement to such
agencies. The distributing agency may
not use funds obtained from the
distribution charge to purchase foods to
replace donated food losses or to pay
claims to make restitution for donated
food losses.
(b) Processing and food service
management company contracts.
School food authorities must use funds
obtained from processors in processing
of donated foods into end products (e.g.,
through rebates for the value of such
donated foods), or from food service
management companies in crediting for
the value of donated foods received, in
support of the nonprofit school food
service, in accordance with 7 CFR
210.14 of this chapter. Other recipient
agencies must use such funds in
accordance with the requirements in
paragraph (c) of this section.
(c) Claims and other sources. The
distributing agency must ensure that
funds collected in payment of claims for
donated food losses are used only for
the payment of expenses of the food
distribution program. The first priority
for the use of funds collected in a claim
for the loss of donated foods is the
purchase of replacement foods for use in
the program in which the loss occurred.
If the purchase of replacement foods is
not feasible, funds collected in a claim
for the loss of donated foods must be
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used to pay allowable administrative
costs incurred in the storage and
distribution of donated foods. The
distributing agency, or recipient agency,
must use funds obtained from sources
incidental to donated food distribution
(except as otherwise indicated in this
section) to pay administrative costs
incurred in the storage and distribution
of donated foods, consistent with the
limitations on the use of funds provided
under a Federal grant in 7 CFR parts
3016 or 3019, and OMB guidance, as
applicable. The distributing agency
must maintain funds obtained from
claims and other sources included in
this paragraph (c) in a donated food
account (separate from the operating
account maintained in accordance with
paragraph (a) of this section), and must
obtain FNS approval for any single
deposit into, or expenditure from, such
account in excess of $25,000.
Distributing and recipient agencies must
maintain records of funds obtained and
expended in accordance with this
paragraph (c). Examples of funds
applicable to the provisions in this
paragraph (c) include funds accrued
from:
(1) The salvage of out-of-condition
donated foods.
(2) The sale of donated food
containers, pallets, or packing materials.
(3) Payments by processors for failure
to meet processing yields or other cause.
(d) Prohibitions. The distributing
agency may not use funds obtained
incidental to donated food distribution
to meet State matching requirements for
Federal administrative funds provided
in household programs, or in place of
State Administrative Expense (SAE)
funds provided in accordance with 7
CFR part 235.
(e) Buy American. When funds
obtained in accordance with this section
are used to purchase foods in the
commercial market, a distributing or
recipient agency in the continental
United States, and in Hawaii, must, to
the maximum extent practical, purchase
only domestic foods or food products.
Such requirement is also applicable to
food purchases made with the cash-inlieu-of-donated foods provided in NSLP
and CACFP, in accordance with
§§ 250.56(e) and 250.61(c). For the
purposes of this section, domestic foods
or food products are:
(1) Agricultural commodities that are
produced in the United States; or
(2) Food products that are processed
in the United States substantially using
agricultural commodities that are
produced in the United States.
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§ 250.18
Reporting requirements.
(a) Inventory and distribution of
donated foods. The distributing agency
must submit to FNS reports relating to
the inventory and distribution of
donated foods in this paragraph (a) or in
other regulations applicable to specific
programs. Such reports must be
submitted in accordance with the time
frames established for each respective
form. For donated foods received in
FDPIR, the distributing agency must
submit form FNS–152, Monthly
Distribution of Donated Foods to Family
Units. For donated foods received in
TEFAP, NSLP, or other child nutrition
programs, the distributing agency must
submit form FNS–155, the Inventory
Management Register.
(b) Processor performance reports.
Processors must submit monthly
performance reports to the distributing
agency, in accordance with § 250.30(m).
Such reports must include the
information listed in § 250.30(m).
(c) Disasters and situations of distress.
The distributing agency must submit to
FNS a report of the types and amounts
of donated foods used from distributing
or recipient agency storage facilities in
disasters and situations of distress, and
a request for replacement of such foods,
using electronic form FNS–292A, Report
of Commodity Distribution for Disaster
Relief, in accordance with §§ 250.69 and
250.70. The report must be submitted
within 45 days of the termination of
such assistance.
(d) Other information. The
distributing agency must submit other
information, as requested by FNS, in
order to ensure compliance with
requirements in this part. For example,
FNS may require the distributing agency
to submit information with respect to its
assessment of the distribution charge, or
to justify the efficiency and costeffectiveness of its distribution system,
in accordance with § 250.13(c) and (d).
§ 250.19
Recordkeeping requirements.
(a) Required records. Distributing
agencies, recipient agencies, and other
entities must maintain records of
agreements and contracts, reports,
audits, and claim actions, funds
obtained as an incident of donated food
distribution, and other records
specifically required in this part or in
other Departmental regulations, as
applicable. In addition, distributing
agencies must keep a record of the value
of donated foods each of its school food
authorities receives, and records to
demonstrate compliance with the
professional standards for distributing
agency directors established in
235.11(g). Processors must also maintain
records documenting the sale of end
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products to recipient agencies,
including the sale of such end products
by distributors. Specific recordkeeping
requirements relating to the use of
donated foods in contracts with food
service management companies are
included in § 250.54. Failure of the
distributing agency, recipient agency, or
other entity to comply with
recordkeeping requirements shall be
considered prima facie evidence of
improper distribution or loss of donated
foods and may result in a claim against
such party for the loss or misuse of
donated foods, in accordance with
§ 250.16, or in other sanctions or
corrective actions.
(b) Retention of records. Records
relating to requirements for donated
foods must be retained for a period of
three years from the close of the fiscal
or school year to which they pertain.
However, records pertaining to claims
or audits that remain unresolved in this
period of time must be retained until
such actions have been resolved.
§ 250.20
Audit requirements.
(a) Requirements for distributing and
recipient agencies. Audit requirements
for State or local government agencies
and nonprofit organizations that receive
Federal awards or grants (including
distributing and recipient agencies
under this part) are included in
Departmental regulations in 7 CFR part
3052 (which codifies audit requirements
in OMB Circular A–133). In accordance
with such regulations, the value of
Federal grants or awards expended in a
fiscal year determine if the distributing
or recipient agency is required to obtain
an audit in that year. The value of
donated foods must be considered as
part of the Federal grants or awards in
determining if an audit is required. FNS
provides guidance for distributing and
recipient agencies in valuing donated
foods for audit purposes, and in
determining whether an audit must be
obtained. (For availability of the OMB
circular mentioned in this paragraph,
please refer to 5 CFR 1310.3).
(b) Requirements for processors. InState processors must obtain an
independent certified public accountant
(CPA) audit in the first year that they
receive donated foods for processing,
while multi-State processors must
obtain such an audit in each of the first
two years that they receive donated
foods for processing. After this initial
requirement period, in-State and multiState processors must obtain an
independent CPA audit at a frequency
determined by the average value of
donated foods received for processing
per year, as indicated in this paragraph
(b). The value of donated foods used in
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determining if an audit is required must
be the contract value of the donated
foods, as defined in § 250.2. The audit
must determine that the processor’s
performance is in compliance with the
requirements in this part, and must be
conducted in accordance with
procedures in the FNS Audit Guide for
Processors. All processors must pay for
audits required in this paragraph (b). An
in-State or multi-State processor must
obtain an audit:
(1) Annually, if it receives, on
average, more than $5,000,000 in
donated foods for processing per year;
(2) Every two years, if it receives, on
average, between $1,000,000 and
$5,000,000 in donated foods for
processing per year; or
(3) Every three years, if it receives, on
average, less than $1,000,000 in donated
foods for processing per year.
(c) Post-audit actions required of
processors. In-State processors must
submit a copy of the audit to the
distributing agency for review by
December 31st of each year in which an
audit is required. The distributing
agency must ensure that in-State
processors provide a corrective action
plan with timelines for correcting
deficiencies identified in the audit, and
must ensure that such deficiencies are
corrected. Multi-State processors must
submit a copy of the audit, and a
corrective action plan with timelines for
correcting deficiencies identified in the
audit, as appropriate, to FNS for review
by December 31st of each year in which
an audit is required. FNS may conduct
an audit or investigation of a processor
to ensure correction of deficiencies, in
accordance with § 250.3(b).
(d) Failure to meet audit
requirements. If a distributing agency or
recipient agency fails to obtain the
required audit, or fails to correct
deficiencies identified in the audit, FNS
may withhold, suspend, or terminate
the Federal award. If a processor fails to
obtain the required audit, or fails to
correct deficiencies identified in the
audit, a distributing or recipient agency
may terminate the processing
agreement, and may not extend or
renew such an agreement. Additionally,
FNS may prohibit the further
distribution of donated foods to such
processor.
§ 250.21
Distributing agency reviews.
(a) Scope of review requirements. The
distributing agency must ensure that
subdistributing agencies, recipient
agencies, and other entities comply with
applicable requirements in this part,
and in other Federal regulations,
through the on-site reviews required in
paragraph (b) of this section, and the
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review of required reports or audits.
However, the distributing agency is not
responsible for the review of school
food authorities and other recipient
agencies in child nutrition programs.
The State administering agency is
responsible for the review of such
recipient agencies, in accordance with
review requirements of part 210.
(b) On-site reviews. The distributing
agency must conduct an on-site review
of:
(1) Charitable institutions, whenever
the distributing agency identifies actual
or probable deficiencies in the use of
donated foods by such institutions,
through audits, investigations,
complaints, or any other information;
(2) Storage facilities at the distributing
agency level (including commercial
storage facilities under contract with the
distributing or subdistributing agency),
on an annual basis; and
(3) Subdistributing and recipient
agencies in CSFP, TEFAP, and FDPIR,
in accordance with 7 CFR parts 247,
251, and 253, respectively.
(c) Identification and correction of
deficiencies. The distributing agency
must inform each subdistributing
agency, recipient agency, or other entity
of any deficiencies identified in its
reviews, and recommend specific
actions to correct such deficiencies. The
distributing agency must ensure that
such agencies or entities implement
corrective actions to correct deficiencies
in a timely manner.
§ 250.22 Distributing agency performance
standards.
(a) Performance standards. The
distributing agency must meet the basic
performance standards included in this
paragraph in the ordering, distribution,
processing, if applicable, and control of
donated foods. Some of the performance
standards apply only to distributing
agencies that distribute donated foods in
NSLP or other child nutrition programs,
as indicated. However, the
identification of specific performance
standards does not diminish the
responsibility of the distributing agency
to meet other requirements in this part.
In meeting basic performance standards,
the distributing agency must:
(1) Provide recipient agencies with
information on donated food
availability, assistance levels, values,
product specifications, and processing
options, as requested;
(2) Implement a request-driven
ordering system, in accordance with
§ 250.10(a), and, for child nutrition
programs, § 250.58(a);
(3) Offer school food authorities in
NSLP, at a minimum, the commodity
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offer value of donated foods, in
accordance with § 250.58;
(4) Provide for the storage,
distribution, and control of donated
foods in accordance with all Federal,
State, or local requirements relating to
food safety and health;
(5) Provide for the distribution of
donated foods in the most efficient and
cost-effective manner, including, to the
extent practical, direct shipments from
vendors to recipient agencies or
processors, and the use of split
shipments;
(6) Use SAE funds, or other Federal or
State funds, as available, in paying State
storage and distribution costs for child
nutrition programs, and impose a
distribution charge on recipient
agencies in child nutrition programs
only to extent that such funds are
insufficient to meet applicable costs;
(7) Provide for the processing of
donated foods, at the request of school
food authorities, in accordance with
Subpart C of this part, including the
testing of end products with school food
authorities, and the solicitation of
acceptability input, when procuring end
products on behalf of school food
authorities or otherwise limiting the
procurement of end products; and
(8) Provide recipient agencies
information regarding the preferred
method for submission of donated foods
complaints to the distributing agency
and act expeditiously to resolve
submitted complaints.
(b) Corrective action plan. The
distributing agency must submit a
corrective action plan to FNS whenever
it is found to be substantially out of
compliance with the performance
standards in paragraph (a) of this
section, or with other requirements in
this part. The plan must identify the
corrective actions to be taken, and the
timeframe for completion of such
actions. The plan must be submitted to
FNS within 60 days after the
distributing agency receives notification
from FNS of a deficiency.
(c) Termination or suspension. FNS
may terminate or suspend all, or part, of
the distributing agency’s participation
in the distribution of donated foods, or
in a food distribution program, for
failure to comply with requirements in
this part, with other applicable Federal
regulations, or with its written
agreement with FNS. FNS may also take
other actions, as appropriate, including
prosecution under applicable Federal
statutes.
Subpart C—Processing and Labeling
of Donated Foods
■
4. In Subpart C, § 250.30:
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a. Revise all references to ‘‘FNSRO’’ to
read ‘‘FNS Regional Office’’.
■ b. Amend paragraph (b)(2)
introductory text by removing the
reference, ‘‘§ 250.12(b)’’, and adding in
its place the reference, ‘‘§ 250.4(c)’’.
■ c. Amend paragraph (b)(2)(i) by
removing the words, ‘‘as defined in
§ 250.3’’, and adding in their place the
words, ‘‘in accordance with paragraph
(d) of this section’’.
■ d. Amend paragraph (c) as follows:
■ i. Redesignate paragraphs (c)(1)(i)
through (vi) as paragraphs (c)(1)(i)(A)
through (F).
■ ii. Redesignate paragraph (c)(1)
introductory text as (c)(1)(i)
introductory text.
■ iii. Designate the undesignated
paragraph following paragraph
(c)(1)(i)(F), beginning with the words
‘‘These criteria will be reviewed’’, as
paragraph (c)(1)(ii).
■ e. Amend newly designated paragraph
(c)(1)(ii) by removing the references,
‘‘Attachment O to OMB Circular A–102’’
and ‘‘Attachment O of OMB Circular A–
102’’, and adding in their place the
reference, ‘‘7 CFR parts 3016 or 3019, as
applicable’’.
■ f. Amend paragraph (c)(4)(iii) by
removing the reference, ‘‘§ 250.3’’, and
adding in its place the reference,
‘‘§ 250.2’’.
■ g. Revise paragraphs (c)(4)(viii)(G) and
(c)(4)(xi).
■ h. Remove paragraph (c)(4)(xiv), and
redesignate paragraphs (c)(4)(xv)
through (xviii) as paragraphs (c)(4)(xiv)
through (xvii).
■ i. Revise paragraph (d)(1)(i).
■ j. Remove the second and third
sentences of paragraph (d)(1)(iii).
■ k. Revise paragraph (e)(1)(i).
■ l. Amend paragraph (f)(1) introductory
text by removing the reference,
‘‘§ 250.3’’, and adding in its place the
reference, ‘‘§ 250.2’’.
■ m. Amend paragraph (f)(2) by
removing the reference, ‘‘§ 250.16’’, and
adding in its place the reference,
‘‘§ 250.19’’.
■ n. Amend paragraph (f)(3)(vii) by
removing the reference, ‘‘§ 250.16(a)(4)’’,
and adding in its place the reference,
‘‘§ 250.19(a)’’.
■ o. Amend paragraph (j)(3) by
removing the reference, ‘‘FNS
Instruction 410–1, Non-Audit Claims,
Food Distribution Program’’, and adding
in its place the reference, ‘‘§ 250.17(c)’’.
■ p. Remove the last sentence of
paragraph (k)(3).
■ q. Remove paragraphs (m)(1)(vii) and
(viii), and redesignate paragraph
(m)(1)(ix) as paragraph (m)(1)(vii).
■ r. Revise the second sentence of
paragraph (n)(3).
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s. Remove paragraph (n)(4), and
redesignate paragraph (n)(5) as
paragraph (n)(4).
■ t. Remove paragraphs (o), (q), and (r),
and redesignate paragraphs (p), (s), and
(t) as paragraphs (o), (p), and (q),
respectively.
The revisions read as follows:
■
§ 250.30
foods.
State processing of donated
*
*
*
*
*
(c) * * *
(4) * * *
(viii) * * *
(G) Meet the requirements of § 250.19
in maintaining records pertaining to the
receipt, distribution, and control of
donated foods, and the sale of end
products;
*
*
*
*
*
(xi) Meet the requirements in
§ 250.20(b) and (c) in obtaining an
independent certified public accountant
audit, and in performing post-audit
actions;
*
*
*
*
*
(d) * * *
(1) * * *
(i) A refund system in which the
processor provides a payment to the
recipient agency in the amount of the
contract value of the donated food
contained in the end product;
*
*
*
*
*
(e) * * *
(1) * * *
(i) A refund system in which the
processor provides a payment to the
recipient agency in the amount of the
contract value of the donated food
contained in the end product;
*
*
*
*
*
(n) * * *
(3) * * * As a part of the annual
reconciliation, the distributing agency
must ensure that a processor with
excessive inventories of donated foods
reduces such inventories. * * *
*
*
*
*
*
Subpart D—Donated Foods in
Contracts With Food Service
Management Companies
5. In § 250.50, revise the second
sentence of paragraph (a) to read as
follows:
■
§ 250.50 Contract requirements and
procurement.
(a) * * * The contract must ensure
that all donated foods received for use
by the recipient agency in the school or
fiscal year, as applicable, are used in the
recipient agency’s food service, or that
commercially purchased foods are used
in place of such donated foods only in
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accordance with the requirements in
§ 250.51(d). * * *
*
*
*
*
*
■ 6. In § 250.52, revise paragraph (a) to
read as follows:
§ 250.52 Storage and inventory
management of donated foods.
(a) General requirements. The food
service management company must
meet the requirements for the safe
storage and control of donated foods in
§ 250.14(a).
*
*
*
*
*
Subpart E—National School Lunch
Program (NSLP) and Other Child
Nutrition Programs
7. In § 250.58, revise paragraphs (a)
and (e) to read as follows:
■
§ 250.58 Ordering donated foods and their
provision to school food authorities.
(a) Ordering and distribution of
donated foods. The distributing agency
must ensure that school food authorities
are able to submit donated food orders
through the FNS electronic donated
foods ordering system, or through a
comparable electronic food ordering
system. The distributing agency must
ensure that all school food authorities
have the opportunity to provide input at
least annually in determining the
donated foods from the full list that are
made available to them for ordering in
the FNS electronic donated foods
ordering system or other comparable
electronic ordering system. The
distributing agency must ensure
distribution to school food authorities of
all such ordered donated foods that may
be distributed to them in a cost-effective
manner (including the use of split
shipments, as necessary), and that they
may utilize efficiently and without
waste.
*
*
*
*
*
(e) Donated food value in offer and
crediting. In offering the school food
authority the commodity offer value of
donated foods, the distributing agency
must use either the cost-per-pound
donated food prices posted annually by
USDA or the most recently published
cost-per-pound price in the USDA
donated foods catalog. The distributing
agency must credit the school food
authority using the USDA purchase
price (cost-per-pound), and update the
price at least semi-annually to reflect
the most recent USDA purchase price.
■ 8. Revise § 250.59 to read as follows:
§ 250.59 Storage, control, and use of
donated foods.
(a) Storage and inventory
management. The distributing agency
must ensure compliance with
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requirements in §§ 250.12 and 250.13 in
order to ensure the safe and effective
storage and inventory management of
donated foods, and their efficient and
cost-effective distribution to school food
authorities. The school food authority
must ensure compliance with
requirements in § 210.13 to ensure the
safe and sanitary storage, inventory
management, and use of donated foods
and purchased foods. In accordance
with § 250.14(c), the school food
authority may commingle donated foods
and purchased foods in storage and
maintain a single inventory record of
such commingled foods, in a single
inventory management system.
(b) Use of donated foods in the
nonprofit school food service. The
school food authority must use donated
foods, as much as is practical, in the
lunches served to schoolchildren, for
which they receive an established permeal value of donated food assistance
each school year. However, the school
food authority may also use donated
foods in other activities of the nonprofit
school food service. Revenues received
from such activities must accrue to the
school food authority’s nonprofit school
food service account, in accordance
with § 210.14. Some examples of such
activities in which donated foods may
be used include:
(1) School breakfasts or other meals
served in child nutrition programs;
(2) A la carte foods sold to
schoolchildren;
(3) Meals served to adults directly
involved in the operation and
administration of the nonprofit school
food service, and to other school staff;
and
(4) Training in nutrition, health, food
service, or general home economics
instruction for students.
(c) Use of donated foods outside of the
nonprofit school food service. The
school food authority should not use
donated foods in meals or other
activities that do not benefit primarily
schoolchildren, such as banquets or
catered events. However, as their use in
such activities may not always be
avoided (e.g., if donated foods are
commingled with purchased foods in a
single inventory management system),
the school food authority must ensure
reimbursement to the nonprofit school
food service for the value of donated
foods used in such activities. When
such reimbursement may not be based
on actual usage of donated foods (e.g.,
in a single inventory management
system), the school food authority must
establish an alternate method of
reimbursement—e.g., by including the
current per-meal value of donated food
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assistance in the price charged for the
meal or other activity.
(d) Use of donated foods in a contract
with a food service management
company. When the school food
authority contracts with a food service
management company to conduct the
food service, in accordance with
§ 210.16, it must ensure compliance
with requirements in Subpart D of this
part, which address the treatment of
donated foods under such contract. The
school food authority must also ensure
compliance with the use of donated
foods in paragraphs (b) and (c) of this
section under its contract with a food
service management company.
(e) School food authorities acting as a
collective unit. Two or more school food
authorities may conduct activities of the
nonprofit school food service as a
collective unit (e.g., in a school co-op or
consortium), including activities
relating to donated foods. Such
activities must be conducted in
accordance with a written agreement or
contract between the parties. The school
food authority collective unit is subject
to the same requirements as a single
school food authority in conducting
such activities. For example, the school
food authority collective unit may use a
single inventory management system in
its storage and control of purchased and
donated foods.
§ 250.60
■
[Removed]
9. Remove § 250.60.
§§ 250.61 and 250.62 [Redesignated as
§§ 250.60 and 250.61]
10. Redesignate §§ 250.61 and 250.62
as §§ 250.60 and 250.61, respectively.
■ 11. Revise Subpart F to read as
follows:
■
Subpart F—Household Programs
Sec.
250.63 Commodity Supplemental Food
Program (CSFP).
250.64 The Emergency Food Assistance
Program (TEFAP).
250.65 Food Distribution Program on
Indian Reservations (FDPIR).
250.66 [Reserved]
§ 250.63 Commodity Supplemental Food
Program (CSFP).
(a) Distribution of donated foods in
CSFP. The Department provides
donated foods in CSFP to the
distributing agency (i.e., the State
agency, in accordance with 7 CFR part
247) for further distribution in the State,
in accordance with 7 CFR part 247.
State agencies and recipient agencies
(i.e., local agencies in 7 CFR part 247)
must comply with the requirements of
this part in the distribution, control, and
use of donated foods in CSFP, to the
extent that such requirements are not
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inconsistent with the requirements in 7
CFR part 247.
(b) Types of donated foods
distributed. Donated foods distributed
in CSFP include Section 4(a) foods, and
donated foods provided under Section
32, Section 416, or Section 709, as
available.
§ 250.64 The Emergency Food Assistance
Program (TEFAP).
(a) Distribution of donated foods in
TEFAP. The Department provides
donated foods in TEFAP to the
distributing agency (i.e., the State
agency, in accordance with 7 CFR part
251) for further distribution in the State,
in accordance with 7 CFR part 251.
State agencies and recipient agencies
must comply with the requirements of
this part in the distribution, control, and
use of donated foods, to the extent that
such requirements are not inconsistent
with the requirements in 7 CFR part
251.
(b) Types of donated foods
distributed. Donated foods distributed
in TEFAP include Section 27 foods, and
donated foods provided under Section
32, Section 416, or Section 709, as
available.
§ 250.65 Food Distribution Program on
Indian Reservations (FDPIR).
(a) Distribution of donated foods in
FDPIR. The Department provides
donated foods in FDPIR to the
distributing agency (i.e., the State
agency, in accordance with 7 CFR parts
253 and 254, which may be an Indian
Tribal Organization) for further
distribution, in accordance with 7 CFR
parts 253 and 254. The State agency
must comply with the requirements of
this part in the distribution, control, and
use of donated foods, to the extent that
such requirements are not inconsistent
with the requirements in 7 CFR parts
253 and 254.
(b) Types of donated foods
distributed. Donated foods distributed
in FDPIR include Section 4(a) foods,
and donated foods provided under
Section 32, Section 416, or Section 709,
as available.
250.66
[Reserved]
Subpart G—Additional Provisions
12. Revise the heading for subpart G
to read as set forth above.
■ 13. Revise § 250.69 to read as follows:
■
§ 250.69
Disasters.
(a) Use of donated foods to provide
congregate meals. The distributing
agency may provide donated foods from
current inventories, either at the
distributing or recipient agency level, to
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a disaster organization (as defined in
§ 250.2), for use in providing congregate
meals to persons in need of food
assistance as a result of a Presidentially
declared disaster or emergency
(hereinafter referred to collectively as a
‘‘disaster’’). FNS approval is not
required for such use. However, the
distributing agency must notify FNS
that such assistance is to be provided,
and the period of time that it is expected
to be needed. The distributing agency
may extend such period of assistance as
needs dictate, but must notify FNS of
such extension.
(b) Use of donated foods for
distribution to households. Subject to
FNS approval, the distributing agency
may provide donated foods from current
inventories, either at the distributing or
recipient agency level, to a disaster
organization, for distribution to
households in need of food assistance
because of a disaster. Such distribution
may continue for the period that FNS
has determined to be necessary to meet
the needs of such households. However,
households receiving disaster SNAP (D–
SNAP) benefits are not eligible to
receive such donated food assistance.
(c) Approval of disaster organization.
Before distribution of donated foods to
a disaster organization, the distributing
agency must review and approve such
organization’s application, which must
be submitted to the distributing agency
either electronically or in written form.
The distributing agency must also
submit such application to FNS for
review and approval before permitting
distribution of donated foods to
households.
(1) The disaster organization’s
application must, to the extent possible,
include the following information:
(i) A description of the disaster
situation;
(ii) The number of people requiring
assistance;
(iii) The period of time for which
donated foods are requested;
(iv) The quantity and types of food
needed; and
(v) The number and location of sites
where donated foods are to be used, to
the extent that such information is
known.
(2) In addition to the information
required above, disaster organizations
applying to distribute donated foods to
households must include the following
information in their application:
(i) An explanation as to why such
distribution is needed;
(ii) The method(s) of distribution
available; and
(iii) A statement assuring that D–
SNAP benefits and donated food
assistance will not be provided
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simultaneously to individual
households, and a description of the
system that will be implemented to
prevent such dual participation.
(d) Information from households. If
the issuance of D–SNAP benefits has
been approved, the distributing agency
must ensure that the disaster
organization obtains the following
information from households receiving
donated foods, and reports such
information to the distributing agency:
(1) The name and address of the
household members applying for
assistance;
(2) The number of household
members; and
(3) A statement from the head of the
household certifying that the household
is in need of food assistance, is not
receiving D–SNAP benefits, and
understands that the sale or exchange of
donated foods is prohibited.
(e) Eligibility of emergency relief
workers for congregate meals. The
disaster organization may use donated
foods to provide meals to any
emergency relief workers at the
congregate feeding site who are directly
engaged in providing relief assistance.
(f) Reporting and recordkeeping
requirements. The distributing agency
must report to FNS the number and
location of sites where donated foods
are used in congregate meals or
household distribution as these sites are
established. The distributing agency
must also report the types and amounts
of donated foods from distributing or
recipient agency storage facilities used
in disaster assistance, utilizing form
FNS–292A, Report of Commodity
Distribution for Disaster Relief, which
must be submitted electronically, within
45 days from the termination of disaster
assistance. This form must also be used
to request replacement of donated foods,
in accordance with paragraph (g) of this
section. The distributing agency must
maintain records of reports and other
information relating to disasters.
(g) Replacement of donated foods. In
order to ensure replacement of donated
foods used in disasters, the distributing
agency must submit to FNS a request for
such replacement, utilizing form FNS–
292A, Report of Commodity Distribution
for Disaster Relief, within 45 days
following the termination of disaster
assistance. The distributing agency may
request replacement of foods used from
inventories in which donated foods are
commingled with other foods (i.e., at
storage facilities of recipient agencies
utilizing single inventory management),
if the recipient agency received donated
foods of the same type as the foods used
during the year preceding the onset of
the disaster assistance. FNS will replace
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such foods in the amounts used, or in
the amount of like donated foods
received during the preceding year,
whichever is less.
(h) Reimbursement of transportation
costs. In order to receive reimbursement
for any costs incurred in transporting
donated foods within the State, or from
one State to another, for use in disasters,
the distributing agency must submit a
public voucher to FNS with
documentation of such costs. FNS will
review the request and reimburse the
distributing agency.
■ 14. Revise § 250.70 to read as follows:
§ 250.70
Situations of distress.
(a) Use of donated foods to provide
congregate meals. The distributing
agency may provide donated foods from
current inventories, either at the
distributing or recipient agency level, to
a disaster organization, for use in
providing congregate meals to persons
in need of food assistance because of a
situation of distress, as this term is
defined in § 250.2. If the situation of
distress results from a natural event
(e.g., a hurricane, flood, or snowstorm),
such donated food assistance may be
provided for a period not to exceed 30
days, without the need for FNS
approval. However, the distributing
agency must notify FNS that such
assistance is to be provided. FNS
approval must be obtained to permit
such donated food assistance for a
period exceeding 30 days. If the
situation of distress results from other
than a natural event (e.g., an explosion),
FNS approval is required to permit
donated food assistance for use in
providing congregate meals for any
period of time.
(b) Use of donated foods for
distribution to households. The
distributing agency must receive FNS
approval to provide donated foods from
current inventories, either at the
distributing or recipient agency level, to
a disaster organization for distribution
to households in need of food assistance
because of a situation of distress. Such
distribution may continue for the period
of time that FNS determines necessary
to meet the needs of such households.
However, households receiving D–
SNAP benefits are not eligible to receive
such donated food assistance.
(c) Approval of disaster organizations.
Before distribution of donated foods to
a disaster organization, the distributing
agency must review and approve such
organization’s application, which must
be submitted to the distributing agency
either electronically or in written form.
The distributing agency must also
submit such application to FNS for
review and approval before permitting
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distribution of donated foods in a
situation of distress that is not the result
of a natural event, or for any
distribution of donated foods to
households. The disaster organization’s
application must, to the extent possible,
include the information required in
§ 250.69(c).
(d) Information from households. If
the issuance of D–SNAP benefits has
been approved, the distributing agency
must ensure that the disaster
organization obtains the information in
§ 250.69(d) from households receiving
donated foods, and reports such
information to the distributing agency.
(e) Eligibility of emergency relief
workers for congregate meals. The
disaster organization may use donated
foods to provide meals to any
emergency relief workers at the
congregate feeding site that are directly
engaged in providing relief assistance.
(f) Reporting and recordkeeping
requirements. The distributing agency
must report to FNS the number and
location of sites where donated foods
are used in congregate meals or
household distribution as these sites are
established. The distributing agency
must also report the types and amounts
of donated foods from distributing or
recipient agency storage facilities used
in the situation of distress, utilizing
form FNS–292A, Report of Commodity
Distribution for Disaster Relief, which
must be submitted electronically, within
45 days from the termination of
assistance. This form must also be used
to request replacement of donated foods,
in accordance with paragraph (g) of this
section. The distributing agency must
maintain records of reports and other
information relating to situations of
distress.
(g) Replacement of donated foods.
FNS will replace donated foods used in
a situation of distress only to the extent
that funds to provide for such
replacement are available. The
VerDate Sep<11>2014
19:25 Oct 21, 2014
Jkt 235001
distributing agency must submit to FNS
a request for replacement of such foods,
utilizing form FNS–292A, Report of
Commodity Distribution for Disaster
Relief, which must be submitted
electronically, within 45 days from the
termination of assistance. The
distributing agency may request
replacement of foods used from
inventories in which donated foods are
commingled with other foods (i.e., at
storage facilities of recipient agencies
utilizing single inventory management),
if the recipient agency received donated
foods of the same type as the foods used
during the year preceding the onset of
the situation of distress. Subject to the
availability of funds, FNS will replace
such foods in the amounts used, or in
the amount of like donated foods
received during the preceding year,
whichever is less.
(h) Reimbursement of transportation
costs. In order to receive reimbursement
for any costs incurred in transporting
donated foods within the State, or from
one State to another, for use in a
situation of distress, the distributing
agency must submit a public voucher to
FNS with documentation of such costs.
FNS will review the request and
reimburse the distributing agency to the
extent that funds are available.
■ 15. Add § 250.71 to read as follows:
§ 250.71
OMB control numbers.
Unless as otherwise specified in the
table below, the information collection
reporting and recordkeeping
requirements in 7 CFR part 250 are
accounted for in OMB control number
0584–0293.
CFR cite
250.4(a) .....................
250.19(a) ...................
250.69(f)–(g) &
250.70(f)–(g).
PO 00000
OMB control No.
0584–0067
0584–0067, 0584–
0293
0584–0067, 0584–
0293
PART 251—THE EMERGENCY FOOD
ASSISTANCE PROGRAM
16. The authority citation for part 251
continues to read as follows:
■
Authority: 7 U.S.C. 7501–7516.
17. In § 251.4:
a. Remove paragraph (f)(4) and
redesignate paragraph (f)(5) as
paragraph (f)(4).
■ b. Revise paragraph (g).
■ c. Remove paragraph (l).
The revision reads as follows:
■
■
§ 251.4
Availability of commodities.
*
*
*
*
*
(g) Distribution and control of
donated commodities. The State agency
must ensure that the distribution,
control, and use of donated
commodities are in accordance with the
requirements in this part, and with the
requirements in 7 CFR part 250, to the
extent that requirements in 7 CFR part
250 are not inconsistent with the
requirements in this part. Transfers of
donated commodities must comply with
requirements in §§ 250.12(e) and
250.14(d), as applicable. In accordance
with § 250.16, the State agency must
ensure that restitution is made for the
loss of donated commodities, or for the
loss or improper use of funds provided
for, or obtained as an incidence of, the
distribution of donated commodities.
The State agency is also subject to
claims for such losses for which it is
responsible, or for its failure to initiate
or pursue claims against other parties
responsible for such losses.
*
*
*
*
*
Dated: October 8, 2014.
Jeffrey J. Tribiano,
Acting Administrator, Food and Nutrition
Service.
[FR Doc. 2014–24613 Filed 10–21–14; 8:45 am]
BILLING CODE 3410–30–P
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]]>Agencies
[Federal Register Volume 79, Number 204 (Wednesday, October 22, 2014)]
[Proposed Rules]
[Pages 63223-63256]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-24613]
[[Page 63223]]
Vol. 79
Wednesday,
No. 204
October 22, 2014
Part II
Department of Agriculture
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Food and Nutrition Service
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7 CFR Parts 250 and 251
Requirements for the Distribution and Control of Donated Foods;
Proposed Rule
Federal Register / Vol. 79 , No. 204 / Wednesday, October 22, 2014 /
Proposed Rules
[[Page 63224]]
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DEPARTMENT OF AGRICULTURE
Food and Nutrition Service
7 CFR Parts 250 and 251
RIN 0584-AE29
Requirements for the Distribution and Control of Donated Foods
AGENCY: Food and Nutrition Service, USDA.
ACTION: Proposed rule.
-----------------------------------------------------------------------
SUMMARY: This rule proposes to revise and clarify requirements to
ensure that USDA donated foods are distributed, stored, and managed in
the safest, most efficient, and cost-effective manner, at State and
recipient agency levels. The rule would also reduce administrative and
reporting requirements for State distributing agencies, revise or
clarify regulatory provisions relating to accountability for donated
foods, and rewrite much of the regulations in a more user-friendly,
``plain language,'' format. Lastly, the rule proposes to revise and
clarify specific requirements to conform more closely to related
requirements elsewhere in the Code of Federal Regulations. In
formulating the proposals, the Food and Nutrition Service (FNS) has
utilized input received from program administrators, industry
representatives, and other organizations at national conferences and
other meetings, and through email or other routine communications with
such parties.
DATES: To be assured of consideration, comments must be received on or
before January 20, 2015.
ADDRESSES: The Food and Nutrition Service invites interested persons to
submit comments on this proposed rule. You may submit comments,
identified by RIN number 0584-AE29, by any of the following methods:
Email: Send written comments to Dana.Rasmussen@fns.usda.gov.
Include RIN number 0584-AE29 in the subject line of the message.
Mail: Send written comments to Dana Rasmussen, Branch Chief, Policy
Branch, Food Distribution Division, Food and Nutrition Service, U.S.
Department of Agriculture, Room 500, 3101 Park Center Drive,
Alexandria, Virginia 22302-1594.
Hand Delivery or Courier: Deliver written comments to the above
address.
Federal eRulemaking Portal: Go to https://www.regulations.gov.
Follow the online instructions for submitting comments.
Further information on the submission of comments or the review of
comments submitted may be found under Part III, Procedural Matters,
under SUPPLEMENTARY INFORMATION.
FOR FURTHER INFORMATION CONTACT: Dana Rasmussen at the above address or
telephone (703) 305-2662, or by email at Dana.Rasmussen@fns.usda.gov.
SUPPLEMENTARY INFORMATION:
I. Background
The Department of Agriculture's (the Department or USDA) Food and
Nutrition Service (FNS) provides food to State distributing agencies
for use in food assistance programs as authorized in the Richard B.
Russell National School Lunch Act (42 U.S.C. 1751 et seq.), the
Emergency Food Assistance Act of 1983 (7 U.S.C. 7501, et seq.), the
Food and Nutrition Act of 2008 (7 U.S.C. 2011, et seq.), the
Agriculture and Consumer Protection Act of 1973 (7 U.S.C. 612c note),
the Older Americans Act of 1965 (42 U.S.C. 3001, et seq.), and the
Robert T. Stafford Disaster Relief and Emergency Assistance Act (42
U.S.C. 5121, et seq.). State distributing agencies, in turn, distribute
the donated foods (which are also referred to as USDA Foods) to
recipient agencies (such as school food authorities, food banks, and
food pantries) which provide assistance to eligible persons or
households in specific food assistance programs, to needy persons
served by charitable institutions, or to persons victimized by a
disaster or situation of distress. The general regulations for the
storage, distribution, and control of donated foods by State
distributing agencies and recipient agencies are included in 7 CFR part
250. Other Federal regulations include requirements specific to
particular food assistance programs that receive donated foods--e.g., 7
CFR part 251 for The Emergency Food Assistance Program (TEFAP) and 7
CFR part 210 for the National School Lunch Program (NSLP).
Following the enactment of the Commodity Distribution Reform Act
and WIC Amendments of 1987, (7 U.S.C. 612c note), hereinafter referred
to as the Commodity Distribution Reform Act, a final rule was issued in
October 1989 amending 7 CFR part 250 to require State distributing
agencies to evaluate the efficiency and cost-effectiveness of their
method of distribution of donated foods to recipient agencies (54 FR
42476). The amended regulations required distributing agencies to
utilize a commercial storage and distribution system, if such system
was determined to be more cost-effective. As a result, most State
distributing agencies currently procure the services of commercial
storage facilities to store donated foods and distribute them to
recipient agencies, or permit direct shipments from vendors of donated
foods to recipient agencies, the contracted commercial storage
facilities of such agencies, or to processors for processing of donated
foods into end products. However, for donated foods distributed in
NSLP, most school food authorities must pay a charge to help meet
storage and distribution costs for donated foods. The charge imposed on
school food authorities varies widely from State to State. This rule
proposes to revise current requirements in 7 CFR part 250 to ensure
that State distribution systems provide the most efficient and cost-
effective service for school food authorities in provision of donated
foods, while reducing the administrative burden on distributing
agencies in providing such service.
In 2002, the Department, in collaboration with State agencies and
school food authorities, developed procedures and instructions for
responding to donated foods subject to a food recall. Such procedures
and instructions ensure that donated foods subject to a food recall are
isolated, inspected, and recovered in an expeditious manner. This rule
proposes to include a section on donated food safety and disposition,
and to require that State distributing agency agreements and contracts
include provisions to ensure compliance with all applicable Federal,
State or local requirements relating to food safety and food recalls.
In October 2002, 7 CFR part 250 was amended to permit school food
authorities in NSLP, as well as other recipient agencies that use
donated foods, to provide meals to recipients, store donated foods
together with commercially purchased foods, and maintain a single
inventory record of the donated and purchased foods (67 FR 65015). The
single inventory management option reduced the workload for school food
authorities in control and monitoring of their food inventories. In
August 2008, 7 CFR part 250 was amended to further clarify the single
inventory management option for school food authorities, and to revise
other requirements to ensure that such entities receive the full
benefit of the donated foods provided in NSLP (73 FR 46189). However,
some confusion still exists regarding the application of the single
inventory management option. This rule proposes to further clarify
storage and inventory management requirements at the distributing and
recipient agency levels.
[[Page 63225]]
In order to ensure compliance with requirements for the processing
of donated foods, the State distributing agency must currently conduct
an on-site review of in-State processors at least once every two years.
This rule proposes to remove this requirement, which is burdensome and
costly for distributing agencies, and to require instead that in-State
processors obtain independent Certified Public Accountant (CPA) audits,
as currently required of multi-State processors. The rule would also
remove requirements for the distributing agency in verification of
sales of processed end products, and in reporting acceptability of
donated foods to FNS.
The Department has developed instructions and guidance in areas of
donated food distribution related to food recalls, the use of donated
foods in disaster situations, ensuring that restitution is made for
donated food losses, shipment and receipt of donated foods, and options
in the processing of donated foods. This rule proposes to include
references to these materials to help the reader better understand
standards and procedures relating to specific aspects of the
distribution and control of donated foods. This rule also proposes to
provide references to other applicable Federal regulations to help the
reader identify Federal requirements affecting the distribution and
control of donated foods that are beyond the scope of this proposed
rule. Lastly, the rule proposes to rewrite and restructure much of 7
CFR part 250 in a more user-friendly, ``plain language,'' format.
Specific proposals for change or clarification are discussed more fully
in the next section of the preamble.
II. Discussion of the Rule's Provisions
7 CFR Part 250
A. Subpart A--General Purpose and Administration
We propose to completely revise current Subpart A of 7 CFR part 250
to more clearly present the general purpose and use of donated foods,
the definitions applicable to 7 CFR part 250, the responsible
administrative agencies in the distribution and control of donated
foods at Federal and State levels, and civil rights requirements. Some
of these requirements are located in current Subpart B. Accordingly, we
propose to change the heading of Subpart A to General Purpose and
Administration, with new sections as described in the following
paragraphs.
1. Purpose and Use of Donated Foods, Sec. 250.1
In Sec. 250.1, we propose to describe the purpose of donated
foods, the general requirements for their use, and the legislative
sanctions that apply in the event that they are used improperly. In
Sec. 250.1(a), we indicate that the Department purchases foods for
donation in specific food assistance programs or to provide assistance
to needy persons, in accordance with legislation authorizing such
assistance in specific programs or providing for removal of market
surpluses and support of food prices.
In Sec. 250.1(b), we propose to include the stipulation, in
current Sec. 250.13(a)(1), that donated foods must be distributed and
used in accordance with the requirements of 7 CFR part 250. We propose
to indicate that other Federal regulations also apply to specific
programs (e.g., 7 CFR part 251 includes requirements for donated foods
provided in TEFAP). We propose to include the provision, in current
Sec. 250.13(a)(7), that permits donated foods to be used in activities
designed to test their effective use in specific programs (e.g., in
nutrition classes or cooking demonstrations). However, we propose to
remove the need for prior approval to permit such use.
In accordance with current Sec. 250.13(a)(1)(ii), donated foods
may not be sold, exchanged, or otherwise disposed of without prior
approval of the Department. And, in accordance with current Sec.
250.15(a)(3), recipients may not be required to make any payments, or
perform any services, in connection with the receipt of donated foods.
We propose to include these requirements in Sec. 250.1(b) of this
proposed rule, with some clarification. We propose to prohibit the
sale, exchange, or other disposition of donated foods, or their use to
require recipients to make any payments, or perform any services,
except as specifically permitted in 7 CFR part 250, or in other Federal
regulations. We also propose to include the requirement, in current
Sec. 250.15(a)(3), that donated foods may not be used to solicit
voluntary contributions, except for donated foods provided in the
Nutrition Services Incentive Program (NSIP), which was formerly called
the Nutrition Program for the Elderly.
In Sec. 250.1(c), we propose to include, in streamlined form, the
sanctions established under the Richard B. Russell National School
Lunch Act (42 U.S.C. 1760) and the Agriculture and Consumer Protection
Act of 1973 (7 U.S.C. 612c note) for persons who embezzle, willfully
misapply, steal, or obtain by fraud, donated foods, or funds deriving
from donated foods. These sanctions are included in current Sec.
250.13(i).
2. Definitions, Sec. 250.2
In Sec. 250.2, we propose to include the definitions applicable to
7 CFR part 250, which are included in current Sec. 250.3. Although
most of the definitions are included without change, we have chosen to
set out all definitions in this rule, in the interest of clarity.
However, this preamble addresses only those current definitions that we
are proposing to remove or revise and the definitions that we are
proposing to add.
We propose to remove the definitions of ``Commodities'', ``Disaster
victims'', ``Discount system'', ``FNSRO'', ``Nonprofit school food
service account'', ``Refund application'', ``Refund system'',
``School'', ``Secretary'', ``State and United States'', ``Substituted
food'', and ``Welfare agency''. The term ``commodities'' is no longer
commonly used, as it has been replaced by ``donated foods'' or ``USDA
Foods,'' both of which are included in Sec. 250.2 of this proposed
rule. The Federal Emergency Management Agency (FEMA) now commonly
refers to survivors of a disaster or emergency, rather than to disaster
victims, and we propose to use the same reference in 7 CFR part 250. In
this proposed rule, we refer simply to FNS actions or requirements,
without specifying FNSRO (i.e., FNS Regional Offices) or FNS
Headquarters. FNS guidance indicates which FNS office is responsible
for specific procedures. The definitions of ``Discount system'',
``Refund'', ``Refund application'', ``Refund system'', and
``Substituted food'', are unnecessary, as their meaning is clear in
current Subpart C of 7 CFR part 250, which includes requirements in the
processing of donated foods. The definition of ``Nonprofit school food
service account'' is included in 7 CFR part 210, and we propose to
include references to that part, as appropriate, rather than repeat the
definition in 7 CFR part 250. Similarly, the definition of ``School''
is included in Sec. 210.2, and we refer invariably to the school food
authority, rather than to individual schools, in 7 CFR part 250. In
this proposed rule, we refer to the Department or USDA, rather than to
the Secretary. The term ``Welfare agency'' is no longer in use, and
such agencies would fall under the term ``Recipient agencies'' in this
proposed rule. The current definition of ``State and United States''
would be replaced by a new definition of ``State''.
[[Page 63226]]
We propose to revise current definitions of ``Adult care
institution'', ``CACFP'', ``Charitable institutions'', ``Department'',
``Disaster'', ``Disaster organizations'', ``Distributing agency'',
``Donated foods'', ``Elderly nutrition project'', ``Household'', ``In-
kind replacement'', ``Multi-State processor'', ``National per-meal
value'', ``Needy persons'', ``NSIP'', ``NSLP'', ``Recipient agencies'',
``SBP'', ``Section 4(a)'', ``Section 6'', ``Section 14'', ``Section
32'', ``Section 311'', ``Section 416'', ``Section 709'', ``SFSP'',
``Similar replacement'', ``Situation of distress'', ``Storage
facility'', ``State Agency on Aging'', and ``Subdistributing agency''.
The proposed revisions of ``Adult care institution'', ``CACFP'',
``Charitable institutions'', ``Department'', ``Donated foods'',
``Elderly nutrition project'', ``Multi-State processor'', ``National
per-meal value'', ``Needy persons'', ``NSIP'', ``NSLP'', ``SBP'',
``Section 4(a)'', ``Section 6'', ``Section 14'', ``Section 32'',
``Section 311'', ``Section 416'', ``Section 709'', ``SFSP'', ``State
Agency on Aging'', and ``Storage facility'' would simply streamline the
current definitions.
The proposed revision of ``Disaster'' would also streamline the
current definition, and would include the Presidential declaration of a
disaster or emergency (e.g., a pandemic), as either event would trigger
the provision of donated foods, in accordance with section 413 of the
Robert T. Stafford Disaster Relief and Emergency Assistance Act, as
amended (42 U.S.C. 5180). The proposed revision of ``Situation of
distress'' would simply indicate that it is a natural catastrophe or
other event that does not meet the definition of disaster, but that, in
the determination of the distributing agency or FNS, warrants the use
of donated foods to assist persons in need of food assistance as a
result of such catastrophe or event. Further explanation relating to
contingencies for the provision of donated food assistance in such an
event is included in Sec. 250.70 of this proposed rule. The proposed
revision of ``Disaster organizations'' would include reference to such
organizations authorized to provide assistance to survivors of a
disaster or a situation of distress, rather than to disaster victims.
The proposed revision of ``Distributing agency'' would clarify the
current definition by indicating that it is a State agency selected by
the appropriate authorities in the State to distribute donated foods in
the State, in accordance with 7 CFR part 250 and other Federal
regulations, as applicable. We also propose to clarify that Indian
Tribal Organizations may act as distributing agencies in the
administration of the Food Distribution Program on Indian Reservations
(FDPIR) or other programs on, or near, Indian reservations, as
currently provided for in Federal regulations. We propose to remove the
inclusion of a Federal agency or private agency under the definition. A
Federal agency may distribute donated foods in a State, but would not
do so as a distributing agency subject to the requirements in this
part. A private nonprofit agency may distribute donated foods in the
State, but only as a subdistributing agency, under an agreement with
the distributing agency. A private for-profit entity (i.e., commercial
enterprise) may also distribute donated foods in the State, but only
under contract with the distributing agency (or subdistributing
agency), and subject to Federal procurement requirements. The proposed
revision of ``Recipient agencies'' would clarify their function in
providing assistance directly to needy persons. It would also clarify
that local agencies in the Commodity Supplemental Food Program (CSFP),
and Indian Tribal Organizations distributing donated foods to needy
persons through FDPIR in a State in which the State government
administers FDPIR, are considered recipient agencies in 7 CFR part 250.
The proposed revision of ``Subdistributing agency'' would clarify
that it is a State agency, public agency, or a nonprofit organization
selected by the distributing agency to perform one or more donated food
activities required of the distributing agency. It would remove the
current designation of State agencies, local agencies, and Indian
Tribal Organizations that administer TEFAP, FDPIR, or CSFP as
subdistributing agencies. State agencies and Indian Tribal
Organizations administering such programs meet the definition of
distributing agency. Local agencies in CSFP may function as
subdistributing agencies if they receive donated foods for further
distribution to other recipient agencies. However, in most cases, they
function only as recipient agencies in that they provide assistance
directly to needy persons.
The proposed revisions of ``In-kind replacement'' and ``Similar
replacement'' would clarify that such replacement must be with the same
(i.e., in-kind) or similar foods of a quality and value at least equal
to the lost donated foods. The proposed revision of ``Similar
replacement'' also clarifies that the replacement food must be from the
same food category (e.g., meat, vegetable, grains) as the lost donated
food. The proposed revision of ``Household'' clarifies the individuals
or the groups of individuals which may be considered a household in
this part.
We propose to add definitions of ``7 CFR Part 3052'',
``Administering agency'', ``Carrier'', ``Consignee'', ``CSFP'',
``Distribution charge'', ``FDPIR'', ``Food recall'', ``Household
programs'', ``In-State processor'', ``Multi-food shipment'', ``Out-of-
condition donated foods'', ``SAE funds'', ``Section 27'', ``SNAP'',
``Split shipment'', ``State'', ``TEFAP'', ``USDA foods'', and
``Vendor''.
The addition of ``Administering agency'' would clarify its function
in the overall administration of a food assistance program in the
State, rather than just the distribution of donated foods, which is the
function of the distributing agency. While the administering agency may
also be the distributing agency in a State, that is not always the
case. The addition of ``CSFP'', ``FDPIR'', ``Household programs'',
``SNAP'', and ``TEFAP'' would help the reader identify food assistance
programs referred to in 7 CFR part 250. The addition of ``7 CFR Part
3052'' would alert the reader to the Departmental regulations relating
to audits of public and nonprofit agencies receiving Federal grants.
The additions of ``Carrier'' and ``Consignee'' would identify entities
that transport donated foods from one location to another, and that
receive shipments of donated foods, respectively. The addition of
``Distribution charge'' would identify the total charge or fee that the
distributing agency may impose on recipient agencies in child nutrition
programs to help defray costs of storing and distributing donated
foods, and associated administrative costs. The addition of ``Multi-
food shipment'' would identify shipments of donated foods from a
Federal storage facility, rather than directly from a vendor.
The addition of ``Food recall'' would identify an action necessary
to protect public health, which is further addressed in Sec. 250.15(c)
of this proposed rule. The addition of ``In-State processor'' would
help the reader distinguish such an entity from a multi-State
processor. The addition of ``Out-of-condition donated foods'' would
identify those donated foods that are no longer fit for human
consumption. The addition of ``SAE funds'' would identify the Federal
funds provided to State agencies to pay for administrative expenses in
NSLP and other child nutrition programs, in accordance with 7 CFR part
235. The addition of ``Section 27'' would identify the section of the
Food and Nutrition Act of 2008 that authorizes funds for food purchases
[[Page 63227]]
in TEFAP. The addition of ``Split shipment'' would identify a shipment
of donated food that is divided among two or more distributing or
recipient agencies. The addition of ``State'' would streamline the
current definition of ``State and United States'', which we are
proposing to remove. It would also exclude the Trust Territory of the
Pacific Islands, which is no longer a recipient of donated foods. The
addition of ``USDA Foods'' would alert the reader to another commonly-
used term for donated foods. The addition of ``Vendor'' would identify
a commercial enterprise from which the Department purchases food for
donation.
3. Administration at the Federal Level, Sec. 250.3
In Sec. 250.3, we propose to include the actions that may be
undertaken by FNS, as the Federal administering agency for USDA food
assistance programs, in ensuring the effective distribution and control
of donated foods. In Sec. 250.3(a), we propose to describe the role of
FNS in administering USDA food assistance programs at the Federal
level, including the distribution of donated foods to State
distributing agencies for further distribution and use, in accordance
with the requirements in this part.
In Sec. 250.3(b), we propose to include the authority, in current
Sec. 250.18(a), for the Department, Comptroller General, or any of
their authorized representatives, to conduct audits or inspections of
any agency, or contracted commercial entity, in order to determine
compliance with the requirements of this part, or with other applicable
Federal regulations.
In Sec. 250.3(c), we propose to include FNS's authority, in
current Sec. 250.20, to terminate the distribution of donated foods,
or the provision of administrative funds, to a distributing agency for
its failure to comply with the requirements of 7 CFR part 250, or with
other applicable Federal regulations. However, we propose to clarify
that FNS may also choose to suspend such activities, rather than
terminate them, as provided for in 7 CFR 3016.43. We also propose to
clarify that FNS must provide written notification to the distributing
agency of such termination or suspension of assistance, and that such
action is subject to an appeal if recourse to an appeal is provided for
in Federal regulations applicable to specific programs (e.g., as
provided for in FDPIR, in accordance with 7 CFR part 253) . Lastly, we
include the stipulation that FNS may also take other actions, as
appropriate, including prosecution under applicable Federal statutes.
4. Administration at the State Level, Sec. 250.4
In Sec. 250.4, we propose to include the responsibility of the
distributing agency in administering the distribution of donated foods
at the State level. In Sec. 250.4(a), we propose to require the
distributing agency to ensure compliance with requirements in 7 CFR
part 250, and in other Federal regulations referenced in this part. We
propose to include the requirement, in current Sec. 250.12(a), that
the distributing agency enter into a written agreement with FNS (i.e.,
the Federal-State agreement) to receive, store, and distribute donated
foods in the State. We propose to retain the current provision that
makes the agreement permanent, but to permit it to be amended or
terminated with the concurrence of both parties. We also indicate that
FNS may terminate the Federal-State agreement for the distributing
agency's failure to ensure compliance with requirements. Lastly, we
propose to retain the provision, in current Sec. 250.2(b), that the
distributing agency may impose additional requirements relating to the
distribution and control of donated foods in the State, as long as such
requirements are not inconsistent with the requirements of 7 CFR part
250 or other Federal regulations referenced in this part. We propose to
remove the provision, in current Sec. 250.2(c), that the distributing
agency must provide adequate personnel to administer the program, as
the need to comply with requirements for effective administration would
necessitate the employment of adequate personnel to do so.
In Sec. 250.4(b), we propose to include the option, in current
Sec. Sec. 250.3 and 250.12(b), for the distributing agency to select a
subdistributing agency (as defined in this proposed rule) to perform
specific activities relating to donated foods for which the
distributing agency is responsible, in accordance with a written
agreement between the parties. We propose to retain the provision, in
current Sec. 250.10(c), that prohibits the distributing agency from
delegating its overall responsibility to ensure compliance with
requirements in 7 CFR part 250 to a subdistributing agency or to any
other organization. We also propose to prohibit the distributing agency
from delegating its responsibility to ensure compliance with the
performance standards included in Sec. 250.22 of this proposed rule.
In Sec. 250.4(c), we propose to include the requirement, in
current Sec. Sec. 250.11(b) and 250.13(d)(1), that the distributing
agency select recipient agencies to receive donated foods for
distribution to needy persons, or for inclusion in meals provided to
needy persons. We propose to clarify that such selection must be in
accordance with eligibility criteria applicable to specific programs or
outlets. We also propose to retain the requirement, in current Sec.
250.12(b), that the distributing agency enter into a written agreement
with a recipient agency prior to distribution of donated foods to it.
We propose to clarify that, for child nutrition programs, the
distributing agency must enter into agreements with recipient agencies
selected by the State administering agency (which may be different from
the distributing agency) for participation in such programs, before
distribution of donated foods to such recipient agencies. The
distributing agency must verify such recipient agencies' participation
in child nutrition programs with the State administering agency. We
propose to include the requirement in current Sec. 250.11(b) that the
distributing agency consider past performance in selecting recipient
agencies to receive donated foods, but specify that this requirement
only applies to household programs. We propose to remove the current
provision that the distributing agency ensure that welfare agencies
determine the eligibility of program participants. Requirements
relating to the determination by recipient agencies of participant
eligibility are included in regulations appropriate to specific
programs or outlets.
We also propose to include the required provisions of agreements
with recipient agencies and subdistributing agencies in Sec. 250.4(c)
of this proposed rule. We propose to retain the provision, in current
Sec. 250.12(b)(1), that ensures compliance with the requirements of 7
CFR part 250, and propose to also include assurance of compliance with
other Federal regulations, as referenced in 7 CFR part 250 and with the
distributing agency's written agreement with FNS. We propose to include
a provision for compliance with all Federal, State or local
requirements relating to food safety and food recalls. In Sec.
250.15(c) of this proposed rule, we are proposing to require
distributing and recipient agencies to follow all applicable Federal,
State or local requirements for donated foods subject to a food recall.
As discussed in Section I of this proposed rule, in 2002, the
Department, in collaboration with State agencies and school food
authorities, developed procedures and instructions for responding to
donated foods subject to a food recall. These procedures and
[[Page 63228]]
instructions are provided to assist distributing and recipient agencies
in ensuring that donated foods subject to a food recall are isolated,
inspected, and recovered in an expeditious manner.
In accordance with current Sec. 250.12(c), distributing agency
agreements with recipient agencies are permanent, with amendments to be
made as necessary. However, the distributing agency's agreement with a
subdistributing agency is limited to one year, and may be extended for
two additional one-year periods. We propose to require that the
duration of agreements with recipient agencies and subdistributing
agencies be included in provisions of such agreements, but propose to
remove the current durational requirements in order to allow
distributing agencies to determine the duration that will best meet the
needs of the program. The distributing agency may choose to enter into
permanent agreements with recipient agencies or subdistributing
agencies, unless other regulations applicable to specific programs
limit such duration. In accordance with current Sec. 250.12(c)(3),
agreements may be terminated for cause by either party upon 30 days
notice. We propose to revise this provision to permit termination of
the agreement by the distributing agency for noncompliance with its
provisions or with other applicable requirements, upon written
notification to the applicable party, but without specifying a
notification period. This will permit the distributing agency to take
immediate action in the event that noncompliance on the part of a
recipient agency or subdistributing agency would result in interruption
of services to program participants or other serious program
disruptions. We also propose to include a provision that permits
termination of the agreement by either party, upon written notification
to the other party at least 60 days prior to the effective date of
termination. This change will allow distributing agencies the time
needed to secure new contracts, alter distribution schedules, and move
existing inventories, as necessary, without negatively impacting
program operations.
We propose to remove agreement provisions in current Sec.
250.12(b) that specifically address the responsibility for donated food
losses and claims against other parties. Responsibility of each party
in such instance is provided for in 7 CFR part 250 and FNS instructions
and guidance, and the agreement must provide for adherence to all such
requirements. Lastly, we propose to remove the requirement, in current
Sec. 250.11(a), that the distributing agency verify registration of
recipient agencies to participate in the National Commodity Processing
Program, as this program is no longer active.
Recipients of Federal grants must ensure compliance with
Departmental procurement requirements in 7 CFR parts 3016 or 3019, as
applicable, in obtaining the services of a commercial enterprise to
conduct activities under the grant. In Sec. 250.4(d), we propose to
clarify that such procurement requirements are applicable to
distributing and recipient agencies in obtaining such services. We also
propose to indicate that such procurement must also ensure compliance
with other applicable Departmental requirements--e.g., a school food
authority must ensure compliance with requirements in 7 CFR part 210,
and in Subpart D of 7 CFR part 250, in obtaining the services of a food
service management company to manage the school food service.
5. Civil Rights, Sec. 250.5
In Sec. 250.5, we propose to include civil rights requirements. In
accordance with current Sec. 250.21, distributing, subdistributing,
and recipient agencies must comply with the Department's regulations
pertaining to nondiscrimination, as well as with FNS civil rights
instructions. Such regulations and instructions ensure that no person
is discriminated against in the receipt or distribution of donated
foods. We propose to include such requirements in Sec. 250.5.
B. Subpart B--Delivery, Distribution, and Control of Donated Foods
We propose to completely revise current Subpart B of 7 CFR part 250
to more clearly present the specific requirements in the ordering and
delivery of donated foods, the distribution of donated foods to
recipient agencies, and the control of donated foods at the
distributing and recipient agency levels. To this end, we propose to
restructure this subpart into 13 new sections, and to change the
heading to Delivery, Distribution, and Control of Donated Foods, with
new sections as described in the following paragraphs.
1. Availability and Ordering of Donated Foods, Sec. 250.10
In Sec. 250.10, we propose to include requirements to ensure that
recipient agencies may order donated foods that are most useful to
them, and that may be utilized efficiently and without waste. We also
propose to assure that recipient agencies have the information
necessary to order and utilize such foods effectively. FNS offers a
wide variety of donated foods and continually updates the foods offered
to ensure that distributing and recipient agencies are able to order
the products which will best meet the needs of their programs. As new
foods become available, and as needs of an individual program or
recipient agency change, it is important that distributing agencies
facilitate ordering and use of the foods which will be most
advantageous to recipient agencies. In Sec. 250.10(a), we propose to
require the distributing agency to utilize a request-driven ordering
system in submitting orders for donated foods to FNS, which must
provide recipient agencies the opportunity to provide input at least
annually in determining the donated foods from the full list that are
made available to them for ordering. We propose to require that the
distributing agency use the input provided to ensure that the types and
forms of donated foods that recipient agencies may best utilize are
made available to them for ordering. FNS has developed guidance to
assist distributing agencies in implementing a request-driven ordering
system that meets the requirements of this section. Lastly, we propose
to include the requirement, in current Sec. 250.13(a), that the
distributing agency ensure donated foods are ordered and distributed in
quantities that may be utilized efficiently and without waste. However,
we propose to remove the specific stipulation, in current Sec.
250.13(d)(2), that Section 416 bonus foods may not be distributed to
recipient agencies if normal food expenditures would be reduced. The
provision of donated foods is meant, in part, to assist recipient
agencies in meeting their food assistance needs in a cost-effective
manner.
In Sec. 250.10(b), we propose to require the distributing agency
to ensure that recipient agencies have information on the types and
quantities of donated foods that may be ordered, donated food
specifications and nutritional value, and procedures for the
disposition of donated foods that are out-of-condition or that are
subject to a food recall.
2. Delivery and Receipt of Donated Food Shipments, Sec. 250.11
In Sec. 250.11, we propose to include requirements for the receipt
of donated food shipments from USDA vendors or from a Federal storage
facility, and the conditions for the replacement of donated foods that
have been delivered unsafe or out-of-condition by such entities. In
Sec. 250.11(a), we propose to indicate that the Department arranges
for the delivery of donated foods from
[[Page 63229]]
vendors or Federal storage facilities to distributing or recipient
agencies or other entities designated by such agencies (i.e., the
consignee). However, we propose to remove the provision, in current
Sec. 250.13(a), that refers to the Department's responsibility to
conform to scheduled delivery periods. While the Department strives to
ensure timely deliveries to distributing and recipient agencies, such
deliveries are subject to vendor and storage facility contracts and
performance.
In Sec. 250.11(b), we propose to require that the distributing or
recipient agency, or other consignee, comply with all applicable
Federal requirements in the receipt of donated food shipments.
Procedures are contained in FNS Instruction 709-5, Shipment and Receipt
of Donated Foods, which include those for donated foods that have been
delivered out-of-condition. We also propose to require that the
distributing or recipient agency, or other consignee, provide
notification of receipt of donated food shipments to FNS through
electronic means, and retain an electronic record of receipt of all
donated food shipments. Implementation of an electronic donated foods
ordering system has allowed distributing or recipient agencies to
notify FNS of receipt of donated foods more efficiently than through
previous ordering systems, resulting in faster payment for vendors, and
more efficient tracking of donated foods, which is important in the
event of food recalls or product complaint investigations.
In Sec. 250.11(c), we propose to include requirements for the
replacement of donated foods that are delivered out-of-condition by the
vendor. In accordance with current Sec. 250.13(g), the Department
arranges for vendor replacement of donated foods that are delivered
out-of-condition. Vendor responsibility for replacement of such foods
may extend up to six months after their delivery, if there is
documentation indicating that the foods were out-of-condition at the
time of delivery. We propose to retain the current requirement for
vendor replacement of donated foods that are delivered out-of-
condition. However, we propose to require that vendor responsibility
for such replacement extend up until the time of expiration of the
product use-by or best-if-used-by date or, if no such date is included
on the product label, until expiration of the vendor warranty period.
The warranty period is the minimum acceptable shelf life established in
the USDA contract with the vendor. In all cases, responsibility for
such replacement is contingent on determination that the foods were
out-of-condition at the time of delivery. The proposed time periods
would be more practical than the current ones, as they bear a closer
relationship to the actual shelf life of the foods.
In accordance with current Sec. 250.13(g)(3), the vendor must
provide for in-kind replacement of donated foods, unless FNS approves
replacement with another type of food in the same food category (i.e.,
similar replacement). We propose to retain this requirement, and to
indicate that the terms in-kind and similar replacement are defined in
Sec. 250.2 of this proposed rule. In accordance with current Sec.
250.13(g), if physical replacement of donated foods would not be cost-
effective or efficient, FNS may approve payment by the vendor to the
distributing or recipient agency, or may credit the distributing
agency's entitlement or assistance level. We propose to retain these
options in Sec. 250.11(c).
In Sec. 250.11(d), we propose to include the information, in
current Sec. 250.13(b), that the Department is responsible for payment
of the cost of delivering donated foods from vendors or Federal storage
facilities to consignees, as well as any processing or handling costs
incurred up to the time of delivery, as is deemed in the best interest
of the Department. In accordance with current Sec. 250.15(d), the
distributing agency is responsible for payment of any charges accruing
as a result of a delay in unloading a donated food shipment after
arrival at the designated location, unless the Department is
responsible for such delay. We propose to retain such obligation, but
to clarify that the distributing agency, recipient agency, or other
consignee, as appropriate, is responsible for the payment of any
delivery charges that accrue as a result of such consignee's failure to
comply with procedures in FNS instructions. We propose to include the
failure to provide for the unloading of a shipment of donated foods
within a designated time period as an example of such noncompliance.
In Sec. 250.11(e), we propose to include the provisions, in
current Sec. 250.13(c), relating to transfer of title to donated
foods. However, we propose to clarify that title transfers to the
distributing or recipient agency, as appropriate (i.e., whichever
agency receives the donated food shipment). We also propose to clarify
that, notwithstanding transfer of title, distributing and recipient
agencies must ensure compliance with the requirements of 7 CFR part 250
in the control and use of donated foods.
3. Storage and Inventory Management at the Distributing Agency Level,
Sec. 250.12
In Sec. 250.12, we propose to describe the requirements for the
storage and management of donated food inventories at storage
facilities used by the distributing agency or subdistributing agency,
which may include commercial storage facilities under contract with
either the distributing or the subdistributing agency. In Sec.
250.12(a), we propose to essentially retain the requirements in current
Sec. 250.14(b), which require that distributing agency facilities for
the storage and control of donated foods protect against theft,
spoilage, damage, or other loss, and obtain the required Federal,
State, or local health inspections. However, we propose to revise this
latter provision to require that the distributing agency ensure that
storage facilities comply with all Federal, State, or local
requirements relating to food safety and health, as applicable, and
obtain all required health inspections.
In Sec. 250.12(b), we propose to include the requirement, in
current Sec. 250.14(b), that the distributing agency ensure that
donated foods at any storage facility used by the distributing or
subdistributing agency are stored in a manner that permits them to be
distinguished from other foods, and must ensure that a separate
inventory record of such donated foods is maintained. Such requirements
ensure distribution of donated foods to the appropriate recipient
agencies. We also propose to require that the distributing agency's
system of inventory management ensure that donated foods are
distributed in a timely manner and in optimal condition. FNS offers
guidance that includes further direction on effective inventory
management practices and the need to consider product dates in
distribution of donated foods. We propose to retain the requirement, in
current Sec. 250.14(e), that the distributing agency conduct a
physical review of such donated food inventories, and reconcile
physical and book inventories, on an annual basis. We propose to
include the requirement in current Sec. 250.15(c) that the
distributing agency report donated food losses to FNS, and ensure
restitution for such losses. FNS provides guidance for complying with
these requirements in FNS Instruction 410-1, Claims for Losses of
Donated Foods and Related Administrative Losses--Procedures for the
State Distributing Agency, and in FNS Instruction 420-1, Managing
Agency Debts.
[[Page 63230]]
In Sec. 250.12(c), we propose to include the limitations on the
amount of donated food inventories on-hand. In accordance with current
Sec. 250.14(f)(2), donated food inventories at the distributing agency
level may not exceed a six-month supply, unless justification is
submitted, and FNS approval obtained, to maintain larger inventories.
The inventory amount must be based on the amount of food that the
distributing agency can reasonably utilize for the six-month period. We
propose to retain the current inventory limitation for donated foods
received in NSLP or other child nutrition programs, and in TEFAP.
However, for donated foods received in CSFP or FDPIR, which offer
defined food packages, we propose to limit inventory on-hand for each
food category to an amount needed for a three-month period. The more
restrictive inventory amounts would allow for more efficient use of
limited program resources, and permit FNS to provide, to the greatest
extent practical within available resources, a full variety of foods
needed to meet monthly food package benefit levels in CSFP and FDPIR.
In addition, implementation of more frequent deliveries in recent years
has allowed distributing agencies in CSFP and FDPIR to more effectively
manage donated food inventories. We propose to retain the option for
the distributing agency to request FNS approval to maintain donated
food inventories in excess of the established limits.
In Sec. 250.12(d), we propose to require that the distributing
agency obtain insurance to protect the value of donated food
inventories at its storage facilities. Many distributing agencies
currently have such protection, which better ensures that restitution
can be made for donated food losses, in the event of a disaster or
management error, and that recipients continue to receive program
benefits. We also propose to require the distributing agency to ensure
that subdistributing agencies, and recipient agencies in household
programs that have agreements with the distributing agency or
subdistributing agency, obtain such insurance for donated foods at
their storage facilities. Lastly, we propose to require the
distributing agency to ensure that commercial storage facilities under
contract with the distributing agency, the subdistributing agency, or
with the recipient agencies cited above, obtain insurance to protect
the value of donated food inventories. We propose to require that, in
all cases, the amount of the required insurance be at least equal to
the average monthly value of donated food inventories at such
facilities in the previous fiscal year. These minimum insurance
requirements will help ensure that distributing agencies and recipient
agencies receive the full benefit of the donated foods entitled to them
in the event that donated foods are lost or damaged. The above entities
are those that are most likely to have large inventories of donated
foods, as well as the means to obtain protection for such foods.
Smaller recipient agencies that do not have direct agreements with a
distributing or subdistributing agency, but provide food packages
directly to recipients, such as food pantries or community action
agencies, would not be required to obtain insurance.
In Sec. 250.12(e), we propose to include requirements for the
transfer of donated foods from the distributing agency to another
distributing agency or to another program. In accordance with current
Sec. 250.13(h), the distributing agency must request FNS approval to
``redonate'' donated foods that it cannot efficiently utilize.
Additionally, current Sec. 250.13(a)(1) includes requirements for the
``transfer'' of donated foods from one recipient agency to another. In
practice, the terms ``redonation'' and ``transfer'' are often used
interchangeably. To clarify, we propose to use the term ``transfer'' to
refer to any redistribution of donated foods from one agency to
another, or from one program to another, at the distributing or
recipient agency level, and to cease using the term ``redonation''. We
propose to clarify that the distributing agency may transfer donated
foods from its inventories to another distributing agency or to another
program, in order to ensure that such foods may be utilized in a timely
manner and while in optimal condition. We propose to permit the
distributing agency to transfer donated foods to another agency within
the same program without FNS approval. However, we propose to require
that the distributing agency request FNS approval to transfer donated
foods from one program to another--e.g., from NSLP to TEFAP--whether
the transfer is in the same or a different State, as these foods would
be used in a program other than the program for which they were
originally intended. We propose to stipulate that FNS may also require
a distributing agency to transfer donated foods at the distributing
agency's storage facilities or at a processor's facility, if
inventories of donated foods are excessive or may not be efficiently
utilized, so that such foods may be used to the benefit of recipients
receiving donated foods through another agency or program.
We propose to require the distributing agency to obtain an
inspection of donated foods by State or local health officials before
transferring them, if there is a question of food safety, or at the
direction of FNS, to ensure that only foods that are still safe and not
out-of-condition are transferred. We also propose to retain the
requirement in current Sec. 250.15(e) that the distributing agency is
responsible for meeting any transportation or inspection costs in
transferring donated foods, unless the transfer is clearly not the
result of negligence or improper action of the distributing agency.
Lastly, we propose to require that the distributing agency maintain a
record of all transfers and inspections of donated foods from its
inventories. Transfer of donated foods at the recipient agency level is
discussed in section II.B.5, Storage and Inventory Management at the
Recipient Agency Level, Sec. 250.14, of this preamble.
In Sec. 250.12(f), we propose to indicate that the distributing
agency may obtain the services of a commercial storage facility to
store and distribute donated foods, or a carrier to transport such
foods, but must ensure compliance with Departmental procurement
requirements in 7 CFR part 3016. We propose to retain the requirement,
in current Sec. 250.14(d), that the distributing agency also enter
into a written contract with such commercial storage facility, and that
such contract not exceed five years in duration, including option years
for extension or renewal. Because carriers assume similar
responsibility for donated foods under their control, we propose to
include the same requirements in contracting with a carrier. We also
propose to retain the required contract provisions in current Sec.
250.14(d) relating to safe and secure storage conditions, inventory
management, insurance, reviews, contract duration and extension, and
termination for noncompliance. We propose to add provisions to assure
compliance with Federal, State or local requirements relative to food
safety and health. We also propose to add a provision to assure that
donated foods will be distributed to eligible recipient agencies in a
timely manner and in optimal condition, and in amounts for which such
recipient agencies are eligible. Lastly, we propose to revise the
current provision providing for termination of the contract by either
party (except as a result of noncompliance with regulatory provisions)
by requiring notification of such termination at least 60 days in
advance, rather than the current 30 days. This change will allow
[[Page 63231]]
distributing agencies the time needed to secure new contracts, alter
distribution schedules, and move existing inventories, as necessary,
without negatively impacting program operations. We propose to require
the same provisions in a contract with a carrier, as such provisions
are necessary to ensure the safe and effective transport of foods from
one location to another.
4. Efficient and Cost-Effective Distribution of Donated Foods, Sec.
250.13
In Sec. 250.13, we propose to include requirements to ensure the
distribution of donated foods to recipient agencies in the most
efficient and cost-effective manner. In Sec. 250.13(a), we propose to
retain the requirements, in current Sec. Sec. 250.14(a) and 250.24(e),
that the distributing agency distribute donated foods to recipient
agencies in the most efficient and cost-effective manner, and that such
distribution is responsive to the needs of recipient agencies, as
feasible. In meeting this requirement, we propose to require the
distributing agency, to the extent practical, to provide for shipment
of donated foods directly from the USDA vendor to the recipient agency,
or (at the recipient agency's request) directly to a processor for
processing into end products. We also propose to require that the
distributing agency provide for split shipments between two or more
recipient agencies, if such agencies are unable to accept a full
truckload. Split shipments allow recipient agencies, particularly small
recipient agencies, to receive donated foods in the forms and
quantities that are most useful to them and on a schedule that will
permit them to store and distribute the foods in the most efficient and
cost-effective manner possible.
In Sec. 250.13(b), we propose to require that, if the distributing
agency determines that direct shipments are impractical (even after
taking into account split shipments), it must provide for storage of
donated foods at the distributing agency level, and subsequent
distribution to recipient agencies. Such storage and distribution must
be provided in the most efficient and cost-effective manner possible in
order to minimize the cost to the recipient agency of receiving donated
foods. We propose to clarify that the distributing agency must use
State Administrative Expense (SAE) funds, as available, to meet costs
of storing and distributing donated foods, or related administrative
costs, for school food authorities or other recipient agencies in child
nutrition programs, or must use other Federal or State administrative
funds received for such purpose. SAE funds are provided to State
agencies administering NSLP or other child nutrition programs, in
accordance with 7 CFR part 235, and distributing agencies receive SAE
funds specifically to cover the costs of storing and distributing
donated foods and related administrative costs for such programs.
However, as SAE funds, or State funds, are limited, distributing
agencies may also assess fees on school food authorities to help defray
such costs. Under 7 CFR part 250, such fees are included under the term
``Distribution charge''.
We propose to retain the provision, in current Sec. 250.15(a)(1),
that permits the distributing agency to impose a distribution charge on
school food authorities, but with the clarification that such charge
may be imposed only if SAE funds, or other funds available from State
or local sources, are insufficient to fully meet the costs of storing
donated foods and distributing them to such agencies, and of
administrative costs relating to such activities. We also propose to
clarify that the distribution charge may cover only allowable costs, in
accordance with 7 CFR part 3016 and with OMB guidance. The Departmental
and OMB guidance provide for allowable costs for Federal grant
expenditures. Lastly, we propose to require that the distributing
agency maintain a record of costs incurred in storing and distributing
donated foods and related administrative costs, and the source of funds
used to pay such costs.
We propose to retain the requirement in current Sec. 250.14 that
the distributing agency use a commercial storage facility to store and
distribute donated foods, in accordance with requirements in Sec.
250.12(f) of this proposed rule, if a commercial system is determined
to be the most efficient and cost-effective. However, we propose to
remove the requirement, in current Sec. 250.14(a)(2), that a
distributing agency utilizing a noncommercial system of storage and
distribution evaluate such system by comparing its costs with the cost
of obtaining a commercial system, at 3-year intervals, and submit such
cost evaluation to FNS. State distributing agencies performed such an
evaluation and cost comparison, as directed in the Commodity
Distribution Reform Act and, as a result, either changed to a
commercially contracted distribution system, or determined that other
storage and distribution options were more cost-effective. Subsequent
periodic evaluations have been required, however, only through the
regulations. We have determined that the use of such evaluations is no
longer necessary for Program integrity. Consequently, we also propose
to remove the requirement, in current Sec. 250.14(a)(5), that the
distributing agency request a waiver to continue using a noncommercial
system.
In Sec. 250.13(c), we propose to retain the requirement, in
current Sec. 250.14(a)(7), that the distributing agency obtain FNS
approval to increase the distribution charge beyond normal inflationary
adjustments or to change the level of service provided under a
distribution charge. We also propose to require FNS approval of the
amount of a newly established distribution charge (some States do not
currently impose a distribution charge on school food authorities). We
propose to clarify that such requirement also applies to any charge
imposed on school food authorities by a distributing agency's
commercially contracted storage facility. We propose to retain the
current requirement that such request be submitted for approval at
least 90 days in advance of its projected implementation. We also
propose to retain the requirement, in current Sec. 250.15(a)(1), that
the request include justification for the new or increased amount, and
the specific costs to be covered by the distribution charge. However,
we propose to add a requirement that the request include justification
for any change in the level of service provided under an existing
distribution charge. Distributing agencies may use SAE funds to meet
the costs of storing and distributing donated foods, and other Federal
or State funds may also be available for this purpose. The use of such
funds should allow distributing agencies to provide for storage and
distribution costs of donated foods with minimal, if any, charge to
recipient agencies. Therefore, any new or increased charge, or change
in the level of services associated with a charge, must be necessary to
provide recipient agencies with donated foods in the most efficient and
cost-effective manner possible, as determined by FNS.
In Sec. 250.13(d), we propose to indicate that FNS may disapprove
the distributing agency's proposed new distribution charge or changes
to an existing distribution charge, if FNS determines that such amount
would not provide for the most cost-effective distribution of donated
foods, or would otherwise impact recipient agencies negatively. We
propose to clarify that, in such case, the distributing agency would be
required to adjust the distribution charge or the level of service
provided under the distribution charge, or to consider other storage
and distribution options. We also propose to
[[Page 63232]]
retain the provision, in current Sec. 250.14(a)(6)(ii), that FNS may,
at any time, require the distributing agency to submit documentation to
justify the cost-effectiveness of its distribution system, and to re-
evaluate such system, if it is determined to be out of compliance with
the requirements in this section, as proposed. We propose to remove the
requirement, in current Sec. 250.15(a), that the distributing agency
submit to FNS a description of its system for assessing its
distribution charge every three years. However, FNS may require the
distributing agency to submit information relating to its assessment of
the distribution charge, or to any other aspect of its distribution
system, in accordance with Sec. 250.18(d) of this proposed rule.
5. Storage and Inventory Management at the Recipient Agency Level,
Sec. 250.14
In Sec. 250.14, we propose to include requirements for the storage
and management of donated foods at the recipient agency level,
including commercial storage facilities or other entities under
contract with the recipient agency. In Sec. 250.14(a), we propose to
require recipient agencies to meet the same requirements for food
safety and health at their storage facilities as those proposed for the
distributing agency in Sec. 250.12(a) of this rule.
In Sec. 250.14(b), we propose to require that recipient agencies
in household programs store donated foods in a manner that permits them
to be distinguished from other foods at their storage facilities, and
to maintain a separate inventory record of donated foods. Recipient
agencies in household programs are currently subject to the requirement
to maintain storage and inventories of donated foods separately from
other foods in accordance with their designation as ``subdistributing
agencies'', in current Sec. 250.3. However, as described in section
II.A.2 of the preamble, we are proposing to remove the current
designation of such recipient agencies as subdistributing agencies. We
also propose to require that such recipient agencies' system of
inventory management ensure that donated foods are distributed to
recipients in a timely manner that permits use of such foods while
still in optimal condition. Lastly, we propose to clarify that
recipient agencies in household programs must notify the distributing
agency of any donated food losses, and take further actions with
respect to such donated foods, as directed by the distributing agency.
In Sec. 250.14(c), we propose to clarify the requirement in
current Sec. 250.59(c) that recipient agencies in child nutrition
programs, and those receiving donated foods as charitable institutions
(in accordance with current Sec. 250.67), are not required to store
donated foods in a manner that distinguishes them from purchased foods
or other foods, or to maintain a separate inventory record of donated
foods. Such recipient agencies may utilize single inventory management,
in which donated foods are commingled with purchased foods or other
foods in storage, and a single inventory record is maintained. Under
single inventory management, all foods are subject to the same
safeguards regarding food safety and health. As a result, we propose to
clarify that all recipient agencies in child nutrition programs, and
those receiving donated foods as charitable institutions, are not
required to separately monitor and report donated food use,
distribution, or loss to the distributing agency, unless there is
evidence indicating that donated food loss has occurred as a result of
theft or fraud. This is true regardless of the inventory management
system actually utilized by such recipient agencies.
In Sec. 250.14(d), we propose to include requirements in current
Sec. 250.13(a)(1)(iii) for the transfer of donated foods from one
recipient agency to another recipient agency and to clarify the types
of transfers to which these requirements apply. We propose to clarify
that a recipient agency operating a household program request approval
from the distributing agency to transfer donated foods to another
recipient agency in the same program. We propose to clarify that
transfer of donated foods from such recipient agency to a recipient
agency in another program receive FNS approval (i.e., through the
distributing agency). We propose to indicate that a recipient agency
operating a child nutrition program, or one receiving donated foods as
a charitable institution (in accordance with current Sec. 250.67), may
transfer donated foods to another recipient agency or charitable
organization without prior approval from the distributing agency or
FNS. This is in accordance with single inventory management, in which
donated foods are commingled with other foods, and often may not be
distinguished from them.
In Sec. 250.14(e), we propose to indicate that recipient agencies
may obtain the services of a commercial storage facility to store and
distribute donated foods, but must ensure compliance with Departmental
procurement requirements in 7 CFR parts 3016 or 3019, as applicable. We
also propose to clarify that recipient agencies must ensure that such
commercial storage facilities comply with the applicable requirements
in 7 CFR part 250 for the storage and inventory management of donated
foods.
6. Out-of-Condition Donated Foods, Food Recalls, and Complaints, Sec.
250.15
In Sec. 250.15, we propose to include requirements for the
disposition of donated foods that are out-of-condition, or that are
subject to a food recall, and requirements for the resolution of
recipient complaints relating to donated foods. In Sec. 250.15(a), we
propose to require the distributing agency to ensure that out-of-
condition donated foods at its storage facilities are destroyed, or
otherwise disposed of, in accordance with State or local requirements
pertaining to food safety and health. We propose to retain the
contingency for sale of out-of-condition donated foods (e.g., to a
salvage company) in accordance with current Sec. 250.13(f), if such
sale is permitted by State laws or regulations, rather than contingent
on FNS approval. We also propose to require the distributing agency to
obtain an inspection of donated foods by State or local health
authorities to determine their safety and condition, as necessary, or
as directed by FNS.
In Sec. 250.15(b), we propose to require that recipient agencies
in household programs report out-of-condition donated foods at their
storage facilities to the distributing agency, and ensure that such
donated foods are destroyed, or otherwise disposed of, in accordance
with State or local requirements pertaining to food safety and health.
We propose to require the distributing agency to ensure that such
recipient agencies obtain an inspection of donated foods by State or
local health authorities to determine their safety and condition, as
necessary, or as directed by FNS. We propose to indicate that, for
recipient agencies in child nutrition programs, and those receiving
donated foods as charitable institutions (in accordance with Sec.
250.67), donated foods must be treated as other foods when safety is in
question. Consequently, such recipient agencies must comply with State
or local requirements in determining the safety of donated foods and
other foods, and in their destruction or other disposition, but are not
required to report such actions to the distributing agency.
In Sec. 250.15(c), we propose to require that the distributing
agency or recipient agency, as appropriate, follow all applicable
Federal, State or local requirements for donated foods subject to a
food recall. Departmental guidance
[[Page 63233]]
is also provided to assist distributing and recipient agencies in
ensuring that donated foods subject to a food recall are isolated,
inspected, and recovered in an expeditious manner, and that the
appropriate parties are reimbursed for costs associated with such
actions.
In Sec. 250.15(d), we propose to indicate that the distributing
agency must inform recipient agencies of the preferred method for
receiving donated food complaints and resolve complaints received from
recipients, recipient agencies, or other entities relating to donated
foods in an expeditious manner, and in accordance with applicable
requirements in 7 CFR part 250. We propose to require the distributing
agency to submit any complaints regarding product quality or
specifications, or suggested products improvements, to FNS through the
established FNS donated foods complaint system for tracking and
evaluation purposes. If resolution of the complaint at the State level
is not feasible, we propose to indicate that the distributing agency
must provide information regarding the complaint to FNS for resolution.
Guidance on meeting these requirements is included on the FNS Web site.
We also propose to prohibit the distributing agency from disposing of
any donated food that is the subject of a complaint prior to guidance
and authorization from FNS. Lastly, we propose to include the
requirement, in current Sec. 250.22, that the distributing agency
maintain a record of its investigations and other actions with respect
to any complaints relating to donated foods. Resolving and tracking
product complaints, either at the Federal or State level, is critical
to ensuring that recipient agencies are receiving replacement products,
as appropriate, and that donated foods meet the standards established
by the Department.
7. Claims and Restitution for Donated Food Losses, Sec. 250.16
In Sec. 250.16, we propose to include requirements to ensure that
restitution is made for donated food losses, including claims against
parties responsible for such losses. In Sec. 250.16(a), we propose to
require that the distributing agency ensure that restitution is made
for donated food losses, and for the loss or improper use of funds
provided for, or obtained incidental to donated food distribution
(e.g., in salvage of donated foods or sale of pallets). We propose to
clarify that, in making restitution for losses, the distributing agency
must identify, and seek restitution from, parties responsible for the
loss, and implement corrective actions to prevent future losses.
Guidance for distributing agencies is included in FNS Instruction 410-
1, Claims for Losses of Donated Foods and Related Administrative
Losses--Procedures for the State Distributing Agency.
We propose to remove the actions required of the distributing
agency in making restitution for donated food losses in current Sec.
250.15(c). We also propose to remove the provision, in current Sec.
250.15(c)(2), that inventory loss of a donated food that does not
exceed one percent of the total inventory of that food may, under
certain conditions, be exempt from recovery through claims. Although
some losses that meet such conditions may be exempted with FNS
approval, as indicated above, a blanket exemption for inventory loss
does not encourage efficient inventory management. Current provisions
in Sec. 250.15(c)(2) also exempt losses in amounts that do not exceed
thresholds established in State laws or regulations. We propose to
remove this exemption as well, as all distributing agencies should be
held to the same standards with respect to accountability for Federal
resources provided.
In Sec. 250.16(b), we propose to clarify that FNS may initiate and
pursue a claim against the distributing agency or other entities for
the loss of donated foods, and for the loss or improper use of funds
provided, or obtained incidental to donated food distribution. We also
propose to clarify that FNS may initiate and pursue a claim if the
distributing agency fails to take required claim actions against other
parties. These requirements incorporate requirements in current Sec.
250.15(c). FNS guidance on taking action on a claim is included in FNS
Instruction 420-1, Managing Agency Debts. Lastly, we propose to clarify
that FNS may, on behalf of the Department, compromise, forgive,
suspend, or waive a claim. Such actions would also be taken in
accordance with FNS Instruction 420-1.
8. Use of Funds Obtained Incidental to Donated Food Distribution, Sec.
250.17
In Sec. 250.17, we propose to include requirements for the use of
funds obtained incidental to donated food distribution--e.g., through
the distribution charge, the salvage of out-of-condition donated foods,
the sale of pallets used for donated foods, or rebates from processors
for the value of donated foods processed into end products. In Sec.
250.17(a), we propose to clarify requirements in current Sec.
250.15(f)(2) relating to the use of funds obtained from the
distribution charge imposed on recipient agencies in child nutrition
programs, in accordance with Sec. 250.13(b) of this proposed rule. We
propose to require that such funds be used to meet costs of storing and
distributing donated foods or related administrative costs, consistent
with limitations on the use of Federal grant funds in 7 CFR part 3016,
and with OMB guidance. We also propose to specifically prohibit the use
of such funds to purchase foods to replace donated food losses or to
pay claims resulting from donated food losses.
We also propose to include in Sec. 250.17(a) the requirement, in
current Sec. 250.15(f)(3), that the distributing agency maintain funds
obtained from the distribution charge in an operating account, separate
from other funds, as well as the current limitation on the amount of
funds that may be maintained in such account. We also propose to retain
the current requirement that, unless FNS approval is requested and
granted, funds in excess of this amount must be used to reduce the
distribution charge imposed on recipient agencies, or to provide
appropriate reimbursement to such agencies. However, we propose to
remove the contingency in current Sec. 250.15(f)(2) that such funds be
returned to the Department.
In Sec. 250.17(b), we propose to require that school food
authorities use funds obtained from processors in the processing of
donated foods into end products (e.g., through rebates for the value of
such processed donated foods, in accordance with Subpart C of 7 CFR
part 250), or from food service management companies in crediting for
the value of donated foods (in accordance with Subpart D of 7 CFR part
250), in support of the nonprofit school food service. This aligns 7
CFR part 250 with Sec. 210.14 which provides that school food
authorities must use revenues received in the operation of the
nonprofit school food service, as defined in Sec. 210.2 and in Sec.
250.2 of this proposed rule, only for that food service. We propose to
require that other recipient agencies use such funds to meet the costs
of storing and distributing donated foods or related administrative
costs, as proposed in Sec. 250.17(c) of this rule.
In Sec. 250.17(c), we propose to clarify requirements in current
Sec. Sec. 250.15(f)(1) and (f)(2) relating to funds collected in
claims for donated food losses, and funds obtained from other sources
incidental to donated food distribution. Donated foods are made
available to distributing agencies to support the participants of each
respective program. Any loss of donated foods means fewer foods will be
available through the
[[Page 63234]]
affected program unless replacement foods are purchased. Therefore, we
propose to require that funds collected in payment of claims for
donated food losses be used to purchase replacement foods for use in
the program in which the losses occurred unless the distributing
agencies receives FNS approval to use the funds for other program
purposes. Guidance for use of funds collected in payment of a claim are
included in FNS Instruction 410-1, Claims for Losses of Donated Foods
and Related Administrative Losses--Procedures for the State
Distributing Agency, and in FNS Instruction 420-1, Managing Agency
Debts. We propose to require that funds obtained from other sources,
except as otherwise indicated in this section, be used to pay
administrative costs of storing and distributing donated foods,
consistent with the limitations on the use of funds provided under a
Federal grant in 7 CFR parts 3016 or 3019, as applicable, and OMB
guidance, as applicable. Using such funds in this manner will permit
distributing agencies to reduce or eliminate the charges imposed on
recipient agencies for storage, distribution and administration related
to donated foods. Sources of such funds may include, for example, the
sale of donated food containers or pallets, the salvage of out-of-
condition donated foods, or payments by processors for failure to meet
processing yields. The Departmental and OMB regulations provide
guidance for allowable costs in Federal grant expenditures for State
and local government entities, and for private nonprofit organizations.
We propose to remove the contingency, in current Sec. 250.15(f)(2),
that such funds be returned to the Department.
We propose to retain the requirement, in current Sec.
250.15(f)(3), that the distributing agency maintain funds obtained from
claims or other sources indicated in this section in a separate salvage
account. However, we propose to rename this account the ``donated food
account.'' We also propose to revise upward the threshold for which
deposits into, and expenditures from, such account must receive FNS
approval. We propose to require that the distributing agency receive
FNS approval for a deposit into, or expenditure from, the donated food
account in excess of $25,000, instead of the $2,500 threshold in
current Sec. 250.15(f)(4). Regardless, such funds must be used in
accordance with the requirements in proposed 250.17(c). Lastly, we
propose to require that the distributing or recipient agency maintain a
record of all funds obtained and expended in accordance with this
proposed Sec. 250.17(c).
In Sec. 250.17(d), we propose to clarify that the distributing
agency is prohibited from using funds obtained incidental to donated
food distribution to meet State matching requirements for other Federal
grants received--e.g., for FDPIR or TEFAP. We also propose to clarify
that such funds may not be used in place of State Administrative
Expense (SAE) funds available to meet costs relating to storage and
distribution of donated foods.
In Sec. 250.17(e), we propose to clarify the ``Buy American''
requirement, in current Sec. 250.23, for the purchase of foods with
funds obtained incidental to donated food distribution. In accordance
with the current requirement, recipient agencies must use Federal funds
to purchase only foods that are produced, or processed, in the United
States, with certain exceptions. We propose to clarify that, when funds
obtained in accordance with this section, as proposed, are used to
purchase foods in the commercial market, a distributing or recipient
agency in the continental United States, and in Hawaii, must, to the
maximum extent practical, purchase only domestic foods or food
products. This clarification of the ``Buy American'' requirement is
consistent with the requirement for school food authority purchases in
Sec. 210.21(d), and in Section 12(n) of the Richard B. Russell
National School Lunch Act (42 U.S.C. 1760). We also propose to include
the definition of domestic foods or food products used in Sec.
210.21(d). Lastly, we propose to clarify that the ``Buy American''
requirement is also applicable to the cash-in-lieu-of-donated foods
provided to school food authorities in NSLP and to child and adult care
institutions in CACFP, in accordance with Sec. Sec. 250.56(e) and
250.61(c), respectively.
9. Reporting Requirements, Sec. 250.18
In Sec. 250.18, we propose to include requirements for submission
of reports relating to the distribution and control of donated foods.
In Sec. 250.18(a), we propose to retain the requirement, in current
Sec. 250.17(a), that the distributing agency submit form FNS-152,
Monthly Distribution of Donated Foods to Family Units, to report
donated food inventories and distribution in FDPIR. However, we propose
to remove reference to form FNS-153, Monthly Report of the Commodity
Supplemental Food Program and Quarterly Administrative Financial Status
Report, as the requirement for submission of this report is included in
7 CFR part 247. We propose instead to indicate that the distributing
agency must submit reports included in regulations for specific food
assistance programs. We also propose to indicate that such reports must
be submitted in accordance with the timeframes established for each
respective report, rather than include specific timeframes for
submission in 7 CFR part 250.
We propose to retain the requirement, in current Sec. 250.17(a),
that the distributing agency report excessive donated food inventories
in TEFAP, NSLP, and other child nutrition programs to FNS, on a
semiannual basis, utilizing form FNS-155, the Inventory Management
Register. We propose to remove the requirement, in current Sec. Sec.
250.13(k) and 250.17(d), that the distributing agency report commodity
acceptability information to FNS, utilizing information collected from
recipient agencies in NSLP, CACFP, NSIP, CSFP, and FDPIR, and submitted
on form FNS-663, the Commodity Acceptability Report. Technological
advances, including the evolution of request-driven ordering systems,
over the last several years have made the collection and reporting of
such information by the distributing agency unnecessary. FNS now
receives information on donated food acceptability from diverse parties
on a routine basis, through electronic communication, national
conferences and other meetings with program operators, as well as
through periodic reviews of its donated food offerings.
In Sec. 250.18(b), we propose to include the requirement, in
current Sec. 250.30(m), that processors submit monthly performance
reports to the distributing agency to report donated food inventories,
processing of donated foods, and sale and delivery of end products.
However, we propose to remove the requirement that the distributing
agency submit a report of processors' inventories to the FNS Regional
Office, in current Sec. 250.17(b). Processors are required to submit
monthly performance reports to FNS, eliminating the need for
distributing agencies to submit such information to FNS.
In Sec. 250.18(c), we propose to include the requirement, in
Sec. Sec. 250.69(f) and 250.70(f) of this proposed rule, that the
distributing agency submit to FNS a report of the amounts of donated
foods used in disasters and situations of distress, utilizing
electronic form FNS-292A, Report of Commodity Distribution for Disaster
Relief. This form is also used to request replacement of donated foods
used in disasters and situations of distress.
[[Page 63235]]
In Sec. 250.18(d), we propose to retain the requirement, in
current Sec. 250.17(e), that the distributing agency submit other
information relating to the distribution of donated foods that may be
requested by FNS on a periodic basis. For example, FNS may require that
the distributing agency provide information relating to the
distribution charge, or to support the efficiency and cost-
effectiveness of its storage and distribution system, in accordance
with Sec. 250.13 of this proposed rule.
10. Recordkeeping Requirements, Sec. 250.19
In Sec. 250.19, we propose to include recordkeeping requirements
relating to the distribution and control of donated foods. In Sec.
250.19(a), we propose to require that distributing and recipient
agencies, and other entities, maintain records of agreements and
contracts, reports, audits, and claim actions, funds obtained
incidental to donated food distribution, and other records required in
this part or in other Departmental regulations, as applicable. In
addition to these requirements, we propose to require distributing
agencies to keep a record of the value of donated foods received by
each of its school food authorities in order to assist in monitoring
distributing agency compliance with the requirement that school food
authorities in NSLP are offered, at a minimum, the commodity offer
value of donated foods, in accordance with Sec. 250.58; and records to
demonstrate compliance with the professional standards for State
directors of distributing agencies in Sec. 235.11(g) of the proposed
rule Professional Standards for State and Local School Nutrition
Programs Personnel as Required by the Healthy, Hunger-Free Kids Act of
2010 (79 FR 6503 (Feb. 4, 2014)). We also propose to require that
processors maintain records documenting the sale of end products to
recipient agencies, including the sale of such end products by
distributors. Specific recordkeeping requirements relating to the use
of donated foods in contracts with food service management companies
are included in Sec. 250.54. Lastly, we propose to include the
provision, in current Sec. 250.16(a)(6), that failure to maintain
required records must be considered prima facie evidence of improper
distribution or loss of donated foods and may result in a claim against
the responsible party for the loss of donated foods, or may result in
other sanctions or corrective actions.
We propose to remove the requirement, in current Sec.
250.16(a)(3), that the distributing agency maintain records of refusal
of donated foods by school food authorities. In accordance with a final
rule published in the Federal Register on August 8, 2008 at 73 FR
46169, the ``offer and refusal'' system of ordering donated foods was
removed. We also propose to remove the requirement, in current Sec.
250.16(a)(5), that recipient agencies maintain records of the data and
method used to determine the number of eligible persons served.
Recordkeeping requirements relating to the determination of
eligibility, or the number of eligible persons served, are included in
regulations applicable to specific programs (e.g., 7 CFR part 247 for
CSFP).
In Sec. 250.19(b), we propose to retain, without change,
requirements in current Sec. 250.16(b) relating to the length of time
that records must be retained.
11. Audit Requirements, Sec. 250.20
In Sec. 250.20, we propose to include reference to Federal audit
requirements for distributing and recipient agencies, and audit
requirements for processors. In Sec. 250.20(a), we propose to
reference audit requirements in 7 CFR part 3052 for State or local
government agencies and nonprofit organizations that receive Federal
grants, as such requirements apply to distributing and recipient
agencies. In accordance with such requirements, the value of Federal
grants or awards expended in a fiscal year determine if the
distributing or recipient agency must obtain an audit in that year. We
propose to clarify that the value of donated foods must be considered
as part of the total value of the Federal grant, and to reference FNS
guidance in valuing donated foods for audit purposes, and in
determining if an audit is required.
In Sec. 250.20(b), we propose to include requirements for
processors to obtain an independent CPA audit to determine compliance
with processing requirements for donated foods. In accordance with
current Sec. 250.18(b), multi-State processors must obtain an
independent CPA audit at a frequency determined by the value of the
donated foods they receive for processing in a year. Currently, a
multi-State processor must obtain an independent CPA audit for any year
in which it receives more than $250,000 in donated foods; every two
years, if it receives $75,000 to $250,000 in donated foods each year;
and every three years, if it receives less than $75,000 in donated
foods each year. Such audits must be paid for by the processor.
We propose to amend the current audit requirement for multi-State
processors by requiring that a multi-State processor obtain an
independent CPA audit in each of the first two years that it receives
donated foods for processing, regardless of the value of donated foods
received, to ensure that new processors receive appropriate oversight
as they establish their processing programs. After the first two years,
we propose to require a multi-State processor to obtain such an audit
at a frequency determined by the average value of donated foods
received for processing per year, as currently required. However, we
propose to revise upward the current thresholds for determining the
required frequency of such audits to reflect the much larger volume of
donated foods provided to such processors for processing over the last
several years. Hence, we propose to require a multi-State processor to
obtain an independent CPA audit:
(1) Annually, if it receives, on average, more than $5,000,000
in donated foods for processing per year;
(2) Every two years, if it receives, on average, between
$1,000,000 and $5,000,000 in donated foods for processing per year;
and
(3) Every three years, if it receives, on average, less than
$1,000,000 in donated foods for processing per year.
In-State processors are not currently required to obtain an
independent CPA audit. In order to ensure compliance with program
requirements, the distributing agency must conduct an on-site review of
in-State processors at least once every two years, in accordance with
current Sec. 250.19(b)(1)(iii). However, the performance of on-site
reviews is a costly and time-consuming exercise for distributing
agencies, and we are proposing to remove this requirement, as discussed
in section II.B.13 of the preamble. We propose, instead, to require
that an in-State processor obtain an independent CPA audit to determine
compliance with processing requirements for donated foods in the first
year that it receives donated foods for processing. After the first
year, we propose to require an in-State processor to obtain such an
audit at a frequency determined by the average value of donated foods
received for processing per year, using the same thresholds for
determining such frequency as we are proposing for multi-State
processors. Due to the lower volume of donated foods received by in-
State processors, we expect that, after the first year, in-State
processors would be subject to the audit requirement every three years.
As currently required for multi-State processors, we propose to require
that in-State processors pay the cost of the audit.
We propose to require that the donated food value utilized must be
the contract value of the donated foods, as
[[Page 63236]]
defined in Sec. 250.2 of this proposed rule. We also propose to
clarify that audits must determine processor compliance with the
requirements in this part, and must be conducted in accordance with the
FNS Audit Guide for Processors. However, we propose to remove the
current stipulation that FNS may require auditors to attend training
sessions conducted by the Department. Although training may still be
provided, FNS provides written guidance and technical assistance for
auditors on an ongoing basis.
In Sec. 250.20(c), we propose to include the actions required of
processors resulting from the audits. We propose to require that in-
State processors submit a copy of the audit to the distributing agency
for review by December 31 of each year in which an audit is required.
We propose to require the distributing agency to ensure that in-State
processors provide a corrective action plan with timelines for
correcting deficiencies identified in the audit, and that such
deficiencies are corrected. We propose to include the requirement in
current Sec. 250.18(b) that multi-State processors submit a copy of
the audit, and a corrective action plan with timelines to correct
deficiencies identified in the audit, as appropriate, to FNS for review
by December 31 of each year in which an audit is required. This will
permit FNS and distributing agencies to review audit findings, follow
up on required corrective actions, and monitor noncompliance issues for
the purpose of identifying trends and implementing program
improvements.
In Sec. 250.20(d), we propose to indicate that a distributing or
recipient agency is subject to sanctions for failure to obtain the
required audit, or for failure to correct deficiencies identified in
audits. Such sanctions may include the withholding, suspension, or
termination of a Federal award. We propose to indicate that, if a
processor fails to obtain the required audit, or to correct
deficiencies identified in audits, a distributing or recipient agency
may terminate the processing contract or agreement, and may not extend
or renew such a contract or agreement. We also propose to include the
stipulation, in current Sec. 250.18(b)(5), that FNS may prohibit the
further distribution of donated foods to a processor for its failure to
comply with audit requirements.
12. Distributing Agency Reviews, Sec. 250.21
In Sec. 250.21, we propose to include the requirements for the
distributing agency to review subdistributing agencies, recipient
agencies, and other entities to ensure compliance with requirements
relating to the distribution and control of donated foods. In Sec.
250.21(a), we propose to clarify and streamline review requirements in
current Sec. 250.19. We propose to require that the distributing
agency ensure compliance with requirements in 7 CFR part 250, and in
other Federal regulations as applicable, through its review of required
reports, and through on-site reviews of the recipient agencies and
other entities indicated in Sec. 250.21(b) of this proposed rule. The
required reports for review may include audit reports, processors'
monthly performance reports, and inventory reports submitted in CSFP
and FDPIR. We also propose to clarify that the distributing agency is
not required to review school food authorities and other recipient
agencies in child nutrition programs. The State administering agency
(which may be different from the distributing agency) is responsible
for the review of such recipient agencies in accordance with review
requirements of Part 210. Lastly, we propose to remove specific review
procedures included in current Sec. 250.19(b)(1), such as the review
of recipient agency eligibility and civil rights requirements, as they
do not apply to all programs, and are included in Federal regulations
for specific programs in which they do apply.
We propose to include current on-site review requirements of
charitable institutions, and of storage facilities at the distributing
agency level, in Sec. 250.21(b), and to add a reference to the
distributing agency's requirement to perform on-site reviews of
subdistributing and recipient agencies in CSFP, TEFAP, and FDPIR, in
accordance with 7 CFR parts 247, 251, and 253, respectively. However,
we propose to remove the requirement, in current Sec.
250.19(b)(1)(iii), that the distributing agency perform on-site reviews
of in-State processors. The on-site review would be replaced by review
of the audits required of such processors, in accordance with Sec.
250.20 of this proposed rule.
We propose to remove the requirement in current Sec. 250.19(b)(2),
that the distributing agency develop a system to verify sales of end
products when a processor delivers end products to a distributor for
sale to recipient agencies under a discount method of sales. Processors
receive notification of such end product sales from the distributor,
usually by electronic means, and the processor must maintain records of
such sales, in accordance with current Sec. 250.30(k)(2), and with
Sec. 250.19(a) of this proposed rule. Such records would be reviewed
by auditors, in conducting the audits required in accordance with Sec.
250.20(b) of this proposed rule. Consequently, all end product sales
may be verified through the review of audit reports, as well as through
the distributing agency's review of the processor's monthly performance
reports. The distributing agency may also require, at its option, that
the processor submit documentation to support information included in
the processor's performance report, including sales of end products to
recipient agencies. The State administering agency may also review
school food authorities' records, in order to ensure receipt of the
requisite quantity of end products, in accordance with the
administrative review required in 7 CFR part 210.
In Sec. 250.21(c), we propose to include the requirement, in
current Sec. 250.19(b)(3) and (b)(4), that the distributing agency
report deficiencies identified in its review to recipient agencies or
other entities, recommend corrective actions, and ensure that such
actions are completed. We propose to remove the requirement in current
Sec. 250.19(b)(6) that the distributing agency require that
subdistributing agencies monitor and review their own operations. Such
responsibility must reside with the distributing agency, in accordance
with Sec. 250.4(a) of this proposed rule.
13. Distributing Agency Performance Standards, Sec. 250.22
In Sec. 250.22, we propose to include the performance standards
that the distributing agency must meet, most of which are included in
current Sec. 250.24. Performance standards are meant to highlight the
most important areas of oversight for distributing agencies relating to
donated foods; however, the current standards cover a wide area. In
Sec. 250.22(a), we propose to revise the performance standards to
include only those relating to oversight of requirements in the
ordering, distribution, processing, and control of donated foods, as
such requirements are proposed in this rule. We propose to revise the
performance standard relating to the provision for processing of
donated foods to clarify that the distributing agency must provide for
such processing, at the request of school food authorities, in
accordance with the processing requirements in Subpart C of 7 CFR part
250. Most distributing agencies already provide for processing of
donated foods into end products, which permit school food authorities
to more easily prepare and serve meals in NSLP. We propose to include
clarification that some performance
[[Page 63237]]
standards are applicable only to distributing agencies that distribute
donated foods in NSLP or other child nutrition programs. We propose an
additional performance standard, ensuring distributing agencies provide
recipient agencies information regarding the preferred method for the
submission of donated food complaints to the distributing agency and
that distributing agencies act expeditiously to resolve submitted
complaints. Lastly, we propose to clarify that the identification of
specific performance standards does not relieve the distributing agency
of the responsibility to meet other requirements in 7 CFR part 250.
In Sec. 250.22(b), we propose to include the requirement, in
current Sec. 250.19(c), that the distributing agency submit a
corrective action plan to FNS if it is found to be substantially out of
compliance with the performance standards. We propose to retain the
current requirements that the plan identify the corrective actions to
be taken, the timeframe for completion of such actions, and that the
distributing agency must submit the plan to FNS within 60 days after
receiving notification of a deficiency. Failure of a distributing
agency to submit a timely corrective action plan to FNS may be
considered a violation of this part, and therefore subject to
suspension or termination under Sec. 250.3(c).
In Sec. 250.22(c), we propose to include the provision, in current
Sec. 250.20, that FNS may terminate the distributing agency's
participation in the distribution of donated foods, or in a food
distribution program, for failure to comply with requirements in 7 CFR
part 250, with other applicable Federal regulations, or with its
written agreement with FNS. We propose to indicate that FNS may also
choose to suspend, rather than terminate, such participation, or may
terminate or suspend some, but not all, activities. In certain
situations, suspending all or part of a program rather than terminating
the program in its entirety will allow FNS to continue serving program
participants while pursuing corrective actions. Lastly, we propose to
include the stipulation, in current Sec. 250.20, that FNS may also
take other actions, as appropriate, including prosecution under
applicable Federal statutes.
C. Subpart C--Processing and Labeling of Donated Foods
We propose to amend current Subpart C of 7 CFR part 250 to reduce
reporting requirements relating to the processing of donated foods, and
to remove the requirement that the processor make a payment to the
distributing agency for the value of excessive donated food inventories
at the annual reconciliation. We also propose to update regulatory
references to conform to other changes proposed in this rule, and to
replace reference to ``FNSRO'' with ``FNS Regional Office'' given that
the rule proposes to remove the definition of ``FNSRO'' from the
definitions section of the rule, in proposed Sec. 250.2.
We propose to remove the requirement, in current Sec.
250.30(k)(3), that the processor submit copies of requests for refunds
and refund payments to the distributing agency. We also propose to
remove the requirements, in current Sec. 250.30(n)(4) and Sec.
250.30(o), that the distributing agency submit monthly performance
reports, or information from such reports, to FNS on a periodic basis.
In accordance with the proposal to remove the requirement that the
distributing agency develop a sales verification system for end product
sales, as described in section II.B.12 of the preamble, we propose to
remove the requirement, in current Sec. 250.30(m)(1)(viii), that the
processor report sales verification findings to the distributing
agency. We also propose to remove current Sec. 250.30(m)(1)(vii),
which is reserved. Accordingly, we propose to redesignate Sec.
250.30(m)(1)(ix) as Sec. 250.30(m)(1)(vii).
In accordance with current Sec. 250.30(n)(3), as part of the
annual reconciliation, a processor that has contracted with the
distributing agency for the following year must first reduce any
excessive donated food inventories by paying the distributing agency
for the value of such donated foods. While such cash-out of donated
food inventories may be the best option in certain instances, in other
cases a transfer of such inventories to another distributing agency or
processor may be the better option. Therefore, we propose to revise
current Sec. 250.30(n)(3) to instead require such processor to reduce
excessive donated food inventories. Policy Memorandum FD-064,
Management of Donated Food Inventories at Processors, which was
implemented in revised form on March 20, 2012, provides several options
for reduction of excessive donated food inventories at processors.
We propose to remove requirements in current Sec. 250.30(q) that
the FNS Regional Office review processing contracts and inventory
reports, and in current Sec. 250.30(r), which indicates that FNS will
provide copies of contracts upon request. Such contracts and inventory
reports are currently reviewed by FNS Headquarters staff. In accordance
with the removal of paragraphs (o), (q), and (r) of this section,
paragraphs (p), (s), and (t) would be redesignated as paragraphs (o),
(p), and (q) of this section, respectively.
D. Subpart D--Donated Foods in Contracts With Food Service Management
Companies
We propose to amend current Subpart D of 7 CFR part 250 to clarify
requirements in the storage, control, and use of donated foods in
contracts with food service management companies. In current Sec.
250.50(a), we propose to clarify that the food service management
company must use all donated foods received in the recipient agency's
food service, or must use commercial substitutes in place of such
donated foods only as permitted in Sec. 250.51(d). We propose to
revise current Sec. 250.52(a) to clarify that the food service
management company must meet the requirements in Sec. 250.14(a) of
this proposed rule for the safe storage and control of donated foods.
E. Subpart E--National School Lunch Program (NSLP) and Other Child
Nutrition Programs
We propose to amend current Subpart E of 7 CFR part 250 to ensure
that school food authorities are able to order and receive the donated
foods that they may best utilize in the school food service, and to
clarify requirements for school food authorities in the storage,
inventory management, and use of donated foods. In order to accomplish
this, we propose to revise current paragraphs Sec. 250.58(a) and (e),
and to consolidate current Sec. Sec. 250.59 and 250.60 into a revised
Sec. 250.59. Current Sec. Sec. 250.61 and 250.62 would be
redesignated as Sec. Sec. 250.60 and 250.61, respectively.
In Sec. 250.58(a), we propose to remove reference to the
Electronic Commodity Ordering System (ECOS), as donated food orders are
now placed through a new FNS electronic donated foods ordering system,
currently named Web Based Supply Chain Management (WBSCM). Although all
distributing agencies currently submit orders and other information to
FNS through the FNS electronic donated foods ordering system, not all
States have rolled down such system to their school food authorities.
Nevertheless, we propose to require that the distributing agency ensure
that all school food authorities are able to submit orders for donated
foods through the FNS electronic donated foods ordering system, or
through a comparable electronic ordering system. Direct submission of
orders by school food authorities better ensures that they receive the
preferred
[[Page 63238]]
types and forms of donated foods, and at a time when they may best
utilize such foods in the school food service. We propose to require
that the distributing agency ensure that all school food authorities
have the opportunity to provide input on at least an annual basis in
determining which donated foods, from the full list of donated foods,
will be made available to them for ordering electronically through the
FNS electronic donated foods ordering system or another system.
Providing school food authorities with the opportunity to order the
types and forms of foods that they have expressed a preference for will
help them to maximize their use of donated foods to meet the nutrition
standards in the National School Lunch Program and to prevent waste.
Lastly, we propose to require that the distributing agency ensure
distribution to school food authorities of all such ordered donated
foods that may be distributed to them in a cost-effective manner
(including the use of split shipments, as necessary), and that they may
efficiently utilize so as to minimize the cost to school food
authorities of receiving donated foods.
In Sec. 250.58(e), we propose to require that the distributing
agency use either the donated food cost-per-pound prices posted
annually by USDA or the most recently published cost-per-pound in the
USDA donated foods catalog in offering the school food authority the
commodity offer value of donated foods, as required in Sec. 250.58(b).
In crediting the school food authority's donated food assistance level,
currently the distributing agency may choose among three options in
valuing donated foods, including the commodity file cost as of a
specified date and the estimated cost-per-pound data included in
commodity survey memoranda. Instead, we propose that the distributing
agency use the USDA purchase price (cost-per-pound) in crediting the
school food authority's donated food assistance level, and that the
distributing agency update this price at least semi-annually to reflect
the most recent purchase price. This will better reflect the actual
benefit received by the school food authority.
In Sec. 250.59(a), we propose to reference the storage and
inventory requirements in Subpart B of 7 CFR part 250 applicable to
distributing agencies to ensure the safe and effective storage and
control of donated foods. We propose to indicate that the school food
authority must ensure the safe and sanitary storage, inventory
management, and use of donated foods and purchased foods, in accordance
with requirements in current Sec. 210.13. In accordance with Sec.
250.14(c) of this proposed rule, the school food authority may
commingle donated foods and purchased foods in a single inventory
management system. We propose to remove the current provision that
permits the distributing agency to determine if the school food
authority may exercise the single inventory option, or must continue to
maintain and track donated food inventories separately from its
purchased foods. Separate inventory tracking of donated foods would be
an unnecessary burden for school food authorities, and it is important
that single inventory management be implemented consistently in all
States.
In Sec. 250.59(b), we propose to include the requirements in
current Sec. 250.60(a) for the use of donated foods in the nonprofit
school food service, with only minor clarifications. In Sec.
250.59(c), we propose to include contingencies and requirements in
current Sec. 250.60(b) for the use of donated foods outside of the
nonprofit school food service, again with only minor clarifications. In
Sec. 250.59(d), we propose to include requirements in current Sec.
250.60(c) for donated foods in contracts with food service management
companies in a more streamlined form, but without substantive changes.
In Sec. 250.59(e), we propose to clarify requirements for two or
more school food authorities acting as a collective unit in conducting
activities relating to donated foods. School food authorities often
perform activities in a collaborative manner through school co-ops or
consortia, in order to minimize costs and improve efficiency of
operations. We propose to clarify that the school collective unit is
subject to the same requirements pertaining to such donated food
activities as a single school food authority. For example, the school
collective unit may commingle donated foods and purchased foods in a
single inventory management system.
F. Subpart F--Household Programs
We propose to revise current Subpart F to streamline and clarify
current descriptions of, and requirements for, the distribution of
donated foods in CSFP and FDPIR, and to include such information for
TEFAP. We propose to remove reference to the Food Distribution Program
in the Trust Territory of the Pacific Islands, as all distribution of
donated foods in this program has been cashed out. We also propose to
remove reference to the Special Supplemental Nutrition Program for
Women, Infants, and Children (i.e., the WIC Program), as donated food
distribution in that program was discontinued several years ago.
Accordingly, we propose to include the following new sections in the
revised Subpart F.
1. Commodity Supplemental Food Program (CSFP), Sec. 250.63
In Sec. 250.63(a), we propose to clarify that the Department
distributes donated foods in CSFP to the distributing agency for
further distribution in the State, in accordance with 7 CFR part 247.
We also propose to clarify that State and recipient agencies must
comply with the requirements of 7 CFR part 250 in the distribution,
control, and use of donated foods in CSFP, to the extent that such
requirements are not inconsistent with the requirements in 7 CFR part
247. In Sec. 250.63(b), we propose to clarify the types of donated
foods distributed in CSFP, in accordance with the legislation
authorizing the purchase of such foods.
2. The Emergency Food Assistance Program (TEFAP), Sec. 250.64
In Sec. 250.64, we propose to include a description of the
distribution of donated foods in TEFAP. In Sec. 250.64(a), we propose
to clarify that the Department distributes donated foods in TEFAP to
the distributing agency for further distribution in the State, in
accordance with 7 CFR part 251. We also propose to clarify that State
and recipient agencies must comply with the requirements of 7 CFR part
250 in the distribution, control, and use of donated foods in TEFAP, to
the extent that such requirements are not inconsistent with the
requirements in 7 CFR part 251. In Sec. 250.64(b), we propose to
clarify the types of donated foods distributed in TEFAP, in accordance
with the legislation authorizing the purchase of such foods.
3. Food Distribution Program on Indian Reservations (FDPIR), Sec.
250.65
In Sec. 250.65(a), we propose to clarify that the Department
distributes donated foods in FDPIR to the distributing agency for
further distribution, in accordance with 7 CFR parts 253 and 254. We
also propose to clarify that the distributing agency may be a State
agency or Indian Tribal Organization, and must comply with the
requirements of 7 CFR part 250 in the distribution, control, and use of
donated foods in FDPIR, to the extent that such requirements are not
inconsistent with the requirements in 7 CFR parts 253 and 254. In Sec.
250.65(b), we propose to clarify the types of donated foods distributed
in FDPIR, in accordance with the legislation authorizing the purchase
of such foods.
[[Page 63239]]
G. Subpart G--Additional Provisions
We propose to amend current Subpart G of 7 CFR part 250 by revising
the Subpart heading to read Additional Provisions, by clarifying
requirements for the distribution of donated foods in disasters and
situations of distress, and by adding a provision which identifies the
OMB assigned information collection and recordkeeping control numbers.
In order to accomplish this, we propose to revise the heading of
Subpart G, as well as current Sec. Sec. 250.69 and 250.70, and we
propose to add Sec. 250.71.
1. Disasters, Sec. 250.69
We propose to revise current Sec. 250.69 to clarify requirements
for the distribution and use of donated foods in a disaster,
contingencies for replacement of such foods, and reporting
requirements. In accordance with Sec. 250.2 of this proposed rule, the
term ``disaster'' includes a Presidentially declared disaster or
emergency (e.g., a pandemic); therefore, we refer simply to a disaster
in this section. In Sec. 250.69(a), we propose to retain the current
provision that the distributing agency may provide donated foods from
current inventories, at the distributing or recipient agency level, to
approved disaster organizations for use in providing congregate meal
assistance to persons in need of food assistance as a result of a
disaster. We propose to retain the current authority for the
distributing agency to provide such assistance without FNS approval.
However, we propose to clarify that the distributing agency must notify
FNS that donated foods will be provided, and the period of time that
they are expected to be needed. If such period of time is extended, the
distributing agency must notify FNS of the extension.
In Sec. 250.69(b), we propose to retain the current provision that
the distributing agency may provide donated foods to disaster
organizations for distribution to households in need of food assistance
once FNS approval has been obtained for such distribution. We propose
to clarify that such assistance may continue for the period of time
that FNS determines necessary to meet the needs of such households. We
propose to retain the prohibition for households to simultaneously
receive disaster Supplemental Nutrition Assistance Program (D-SNAP)
benefits (formerly disaster food stamps) and donated food assistance.
In Sec. 250.69(c), we propose to retain the current requirement
that the distributing agency review and approve a disaster
organization's application to provide donated food disaster assistance,
before distributing donated foods to such organization. We also propose
to retain the current requirement that, for distribution of donated
foods to households, the application must also be forwarded to FNS for
approval. We propose to retain the current required elements of such
applications, including those additional elements required for
distribution of donated foods to households.
In Sec. 250.69(d), we propose to include the current requirement
that disaster organizations collect information from households
receiving donated foods, if issuance of D-SNAP benefits has also been
approved, in order to ensure that households receiving D-SNAP benefits
do not also receive donated foods. We propose to retain the current
information that must be collected from such households. We also
propose to include the current requirements that such household
information be reported to the distributing agency, and that the
distributing agency maintain a record of such information.
In Sec. 250.69(e), we propose to include the provision, in current
Sec. 250.13(d)(1), that permits disaster relief workers to receive
meals containing donated foods as an incident of their service to
eligible recipients. However, we propose to clarify that any emergency
relief workers at the congregate feeding site who are directly engaged
in providing relief assistance may be served congregate meals
containing donated foods.
In Sec. 250.69(f), we propose to include the current requirement
that the distributing agency report to FNS the number and location of
sites where donated foods are used in congregate meals or household
distribution, as these sites are established. We also propose to retain
the requirement that the distributing agency provide a report of the
types and amounts of donated foods used in disaster assistance.
However, we propose to require this information to be reported
electronically, utilizing form FNS-292A, Report of Commodity
Distribution for Disaster Relief.
In Sec. 250.69(g), we propose to include the current provision for
FNS replacement of donated foods used in disasters, as requested by the
distributing agency. However, we propose to require that such
information must be reported within 45 days of termination of disaster
assistance, rather than the current 30 day period. Also, we propose to
require that such replacement be requested electronically, utilizing
form FNS-292A, Report of Commodity Distribution for Disaster Relief,
along with the report of the donated foods used in the disaster.
Lastly, we propose to clarify that, for food diverted from inventories
of recipient agencies in child nutrition programs, FNS will replace
such food if the recipient agency received the same types of donated
food during the year preceding the onset of the disaster assistance.
Such recipient agencies may commingle donated foods and commercially
purchased foods in a single inventory management system, which makes it
difficult to ascertain which foods are actually used. We propose to
clarify that such replacement will be in the amount of food used, but
not to exceed the amount of like donated food received during the
preceding year.
In Sec. 250.69(h), we propose to indicate that FNS will, upon
receiving a distributing agency request via public voucher, reimburse
the distributing agency for any costs incurred in transporting donated
foods within the State, or from one State to another, for use in
disasters.
2. Situations of Distress, Sec. 250.70
We propose to revise current Sec. 250.70 to clarify requirements
for the distribution and use of donated foods in a situation of
distress (as defined in Sec. 250.2 of this proposed rule),
contingencies for replacement of such foods, and reporting
requirements. As in a disaster, donated foods may be used to provide
assistance in a situation of distress, but requirements for the use of
such foods, and conditions for their replacement, are somewhat
different. In Sec. 250.70(a), we propose to retain the current
conditions for the distributing agency to provide donated foods to
approved disaster organizations for use in providing congregate meals
to persons in need of food assistance as a result of a situation of
distress. In accordance with current requirements, FNS approval is not
required for such use if the situation of distress is the result of a
natural event--e.g., a hurricane, flood, or snowstorm--and if its
duration will not exceed 30 days. However, we propose to clarify that
the distributing agency must notify FNS that donated food assistance is
to be provided. FNS approval is required to permit such donated food
assistance for a period exceeding 30 days. We propose to clarify that
FNS approval is required to permit donated food assistance in providing
congregate meals in a situation of distress that is not the result of a
natural event (e.g., an explosion), for any period of time. As with
disasters, the distributing agency may
[[Page 63240]]
use donated foods from current inventories at the distributing or
recipient agency level.
In Sec. 250.70(b), we propose to retain the current requirement
that the distributing agency obtain FNS approval to provide donated
foods to approved disaster organizations for distribution to households
in a situation of distress. We propose to clarify that such assistance
may continue for the period of time that FNS determines necessary to
meet the needs of such households. In accordance with current
restrictions, households receiving D-SNAP benefits are not eligible to
also receive donated foods.
In Sec. 250.70(c), we propose to retain the current requirement
that the disaster organization submit an application to the
distributing agency, for its review and approval, to receive donated
foods to provide assistance in a situation of distress. For
distribution of donated foods in a situation of distress that is not
the result of a natural event, or for any distribution of donated foods
to households, we propose to clarify that, once the distributing agency
approves the application, it must submit the application to FNS for
approval. We propose to require the same elements for all such
applications as we propose to be included for applications in a
disaster, in accordance with Sec. 250.69(c) of this proposed rule.
In Sec. 250.70(d), we propose to retain the current requirement
that disaster organizations collect specific information from
households receiving donated foods in a situation of distress, if
issuance of D-SNAP benefits has also been approved. We propose to
include the same information that is required to be collected from
households in a disaster, to require that such information be reported
to the distributing agency, and that the distributing agency maintain a
record of such information. In Sec. 250.70(e), we propose to clarify
that emergency relief workers may receive meals containing donated
foods at a congregate feeding site in a situation of distress in
accordance with the same conditions that apply in a disaster in Sec.
250.69(e) of this proposed rule.
In Sec. 250.70(f), we propose to include the current requirement
that the distributing agency report to FNS the number and location of
sites where donated foods are used in congregate meals or household
distribution, as these sites are established. We also propose to
require the distributing agency to report the types and amounts of
donated foods used in the situation of distress electronically,
utilizing form FNS-292A, Report of Commodity Distribution for Disaster
Relief, within the same 45-day time period as required for disasters.
In Sec. 250.70(g), we propose to include the current contingencies
for the replacement of donated foods used in situations of distress.
FNS will replace such foods to the extent that funds are available to
purchase replacement foods, and if the distributing agency requests
such replacement within 45 days following the termination of such
assistance. This is longer than the 30 days that distributing agencies
currently have to request replacement of these foods. However, we
propose to require that such replacement be requested electronically,
utilizing form FNS-292A, Report of Commodity Distribution for Disaster
Relief, along with the report of the donated foods used in the
situation of distress. We also propose to clarify that, subject to the
above conditions, FNS will replace foods diverted from inventories of
recipient agencies in child nutrition programs if the recipient agency
received the same types of donated food during the year preceding the
onset of the assistance. Such replacement will be in the amount of food
used, but not to exceed the amount of like donated food received during
the preceding year.
In Sec. 250.70(h), we propose to indicate that FNS will, upon
receiving a distributing agency request via public voucher, reimburse
the distributing agency, to the extent that funds are available, for
any costs incurred in transporting donated foods within the State, or
from one State to another, for use in a situation of distress.
In Sec. 250.71 we propose to add a provision providing the current
OMB assigned control numbers for the information collection and
recordkeeping provisions in 7 CFR part 250.
7 CFR Part 251
We propose to amend 7 CFR part 251 to conform certain requirements
for distribution of donated foods in TEFAP to requirements for such
distribution in other programs, or with changes to 7 CFR part 250
proposed in this rule. We propose to remove current Sec. 251.4(f)(4),
which requires that the external shipping containers and product labels
of processed end products distributed in TEFAP identify them as USDA
donated food products. The removal of this requirement would conform to
requirements for unprocessed donated foods distributed in TEFAP, as
well as other programs, which do not require such identification. In
accordance with this proposal, we propose to redesignate current Sec.
251.4(f)(5) as Sec. 251.4(f)(4).
We propose to revise current Sec. 251.4(g) to require TEFAP
donated foods to be distributed and used in accordance with the
requirements in 7 CFR part 251, and with the requirements in 7 CFR part
250, to the extent that such requirements are not inconsistent with the
requirements in 7 CFR part 251. We propose to align requirements in the
transfer of TEFAP foods, and in ensuring restitution for losses of
TEFAP foods, with such requirements for other donated foods, as
proposed in this rule.
We propose to require that transfers of TEFAP donated foods comply
with requirements in Sec. Sec. 250.12(d) and 250.14(d) of this
proposed rule, as applicable. We propose to clarify that the State
agency must ensure that restitution is made for the loss of TEFAP
donated foods, or for the loss or improper use of funds provided for,
or obtained as an incident of, the distribution of such foods, in
accordance with Sec. 250.16 of this proposed rule. Lastly, we propose
to indicate that the State agency is subject to claims for such losses
for which it is responsible, as well as for its failure to initiate or
pursue claims against other parties responsible for such losses. We
propose to remove current Sec. 251.4(l), as the requirements for
ensuring restitution for losses of donated foods are included in
proposed Sec. 250.16.
III. Procedural Matters
A. Public Comment Procedures
Your written comments on this proposed rule should be specific,
confined to issues pertinent to the proposed rule, and should explain
your reasons for any change recommended. 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
(see DATES) will not be considered or included in the Administrative
Record for the final rule.
The comments, including names, street addresses, and other contact
information of commenters, will be available for public review at FNS,
Room 500, 3101 Park Center Drive, Alexandria, Virginia, during regular
business hours (8:30 a.m. to 5 p.m.), Mondays through Fridays, except
Federal holidays.
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 regulations easier to understand, including answers to
questions such as the following:
[[Page 63241]]
(1) Are the requirements in the rule clearly stated?
(2) Does the rule contain technical language or jargon that
interferes with its clarity?
(3) Does the format of the rule (grouping and order of sections,
use of headings, paragraphs, etc.) make it more or less clear?
(4) Would the rule be easier to understand if it were 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?
B. Executive Order 12866 and 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 proposed rule has been determined to be not
significant and was not reviewed by the Office of Management and Budget
(OMB) under Executive Order 12866.
C. Regulatory Flexibility Act
This proposed rule has been reviewed with regard to the
requirements of the Regulatory Flexibility Act (5 U.S.C. 601-612).
Pursuant to that review, it has been certified that this action will
not have a significant impact on a substantial number of small
entities. Although the rule would require specific procedures for
distributing and recipient agencies to follow in the distribution and
control of donated foods, USDA does not expect them to have a
significant impact on such entities.
D. Public Law 104-4, Unfunded Mandates Reform Act of 1995
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, FNS
generally must prepare a written statement, including a cost-benefit
analysis, for proposed and final rules with ``Federal mandates'' that
may result in expenditures to State, local, or Tribal governments, in
the aggregate, or to the private sector, of $100 million or more in any
one year. When such a statement is needed for a rule, section 205 of
the UMRA generally requires FNS 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) for 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.
E. Executive Order 12372
The donation of foods in USDA food distribution and child nutrition
programs is included in the Catalog of Federal Domestic Assistance
under 10.555, 10.558, 10.559, 10.565, 10.567, and 10.569. For the
reasons set forth in the final rule in 7 CFR part 3015, Subpart V and
related Notice (48 FR 29115, June 24, 1983), the donation of foods in
such programs is included in the scope of Executive Order 12372, which
requires intergovernmental consultation with State and local officials.
F. 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. FNS has
considered the impact of this rule on State and local governments and
has determined that this rule does have Federalism implications.
1. Prior Consultation With State Officials
The programs affected by the regulatory proposals in this rule are
all State-administered, Federally-funded programs. Hence, our national
headquarters office has formal and informal discussions with State and
local officials, as well as commercial contractors, on an ongoing basis
regarding issues relating to the distribution and control of donated
foods. FNS attends annual conferences of the American Commodity
Distribution Association, a national group with State, local, and
industry representation, and the School Nutrition Association, as well
as other conferences.
2. Nature of Concerns and the Need to Issue This Rule
The rule addresses the concerns of program operators that
distribute and use donated foods in food distribution and child
nutrition programs. The rule would reduce the reporting and
administrative workload for distributing and recipient agencies
involved in the distribution and control of donated foods.
3. Extent to Which We Meet Those Concerns
FNS has considered the impact of the proposed rule on State and
local agencies. The overall effect of this rule is to ensure that such
agencies are able to utilize and distribute donated foods safely and
efficiently, with a minimal reporting and recordkeeping burden. FNS is
not aware of any case in which the provisions of the rule would preempt
State law.
G. Executive Order 12988
This proposed rule has been reviewed under Executive Order 12988,
Civil Justice Reform. This proposed rule, when finalized, would 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 proposed rule would not have
retroactive effect. Prior to any judicial challenge to the provisions
of this rule or the application of its provisions, all applicable
administrative procedures must be exhausted.
H. Civil Rights Impact Analysis
FNS has reviewed this rule in accordance with the Department
Regulation 4300-4, ``Civil Rights Impact Analysis'', to identify and
address any major civil rights impacts the rule might have on
minorities, women, and persons with disabilities. After a careful
review of the rule's intent and provisions, FNS has determined that
this rule will not in any way limit or reduce the ability of
participants to receive the benefits of donated foods in food
distribution or child nutrition programs on the basis of an
individual's or group's race, color, national origin, sex, age, or
disability. FNS found no factors that would negatively and
disproportionately affect any group of individuals.
I. Paperwork Reduction Act
In accordance with the Paperwork Reduction Act of 1995, this notice
[[Page 63242]]
invites the general public and other public agencies to comment on this
proposed information collection. This collection is a revision of a
currently approved collection, OMB#0584-0293.
Written comments must be received on or before January 20, 2015.
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 shall 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 that were 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 use of appropriate automated,
electronic, mechanical, or other technological collection techniques or
other forms of information technology.
Comments may be sent to Dana Rasmussen, at the address listed in
the ADDRESSES section of this preamble. Comments may also be submitted
via email to Dana.Rasmussen@fns.usda.gov. Comments will also be
accepted through the Federal eRulemaking Portal. Go to https://www.regulations.gov, and follow the online instructions for submitting
comments electronically. Commenters are asked to separate their
comments on the information collection requirements from their comments
on the remainder of the proposed rule.
Title: Food Distribution Forms.
OMB Number: 0584-0293.
Expiration Date: 09/30/2016.
Type of Request: Revision of a currently approved collection.
Abstract: This is a revision of an existing information collection
based on a proposed rule titled Proposed Changes to the Requirements
for the Distribution and Control of Donated Foods, which substantially
re-writes 7 CFR part 250. The rule proposes to revise and clarify
requirements in 7 CFR part 250 to ensure that USDA donated foods are
distributed, stored, and managed in the safest, most efficient, and
cost-effective manner, at State and recipient agency levels. The rule
would also reduce administrative and reporting requirements for State
distributing agencies, revise or clarify regulatory provisions relating
to accountability for donated foods, and rewrite much of 7 CFR part 250
in a more user-friendly, ``plain language,'' format. Lastly, the rule
proposes to revise and clarify specific requirements in 7 CFR part 251
to conform more closely to related requirements in 7 CFR part 250. This
revision also includes provisions inadvertently omitted in the
currently approved information collection, substantially revises other
provisions which were inaccurate, and updates all relevant aspects of
information collection requirements in the package.
Affected Public: Respondent groups include: (1) Individuals and
households; (2) businesses or other for-profit agencies; (3) not for
profit organizations; and (4) State, local, and Tribal governments.
Estimated Number of Respondents: The total estimated number of
respondents is 636,478. This includes 611,200 individuals and
households, 2,812 businesses and other for-profit companies, 1,600
private not-for-profit organizations, and 20,866 State, Local, and
Tribal governments.
Estimated Number of Responses per Respondent: The total estimated
average number of responses is 6.10 per respondent.
Estimated Total Annual Responses: 3,879,952.
Estimated Time per Response: The average response time is 0.30
hours per response.
Estimated Total Annual Burden on Respondents: See the table below
for estimated total annual burden for each type of respondent.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Number of Estimated total
Affected public Estimated number responses per Total annual hours per Estimated total
of respondents respondent responses response burden
--------------------------------------------------------------------------------------------------------------------------------------------------------
Reporting
--------------------------------------------------------------------------------------------------------------------------------------------------------
State, Local, and Tribal Governments......................... 20,866 11.16 232,774.24 0.26 59,589.50
Private for Profit........................................... 2,812 305.10 857,949.00 0.03 24,566.72
Private Not for Profit....................................... 1,600 2.03 3,240.00 0.19 614.50
Individual................................................... 611,200.00 1.96 1,199,200.00 0.25 304,400.00
------------------------------------------------------------------------------------------
Total Estimated Reporting Burden......................... 636,478.00 3.60 2,293,163.24 0.17 389,170.72
--------------------------------------------------------------------------------------------------------------------------------------------------------
Recordkeeping
--------------------------------------------------------------------------------------------------------------------------------------------------------
State, Local, and Tribal Governments......................... 20,866.00 24.22 505,305.46 0.07 37,129.57
Private for Profit........................................... 2,812 367.99 1,034,786.00 0.06 62,790.72
Private Not for Profit....................................... 1,600 29.19 46,697.00 14.44 674,358.04
Individual................................................... 0 0.00 0.00 0.00 0.00
------------------------------------------------------------------------------------------
Total Estimated Recordkeeping Burden..................... 25,278.00 62.77 1,586,788.46 0.49 774,278.33
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total of Reporting and Recordkeeping
--------------------------------------------------------------------------------------------------------------------------------------------------------
Reporting.................................................... 636,478.00 3.60 2,293,163.24 0.17 389,170.72
Recordkeeping................................................ 25,278.00 62.77 1,586,788.46 0.49 774,278.33
Total.................................................... 636,478.00 6.10 3,879,951.70 0.30 1,163,449.05
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: A detailed table is included in the supplemental documents to this rule.
J. Regulatory Impact Analysis
This rule has been designated as Not Significant by the Office of
Management and Budget, therefore, no Regulatory Impact Analysis is
required.
K. Executive Order 13175--Consultation and Coordination With Indian
Tribal Governments
Executive Order 13175 requires Federal agencies to consult and
coordinate with Tribes on a government-to-government basis on policies
that have Tribal implications, including regulations, legislative
comments or proposed legislation, and
[[Page 63243]]
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. On
February 13, 2013, as part of its regular quarterly Tribal consultation
schedule, USDA engaged in a consultative session to obtain input by
Tribal officials, or their designees, and Tribal members concerning the
effect of this and other rules on the Tribes or Indian Tribal
governments. In regard to the provisions of this rule, at the
consultative session a Tribal member requested, and FNS provided,
clarification regarding the purpose of this rule. No concerns regarding
the provisions of the rule were expressed.
We are unaware of any current Tribal laws that could be in conflict
with the proposed rule.
L. E-Government Act Compliance
The Department is committed to complying with the E-Government Act,
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.
List of Subjects
7 CFR Part 250
Disaster assistance, Food assistance programs, Grant programs-
social programs, Reporting and recordkeeping requirements.
7 CFR Part 251
Food assistance programs, Grant programs-social programs, Reporting
and recordkeeping requirements, Surplus agricultural commodities.
Accordingly, 7 CFR parts 250 and 251 are proposed to be amended as
follows:
PART 250--DONATION OF FOODS FOR USE IN THE UNITED STATES, ITS
TERRITIORIES AND POSSESSIONS AND AREAS UNDER ITS JURISDICTION
0
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.
0
2. Revise Subpart A to read as follows:
Subpart A--General Purpose and Administration
Sec.
250.1 Purpose and use of donated foods.
250.2 Definitions.
250.3 Administration at the Federal level.
250.4 Administration at the State level.
250.5 Civil rights.
Sec. 250.1 Purpose and use of donated foods.
(a) Purpose. The Department purchases foods and donates them to
State distributing agencies for further distribution and use in food
assistance programs, or to provide assistance to needy persons, in
accordance with legislation:
(1) Authorizing donated food assistance in specific programs (e.g.,
the Richard B. Russell National School Lunch Act for the National
School Lunch Program (NSLP)); or
(2) Authorizing the removal of surplus foods from the market or the
support of food prices (i.e., in accordance with Section 32, Section
416, and Section 709, as defined in Sec. 250.2).
(b) Use of donated foods. Donated foods must be used in accordance
with the requirements of this part and with other Federal regulations
applicable to specific food assistance programs (e.g., 7 CFR part 251
includes requirements for the use of donated foods in The Emergency
Food Assistance Program (TEFAP)). Such use may include activities
designed to demonstrate or test the effective use of donated foods
(e.g., in nutrition classes or cooking demonstrations) in any programs.
However, donated foods may not be:
(1) Sold or exchanged, or otherwise disposed of, unless approved by
FNS, or specifically permitted elsewhere in this part or in other
Federal regulations (e.g., donated foods may be used in meals sold in
NSLP);
(2) Used to require recipients to make any payments or perform any
services in exchange for their receipt, unless approved by FNS, or
specifically permitted elsewhere in this part or in other Federal
regulations; or
(3) Used to solicit voluntary contributions in connection with
their receipt, except for donated foods provided in the Nutrition
Services Incentive Program (NSIP).
(c) Legislative sanctions. In accordance with the Richard B.
Russell National School Lunch Act (42 U.S.C. 1760) and the Agriculture
and Consumer Protection Act of 1973 (7 U.S.C. 612c note), any person
who embezzles, willfully misapplies, steals, or obtains by fraud any
donated foods (or funds, assets, or property deriving from such donated
foods) will be subject to Federal criminal prosecution and other
penalties. Any person who receives, conceals, or retains such donated
foods or funds, assets, or property deriving from such foods, with the
knowledge that they were embezzled, willfully misapplied, stolen, or
obtained by fraud, will also be subject to Federal criminal prosecution
and other penalties. The distributing agency, or other parties, as
applicable, must immediately notify FNS of any such violations.
Sec. 250.2 Definitions.
7 CFR Part 3016 means the Department's regulations establishing
uniform administrative requirements for Federal grants and cooperative
agreements and subawards to State, local, and Indian Tribal
governments.
7 CFR Part 3019 means the Department's regulations establishing
uniform administrative requirements for Federal grants and cooperative
agreements awarded to institutions of higher education, hospitals, and
other nonprofit organizations.
7 CFR Part 3052 means the Department's regulations establishing
audit requirements for State and local governments and nonprofit
organizations that receive Federal grants.
Administering agency means a State agency that has been approved by
the Department to administer a food assistance program. If such agency
is also responsible for the distribution of donated foods, it is
referred to as the distributing agency in this part.
Adult care institution means a nonresidential adult day care center
that participates independently in CACFP, or that participates as a
sponsoring organization, and that may receive donated foods or cash-in-
lieu of donated foods, in accordance with an agreement with the
distributing agency.
AoA means the Administration on Aging, which is the DHHS agency
that administers NSIP.
Bonus foods means Section 32, Section 416, and Section 709 donated
foods, as defined in this section, which are purchased under surplus
removal or price support authority, and provided to distributing
agencies in addition to legislatively authorized levels of assistance.
CACFP means the Child and Adult Care Food Program.
Carrier means a commercial enterprise that transports donated foods
from one location to another, but does not store such foods.
Charitable institutions means public institutions or private
nonprofit organizations that provide a meal
[[Page 63244]]
service on a regular basis to predominantly needy persons in the same
place without marked changes. Some types of charitable institutions are
included in Sec. 250.67.
Child care institution means a nonresidential child care center
that participates independently in CACFP, or that participates as a
sponsoring organization, in accordance with an agreement with the
distributing agency.
Child nutrition program means NSLP, CACFP, SFSP, or SBP.
Commodity offer value means the minimum value of donated foods that
the distributing agency must offer to a school food authority
participating in NSLP each school year. The commodity offer value is
equal to the national per-meal value of donated food assistance
multiplied by the number of reimbursable lunches served by the school
food authority in the previous school year.
Commodity school means a school that operates a nonprofit food
service, in accordance with 7 CFR part 210, but that receives
additional donated food assistance rather than the cash assistance
available to it under Section 4 of the Richard B. Russell National
School Lunch Act (42 U.S.C. 1753).
Consignee means an entity (e.g., the distributing or recipient
agency, a commercial storage facility, or a processor) that receives a
shipment of donated foods from a vendor or Federal storage facility.
Contract value of the donated foods means the price assigned by the
Department to a donated food which shall reflect the Department's
current acquisition price, transportation and, if applicable,
processing costs related to the food.
Contracting agency means the distributing agency, subdistributing
agency, or recipient agency which enters into a processing contract.
CSFP means the Commodity Supplemental Food Program.
Department means the United States Department of Agriculture
(USDA).
DHHS means the United States Department of Health and Human
Services.
Disaster means a Presidentially declared disaster or emergency, in
accordance with the Robert T. Stafford Disaster Relief and Emergency
Assistance Act, in which Federal assistance, including donated food
assistance, may be provided to persons in need of such assistance as a
result of the disaster or emergency.
Disaster organization means an organization authorized by FNS or a
distributing agency, when appropriate, to provide assistance to
survivors of a disaster or a situation of distress.
Distributing agency means a State agency selected by the Governor
of the State or the State legislature to distribute donated foods in
the State, in accordance with an agreement with FNS, and with the
requirements in this part and other Federal regulations, as applicable
(e.g., a State agency distributing donated foods in CSFP must comply
with requirements in 7 CFR part 247). Indian Tribal Organizations may
act as a distributing agency in the distribution of donated foods on,
or near, Indian reservations, as provided for in applicable Federal
regulations (e.g., 7 CFR parts 253 or 254 for FDPIR).
Distribution charge means the cumulative charge imposed by
distributing agencies on school food authorities to help meet the costs
of storing and distributing donated foods, and administrative costs
related to such activities.
Distributor means a commercial food purveyor or handler who is
independent of a processor and both sells and bills for the end
products delivered to recipient agencies.
Donated foods means foods purchased by USDA for donation in food
assistance programs, or for donation to entities assisting needy
persons, in accordance with legislation authorizing such purchase and
donation. Donated foods are also referred to as USDA Foods.
Elderly nutrition project means a recipient agency selected by the
State or Area Agency on Aging to receive assistance in NSIP, which may
include donated food assistance.
End product means a food product that contains processed donated
foods.
Entitlement means the value of donated foods a distributing agency
is authorized to receive in a specific program, in accordance with
program legislation.
Entitlement foods means donated foods that USDA purchases and
provides in accordance with levels of assistance mandated by program
legislation.
FDPIR means the Food Distribution Program on Indian Reservations
and the Food Distribution Program for Indian Households in Oklahoma.
Federal acceptance service means the acceptance service provided
by:
(1) The applicable grading branches of the Department's
Agricultural Marketing Service (AMS);
(2) The Department's Federal Grain Inspection Service; and
(3) The National Marine Fisheries Service of the U.S. Department of
Commerce.
Fee-for-service means the price by pound or case representing a
processor's cost of ingredients (other than donated foods), labor,
packaging, overhead, and other costs incurred in the conversion of the
donated food into the specified end product.
Fiscal year means the period of 12 months beginning October 1 of
any calendar year and ending September 30 of the following calendar
year.
FNS means the Food and Nutrition Service of the Department of
Agriculture.
Food recall means an action to remove food products from commerce
when there is reason to believe the products may be unsafe,
adulterated, or mislabeled. The action is taken to protect the public
from products that may cause health problems or possible death.
Food service management company means a commercial enterprise,
nonprofit organization, or public institution that is, or may be,
contracted with by a recipient agency to manage any aspect of a
recipient agency's food service, in accordance with 7 CFR parts 210,
225, or 226, or, with respect to charitable institutions, in accordance
with this part. To the extent that such management includes the use of
donated foods, the food service management company is subject to the
applicable requirements in this part. However, a school food authority
participating in NSLP that performs such functions is not considered a
food service management company. Also, a commercial enterprise that
uses donated foods to prepare meals at a commercial facility, or to
perform other activities that meet the definition of processing in this
section, is considered a processor in this part, and is subject to the
requirements in subpart C, and not subpart D, of this part.
Household means any of the following individuals or groups of
individuals, exclusive of boarders or residents of an institution:
(1) An individual living alone;
(2) An individual living with others, but customarily purchasing
food and preparing meals for home consumption separate and apart from
the others;
(3) A group of individuals living together who customarily purchase
and prepare meals in common for home consumption; and
(4) Other individuals or groups of individuals, as provided in FNS
regulations specific to particular food assistance programs.
[[Page 63245]]
Household programs means CSFP, FDPIR, and TEFAP.
In-kind replacement means the replacement of a loss of donated food
with the same type of food of U.S. origin, of equal or better quality
as the donated food, and at least equal in value to the lost donated
food.
In-State processor means a processor that has entered into
agreements with distributing or recipient agencies that are located
only in the State in which all of the processor's processing facilities
are located.
Multi-food shipment means a shipment from a Federal storage
facility that usually includes more than one type of donated food.
Multi-State processor means a processor that has entered into
agreements with distributing or recipient agencies in more than one
State, or that has entered into one or more agreements with
distributing or recipient agencies that are located in a State other
than the State in which the processor's processing facilities or
business office is located.
National per-meal value means the value of donated foods provided
for each reimbursable lunch served in NSLP in the previous school year,
and for each reimbursable lunch and supper served in CACFP in the
previous school year, as established in section 6(c) of the Richard B.
Russell National School Lunch Act (42 U.S.C. 1755(c)).
Needy persons means persons in need of food assistance as a result
of their:
(1) Economic status;
(2) Eligibility for a specific food assistance program; or
(3) Eligibility as survivors of a disaster or a situation of
distress.
Nonprofit organization means a private organization with tax-exempt
status under the Internal Revenue Code. Nonprofit organizations
operated exclusively for religious purposes are automatically tax-
exempt under the Internal Revenue Code.
Nonprofit school food service means all food service operations
conducted by the school food authority principally for the benefit of
schoolchildren, all of the revenue from which is used solely for the
operation or improvement of such food services.
NSIP means the Nutrition Services Incentive Program.
NSLP means the National School Lunch Program.
Out-of-condition donated foods means donated foods that are no
longer fit for human consumption as a result of spoilage,
contamination, infestation, adulteration, or damage.
Performance supply and surety bond means a written instrument
issued by a surety company which guarantees performance and supply of
end products by a processor under the terms of a processing contract.
Processing means a commercial enterprise's use of a commercial
facility to:
(1) Convert donated foods into an end product;
(2) Repackage donated foods; or
(3) Use donated foods in the preparation of meals.
Processor means a commercial enterprise that processes donated
foods at a commercial facility.
Recipient agencies means agencies or organizations that receive
donated foods for distribution to needy persons or for use in meals
provided to needy persons, in accordance with agreements with a
distributing or subdistributing agency, or with another recipient
agency. Local agencies in CSFP, and Indian Tribal Organizations
distributing donated foods to needy persons through FDPIR in a State in
which the State government administers FDPIR, are considered recipient
agencies in this part.
Recipients means persons receiving donated foods, or a meal
containing donated foods, provided by recipient agencies.
Reimbursable meals means meals that meet the nutritional standards
established in Federal regulations pertaining to NSLP, SFSP, or CACFP,
and that are served to eligible recipients.
SAE funds means Federal funds provided to State agencies for State
administrative expenses, in accordance with 7 CFR part 235.
SBP means the School Breakfast Program.
School food authority means the governing body responsible for the
administration of one or more schools, and that has the legal authority
to operate NSLP or be otherwise approved by FNS to operate NSLP.
School year means the period of 12 months beginning July 1 of any
calendar year and ending June 30 of the following calendar year.
Section 4(a) means section 4(a) of the Agriculture and Consumer
Protection Act of 1973, as amended (7 U.S.C. 612c note), which
authorizes the Department to purchase donated foods to maintain the
traditional level of assistance for food assistance programs authorized
by law, including, but not limited to, CSFP, FDPIR, and disaster
assistance.
Section 6 means section 6 of the Richard B. Russell National School
Lunch Act, as amended (42 U.S.C. 1755), which authorizes the Department
to provide a specified value of donated food assistance in NSLP.
Section 14 means section 14 of the Richard B. Russell National
School Lunch Act, as amended (42 U.S.C. 1762a), which authorizes the
Department to use Section 32 or Section 416 funds to maintain the
annually programmed levels of donated food assistance in child
nutrition programs.
Section 27 means section 27 of the Food and Nutrition Act of 2008,
as amended (7 U.S.C. 2036), which authorizes the purchase of donated
foods for distribution in TEFAP.
Section 32 means section 32 of Public Law 74-320, as amended (7
U.S.C. 612c), which authorizes the Department to purchase primarily
perishable foods to remove market surpluses, and to donate them for use
in domestic food assistance programs or by charitable institutions.
Section 311 means section 311 of the Older Americans Act of 1965,
as amended (42 U.S.C. 3030a), which permits State Agencies on Aging to
receive all or part of their NSIP grant as USDA donated foods.
Section 416 means section 416 of the Agricultural Act of 1949, as
amended (7 U.S.C. 1431), which authorizes the Department to purchase
nonperishable foods to support market prices, and to donate them for
use in domestic food assistance programs or by charitable institutions.
Section 709 means section 709 of the Food and Agricultural Act of
1965, as amended (7 U.S.C. 1446a-1), which authorizes the Department to
purchase dairy products to meet authorized levels of assistance in
domestic food assistance programs when such assistance cannot be met by
Section 416 food purchases.
Service institution means recipient agencies that participate in
SFSP.
SFSP means the Summer Food Service Program.
Similar replacement means the replacement of a loss of donated food
with another type of food from the same food category (i.e., dairy,
grain, meat/meat alternate, vegetable, fruit, etc.) that is of U.S.
origin, of equal or better quality than that type of donated food, and
at least equal in value to the lost donated food.
Single inventory management means the commingling in storage of
donated foods and foods from other sources, and the maintenance of a
single inventory record of such commingled foods.
Situation of distress means a natural catastrophe or other event
that does not meet the definition of disaster in this section, but
that, in the determination of the distributing agency, or of FNS, as
applicable, warrants the use of donated foods to assist survivors of
such catastrophe or other event. A situation
[[Page 63246]]
of distress may include, for example, a hurricane, flood, snowstorm, or
explosion.
SNAP means the Supplemental Nutrition Assistance Program.
Split shipment means a shipment of donated foods from a vendor that
is split between two or more distributing or recipient agencies, and
that usually includes more than one stop-off or delivery location.
State means any State of the United States, the District of
Columbia, Puerto Rico, the Virgin Islands, Guam, and American Samoa.
State Agency on Aging means:
(1) The State agency that has been approved by DHHS to administer
NSIP; or
(2) The Indian Tribal Organization that has been approved by DHHS
to administer NSIP.
Storage facility means a publicly-owned or nonprofit facility or a
commercial enterprise that stores donated foods or end products, and
that may also transport such foods to another location.
Subdistributing agency means a State agency, a public agency, or a
nonprofit organization selected by the distributing agency to perform
one or more activities required of the distributing agency in this
part, in accordance with a written agreement between the parties. A
subdistributing agency may also be a recipient agency.
Substitution means:
(1) The replacement of donated foods with like quantities of
domestically produced commercial foods of the same generic identity and
of equal or better quality (i.e., cheddar cheese for cheddar cheese,
nonfat dry milk for nonfat dry milk, etc.).
(2) In the case of donated nonfat dry milk, substitution as defined
under paragraph (1) of this definition or replacement with an
equivalent amount, based on milk solids content, of domestically
produced concentrated skim milk.
(3) A processor can substitute commercial product for donated
commodity, as described in paragraph (1) of this definition, without
restrictions under full substitution. The processor must return to the
contracting agency, in finished end products, the same number of pounds
of commodity that the processor originally received for processing
under full substitution. This is the 100-percent yield requirement.
(4) A processor can substitute commercial product for donated
commodity product, as described in paragraph (1) of this definition,
with some restrictions under limited substitution. Restrictions
include, but are not limited to, the prohibition against substituting
for backhauled poultry commodity product. FNS may also prohibit
substitution of certain types of the same generic commodity. (For
example, FNS may decide to permit substitution for bulk chicken but not
for canned chicken.)
Summer camp means a nonprofit or public camp for children aged 18
and under.
TEFAP means The Emergency Food Assistance Program.
USDA Foods means donated foods.
Vendor means a commercial food company from which the Department
purchases foods for donation.
Sec. 250.3 Administration at the Federal level.
(a) Food and Nutrition Service. Within the Department, the Food and
Nutrition Service (FNS) shall act on behalf of the Department to
administer the distribution of donated foods to distributing agencies
for further distribution and use at the State level, in accordance with
the requirements of this part.
(b) Audits or inspections. The Department, the Comptroller General
of the United States, or any of their authorized representatives, may
conduct audits or inspections of distributing, subdistributing, or
recipient agencies, or the commercial enterprises with which they have
contracts or agreements, in order to determine compliance with the
requirements of this part, or with other applicable Federal
regulations.
(c) Suspension or termination. Whenever it is determined that a
distributing agency has materially failed to comply with the provisions
of this part, or with other applicable Federal regulations, FNS may
suspend or terminate the distribution of donated foods, or the
provision of administrative funds, to the distributing agency. FNS must
provide written notification of such suspension or termination of
assistance, including the reasons for the action and the effective
date. The distributing agency may appeal a suspension or termination of
assistance if such appeal is provided for in Federal regulations
applicable to a specific food assistance program (e.g., as provided for
in Sec. 253.5(l) for FDPIR). FNS may also take other actions, as
appropriate, including prosecution under applicable Federal statutes.
Sec. 250.4 Administration at the State level.
(a) Distributing agency. The distributing agency, as defined in
Sec. 250.2, is responsible for ensuring compliance with the
requirements in this part, and in other Federal regulations referenced
in this part, in the distribution and control of donated foods. In
order to receive, store, and distribute donated foods, the distributing
agency shall enter into a written agreement with FNS (the Federal-State
Agreement, form FNS-74) for the distribution of donated foods in
accordance with the provisions of this part and other applicable
Federal regulations. The Federal-State agreement is permanent, but may
be amended with the concurrence of both parties. FNS may terminate the
Federal-State agreement if the distributing agency fails to meet its
obligations, in accordance with Sec. 250.3(c). The distributing agency
may impose additional requirements relating to the distribution and
control of donated foods in the State, as long as such requirements are
not inconsistent with the requirements in this part or other Federal
regulations referenced in this part.
(b) Subdistributing agency. The distributing agency may enter into
a written agreement with a subdistributing agency, as defined in Sec.
250.2, to perform specific activities required of the distributing
agency in this part. However, the distributing agency may not assign
its overall responsibility for donated food distribution and control to
a subdistributing agency or to any other organization, and may not
delegate its responsibility to ensure compliance with the performance
standards in Sec. 250.22. The agreement entered into with the
subdistributing agency must include the provisions in paragraph (c) of
this section, and must indicate the specific activities for which the
subdistributing agency is responsible.
(c) Recipient agencies. The distributing agency must select
recipient agencies, as defined in Sec. 250.2, to receive donated foods
for distribution to needy persons, or for use in meals provided to
needy persons, in accordance with eligibility criteria for specific
programs or outlets, and must enter into a written agreement with a
recipient agency prior to distribution of donated foods to it. However,
for child nutrition programs, the distributing agency must enter into
agreements with those recipient agencies selected by the State
administering agency to participate in such programs, prior to
distribution of donated foods to such recipient agencies. The
distributing agency must confirm such recipient agencies' approval for
participation in the appropriate child nutrition program with the State
administering agency. For household programs, distributing agencies
must consider the past performance of recipient agencies when
[[Page 63247]]
approving applications for participation. Agreements with recipient
agencies must include the provisions in this paragraph (c), as well as
provisions required in Federal regulations applicable to specific
programs (e.g., agreements with local agencies in CSFP must include the
provisions in Sec. 247.4(b)). The agreements with recipient agencies
and subdistributing agencies must:
(1) Ensure compliance with the applicable requirements in this
part, with other Federal regulations referenced in this part, and with
the distributing agency's written agreement with FNS;
(2) Ensure compliance with all requirements relating to food safety
and food recalls;
(3) Establish the duration of the agreement;
(4) Permit termination of the agreement by the distributing agency
for failure of the recipient agency (or subdistributing agency, as
applicable) to comply with its provisions or applicable requirements,
upon written notification to the applicable party; and
(5) Permit termination of the agreement by either party, upon
written notification to the other party, at least 60 days prior to the
effective date of termination.
(d) Procurement of services of commercial enterprises. The
distributing agency, or a recipient agency, must ensure compliance with
Departmental procurement requirements in 7 CFR part 3016 or 3019, as
applicable, to obtain the services of a commercial enterprise to
conduct activities relating to donated foods. The distributing agency,
or a recipient agency, must also ensure compliance with other
applicable Departmental regulations in such procurements--for example,
a school food authority must ensure compliance with requirements in
Sec. Sec. 210.16 and 210.21, and in subpart D of this part, in
procuring the services of a food service management company.
Sec. 250.5 Civil rights.
Distributing agencies, subdistributing agencies and recipient
agencies shall comply with the Department's nondiscrimination
regulations (7 CFR parts 15, 15a, and 15b) and the FNS civil rights
instructions to ensure that in the operation of the program no person
is discriminated against on a protected bases as it applies to each
program.
0
3. Revise Subpart B to read as follows:
Subpart B--Delivery, Distribution, and Control of Donated Foods
Sec.
250.10 Availability and ordering of donated foods.
250.11 Delivery and receipt of donated food shipments.
250.12 Storage and inventory management at the distributing agency
level.
250.13 Efficient and cost-effective distribution of donated foods.
250.14 Storage and inventory management at the recipient agency
level.
250.15 Out-of-condition donated foods, food recalls, and complaints.
250.16 Claims and restitution for donated food losses.
250.17 Use of funds obtained incidental to donated food
distribution.
250.18 Reporting requirements.
250.19 Recordkeeping requirements.
250.20 Audit requirements.
250.21 Distributing agency reviews.
250.22 Distributing agency performance standards.
Sec. 250.10 Availability and ordering of donated foods.
(a) Ordering donated foods. The distributing agency must utilize a
request-driven ordering system in submitting orders for donated foods
to FNS. As part of such system, the distributing agency must provide
recipient agencies with the opportunity to submit input, on at least an
annual basis, in determining the donated foods from the full list that
are made available to them for ordering. Based on the input received,
the distributing agency must ensure that the types and forms of donated
foods that recipient agencies may best utilize are made available to
them for ordering. The distributing agency must also ensure that
donated foods are ordered and distributed only in amounts that may be
utilized efficiently and without waste.
(b) Provision of information on donated foods. The distributing
agency must provide recipient agencies, at their request, information
that will assist them in ordering or utilization of donated foods,
including:
(1) The types and quantities of donated foods that they may order;
(2) Donated food specifications and nutritional value; and
(3) Procedures for the disposition of donated foods that are out-
of-condition or that are subject to a food recall.
Sec. 250.11 Delivery and receipt of donated food shipments.
(a) Delivery. The Department arranges for delivery of donated foods
from the vendor or Federal storage facility to the distributing
agency's storage facility, or to a processor with which the
distributing agency has entered into a contract or agreement. The
Department may also deliver donated foods directly to a recipient
agency, or to a storage facility or processor with which the recipient
agency has entered into a contract or agreement, with the approval of
the distributing agency. In accordance with Sec. 250.2, an entity that
receives a shipment of donated foods directly from a USDA vendor or a
Federal storage facility is referred to as the consignee. Consignees
must provide a delivery address, and other information as required by
FNS, as well as update this information as necessary, to ensure foods
are delivered to the correct location.
(b) Receipt of shipments. The distributing or recipient agency, or
other consignee, must comply with all applicable Federal requirements
in receiving shipments of donated foods, including procedures for the
disposition of any donated foods in a shipment that are out-of-
condition (as this term is defined in Sec. 250.2), or are not in
accordance with ordered amounts. The distributing or recipient agency,
or other consignee, must provide notification of the receipt of donated
food shipments to FNS, through electronic means, and must maintain an
electronic record of receipt of all donated food shipments.
(c) Replacement of donated foods. The vendor is responsible for the
replacement of donated foods that are delivered out-of-condition. Such
responsibility extends until expiration of the use-by or best-if-used-
by date on the food label, or, if no such date is included on the food
label, until expiration of the vendor warranty period included in the
vendor contract with USDA. In all cases, responsibility for replacement
is contingent on the determination that the foods were out-of-condition
at the time of delivery. Replacement must be in-kind, unless FNS
approves similar replacement (the terms in-kind and similar replacement
are defined in Sec. 250.2). If FNS determines that physical
replacement of donated foods is not cost-effective or efficient, FNS
may:
(1) Approve payment by the vendor to the distributing or recipient
agency, as appropriate, for the value of the donated foods at time of
delivery (or at another value determined by FNS); or
(2) Credit the distributing agency's entitlement, as feasible.
(d) Payment of costs relating to shipments. The Department is
responsible for payment of processing, transportation, handling, or
other costs incurred up to the time of delivery of donated foods to a
distributing or recipient agency, or other consignee, as the Department
deems in its best interest. However, the distributing or
[[Page 63248]]
recipient agency, or other consignee, is responsible for payment of any
delivery charges that accrue as a result of such consignee's failure to
comply with procedures in FNS instructions--e.g., failure to provide
for the unloading of a shipment of donated foods within a designated
time period.
(e) Transfer of title. Title to donated foods transfers to the
distributing or recipient agency, as appropriate, upon acceptance of
the donated foods at the time and place of delivery. Notwithstanding
transfer of title, distributing and recipient agencies must ensure
compliance with the requirements of this part in the distribution,
control, and use of donated foods.
Sec. 250.12 Storage and inventory management at the distributing
agency level.
(a) Safe storage and control. The distributing agency (or
subdistributing agency, as applicable) must provide facilities for the
storage and control of donated foods that protect against theft,
spoilage, damage, or other loss. Accordingly, such storage facilities
must maintain donated foods in sanitary conditions, at the proper
temperature and humidity, and with adequate air circulation. The
distributing agency must ensure that storage facilities comply with all
Federal, State, or local requirements relative to food safety and
health, as applicable, and obtain all required health inspections.
(b) Inventory management. The distributing agency must ensure that
donated foods at all storage facilities used by the distributing agency
(or by a subdistributing agency) are stored in a manner that permits
them to be distinguished from other foods, and must ensure that a
separate inventory record of donated foods is maintained. The
distributing agency's system of inventory management must ensure that
donated foods are distributed in a timely manner and in optimal
condition. On an annual basis, the distributing agency must conduct a
physical review of donated food inventories at all storage facilities
used by the distributing agency (or by a subdistributing agency), and
must reconcile physical and book inventories of donated foods. The
distributing agency must report donated food losses to FNS, and ensure
that restitution is made for such losses.
(c) Inventory limitations. The distributing agency is subject to
the following limitations in the amount of donated food inventories on-
hand, unless FNS approval is obtained to maintain larger inventories:
(1) For TEFAP, NSLP and other child nutrition programs, inventories
may not exceed an amount needed for a six-month period, based on an
average amount of donated foods utilized in that period; and
(2) For CSFP and FDPIR, inventories of each category of donated
food in the food package may not exceed an amount needed for a three-
month period, based on an average amount of donated food that the
distributing agency can reasonably utilize in that period to meet CSFP
caseload or FDPIR average participation.
(d) Inventory protection. The distributing agency must obtain
insurance to protect the value of donated foods at its storage
facilities. The amount of such insurance must be at least equal to the
average monthly value of donated food inventories at such facilities in
the previous fiscal year. The distributing agency must also ensure that
the following entities obtain insurance to protect the value of their
donated food inventories, in the same amount required of the
distributing agency in this paragraph (d):
(1) Subdistributing agencies;
(2) Recipient agencies in household programs that have an agreement
with the distributing agency or subdistributing agency to store and
distribute foods; and
(3) Commercial storage facilities under contract with the
distributing agency or with an agency identified in paragraph (d)(1) or
(2) of this section.
(e) Transfer of donated foods. The distributing agency may transfer
donated foods from its inventories to another distributing agency, or
to another program, in order to ensure that such foods may be utilized
in a timely manner and in optimal condition, in accordance with this
part. However, the distributing agency must request FNS approval to
transfer donated foods from one program to another (e.g., from NSLP to
TEFAP). FNS may also require a distributing agency to transfer donated
foods at the distributing agency's storage facilities or at a
processor's facility, if inventories of donated foods are excessive or
may not be efficiently utilized. If there is a question of food safety,
or if directed by FNS, the distributing agency must obtain an
inspection of donated foods by State or local health authorities to
ensure that the donated foods are still safe and not out-of-condition
before transferring them. The distributing agency is responsible for
meeting any transportation or inspection costs incurred, unless it is
determined by FNS that the transfer is not the result of negligence or
improper action on the part of the distributing agency. The
distributing agency must maintain a record of all transfers from its
inventories, and of any inspections related to such transfers.
(f) Commercial storage facilities or carriers. The distributing
agency may obtain the services of a commercial storage facility to
store and distribute donated foods, or a carrier to transport donated
foods, but must ensure compliance with Departmental procurement
requirements in 7 CFR part 3016. The distributing agency must enter
into a written contract with a commercial storage facility or carrier,
which may not exceed five years in duration, including any extensions
or renewals. The contract must include applicable provisions required
by Federal statutes and executive orders listed in 7 CFR 3016.36(i).
The contract must also include, as applicable to a storage facility or
carrier, provisions that:
(1) Assure storage, management, and transportation of donated foods
in a manner that properly safeguards them against theft, spoilage,
damage, or other loss, in accordance with the requirements in this
part;
(2) Assure compliance with all Federal, State, or local
requirements relative to food safety and health, including required
health inspections, and procedures for responding to a food recall;
(3) Assure storage of donated foods in a manner that distinguishes
them from other foods, and assure separate inventory recordkeeping of
donated foods;
(4) Assure distribution of donated foods to eligible recipient
agencies in a timely manner, in optimal condition, and in amounts for
which such recipient agencies are eligible;
(5) Include the amount of insurance coverage obtained to protect
the value of donated foods;
(6) Permit the performance of on-site reviews of the storage
facility by the distributing agency, the Comptroller General, the
Department of Agriculture, or any of its duly authorized
representatives, in order to determine compliance with requirements in
this part;
(7) Establish the duration of the contract, and provide for
extension or renewal of the contract only upon fulfillment of all
contract provisions;
(8) Provide for expeditious termination of the contract for
noncompliance with its provisions; and
(9) Provide for termination of the contract by either party for
other cause, after written notification of such intent
[[Page 63249]]
at least 60 days prior to the effective date of such action.
Sec. 250.13 Efficient and cost-effective distribution of donated
foods.
(a) Direct shipments. The distributing agency must ensure that the
distribution of donated foods is conducted in the most efficient and
cost-effective manner, and, to the extent practical, in accordance with
the specific needs and preferences of recipient agencies. In meeting
this requirement, the distributing agency must, to the extent
practical, provide for:
(1) Shipments of donated foods directly from USDA vendors to
recipient agencies, including two or more recipient agencies acting as
a collective unit (such as a school co-op), or to the commercial
storage facilities of such agencies;
(2) Shipments of donated foods directly from USDA vendors to
processors for processing of donated foods and sale of end products to
recipient agencies, in accordance with Subpart C of this part; and
(3) The use of split shipments, as defined in Sec. 250.2, in
arranging for delivery of donated foods to recipient agencies that
cannot accept a full truckload.
(b) Distributing agency storage and distribution charge. If a
distributing agency determines that direct shipments of donated foods,
as described in paragraph (a) of this section, are impractical, it must
provide for the storage of donated foods at the distributing agency
level, and subsequent distribution to recipient agencies, in the most
efficient and cost-effective manner. The distributing agency must use a
commercial storage facility, in accordance with Sec. 250.12(f), if
such system is determined to be more efficient and cost-effective. The
distributing agency must utilize State Administrative Expense (SAE)
funds, as available, to meet the costs of storing and distributing
donated foods for school food authorities or other recipient agencies
in child nutrition programs, and administrative costs related to such
activities, in accordance with 7 CFR part 235. If SAE funds, or any
other Federal or State funds received for such purpose, are
insufficient to fully meet the distributing agency's costs of storing
and distributing donated foods, and related administrative costs (e.g.,
salaries of employees engaged in such activities), the distributing
agency may require school food authorities or other recipient agencies
in child nutrition programs to pay a distribution charge, as defined in
Sec. 250.2, to help meet such costs. The distribution charge may cover
only allowable costs, in accordance with 7 CFR part 3016 and with OMB
guidance. The distributing agency must maintain a record of costs
incurred in storing and distributing donated foods and related
administrative costs, and the source of funds used to pay such costs.
(c) FNS approval of amount of distribution charge. In determining
the amount of a new distribution charge, or in increasing the amount
(except for normal inflationary adjustments) or reducing the level of
service provided once a distribution charge is established, the
distributing agency must request FNS approval prior to implementation.
Such requirement also applies to the distribution charge imposed by a
commercial storage facility under contract with the distributing
agency. The request for approval must be submitted to FNS at least 90
days in advance of its projected implementation, and must include
justification of the newly established amount, or any increased charge
or reduction in the level of service provided under an established
distribution charge, and the specific costs covered under the
distribution charge (e.g., storage, delivery, or administrative costs).
(d) FNS review authority. FNS may reject the distributing agency's
proposed new, or changes to an existing, distribution charge if it
determines that the charge would not provide for distribution of
donated foods in the most efficient and cost-effective manner, or may
otherwise impact recipient agencies negatively. In such case, the
distributing agency would be required to adjust the proposed amount or
the level of service provided in its distribution charge, or consider
other distribution options. FNS may also require the distributing
agency to submit documentation to justify the efficiency and cost-
effectiveness of its storage and distribution system at other times,
and may require the distributing agency to re-evaluate such system in
order to ensure compliance with the requirements in this part.
Sec. 250.14 Storage and inventory management at the recipient agency
level.
(a) Safe storage and control. Recipient agencies must provide
facilities for the storage and control of donated foods that protect
against theft, spoilage, damage, or other loss. Accordingly, such
storage facilities must maintain donated foods in sanitary conditions,
at the proper temperature and humidity, and with adequate air
circulation. Recipient agencies must ensure that storage facilities
comply with all Federal, State, or local requirements relative to food
safety and health, as applicable, and obtain all required health
inspections.
(b) Inventory management--household programs. Recipient agencies in
household programs must store donated foods in a manner that permits
them to be distinguished from other foods in storage, and must maintain
a separate inventory record of donated foods. Such recipient agencies'
system of inventory management must ensure that donated foods are
distributed to recipients in a timely manner that permits use of such
foods while still in optimal condition. Such recipient agencies must
notify the distributing agency of donated food losses and take further
actions with respect to such food losses, as directed by the
distributing agency.
(c) Inventory management--child nutrition programs and charitable
institutions. Recipient agencies in child nutrition programs, and those
receiving donated foods as charitable institutions, in accordance with
Sec. 250.67, are not required to store donated foods in a manner that
distinguishes them from purchased foods or other foods, or to maintain
a separate inventory record of donated foods--i.e., they may utilize
single inventory management, as defined in Sec. 250.2. For such
recipient agencies, donated foods are subject to the same safeguards
and effective management practices as other foods. Accordingly,
recipient agencies in child nutrition programs and those receiving
donated foods as charitable institutions (regardless of the inventory
management system utilized), are not required to separately monitor and
report donated food use, distribution, or loss to the distributing
agency, unless there is evidence indicating that donated food loss has
occurred as a result of theft or fraud.
(d) Transfer of donated foods to another recipient agency. A
recipient agency operating a household program must request approval
from the distributing agency to transfer donated foods at its storage
facilities to another recipient agency. The distributing agency may
approve such transfer to another recipient agency in the same household
program (e.g., the transfer of TEFAP foods from one food pantry to
another) without FNS approval. However, the distributing agency must
receive FNS approval to permit a recipient agency in a household
program to transfer donated foods to a recipient agency in a different
program (e.g., the transfer of TEFAP foods from a food pantry to a CSFP
local agency), even if the same recipient agency administers both
programs. A recipient
[[Page 63250]]
agency operating a child nutrition program, or receiving donated foods
as a charitable institution, in accordance with Sec. 250.67, may
transfer donated foods to another recipient agency or charitable
organization without approval from the distributing agency or FNS.
(e) Commercial storage facilities. Recipient agencies may obtain
the services of commercial storage facilities to store and distribute
donated foods, but must ensure compliance with Departmental procurement
requirements in 7 CFR parts 3016 or 3019, as applicable. Recipient
agencies must ensure that commercial storage facilities comply with all
of the applicable requirements in this section regarding the storage
and inventory management of donated foods.
Sec. 250.15 Out-of-condition donated foods, food recalls, and
complaints.
(a) Out-of-condition donated foods at the distributing agency
level. The distributing agency must ensure that donated foods that are
out-of-condition, as defined in Sec. 250.2, at any of its storage
facilities are destroyed, or otherwise disposed of, in accordance with
State or local requirements pertaining to food safety and health. The
distributing agency must obtain an inspection of donated foods by State
or local health authorities to determine their safety and condition, as
necessary, or as directed by FNS. Out-of-condition donated foods may be
sold (e.g., to a salvage company), if permitted by State or local laws
or regulations.
(b) Out-of-condition donated foods at the recipient agency level.
Recipient agencies in household programs must report out-of-condition
donated foods at their storage facilities to the distributing agency,
in accordance with Sec. 250.14(b), and must ensure that such donated
foods are destroyed, or otherwise disposed of, in accordance with State
or local requirements pertaining to food safety and health. The
distributing agency must ensure that such recipient agencies obtain an
inspection of donated foods by State or local health authorities to
determine their safety and condition, as necessary, or as directed by
FNS. For charitable institutions, in accordance with Sec. 250.67, and
recipient agencies in child nutrition programs, donated foods must be
treated as other foods when safety is in question. Consequently, such
recipient agencies must comply with State or local requirements in
determining the safety of foods (including donated foods), and in their
destruction or other disposition. However, they are not required to
report such actions to the distributing agency.
(c) Food recalls. The distributing or recipient agency, as
appropriate, must follow all applicable Federal, State or local
requirements for donated foods subject to a food recall, as this term
is defined in Sec. 250.2. Further, in the event of a recall,
Departmental guidance is provided, including procedures or instructions
for all parties in responding to a food recall, replacement of recalled
donated foods, and reimbursement of specific costs incurred as a result
of such actions.
(d) Complaints relating to donated foods. The distributing agency
must inform recipient agencies of the preferred method of receiving
complaints regarding donated foods. Complaints received from
recipients, recipient agencies, or other entities relating to donated
foods must be resolved in an expeditious manner, and in accordance with
applicable requirements in this part. However, the distributing agency
may not dispose of any donated food that is the subject of a complaint
prior to guidance and authorization from FNS. Any complaints regarding
product quality or specifications, or suggested product improvements,
must be submitted to FNS through the established FNS donated foods
complaint system for tracking purposes. If complaints may not be
resolved at the State level, the distributing agency must provide
information regarding the complaint to FNS. The distributing agency
must maintain a record of its investigations and other actions with
respect to complaints relating to donated foods.
Sec. 250.16 Claims and restitution for donated food losses.
(a) Distributing agency responsibilities. The distributing agency
must ensure that restitution is made for the loss of donated foods, or
for the loss or improper use of funds provided for, or obtained as an
incident of, the distribution of donated foods. The distributing agency
must identify, and seek restitution from, parties responsible for the
loss, and implement corrective actions to prevent future losses.
(b) FNS claim actions. FNS may initiate and pursue claims against
the distributing agency or other entities for the loss of donated
foods, or for the loss or improper use of funds provided for, or
obtained as an incident of, the distribution of donated foods. FNS may
also initiate and pursue claims against the distributing agency for
failure to take required claim actions against other parties. FNS may,
on behalf of the Department, compromise, forgive, suspend, or waive a
claim. FNS may, at its option, require assignment to it of any claim
arising from the distribution of donated foods.
Sec. 250.17 Use of funds obtained incidental to donated food
distribution.
(a) Distribution charge. The distributing agency must use funds
obtained from the distribution charge imposed on recipient agencies in
child nutrition programs, in accordance with Sec. 250.13(b), to meet
the costs of storing and distributing donated foods or related
administrative costs, consistent with the limitations on the use of
funds provided under a Federal grant in 7 CFR part 3016 and OMB
guidance. The distributing agency must maintain such funds in an
operating account, separate from other funds obtained incidental to
donated food distribution. The amount of funds maintained at any time
in the operating account may not exceed the distributing agency's
highest expenditure from that account over any three-month period in
the previous school or fiscal year, unless the distributing agency
receives FNS approval to maintain a larger amount of funds in such
account. Unless such approval is granted, funds in excess of the
established limit must be used to reduce the distribution charge
imposed on recipient agencies, or to provide appropriate reimbursement
to such agencies. The distributing agency may not use funds obtained
from the distribution charge to purchase foods to replace donated food
losses or to pay claims to make restitution for donated food losses.
(b) Processing and food service management company contracts.
School food authorities must use funds obtained from processors in
processing of donated foods into end products (e.g., through rebates
for the value of such donated foods), or from food service management
companies in crediting for the value of donated foods received, in
support of the nonprofit school food service, in accordance with 7 CFR
210.14 of this chapter. Other recipient agencies must use such funds in
accordance with the requirements in paragraph (c) of this section.
(c) Claims and other sources. The distributing agency must ensure
that funds collected in payment of claims for donated food losses are
used only for the payment of expenses of the food distribution program.
The first priority for the use of funds collected in a claim for the
loss of donated foods is the purchase of replacement foods for use in
the program in which the loss occurred. If the purchase of replacement
foods is not feasible, funds collected in a claim for the loss of
donated foods must be
[[Page 63251]]
used to pay allowable administrative costs incurred in the storage and
distribution of donated foods. The distributing agency, or recipient
agency, must use funds obtained from sources incidental to donated food
distribution (except as otherwise indicated in this section) to pay
administrative costs incurred in the storage and distribution of
donated foods, consistent with the limitations on the use of funds
provided under a Federal grant in 7 CFR parts 3016 or 3019, and OMB
guidance, as applicable. The distributing agency must maintain funds
obtained from claims and other sources included in this paragraph (c)
in a donated food account (separate from the operating account
maintained in accordance with paragraph (a) of this section), and must
obtain FNS approval for any single deposit into, or expenditure from,
such account in excess of $25,000. Distributing and recipient agencies
must maintain records of funds obtained and expended in accordance with
this paragraph (c). Examples of funds applicable to the provisions in
this paragraph (c) include funds accrued from:
(1) The salvage of out-of-condition donated foods.
(2) The sale of donated food containers, pallets, or packing
materials.
(3) Payments by processors for failure to meet processing yields or
other cause.
(d) Prohibitions. The distributing agency may not use funds
obtained incidental to donated food distribution to meet State matching
requirements for Federal administrative funds provided in household
programs, or in place of State Administrative Expense (SAE) funds
provided in accordance with 7 CFR part 235.
(e) Buy American. When funds obtained in accordance with this
section are used to purchase foods in the commercial market, a
distributing or recipient agency in the continental United States, and
in Hawaii, must, to the maximum extent practical, purchase only
domestic foods or food products. Such requirement is also applicable to
food purchases made with the cash-in-lieu-of-donated foods provided in
NSLP and CACFP, in accordance with Sec. Sec. 250.56(e) and 250.61(c).
For the purposes of this section, domestic foods or food products are:
(1) Agricultural commodities that are produced in the United
States; or
(2) Food products that are processed in the United States
substantially using agricultural commodities that are produced in the
United States.
Sec. 250.18 Reporting requirements.
(a) Inventory and distribution of donated foods. The distributing
agency must submit to FNS reports relating to the inventory and
distribution of donated foods in this paragraph (a) or in other
regulations applicable to specific programs. Such reports must be
submitted in accordance with the time frames established for each
respective form. For donated foods received in FDPIR, the distributing
agency must submit form FNS-152, Monthly Distribution of Donated Foods
to Family Units. For donated foods received in TEFAP, NSLP, or other
child nutrition programs, the distributing agency must submit form FNS-
155, the Inventory Management Register.
(b) Processor performance reports. Processors must submit monthly
performance reports to the distributing agency, in accordance with
Sec. 250.30(m). Such reports must include the information listed in
Sec. 250.30(m).
(c) Disasters and situations of distress. The distributing agency
must submit to FNS a report of the types and amounts of donated foods
used from distributing or recipient agency storage facilities in
disasters and situations of distress, and a request for replacement of
such foods, using electronic form FNS-292A, Report of Commodity
Distribution for Disaster Relief, in accordance with Sec. Sec. 250.69
and 250.70. The report must be submitted within 45 days of the
termination of such assistance.
(d) Other information. The distributing agency must submit other
information, as requested by FNS, in order to ensure compliance with
requirements in this part. For example, FNS may require the
distributing agency to submit information with respect to its
assessment of the distribution charge, or to justify the efficiency and
cost-effectiveness of its distribution system, in accordance with Sec.
250.13(c) and (d).
Sec. 250.19 Recordkeeping requirements.
(a) Required records. Distributing agencies, recipient agencies,
and other entities must maintain records of agreements and contracts,
reports, audits, and claim actions, funds obtained as an incident of
donated food distribution, and other records specifically required in
this part or in other Departmental regulations, as applicable. In
addition, distributing agencies must keep a record of the value of
donated foods each of its school food authorities receives, and records
to demonstrate compliance with the professional standards for
distributing agency directors established in 235.11(g). Processors must
also maintain records documenting the sale of end products to recipient
agencies, including the sale of such end products by distributors.
Specific recordkeeping requirements relating to the use of donated
foods in contracts with food service management companies are included
in Sec. 250.54. Failure of the distributing agency, recipient agency,
or other entity to comply with recordkeeping requirements shall be
considered prima facie evidence of improper distribution or loss of
donated foods and may result in a claim against such party for the loss
or misuse of donated foods, in accordance with Sec. 250.16, or in
other sanctions or corrective actions.
(b) Retention of records. Records relating to requirements for
donated foods must be retained for a period of three years from the
close of the fiscal or school year to which they pertain. However,
records pertaining to claims or audits that remain unresolved in this
period of time must be retained until such actions have been resolved.
Sec. 250.20 Audit requirements.
(a) Requirements for distributing and recipient agencies. Audit
requirements for State or local government agencies and nonprofit
organizations that receive Federal awards or grants (including
distributing and recipient agencies under this part) are included in
Departmental regulations in 7 CFR part 3052 (which codifies audit
requirements in OMB Circular A-133). In accordance with such
regulations, the value of Federal grants or awards expended in a fiscal
year determine if the distributing or recipient agency is required to
obtain an audit in that year. The value of donated foods must be
considered as part of the Federal grants or awards in determining if an
audit is required. FNS provides guidance for distributing and recipient
agencies in valuing donated foods for audit purposes, and in
determining whether an audit must be obtained. (For availability of the
OMB circular mentioned in this paragraph, please refer to 5 CFR
1310.3).
(b) Requirements for processors. In-State processors must obtain an
independent certified public accountant (CPA) audit in the first year
that they receive donated foods for processing, while multi-State
processors must obtain such an audit in each of the first two years
that they receive donated foods for processing. After this initial
requirement period, in-State and multi-State processors must obtain an
independent CPA audit at a frequency determined by the average value of
donated foods received for processing per year, as indicated in this
paragraph (b). The value of donated foods used in
[[Page 63252]]
determining if an audit is required must be the contract value of the
donated foods, as defined in Sec. 250.2. The audit must determine that
the processor's performance is in compliance with the requirements in
this part, and must be conducted in accordance with procedures in the
FNS Audit Guide for Processors. All processors must pay for audits
required in this paragraph (b). An in-State or multi-State processor
must obtain an audit:
(1) Annually, if it receives, on average, more than $5,000,000 in
donated foods for processing per year;
(2) Every two years, if it receives, on average, between $1,000,000
and $5,000,000 in donated foods for processing per year; or
(3) Every three years, if it receives, on average, less than
$1,000,000 in donated foods for processing per year.
(c) Post-audit actions required of processors. In-State processors
must submit a copy of the audit to the distributing agency for review
by December 31st of each year in which an audit is required. The
distributing agency must ensure that in-State processors provide a
corrective action plan with timelines for correcting deficiencies
identified in the audit, and must ensure that such deficiencies are
corrected. Multi-State processors must submit a copy of the audit, and
a corrective action plan with timelines for correcting deficiencies
identified in the audit, as appropriate, to FNS for review by December
31st of each year in which an audit is required. FNS may conduct an
audit or investigation of a processor to ensure correction of
deficiencies, in accordance with Sec. 250.3(b).
(d) Failure to meet audit requirements. If a distributing agency or
recipient agency fails to obtain the required audit, or fails to
correct deficiencies identified in the audit, FNS may withhold,
suspend, or terminate the Federal award. If a processor fails to obtain
the required audit, or fails to correct deficiencies identified in the
audit, a distributing or recipient agency may terminate the processing
agreement, and may not extend or renew such an agreement. Additionally,
FNS may prohibit the further distribution of donated foods to such
processor.
Sec. 250.21 Distributing agency reviews.
(a) Scope of review requirements. The distributing agency must
ensure that subdistributing agencies, recipient agencies, and other
entities comply with applicable requirements in this part, and in other
Federal regulations, through the on-site reviews required in paragraph
(b) of this section, and the review of required reports or audits.
However, the distributing agency is not responsible for the review of
school food authorities and other recipient agencies in child nutrition
programs. The State administering agency is responsible for the review
of such recipient agencies, in accordance with review requirements of
part 210.
(b) On-site reviews. The distributing agency must conduct an on-
site review of:
(1) Charitable institutions, whenever the distributing agency
identifies actual or probable deficiencies in the use of donated foods
by such institutions, through audits, investigations, complaints, or
any other information;
(2) Storage facilities at the distributing agency level (including
commercial storage facilities under contract with the distributing or
subdistributing agency), on an annual basis; and
(3) Subdistributing and recipient agencies in CSFP, TEFAP, and
FDPIR, in accordance with 7 CFR parts 247, 251, and 253, respectively.
(c) Identification and correction of deficiencies. The distributing
agency must inform each subdistributing agency, recipient agency, or
other entity of any deficiencies identified in its reviews, and
recommend specific actions to correct such deficiencies. The
distributing agency must ensure that such agencies or entities
implement corrective actions to correct deficiencies in a timely
manner.
Sec. 250.22 Distributing agency performance standards.
(a) Performance standards. The distributing agency must meet the
basic performance standards included in this paragraph in the ordering,
distribution, processing, if applicable, and control of donated foods.
Some of the performance standards apply only to distributing agencies
that distribute donated foods in NSLP or other child nutrition
programs, as indicated. However, the identification of specific
performance standards does not diminish the responsibility of the
distributing agency to meet other requirements in this part. In meeting
basic performance standards, the distributing agency must:
(1) Provide recipient agencies with information on donated food
availability, assistance levels, values, product specifications, and
processing options, as requested;
(2) Implement a request-driven ordering system, in accordance with
Sec. 250.10(a), and, for child nutrition programs, Sec. 250.58(a);
(3) Offer school food authorities in NSLP, at a minimum, the
commodity offer value of donated foods, in accordance with Sec.
250.58;
(4) Provide for the storage, distribution, and control of donated
foods in accordance with all Federal, State, or local requirements
relating to food safety and health;
(5) Provide for the distribution of donated foods in the most
efficient and cost-effective manner, including, to the extent
practical, direct shipments from vendors to recipient agencies or
processors, and the use of split shipments;
(6) Use SAE funds, or other Federal or State funds, as available,
in paying State storage and distribution costs for child nutrition
programs, and impose a distribution charge on recipient agencies in
child nutrition programs only to extent that such funds are
insufficient to meet applicable costs;
(7) Provide for the processing of donated foods, at the request of
school food authorities, in accordance with Subpart C of this part,
including the testing of end products with school food authorities, and
the solicitation of acceptability input, when procuring end products on
behalf of school food authorities or otherwise limiting the procurement
of end products; and
(8) Provide recipient agencies information regarding the preferred
method for submission of donated foods complaints to the distributing
agency and act expeditiously to resolve submitted complaints.
(b) Corrective action plan. The distributing agency must submit a
corrective action plan to FNS whenever it is found to be substantially
out of compliance with the performance standards in paragraph (a) of
this section, or with other requirements in this part. The plan must
identify the corrective actions to be taken, and the timeframe for
completion of such actions. The plan must be submitted to FNS within 60
days after the distributing agency receives notification from FNS of a
deficiency.
(c) Termination or suspension. FNS may terminate or suspend all, or
part, of the distributing agency's participation in the distribution of
donated foods, or in a food distribution program, for failure to comply
with requirements in this part, with other applicable Federal
regulations, or with its written agreement with FNS. FNS may also take
other actions, as appropriate, including prosecution under applicable
Federal statutes.
Subpart C--Processing and Labeling of Donated Foods
0
4. In Subpart C, Sec. 250.30:
[[Page 63253]]
0
a. Revise all references to ``FNSRO'' to read ``FNS Regional Office''.
0
b. Amend paragraph (b)(2) introductory text by removing the reference,
``Sec. 250.12(b)'', and adding in its place the reference, ``Sec.
250.4(c)''.
0
c. Amend paragraph (b)(2)(i) by removing the words, ``as defined in
Sec. 250.3'', and adding in their place the words, ``in accordance
with paragraph (d) of this section''.
0
d. Amend paragraph (c) as follows:
0
i. Redesignate paragraphs (c)(1)(i) through (vi) as paragraphs
(c)(1)(i)(A) through (F).
0
ii. Redesignate paragraph (c)(1) introductory text as (c)(1)(i)
introductory text.
0
iii. Designate the undesignated paragraph following paragraph
(c)(1)(i)(F), beginning with the words ``These criteria will be
reviewed'', as paragraph (c)(1)(ii).
0
e. Amend newly designated paragraph (c)(1)(ii) by removing the
references, ``Attachment O to OMB Circular A-102'' and ``Attachment O
of OMB Circular A-102'', and adding in their place the reference, ``7
CFR parts 3016 or 3019, as applicable''.
0
f. Amend paragraph (c)(4)(iii) by removing the reference, ``Sec.
250.3'', and adding in its place the reference, ``Sec. 250.2''.
0
g. Revise paragraphs (c)(4)(viii)(G) and (c)(4)(xi).
0
h. Remove paragraph (c)(4)(xiv), and redesignate paragraphs (c)(4)(xv)
through (xviii) as paragraphs (c)(4)(xiv) through (xvii).
0
i. Revise paragraph (d)(1)(i).
0
j. Remove the second and third sentences of paragraph (d)(1)(iii).
0
k. Revise paragraph (e)(1)(i).
0
l. Amend paragraph (f)(1) introductory text by removing the reference,
``Sec. 250.3'', and adding in its place the reference, ``Sec.
250.2''.
0
m. Amend paragraph (f)(2) by removing the reference, ``Sec. 250.16'',
and adding in its place the reference, ``Sec. 250.19''.
0
n. Amend paragraph (f)(3)(vii) by removing the reference, ``Sec.
250.16(a)(4)'', and adding in its place the reference, ``Sec.
250.19(a)''.
0
o. Amend paragraph (j)(3) by removing the reference, ``FNS Instruction
410-1, Non-Audit Claims, Food Distribution Program'', and adding in its
place the reference, ``Sec. 250.17(c)''.
0
p. Remove the last sentence of paragraph (k)(3).
0
q. Remove paragraphs (m)(1)(vii) and (viii), and redesignate paragraph
(m)(1)(ix) as paragraph (m)(1)(vii).
0
r. Revise the second sentence of paragraph (n)(3).
0
s. Remove paragraph (n)(4), and redesignate paragraph (n)(5) as
paragraph (n)(4).
0
t. Remove paragraphs (o), (q), and (r), and redesignate paragraphs (p),
(s), and (t) as paragraphs (o), (p), and (q), respectively.
The revisions read as follows:
Sec. 250.30 State processing of donated foods.
* * * * *
(c) * * *
(4) * * *
(viii) * * *
(G) Meet the requirements of Sec. 250.19 in maintaining records
pertaining to the receipt, distribution, and control of donated foods,
and the sale of end products;
* * * * *
(xi) Meet the requirements in Sec. 250.20(b) and (c) in obtaining
an independent certified public accountant audit, and in performing
post-audit actions;
* * * * *
(d) * * *
(1) * * *
(i) A refund system in which the processor provides a payment to
the recipient agency in the amount of the contract value of the donated
food contained in the end product;
* * * * *
(e) * * *
(1) * * *
(i) A refund system in which the processor provides a payment to
the recipient agency in the amount of the contract value of the donated
food contained in the end product;
* * * * *
(n) * * *
(3) * * * As a part of the annual reconciliation, the distributing
agency must ensure that a processor with excessive inventories of
donated foods reduces such inventories. * * *
* * * * *
Subpart D--Donated Foods in Contracts With Food Service Management
Companies
0
5. In Sec. 250.50, revise the second sentence of paragraph (a) to read
as follows:
Sec. 250.50 Contract requirements and procurement.
(a) * * * The contract must ensure that all donated foods received
for use by the recipient agency in the school or fiscal year, as
applicable, are used in the recipient agency's food service, or that
commercially purchased foods are used in place of such donated foods
only in accordance with the requirements in Sec. 250.51(d). * * *
* * * * *
0
6. In Sec. 250.52, revise paragraph (a) to read as follows:
Sec. 250.52 Storage and inventory management of donated foods.
(a) General requirements. The food service management company must
meet the requirements for the safe storage and control of donated foods
in Sec. 250.14(a).
* * * * *
Subpart E--National School Lunch Program (NSLP) and Other Child
Nutrition Programs
0
7. In Sec. 250.58, revise paragraphs (a) and (e) to read as follows:
Sec. 250.58 Ordering donated foods and their provision to school food
authorities.
(a) Ordering and distribution of donated foods. The distributing
agency must ensure that school food authorities are able to submit
donated food orders through the FNS electronic donated foods ordering
system, or through a comparable electronic food ordering system. The
distributing agency must ensure that all school food authorities have
the opportunity to provide input at least annually in determining the
donated foods from the full list that are made available to them for
ordering in the FNS electronic donated foods ordering system or other
comparable electronic ordering system. The distributing agency must
ensure distribution to school food authorities of all such ordered
donated foods that may be distributed to them in a cost-effective
manner (including the use of split shipments, as necessary), and that
they may utilize efficiently and without waste.
* * * * *
(e) Donated food value in offer and crediting. In offering the
school food authority the commodity offer value of donated foods, the
distributing agency must use either the cost-per-pound donated food
prices posted annually by USDA or the most recently published cost-per-
pound price in the USDA donated foods catalog. The distributing agency
must credit the school food authority using the USDA purchase price
(cost-per-pound), and update the price at least semi-annually to
reflect the most recent USDA purchase price.
0
8. Revise Sec. 250.59 to read as follows:
Sec. 250.59 Storage, control, and use of donated foods.
(a) Storage and inventory management. The distributing agency must
ensure compliance with
[[Page 63254]]
requirements in Sec. Sec. 250.12 and 250.13 in order to ensure the
safe and effective storage and inventory management of donated foods,
and their efficient and cost-effective distribution to school food
authorities. The school food authority must ensure compliance with
requirements in Sec. 210.13 to ensure the safe and sanitary storage,
inventory management, and use of donated foods and purchased foods. In
accordance with Sec. 250.14(c), the school food authority may
commingle donated foods and purchased foods in storage and maintain a
single inventory record of such commingled foods, in a single inventory
management system.
(b) Use of donated foods in the nonprofit school food service. The
school food authority must use donated foods, as much as is practical,
in the lunches served to schoolchildren, for which they receive an
established per-meal value of donated food assistance each school year.
However, the school food authority may also use donated foods in other
activities of the nonprofit school food service. Revenues received from
such activities must accrue to the school food authority's nonprofit
school food service account, in accordance with Sec. 210.14. Some
examples of such activities in which donated foods may be used include:
(1) School breakfasts or other meals served in child nutrition
programs;
(2) A la carte foods sold to schoolchildren;
(3) Meals served to adults directly involved in the operation and
administration of the nonprofit school food service, and to other
school staff; and
(4) Training in nutrition, health, food service, or general home
economics instruction for students.
(c) Use of donated foods outside of the nonprofit school food
service. The school food authority should not use donated foods in
meals or other activities that do not benefit primarily schoolchildren,
such as banquets or catered events. However, as their use in such
activities may not always be avoided (e.g., if donated foods are
commingled with purchased foods in a single inventory management
system), the school food authority must ensure reimbursement to the
nonprofit school food service for the value of donated foods used in
such activities. When such reimbursement may not be based on actual
usage of donated foods (e.g., in a single inventory management system),
the school food authority must establish an alternate method of
reimbursement--e.g., by including the current per-meal value of donated
food assistance in the price charged for the meal or other activity.
(d) Use of donated foods in a contract with a food service
management company. When the school food authority contracts with a
food service management company to conduct the food service, in
accordance with Sec. 210.16, it must ensure compliance with
requirements in Subpart D of this part, which address the treatment of
donated foods under such contract. The school food authority must also
ensure compliance with the use of donated foods in paragraphs (b) and
(c) of this section under its contract with a food service management
company.
(e) School food authorities acting as a collective unit. Two or
more school food authorities may conduct activities of the nonprofit
school food service as a collective unit (e.g., in a school co-op or
consortium), including activities relating to donated foods. Such
activities must be conducted in accordance with a written agreement or
contract between the parties. The school food authority collective unit
is subject to the same requirements as a single school food authority
in conducting such activities. For example, the school food authority
collective unit may use a single inventory management system in its
storage and control of purchased and donated foods.
Sec. 250.60 [Removed]
0
9. Remove Sec. 250.60.
Sec. Sec. 250.61 and 250.62 [Redesignated as Sec. Sec. 250.60 and
250.61]
0
10. Redesignate Sec. Sec. 250.61 and 250.62 as Sec. Sec. 250.60 and
250.61, respectively.
0
11. Revise Subpart F to read as follows:
Subpart F--Household Programs
Sec.
250.63 Commodity Supplemental Food Program (CSFP).
250.64 The Emergency Food Assistance Program (TEFAP).
250.65 Food Distribution Program on Indian Reservations (FDPIR).
250.66 [Reserved]
Sec. 250.63 Commodity Supplemental Food Program (CSFP).
(a) Distribution of donated foods in CSFP. The Department provides
donated foods in CSFP to the distributing agency (i.e., the State
agency, in accordance with 7 CFR part 247) for further distribution in
the State, in accordance with 7 CFR part 247. State agencies and
recipient agencies (i.e., local agencies in 7 CFR part 247) must comply
with the requirements of this part in the distribution, control, and
use of donated foods in CSFP, to the extent that such requirements are
not inconsistent with the requirements in 7 CFR part 247.
(b) Types of donated foods distributed. Donated foods distributed
in CSFP include Section 4(a) foods, and donated foods provided under
Section 32, Section 416, or Section 709, as available.
Sec. 250.64 The Emergency Food Assistance Program (TEFAP).
(a) Distribution of donated foods in TEFAP. The Department provides
donated foods in TEFAP to the distributing agency (i.e., the State
agency, in accordance with 7 CFR part 251) for further distribution in
the State, in accordance with 7 CFR part 251. State agencies and
recipient agencies must comply with the requirements of this part in
the distribution, control, and use of donated foods, to the extent that
such requirements are not inconsistent with the requirements in 7 CFR
part 251.
(b) Types of donated foods distributed. Donated foods distributed
in TEFAP include Section 27 foods, and donated foods provided under
Section 32, Section 416, or Section 709, as available.
Sec. 250.65 Food Distribution Program on Indian Reservations (FDPIR).
(a) Distribution of donated foods in FDPIR. The Department provides
donated foods in FDPIR to the distributing agency (i.e., the State
agency, in accordance with 7 CFR parts 253 and 254, which may be an
Indian Tribal Organization) for further distribution, in accordance
with 7 CFR parts 253 and 254. The State agency must comply with the
requirements of this part in the distribution, control, and use of
donated foods, to the extent that such requirements are not
inconsistent with the requirements in 7 CFR parts 253 and 254.
(b) Types of donated foods distributed. Donated foods distributed
in FDPIR include Section 4(a) foods, and donated foods provided under
Section 32, Section 416, or Section 709, as available.
250.66 [Reserved]
Subpart G--Additional Provisions
0
12. Revise the heading for subpart G to read as set forth above.
0
13. Revise Sec. 250.69 to read as follows:
Sec. 250.69 Disasters.
(a) Use of donated foods to provide congregate meals. The
distributing agency may provide donated foods from current inventories,
either at the distributing or recipient agency level, to
[[Page 63255]]
a disaster organization (as defined in Sec. 250.2), for use in
providing congregate meals to persons in need of food assistance as a
result of a Presidentially declared disaster or emergency (hereinafter
referred to collectively as a ``disaster''). FNS approval is not
required for such use. However, the distributing agency must notify FNS
that such assistance is to be provided, and the period of time that it
is expected to be needed. The distributing agency may extend such
period of assistance as needs dictate, but must notify FNS of such
extension.
(b) Use of donated foods for distribution to households. Subject to
FNS approval, the distributing agency may provide donated foods from
current inventories, either at the distributing or recipient agency
level, to a disaster organization, for distribution to households in
need of food assistance because of a disaster. Such distribution may
continue for the period that FNS has determined to be necessary to meet
the needs of such households. However, households receiving disaster
SNAP (D-SNAP) benefits are not eligible to receive such donated food
assistance.
(c) Approval of disaster organization. Before distribution of
donated foods to a disaster organization, the distributing agency must
review and approve such organization's application, which must be
submitted to the distributing agency either electronically or in
written form. The distributing agency must also submit such application
to FNS for review and approval before permitting distribution of
donated foods to households.
(1) The disaster organization's application must, to the extent
possible, include the following information:
(i) A description of the disaster situation;
(ii) The number of people requiring assistance;
(iii) The period of time for which donated foods are requested;
(iv) The quantity and types of food needed; and
(v) The number and location of sites where donated foods are to be
used, to the extent that such information is known.
(2) In addition to the information required above, disaster
organizations applying to distribute donated foods to households must
include the following information in their application:
(i) An explanation as to why such distribution is needed;
(ii) The method(s) of distribution available; and
(iii) A statement assuring that D-SNAP benefits and donated food
assistance will not be provided simultaneously to individual
households, and a description of the system that will be implemented to
prevent such dual participation.
(d) Information from households. If the issuance of D-SNAP benefits
has been approved, the distributing agency must ensure that the
disaster organization obtains the following information from households
receiving donated foods, and reports such information to the
distributing agency:
(1) The name and address of the household members applying for
assistance;
(2) The number of household members; and
(3) A statement from the head of the household certifying that the
household is in need of food assistance, is not receiving D-SNAP
benefits, and understands that the sale or exchange of donated foods is
prohibited.
(e) Eligibility of emergency relief workers for congregate meals.
The disaster organization may use donated foods to provide meals to any
emergency relief workers at the congregate feeding site who are
directly engaged in providing relief assistance.
(f) Reporting and recordkeeping requirements. The distributing
agency must report to FNS the number and location of sites where
donated foods are used in congregate meals or household distribution as
these sites are established. The distributing agency must also report
the types and amounts of donated foods from distributing or recipient
agency storage facilities used in disaster assistance, utilizing form
FNS-292A, Report of Commodity Distribution for Disaster Relief, which
must be submitted electronically, within 45 days from the termination
of disaster assistance. This form must also be used to request
replacement of donated foods, in accordance with paragraph (g) of this
section. The distributing agency must maintain records of reports and
other information relating to disasters.
(g) Replacement of donated foods. In order to ensure replacement of
donated foods used in disasters, the distributing agency must submit to
FNS a request for such replacement, utilizing form FNS-292A, Report of
Commodity Distribution for Disaster Relief, within 45 days following
the termination of disaster assistance. The distributing agency may
request replacement of foods used from inventories in which donated
foods are commingled with other foods (i.e., at storage facilities of
recipient agencies utilizing single inventory management), if the
recipient agency received donated foods of the same type as the foods
used during the year preceding the onset of the disaster assistance.
FNS will replace such foods in the amounts used, or in the amount of
like donated foods received during the preceding year, whichever is
less.
(h) Reimbursement of transportation costs. In order to receive
reimbursement for any costs incurred in transporting donated foods
within the State, or from one State to another, for use in disasters,
the distributing agency must submit a public voucher to FNS with
documentation of such costs. FNS will review the request and reimburse
the distributing agency.
0
14. Revise Sec. 250.70 to read as follows:
Sec. 250.70 Situations of distress.
(a) Use of donated foods to provide congregate meals. The
distributing agency may provide donated foods from current inventories,
either at the distributing or recipient agency level, to a disaster
organization, for use in providing congregate meals to persons in need
of food assistance because of a situation of distress, as this term is
defined in Sec. 250.2. If the situation of distress results from a
natural event (e.g., a hurricane, flood, or snowstorm), such donated
food assistance may be provided for a period not to exceed 30 days,
without the need for FNS approval. However, the distributing agency
must notify FNS that such assistance is to be provided. FNS approval
must be obtained to permit such donated food assistance for a period
exceeding 30 days. If the situation of distress results from other than
a natural event (e.g., an explosion), FNS approval is required to
permit donated food assistance for use in providing congregate meals
for any period of time.
(b) Use of donated foods for distribution to households. The
distributing agency must receive FNS approval to provide donated foods
from current inventories, either at the distributing or recipient
agency level, to a disaster organization for distribution to households
in need of food assistance because of a situation of distress. Such
distribution may continue for the period of time that FNS determines
necessary to meet the needs of such households. However, households
receiving D-SNAP benefits are not eligible to receive such donated food
assistance.
(c) Approval of disaster organizations. Before distribution of
donated foods to a disaster organization, the distributing agency must
review and approve such organization's application, which must be
submitted to the distributing agency either electronically or in
written form. The distributing agency must also submit such application
to FNS for review and approval before permitting
[[Page 63256]]
distribution of donated foods in a situation of distress that is not
the result of a natural event, or for any distribution of donated foods
to households. The disaster organization's application must, to the
extent possible, include the information required in Sec. 250.69(c).
(d) Information from households. If the issuance of D-SNAP benefits
has been approved, the distributing agency must ensure that the
disaster organization obtains the information in Sec. 250.69(d) from
households receiving donated foods, and reports such information to the
distributing agency.
(e) Eligibility of emergency relief workers for congregate meals.
The disaster organization may use donated foods to provide meals to any
emergency relief workers at the congregate feeding site that are
directly engaged in providing relief assistance.
(f) Reporting and recordkeeping requirements. The distributing
agency must report to FNS the number and location of sites where
donated foods are used in congregate meals or household distribution as
these sites are established. The distributing agency must also report
the types and amounts of donated foods from distributing or recipient
agency storage facilities used in the situation of distress, utilizing
form FNS-292A, Report of Commodity Distribution for Disaster Relief,
which must be submitted electronically, within 45 days from the
termination of assistance. This form must also be used to request
replacement of donated foods, in accordance with paragraph (g) of this
section. The distributing agency must maintain records of reports and
other information relating to situations of distress.
(g) Replacement of donated foods. FNS will replace donated foods
used in a situation of distress only to the extent that funds to
provide for such replacement are available. The distributing agency
must submit to FNS a request for replacement of such foods, utilizing
form FNS-292A, Report of Commodity Distribution for Disaster Relief,
which must be submitted electronically, within 45 days from the
termination of assistance. The distributing agency may request
replacement of foods used from inventories in which donated foods are
commingled with other foods (i.e., at storage facilities of recipient
agencies utilizing single inventory management), if the recipient
agency received donated foods of the same type as the foods used during
the year preceding the onset of the situation of distress. Subject to
the availability of funds, FNS will replace such foods in the amounts
used, or in the amount of like donated foods received during the
preceding year, whichever is less.
(h) Reimbursement of transportation costs. In order to receive
reimbursement for any costs incurred in transporting donated foods
within the State, or from one State to another, for use in a situation
of distress, the distributing agency must submit a public voucher to
FNS with documentation of such costs. FNS will review the request and
reimburse the distributing agency to the extent that funds are
available.
0
15. Add Sec. 250.71 to read as follows:
Sec. 250.71 OMB control numbers.
Unless as otherwise specified in the table below, the information
collection reporting and recordkeeping requirements in 7 CFR part 250
are accounted for in OMB control number 0584-0293.
------------------------------------------------------------------------
CFR cite OMB control No.
------------------------------------------------------------------------
250.4(a).................................. 0584-0067
250.19(a)................................. 0584-0067, 0584-0293
250.69(f)-(g) & 250.70(f)-(g)............. 0584-0067, 0584-0293
------------------------------------------------------------------------
PART 251--THE EMERGENCY FOOD ASSISTANCE PROGRAM
0
16. The authority citation for part 251 continues to read as follows:
Authority: 7 U.S.C. 7501-7516.
0
17. In Sec. 251.4:
0
a. Remove paragraph (f)(4) and redesignate paragraph (f)(5) as
paragraph (f)(4).
0
b. Revise paragraph (g).
0
c. Remove paragraph (l).
The revision reads as follows:
Sec. 251.4 Availability of commodities.
* * * * *
(g) Distribution and control of donated commodities. The State
agency must ensure that the distribution, control, and use of donated
commodities are in accordance with the requirements in this part, and
with the requirements in 7 CFR part 250, to the extent that
requirements in 7 CFR part 250 are not inconsistent with the
requirements in this part. Transfers of donated commodities must comply
with requirements in Sec. Sec. 250.12(e) and 250.14(d), as applicable.
In accordance with Sec. 250.16, the State agency must ensure that
restitution is made for the loss of donated commodities, or for the
loss or improper use of funds provided for, or obtained as an incidence
of, the distribution of donated commodities. The State agency is also
subject to claims for such losses for which it is responsible, or for
its failure to initiate or pursue claims against other parties
responsible for such losses.
* * * * *
Dated: October 8, 2014.
Jeffrey J. Tribiano,
Acting Administrator, Food and Nutrition Service.
[FR Doc. 2014-24613 Filed 10-21-14; 8:45 am]
BILLING CODE 3410-30-P
