Streamlining Program Requirements and Improving Integrity in the Summer Food Service Program (SFSP), 57304-57366 [2022-20084]

Agencies

• DEPARTMENT OF AGRICULTURE
• Food and Nutrition Service

[Federal Register Volume 87, Number 180 (Monday, September 19, 2022)]
[Rules and Regulations]
[Pages 57304-57366]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-20084]



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Vol. 87

Monday,

No. 180

September 19, 2022

Part III





Department of Agriculture





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Food and Nutrition Service





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7 CFR Parts 210, 215, et al.





Streamlining Program Requirements and Improving Integrity in the Summer 
Food Service Program (SFSP); Final Rule

Federal Register / Vol. 87, No. 180 / Monday, September 19, 2022 / 
Rules and Regulations

[[Page 57304]]


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DEPARTMENT OF AGRICULTURE

Food and Nutrition Service

7 CFR Parts 210, 215, 220, 225, and 226

RIN 0584-AE72


Streamlining Program Requirements and Improving Integrity in the 
Summer Food Service Program (SFSP)

AGENCY: Food and Nutrition Service (FNS), USDA.

ACTION: Final rule.

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SUMMARY: This rulemaking amends the Summer Food Service Program (SFSP) 
regulations to strengthen program integrity by clarifying, simplifying, 
and streamlining program administration to facilitate compliance with 
program requirements. Through this final rule, USDA is codifying 
changes to the regulations that will streamline requirements among 
Child Nutrition Programs, simplify the application process, enhance 
monitoring requirements, offer more clarity on existing requirements, 
and provide more discretion at the State agency level to manage program 
operations.

Effective date:
    This rule is effective October 1, 2022.
    Compliance date: Compliance with the provisions of this rule must 
begin May 1, 2023.

FOR FURTHER INFORMATION CONTACT: Anne Fiala, 703-305-2590, 
[email protected].

SUPPLEMENTARY INFORMATION:

I. Background
II. Public Comments
III. Section-by-Section Discussion of the Regulatory Provisions
    A. Reorganization of Section 225.6
    B. Streamlining Program Requirements
    i. Application Procedures for New Sponsors
    ii. Demonstration of Financial and Administrative Capability
    iii. Clarifying Performance Standards for Evaluating Sponsor 
Viability, Capability, and Accountability
    C. Facilitating Compliance With Program Monitoring Requirements
    i. First Week Site Visits
    ii. Establishing the Initial Maximum Approved Level of Meals for 
Sites of Vended Sponsors
    iii. Statistical Monitoring Procedures, Site Selection, and Meal 
Claim Validation for Site Reviews
    D. Providing a Customer-Service Friendly Meal Service
    i. Meal Service Times
    ii. Off-Site Consumption of Food Items
    iii. Offer Versus Serve
    E. Clarification of Program Requirements
    i. Reimbursement Claims for Meals Served Away From Approved 
Locations
    ii. Timeline for Reimbursements to Sponsors
    iii. Requirements for Media Release
    iv. Annual Verification of Tax-Exempt Status
    F. Important Definitions in the SFSP
    i. Self-Preparation Versus Vended Sites
    ii. Eligibility for Closed Enrolled Sites
    iii. Roles and Responsibilities of Site Supervisors
    iv. Unaffiliated Sites
    v. Unanticipated School Closure
    vi. Nonprofit Food Service, Nonprofit Food Service Account, Net 
Cash Resources
    G. Miscellaneous
    i. Authority To Waive Statute and Regulations
    ii. Duration of Eligibility
    iii. Methods of Providing Training
    iv. Meal Preparation Facility Reviews
    v. Technical Changes
IV. Procedural Matters

I. Background

    The Summer Food Service Program (SFSP) is authorized under section 
13 of the Richard B. Russell National School Lunch Act (NSLA), 42 
U.S.C. 1761. Its primary purpose is to provide free, nutritious meals 
to children from low-income areas during periods when schools are not 
in session.
    USDA published the proposed rule Streamlining Program Requirements 
and Improving Integrity in the Summer Food Service Program (SFSP) on 
January 23, 2020 (85 FR 4064) in order to streamline requirements for 
program operators and enhance the customer experience for participating 
children and their families. Although this final rule primarily affects 
the SFSP, it also makes changes to the regulations related to waiver 
authority for the National School Lunch Program (NSLP), School 
Breakfast Program (SBP), Special Milk Program, Fresh Fruit and 
Vegetable Program, and the Child and Adult Care Food Program (CACFP). 
This rulemaking is the culmination of many years of stakeholder and 
community engagement, which informed the development of these policies.
    Many of the provisions codified through this final rule are 
currently allowed as program flexibilities and have been shown to 
improve program administration and enhance service delivery for 
participating children and their families. These flexibilities were 
previously indicated through policy memoranda and will now have the 
full force and effect of law. In addition, this rule will codify key 
aspects of four nationwide waivers that were available in the past but 
have been rescinded in response to an audit by the USDA Office of the 
Inspector General (OIG), entitled ``FNS Controls Over the Summer Food 
Service Program'' (27601-0004-41). This report led USDA to determine 
that offering waivers under 42 U.S.C. 1760(l) on a nationwide basis is 
not supported by the statute. However, beginning in 2019, USDA allowed 
States and sponsors to request, on an individual basis, four of the 
rescinded waivers: first week site visits, meal service times, offer 
versus serve, and eligibility for closed enrolled sites. Such 
individual waivers are authorized under section 12(l) of the NSLA, 
which provides USDA authority to waive certain provisions of the Child 
Nutrition Programs if a waiver would facilitate the ability of the 
State or eligible service provider to carry out the purpose of the 
affected program while also meeting public notice and federal cost 
requirements. States and eligible service providers were approved for 
more than 230 individual section 12(l) waivers under this authority for 
summer 2019, related primarily to the four rescinded waivers. In March 
2020, Congress passed the Families First Coronavirus Response Act 
(FFCRA) (Pub. L. 116-127), which authorized USDA to establish 
nationwide waivers for all States for the purposes of providing meals 
under the Child Nutrition Programs with appropriate safety measures 
with respect to the novel coronavirus (COVID-19) pandemic. Under 
section 2202(a) of this authority, USDA issued nationwide waivers for 
first week site visits, meal service times, offer versus serve, and 
eligibility for closed enrolled sites. Therefore, States and eligible 
service providers did not need to request these same waivers under 
section 12(l) of the NSLP on an individual basis in summers 2020 or 
2021. Prior to issuance of the nationwide waivers under section 2202(a) 
of FFCRA, USDA received 189 requests for individual waivers under 
section 12(l) of the NSLP related to the four rescinded waivers for 
summer 2020. The large number of individual waiver requests received 
from States and sponsors related to the rescinded waivers demonstrates 
the value of the policies allowed through the waivers, and the benefit 
of codifying key aspects of the waivers so that these policies are 
available to all States and sponsors without the need to request a 
waiver. Through the process of evaluating waiver requests and outcomes 
for summer 2019, USDA gained valuable insight into challenges and best 
practices of using the waivers, which informed changes in this final 
rule to provisions impacted by the waivers. As a result, this final 
rule codifies, with modifications that will promote better program 
integrity, the four most requested SFSP waivers.

[[Page 57305]]

    Codifying existing flexibilities and key aspects of the four 
rescinded nationwide waivers will facilitate sponsor and site 
participation, decrease paperwork burdens on State agencies and 
sponsors, and provide certainty that these options will continue to be 
available. The following table, entitled FNS Policy Memoranda Addressed 
in This Rule, details USDA policy memoranda that are discussed in this 
rule, the specific provision(s) from each memorandum that is discussed, 
the status of the impacted waiver or flexibility, and the section of 
the rule in which it is addressed.
    This final rule also codifies additional provisions to streamline 
program administration, enhance monitoring requirements, and provide 
needed clarity on existing provisions. In their totality, these changes 
will improve the customer experience, and facilitate the ability of 
States and sponsors to implement the program with fidelity.
BILLING CODE 3410-30-P

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BILLING CODE 3410-30-C

II. Public Comments

    USDA received 163 comments during a 90-day comment period, which 
was originally 60-days, then extended another 30 days to April 22, 
2020. Commenters were generally representative of SFSP stakeholders and 
offered a diversity of viewpoints. Of the comments received, 16 
responses were associated with five form letter campaigns, 16 responses 
were non-germane or duplicates, and 131 responses were unique. One 
hundred of the 131 unique comments were substantive and supported by 
detailed reasoning and explanations for the commenters' positions.
    These comments represented 59 individuals and commenters who 
remained anonymous, 29 State agencies (47 total comments), 12 advocacy 
or nonprofit organizations, nine sponsoring organizations, seven food 
banks, six school districts, three nutritionists, two professional 
associations, and one Federal elected official. A few State agencies 
submitted multiple comments, some of which were unique and are counted 
as individual submissions, and some of which were the same or virtually 
the same and are considered to be form letters for the purpose of this 
comment analysis. FNS received comments from four additional form 
letter campaigns comprised of 12 total comments from sponsors, food 
banks, and general advocacy or nonprofit organizations. Comments 
associated with these four campaigns were detailed and provided 
explanations for their responses and recommendations.
    Nearly two-thirds of all comments were generally supportive of this 
rulemaking and many commenters offered substantive and detailed 
recommendations. The provisions that garnered the most comments were: 
first week site visits (67), off-site consumption of food items (63), 
offer versus serve (62), eligibility for closed enrolled sites (52), 
meal service times (47), and clarifying performance standards for 
evaluating sponsor viability, capability, and accountability (40).
    Except for a small number of non-germane responses, the comments 
are posted at https://www.regulations.gov under docket ID FNS-2019-0034-
0001, Streamlining Program Requirements and Improving Integrity in the 
Summer Food Service Program.

III. Section-by-Section Discussion of the Regulatory Provisions

A. Reorganization of Section 225.6

    USDA proposed to reorganize and streamline Sec.  225.6. This 
proposal would not change any existing requirements; rather, it would 
more clearly present current requirements for sponsor and site 
applications by reorganizing Sec.  225.6(c), Content of sponsor 
application. The provisions found in current Sec.  225.6(c)(2) would 
move to a new paragraph (g) and the provisions in current Sec.  
225.6(c)(4) would move to a new paragraph (f). In addition, Sec.  
225.6(d) through (i) would be reordered to make space for a new 
paragraph (d), related to performance standards for determining 
financial and administrative capability, and a new paragraph (e), 
related to sponsor submission of a management plan. These new sections 
are described in more detail in the next section of this preamble. The 
table below provides an outline of the proposed revisions:

------------------------------------------------------------------------
            Current outline                      Proposed outline
------------------------------------------------------------------------
a. General Responsibilities............  a. General responsibilities.
b. Approval of sponsor applications....  b. Approval of sponsor
                                          applications.
c. Content of sponsor application......  c. Content of sponsor
                                          application.
    1. Application forms...............     1. Application form.
    2. Requirements for new sponsors,       2. Application requirements
     new sites, and, as determined by        for new sponsors and
     the State agency, sponsors and          sponsors that have
     sites which have experienced            experienced significant
     significant operational problems        operational problems in the
     in the prior year.                      prior year.
                                         3. Application requirements for
                                          experienced sponsors.
    3. Requirements for experienced         4. Application requirements
     sponsors and experienced sites.         for school food authorities
                                             and Child and Adult Care
                                             Food Program institutions.
                                         d. Performance standards.
                                            1. Performance standard 1.
                                            2. Performance standard 2.
                                            3. Performance standard 3.
                                         e. Management plan.
    4. Free meal policy statement......  f. Free meal policy statement.
    5. Hearing procedures statement....     1. Nondiscrimination
                                             statement.
                                         2. Hearing procedures
                                          statement.

[[Page 57308]]

 
                                         g. Site information sheets.
                                         1. New sites.
                                         2. Experienced sites.
d. Approval of sites...................  h. Approval of sites.
e. State-sponsor agreement.............  i. State-sponsor agreement.
f. Special account.....................  j. Special account.
g. Food service management company       k. Food service management
 registration.                            company registration.
h. Monitoring of food service            l. Monitoring of food service
 management company procurements.         management company
                                          procurements.
i. Meal pattern exceptions.............  m. Meal pattern exceptions.
------------------------------------------------------------------------

Public Comments
    USDA received one comment on this provision. The commenter 
expressed support for the proposed changes and suggested that USDA 
further divide the information in Sec.  225.6 into shorter sections 
that are easier to use.
USDA Response
    USDA appreciates the comment and agrees that various portions of 
Sec.  225.6 could benefit from further reorganization. However, USDA 
prefers to propose any additional significant organizational changes to 
the regulations through notice and comment rule making and receive 
public comments before finalizing such changes. For that reason, USDA 
will codify this provision as proposed.

B. Streamlining Program Requirements

i. Application Procedures for New Sponsors
    All sponsors are required to submit an annual application to 
participate in the SFSP. In accordance with current Sec.  225.6(c), new 
applicants and sponsors that have experienced significant operational 
problems in the previous year must submit detailed information 
sufficient to demonstrate their ability to successfully operate the 
SFSP in compliance with program requirements and with integrity. This 
includes, but is not limited to, information on sites, arrangements for 
meeting health and safety standards, and a program budget. Experienced 
sponsors that have operated the SFSP in a prior year without 
significant operation problems may use a streamlined application 
process described in current Sec.  225.6(c)(3). To reduce duplicative 
work, these sponsors submit updates on the types of information that 
are most likely to change from year to year.
    Sponsors that have successfully operated other Child Nutrition 
Programs are likely to perform well in the operation of the SFSP. For 
example, school food authorities (SFA), which are the governing bodies 
that have the legal authority to operate the school meal programs in 
one or more schools, and CACFP institutions, which have agreements with 
a State agency to assume final administrative and financial 
responsibility for CACFP operations, have already demonstrated their 
ability to operate a food service and comply with State and Federal 
nutrition program requirements. In order to encourage participation of 
sponsors with Child Nutrition Program experience, USDA extended 
flexibilities through policy memoranda which allow SFAs operating the 
NSLP or SBP, and CACFP institutions in good standing to use the 
application procedures for experienced sponsors in certain 
circumstances (SFSP 05-2012, Simplifying Application Procedures in the 
Summer Food Service Program, October 31, 2011 and SFSP 04-2013, Summer 
Feeding Options for School Food Authorities, November 23, 2012).
    The aforementioned flexibilities apply to SFAs and CACFP 
institutions in good standing that are applying for the SFSP for the 
first time and will serve meals at the same sites where they provide 
meal services through the NSLP, SBP, or CACFP during the school year. 
Such institutions are allowed to follow the application requirements 
for experienced sponsors found in current Sec.  225.6(c)(3). The 
institution must also provide site information that is necessary for 
the State agency to evaluate each proposed site, including whether it 
is rural or non-rural, self-preparation or vended, and certification 
from a migrant organization if it will primarily serve the children of 
migrant families.
    In accordance with these memoranda, an SFA or CACFP institution may 
be considered `in good standing' if it has been reviewed by the State 
agency in the last 12 months and had no major findings or program 
violations, or completed and implemented all corrective actions from 
the last compliance review. In addition, an SFA or CACFP institution 
may be considered in good standing if it has not been found to be 
seriously deficient by the State agency in the past two years and has 
never been terminated from another Child Nutrition Program.
    USDA proposed to codify the flexibilities currently extended 
through policy guidance and proposed to allow State agencies the 
discretion to determine whether or not to implement this streamlined 
application process.
Public Comments
    USDA received 31 comments about application procedures for new 
sponsors, including three form letter copies. Of these, 24 were 
supportive, three offered partial support, none were opposed, and four 
were mixed. Proponents of this provision included all types of 
commenters, many of whom stated that offering the streamlined process 
is a proven strategy to reduce administrative burden and encourage 
participation among operators of other Child Nutrition Programs. Two 
State agencies and a general advocacy organization noted the importance 
of maintaining State agency discretion to request additional 
documentation if the State has reason to conduct a more thorough review 
of an application. A few other State agencies had suggestions or 
questions related to making a determination of `good standing' for an 
applicant. These commenters suggested additional criteria to consider 
when making this determination, such as debts owed to the State agency, 
contractual arrangements for purchasing meals, and where the sponsor is 
in the serious deficiency process for the CACFP. One State agency 
pointed out that sponsors are not reviewed annually and so they may not 
have major findings or program violations recorded in the last 12 
months as the proposed rule recommended. A State agency noted that this 
flexibility is only for sites at which the sponsor offers meal service 
during the school year and stated that this arrangement is often not 
the case. Another commenter stated that it would be burdensome for some 
States to make changes to their current automated application system.
USDA Response
    This final rule codifies as proposed the flexibility for SFAs 
operating the NSLP or SBP and CACFP institutions in

[[Page 57309]]

good standing applying to the SFSP as new sponsors to use the 
application procedures for experienced sponsors in certain 
circumstances. However, USDA recognizes that States are in the best 
position to determine how and when to implement this flexibility. 
Therefore, States are encouraged to request additional evidence of 
administrative capability or require submission of a new sponsor 
application if they have reason to believe that a new SFA or CACFP 
sponsor may have difficulty operating the SFSP. States may also 
consider additional factors when determining if a sponsor applicant is 
`in good standing.' The rule allows the State agency the latitude to 
use its discretion in this way.
    With regard to determining if an applicant is in good standing in 
the NSLP, SBP, or CACFP, the proposed rule included standards found in 
existing policy guidance. However, USDA agrees with the commenter who 
pointed out that not all sponsors are reviewed annually, and it is not 
appropriate to say that they should, within the last 12 months, have no 
major findings or program violations. Instead, USDA suggests that an 
SFA or CACFP institution is considered to be in `good standing' if it 
has been reviewed by the State agency and had no major program 
violations or has completed and implemented all corrective actions from 
the last compliance review. The same commenters asked for clarification 
on determining good standing for an applicant that has been found 
seriously deficient in the CACFP. A CACFP institution applicant in good 
standing should have completed and implemented all corrective actions 
outlined in its serious deficiency corrective action plan, if 
applicable. In addition, State agencies should carefully consider the 
capabilities of any sponsor that has been found seriously deficient 
when reviewing application materials. USDA understands that providing 
further clarification to determine good standing for program operators 
across all Child Nutrition Programs would benefit States and program 
operators. The Department intends to address this issue through a 
separate rulemaking that will allow the public to comment specifically 
on proposals related to determining good standing for Child Nutrition 
Program operators.
    This flexibility has long been limited to SFAs and CACFP 
institutions applying to operate the SFSP at the same sites where they 
provide meal services during the school year. A commenter noted that 
this is not the arrangement in all cases, which USDA interprets to mean 
that some SFAs and CACFP institutions operate the SFSP at sites where 
they do not provide a meal service during the school year. Although 
SFAs and CACFP institutions may serve additional sites during the 
summer, this provision is limited to existing sites for which a new SFA 
or CACFP sponsor has demonstrated that they have the resources and 
capability to provide a meal service. After a year of operating the 
SFSP at their existing sites, an SFA or CACFP sponsor will be 
considered `experienced' and can apply using the experienced 
application procedures for all of its sites, including those at which 
they will only offer a summer meal service through the SFSP. 
Alternatively, the new SFA or CACFP institution could apply to serve 
additional sites using the application process for new sponsors.
    Accordingly, USDA will codify as proposed in Sec.  225.6(c)(4) the 
flexibilities extended through policy guidance for NSLP and SBP SFAs 
and CACFP institutions to use application procedures for experienced 
sponsors.
ii. Demonstration of Financial and Administrative Capability
    SFSP sponsors must have the financial and administrative capacity 
to support program operations and be able to accept full financial 
responsibly for all of their meal sites. The ability to meet these 
requirements is assessed through the application process, during which 
the State agency may consider budget submissions, financial records, 
documentation of organizational structure, menu planning, or other 
indicators of financial and administrative capability.
    NSLP and SBP SFAs and CACFP institutions already undergo a rigorous 
application process to participate in the NSLP, SBP, and the CACFP, and 
have demonstrated that they have the financial and organizational 
viability, capability, and accountability necessary to operate a Child 
Nutrition Program. USDA extended several flexibilities to these 
sponsors when they participate in the SFSP through policy memoranda 
(SFSP 05-2012, Simplifying Application Procedures in the Summer Food 
Service Program, October 31, 2011, and SFSP 04-2013, Summer Feeding 
Options for School Food Authorities, November 23, 2012). This guidance 
provided that SFAs and CACFP institutions in good standing applying to 
participate in the SFSP are not required to submit further evidence of 
financial and administrative capability, as required in Sec.  
225.14(c)(1). However, if the State agency has reason to believe that 
operation of the SFSP would pose significant challenges for an SFA or 
CACFP institution, the State agency may request additional evidence of 
financial and administrative capacity sufficient to ensure that the 
sponsor has the ability and resources for successful administration of 
the SFSP. USDA proposed to codify these flexibilities in a revised 
Sec.  225.14(c)(1).
    In some States, the SFSP, school meals programs, and the CACFP are 
operated by different State agencies. USDA proposed that, in these 
situations, State agencies must develop an information sharing process 
so that information on the financial and administrative capability of 
sponsors will be shared across State agencies to protect the integrity 
of the SFSP. State agencies would be required to share relevant sponsor 
information, including, but not limited to:
     Demonstration of fiscal resources and financial history;
     Budget documents;
     Demonstration of appropriate and effective management 
practices; and
     Demonstration of adequate internal controls and other 
management systems in effect to ensure fiscal accountability.
    USDA requested specific comments on the proposed information 
sharing requirement, including:
     Would the sharing of information help improve the 
integrity of the program?
     Would developing an information sharing process create 
undue burden on State agencies?
     What are the potential costs of developing an information 
sharing process?
Public Comments
    USDA received 34 comments on this provision, including three form 
letter copies. Commenters were primarily State agencies, but also 
included a general advocacy organization, industry associations, 
sponsors, and individuals. Of those who commented on the proposal to 
not require additional evidence of financial and administrative 
capability for certain sponsors, 19 commenters were supportive, none 
were opposed, and 15 were mixed, including those who commented only on 
the specific requests for comment. Of those who commented on State 
agency information sharing requirements, six were supportive, two were 
opposed, and five were mixed. Eleven commenters, including three form 
letter copies, also provided information in response to the request for 
specific comments.
    With regard to not requiring additional evidence of financial and 
administrative capability for certain sponsors, proponents and those 
with mixed feedback voiced that this provision would reduce 
administrative

[[Page 57310]]

burden and improve efficiency without compromising program integrity. 
It would also encourage participation by sponsors that have a proven 
track record of successfully operating other Child Nutrition Programs. 
However, some State agencies said that States should have the 
discretion to apply this flexibility as they deem most appropriate. For 
example, requesting additional documentation if needed to determine a 
sponsor's capability to operate the Program, or applying additional 
scrutiny based on sponsor characteristics, such as their method of 
procuring meals. One State agency commenter worried that it would not 
be able to accept the good standing determination of another State 
agency unless their protocols were aligned. A State agency also raised 
similar issues regarding determining good standing as were addressed in 
section III. B. i. of this final rule. Another commenter wanted to know 
how this provision would fit with the proposal to require submission of 
a management plan demonstrating sponsor viability, capability, and 
accountability found in section III. B. iii. of this final rule.
    With regard to a State agency information sharing requirement, 
proponents said that the proposal would reduce burden at the State 
agency and sponsor level, and would spur States to improve existing 
informal information sharing relationships. Opponents expressed concern 
that establishing an information sharing process could be burdensome, 
costly, or unnecessary in States where the various Child Nutrition 
agencies already communicate effectively.
    Eight State agencies responded to the requests for specific 
comments. In general, these State agencies said sharing information 
across agencies would improve integrity, although developing an 
information sharing process could be costly or burdensome depending on 
the requirements. Many of those who expressed concern about the costs 
cited development or modification of State information technology (IT) 
systems as a driver of the costs.
USDA Response
    This final rule codifies as proposed the flexibility outlined in 
guidance that SFAs and CACFP institutions in good standing applying to 
operate the SFSP do not have to provide further evidence of financial 
and administrative capabilities. The final rule will also clarify that 
these sponsor applicants are not required to submit a management plan 
unless requested by the State agency. In addition, the final rule will 
codify as proposed the requirement that State agencies develop an 
information sharing process if programs are administered by separate 
agencies within the State.
    USDA appreciates the comment that inquired about how this provision 
would fit with the requirement found in section III. B. iii. of this 
rule for sponsors to submit a management plan demonstrating financial 
and administrative capability. It was not intended that NSLP and SBP 
SFAs and CACFP institutions in good standing would be required to 
submit a management plan because they have already demonstrated the 
qualifications to be addressed in the management plan through their 
operation of another Child Nutrition Program. Accordingly, this final 
rule will revise the regulations to clarify that submission of a 
management plan is not required for these applicants unless requested 
by the State agency. Although SFAs and CACFP institutions have already 
demonstrated their financial and administrative capability through 
successful operation of another Child Nutrition Program, USDA agrees 
with commenters who expressed that States should have the discretion to 
require more documentation, including a management plan, if needed to 
evaluate an applicant's ability and resources to operate the Program if 
the State agency has reason to believe that this would pose significant 
challenges for the applicant.
    Similar to the response provided in section III. B. i. of this 
final rule, USDA suggests that an SFA or CACFP institution is 
considered to be in `good standing' if it has been reviewed by the 
State agency and had no major program violations, or has completed and 
implemented all corrective actions from the last compliance review, 
including actions outlined in its serious deficiency corrective action 
plan, if applicable. State agencies should carefully consider the 
capabilities of any applicant that has been found seriously deficient 
when reviewing application materials. As previously noted, USDA 
recognizes the benefit of providing more clarity to determine good 
standing for Child Nutrition Program operators and will solicit public 
comments on this specific issue in a separate rulemaking.
    USDA will codify as proposed the requirement for States to share 
information on the financial and administrative capability of sponsors. 
USDA does not intend for this provision to require States to invest in 
new IT systems or modify existing IT systems. Information can be shared 
through any method that is mutually agreed upon by the participating 
agencies. For example, the SFSP State agency may have an agreement with 
a school meals or CACFP State agency to share the outcome of reviews, 
corrective actions, or other monitoring activities upon request. In 
developing this information sharing process, State agencies can clarify 
what information each agency uses to determine good standing and how it 
can best be applied for this purpose. This type of arrangement would 
require no more investment than establishing a contact with partnering 
State agencies.
    Accordingly, this final rule amends regulations found at Sec.  
225.14(c)(1) to include the flexibility outlined in guidance that SFAs 
and CACFP institutions in good standing applying to operate the SFSP do 
not have to provide further evidence of financial and administrative 
capabilities. This rule also amends the regulations to clarify that 
SFAs and CACFP institutions are not required to submit a management 
plan unless requested by the State agency. In addition, this final rule 
adds a requirement that State agencies develop an information sharing 
process if programs are administered by separate agencies within the 
State.
iii. Clarifying Performance Standards for Evaluating Sponsor Viability, 
Capability, and Accountability
    Current regulations at Sec.  225.14(c)(1) require any organization 
applying to be an SFSP sponsor to demonstrate financial and 
administrative capability for program operations and accept final 
financial and administrative responsibility for total program 
operations at all sites at which it proposes to conduct a food service. 
However, the regulations do not provide metrics or methods for 
evaluating an applicant's potential to be viable, capable, and 
accountable for operating the SFSP with program integrity. USDA has 
provided technical assistance to States to aid in this process and has 
received requests from State agencies to provide additional clarity on 
the requirements in Sec.  225.14(c)(1).
    USDA proposed to add a new Sec.  225.6(d) with performance 
standards for organizations applying to participate as SFSP sponsors 
that correspond to standards currently in place at Sec.  226.6 for 
organizations applying to participate as CACFP sponsors. These 
standards are not new requirements; they are intended to clarify 
existing SFSP requirements and provide support and guidance to State 
agencies when evaluating sponsor applications.
    Although this proposal would require some State agencies to modify 
their process for evaluating applications, the

[[Page 57311]]

intended effect of these changes is to provide clarity sought by 
States, streamline requirements across programs, and increase program 
integrity by supporting the ability of State agencies to more 
efficiently and consistently evaluate an applicant sponsor's financial 
and administrative capability. While there are operational and 
monitoring differences between the SFSP and the CACFP, the standards 
set forth in Sec.  226.6 are intended to help State agencies identify 
whether an organization is able to meet the basic requirements for 
operating a Child Nutrition Program. In addition, the rule proposed 
that sponsors must demonstrate compliance with these performance 
standards as part of their management plan (Sec.  225.6(c)(2)(i) and 
new Sec.  225.6(e)).
    The proposed standards addressed: (1) financial viability and 
financial management, (2) administrative capability, and (3) internal 
controls and management systems that ensure program accountability. The 
proposed regulations included criteria for assessing each performance 
standard.
    Finally, USDA proposed to amend Sec.  225.14(a) and (c)(1) and (4) 
to reference application requirements, performance standards, and the 
management plan, respectively, in the reorganized Sec.  225.6.
Public Comments
    USDA received 40 comments on this provision, including 10 form 
letter copies. Of those who commented on the proposed performance 
standard, 19 were supportive, two offered partial support, three 
opposed, and 15 shared mixed feedback. Of those who commented on the 
proposed requirement for submission of a management plan demonstrating 
compliance with the performance standards, three were supportive and 
one comment was mixed.
    Proponents and those who offered partial support for the 
performance standards were State agencies and one individual. These 
commenters appreciated that this change would create consistency across 
Child Nutrition Programs and provide State agencies and sponsors with 
objective standards for assessing a sponsor's potential to be viable, 
capable, and accountable for operating the SFSP with program integrity. 
Some commenters said that this would strengthen program integrity and 
result in more capable sponsors that stick with the Program over the 
long term. A few State agencies indicated that they already use the 
proposed standards or suggested that the proposal be strengthened. One 
State agency recommended that USDA further align SFSP requirements with 
other integrity measures used in the CACFP such as disqualification of 
individuals and organizations.
    Opponents and several commenters with mixed feedback included State 
agencies and general advocacy organizations, a few sponsors, and an 
industry association. These commenters suggested that the SFSP is 
sufficiently different from the CACFP that USDA should develop unique 
performance standards for the SFSP. However, commenters did not provide 
specific suggestions for performance standards that would be suited for 
the SFSP. These commenters noted that the SFSP operates in a short 
timeframe and sponsors include small organizations with less 
administrative capacity than CACFP sponsors, such as faith-based 
organizations and local youth program providers. Some commenters 
expressed concern that increasing administrative burden would deter 
smaller organizations and private nonprofits from participating as 
sponsors, and would require additional paperwork and systems changes 
for State agencies.
    Several commenters suggested that the requirements in this 
provision be waived or streamlined in certain circumstances, such as 
for SFAs and CACFP institutions, or experienced sponsors in good 
standing. A few commenters inquired about the frequency with which 
management plans must be submitted or updated, and some suggested that 
the State should have the discretion to determine how often to re-
verify information provided in a sponsor's management plan.
    Several commenters requested training and technical support from 
USDA to aid in implementation, and a few suggested allowing at least 
two years between publication of this rule and the effective date for 
this requirement. One State agency noted that they would need to make 
changes to their IT systems to accommodate this change.
USDA Response
    This final rule codifies the performance standards as proposed and 
provides a streamlined option for experienced sponsors to comply with 
this requirement.
    USDA understands the concerns of commenters who suggested that the 
proposed performance standards could be a deterrent to smaller 
sponsors. The addition of specific performance standards will improve 
program integrity by providing a consistent benchmark for determining 
financial and administrative capability; for this reason, the standards 
will be codified as proposed. However, USDA has determined that the 
process for sponsors to demonstrate financial and administrative 
capability can be streamlined without negatively impacting program 
integrity. Therefore, the final rule will allow experienced sponsors 
that have not demonstrated significant operational problems in the 
prior year to submit a simplified management plan. The simplified plan 
must include a certification that any information previously submitted 
to the State as part of a sponsor's management plan is current, or that 
the sponsor has submitted any changes or updates to the State. This 
certification must be submitted annually with the sponsor's application 
and must address all required elements of each performance standard. 
However, a full management plan must be submitted at least once every 
three years to ensure that State agencies periodically conduct a full 
review and assessment of a sponsor's financial and administrative 
capability. The State agency may require submission of a full plan more 
frequently if it determines that more information is needed to evaluate 
the sponsor's capabilities. New sponsors and those that have 
experienced significant operational problems in the prior year must 
submit a full management plan that thoroughly addresses all three 
performance standards.
    In addition, another group of sponsors is largely exempt from the 
requirements in this provision. As discussed in section III. B. ii., 
under this final rule, SFAs and CACFP institutions in good standing 
applying to operate the SFSP do not have to provide further evidence of 
financial and administrative capabilities and are not required to 
submit a management plan unless requested by the State agency. These 
sponsors have already demonstrated their financial and administrative 
capability through operation of another Child Nutrition Program, and it 
is not necessary for them to duplicate that effort in order to 
participate in the SFSP.
    USDA sees the value of finding more options to streamline 
requirements across Child Nutrition Programs, as suggested by a State 
agency that recommended the SFSP adopt more CACFP requirements related 
to disqualification of individuals and organizations. However, adding 
such requirements to the SFSP is beyond the scope of this rulemaking. 
In response to commenters who requested a year or more to implement 
these provisions,

[[Page 57312]]

this final rule will go into effect on October 1, 2022, which should 
provide sufficient time to update current systems in advance of May 1, 
2023, when compliance with the provisions of this rule is required. As 
previously noted, this rulemaking is clarifying existing SFSP 
requirements, so States should already have systems in place to 
evaluate an applicant's potential to be viable, capable, and 
accountable for operating the SFSP. In addition, SFAs and CACFP 
institutions in good standing are not required to submit management 
plans, which will limit the number of plans that States must review.
    Accordingly, this rule adds performance standards for determining 
sponsor financial viability, administrative capability, and program 
accountability in a new Sec.  225.6(d) against which State agencies 
must evaluate an applicant sponsor's financial and administrative 
capabilities and clarifies the circumstances under which a full or 
simplified plan is required. This rule also requires in Sec.  
225.6(c)(2)(i) and (c)(3)(i) and the new Sec.  225.6(e) the submission 
of a management plan demonstrating compliance with the performance 
standards in the new Sec.  225.6(d) and describes the requirements for 
the full and simplified plans. Finally, this rule amends Sec.  
225.14(a) and (c)(1) and (4) to reference application requirements, 
performance standards, and the management plan, respectively, in the 
reorganized Sec.  225.6.

C. Facilitating Compliance With Program Monitoring Requirements

i. First Week Site Visits
    Section 225.15(d)(2) of the current regulations requires sponsors 
to visit each of their sites at least once during the first week of 
program operation. However, in response to consistent feedback from 
State agencies and sponsors that some sponsors lack sufficient 
resources to conduct monitoring visits during the first week of 
operation at all site locations, USDA issued policy guidance to waive 
the requirement in its entirety for:
     Sponsors in good standing in the NSLP or CACFP (SFSP 04-
2013, Summer Feeding Options for School Food Authorities, November 23, 
2012, and SFSP 06-2014, Available Flexibilities for CACFP At-Risk 
Sponsors and Centers Transitioning to SFSP, November 12, 2013, 
respectively); and
     Sites that had operated successfully the previous summer 
(or other most recent period of operation) and had no serious 
deficiency findings (SFSP 12-2011, Waiver of Site Monitoring 
Requirements in the Summer Food Service Program, April 5, 2011).
    However, the nationwide waivers noted above were rescinded in 2018, 
as discussed in the background section of this final rule. Beginning in 
summer 2019, State agencies and sponsors were permitted to request a 
waiver of these regulations on an individual basis. Between 2019 and 
2020, 38 States requested individual waivers related to first week site 
visits. Through implementation of these individual waivers and waivers 
provided on a nationwide basis through policy memoranda prior to 2019, 
USDA learned that waiving the first week site visit requirement eased 
the burden for the sponsors and sites that met the requirements of the 
waiver. However, USDA also determined that site visits during the first 
weeks of operation are an important monitoring tool that can help 
ensure effective and compliant program operations. Therefore, USDA 
proposed amending current requirements to provide flexibility in the 
timeframe during which first monitoring visits must take place for 
larger sponsors while still requiring an early visit for all sites. The 
proposed rule:
     Creates a tiered framework in which sponsors responsible 
for the management of 10 or fewer sites are required to conduct the 
first site monitoring visit within the first week of operations, and 
sponsors responsible for the management of more than 10 sites are 
required to conduct the first site monitoring visit within the first 
two weeks of program operations.
     Requires that, if a site operates for one week or less, 
the site visit will be conducted during the period of operation.
     Allows sponsors to conduct a first monitoring visit and a 
food service review at the same time.
Public Comments
    In total, USDA received 67 comments on the proposed changes to 
first week site visit requirements. The summary below discusses these 
commenters' responses to the proposed tiered framework, proposed 
changes to the timing of first monitoring visits, including the food 
service review, and the specific requests for comment, respectively.
Tiered Framework for the First Monitoring Visit
    USDA received 66 comments addressing the proposed tiered framework 
for the first monitoring visit requirement. Of these, nine were 
supportive, six were opposed, and six were mixed. The remaining 45 
comments, including 10 form letters, supported amending current 
regulations, but voiced concerns over the tiered framework's ability to 
alleviate the problems it was designed to address. Multiple respondents 
suggested alternative formulations to the tiered framework; however, 
the majority of those comments requested a return to the flexibilities 
provided under the rescinded nationwide waivers. Commenters in support 
of reinstating previous policy guidance cited it as an effective 
monitoring approach that was responsive to the challenges that many 
sponsors faced in meeting the first week site visit requirement. 
Commenters also wrote that the previous policy guidance allowed 
sponsors to better target their monitoring resources to sites in 
greatest need of the monitoring.
    In general, respondents who expressed concerns with or opposition 
to the tiered framework maintained that sponsors will still struggle to 
meet the requirements under the proposed rule. Multiple commenters 
wrote that the number of sites a sponsor manages is not always an 
indicator of their ability to administer the program, and that both 
small and large sponsors have similar difficulties in fulfilling these 
requirements. The logistical and administrative challenges commenters 
listed to visiting all sites in the given timeframe included: 
insufficient staff, time, and resources to conduct site visits; the 
inability to visit multiple sites with meal services occurring at the 
same time; sites operating fewer than seven days per week; and large 
distances between sites, particularly in rural areas. Several 
commenters wrote that sponsors may choose to support fewer sites if 
they cannot meet the proposed monitoring requirements.
    Proponents of the tiered framework were appreciative of the 
flexibility in the timeframe afforded to larger sponsors, stating that 
the additional time to conduct the visit recognizes the administrative 
difficulties for larger sponsors, and allows larger sponsors greater 
flexibility in ensuring compliance and managing their resources.
Concurrent First Monitoring Visit and Food Service Review
    USDA received 38 comments about the proposed change to allow the 
food service review to occur at the same time as the first monitoring 
visit. Of these, 18 were supportive, 12 provided partial support, six 
were opposed, and two were mixed. The 12 comments (including form 
letters) that provided

[[Page 57313]]

partial support expressed concern over the time constraints for first 
monitoring visits if sponsors are required to visit all sites. The 
commenters stated that the proposed change was a positive step for 
program administration; however, the timeframe for the first monitoring 
visit may not provide sponsors an adequate amount of time to conduct a 
full review early in operations if required to visit all sites.
    Opponents of the proposed change wrote that it would increase the 
program's administrative burden without providing any benefit to 
oversight of operations, stating it is only a duplication of paperwork 
and recordkeeping. However, proponents of the proposal stated that it 
would provide more flexibility for sponsors to manage resources.
    Finally, USDA received four comments specifically addressing the 
provision, which requires that, if a site operates for a week or less, 
the site visit must be conducted during the period of operation. One 
comment was in support, and the remaining comments were mixed. Two of 
the mixed comments requested that the first monitoring visit be 
eliminated for sites that operate for a week or less. One commenter 
wrote that the food service review is sufficient to ensure program 
integrity, while another commenter reasoned there is no opportunity for 
follow up and technical assistance given the short period of operation, 
particularly those sites that operate for only one day.
Specific Requests for Comments
    USDA asked respondents to the proposed rule to address how the 
tiers would affect sponsors of different sizes and that operate under 
varying conditions. Specifically, USDA requested comments on the:
     Number of sites that sponsors manage;
     Number of staff available to conduct site visits;
     Logistics of conducting site visits;
     Time and resources necessary, as well as any other 
factors, that impact the ability of sponsors to fulfill this 
requirement;
     Proposed tiers and whether they provide sufficient 
flexibilities for sponsors; and
     Benefits of requiring first monitoring visits at all sites 
versus those sites that are new to the program or experienced 
operational or administrative difficulties in the past.
    Eight State agencies provided specific feedback on all or some of 
the request for comments. The feedback to these specific comments 
varied among respondents. Overall, comments indicated there is a large 
variation in the number of sites a sponsor manages, and the number of 
staff available to conduct site visits. One State agency wrote that a 
sponsor may have up to 64 sites, while another said a sponsor may have 
up to 250 sites. Likewise, the average number of sites that sponsors 
have also varied. Several commenters wrote that typically one or two 
monitoring staff conduct site visits, but numbers as high as ten were 
also cited. Another State agency wrote that the number of staff 
available to conduct site visits is proportional to the number of sites 
the sponsor manages.
    Respondents agreed that conducting a site visit takes a significant 
amount of time, taking into consideration that site visits also include 
travel, follow up, and technical assistance. Limited time, in addition 
to minimal staff, funding, and resources, were all given as factors 
that impact the ability of sponsors to conduct site visits and fulfill 
these monitoring requirements within the given timeframe. Commenters 
also wrote that sponsors often resort to rushing through site visits or 
staggering their sites' dates of operation to meet these requirements.
    Commenters cited multiple benefits to requiring site visits for all 
sites. Requiring sponsors to monitor their sites helps ensure that 
sites are following program requirements, allows sponsors to identify 
and correct site issues early, and fosters open communication between 
sponsors and sites. A State agency wrote that visiting all sites would 
ensure that a well-run site continues to maintain standards, but added 
that the monitoring resources would be better spent on sites with 
operational issues.
    Submissions were generally split on whether the tiered framework 
provided sufficient flexibility for sponsors. A State agency wrote that 
the tiered framework does not provide an adequate amount of flexibility 
and will remove the sponsor's ability to address sites with the most 
risk. Two State agencies wrote that there are sites that have 
successfully operated the program for years, and few, if any, of these 
sites, or sites managed by experienced sponsors, have any findings in 
the first week site visit. A State agency wrote that new sites or sites 
that experience operational or administrative difficulties require more 
technical assistance and training. Requiring site visits for only those 
sites empowers sponsors to determine where to focus monitoring 
resources.
USDA Response
    This final rule revises the changes to first week site visit 
requirements in response to the comments received on the proposed rule. 
As a result, this final rule requires that sponsors must conduct a site 
visit in the first two weeks of operation for all new sites and sites 
that had operational problems in the prior year. State agencies may 
require a site visit during the first two weeks of program operations 
for any or all other sites in the State, at their discretion. In 
addition, each State agency must establish criteria for what 
constitutes operational problems in order to help sponsors determine 
which of their returning sites are required to receive a site visit 
during first two weeks of program operations. Operational problems may 
include, but are not limited to, deficiencies related to:
     Meal preparation;
     Meal service (components);
     Food safety issues; and
     Verification of meal counts at point of service.
    Through the process of requesting individual waivers authorized 
under section 12(l) of the NSLA for summers 2019 and 2020, many State 
agencies expressed the need for significant flexibilities related to 
first week site visit requirements, which was echoed in a majority of 
the comments received for this rulemaking. In developing this final 
rule, USDA revised its initial proposal in a way that balances program 
integrity and administrative flexibilities. USDA recognizes the 
concerns of State agencies, sponsors, and other respondents about 
whether the proposed changes would provide a manageable monitoring 
schedule that ensures compliance with program requirements for all 
sponsors and sites. The proposed tiered framework was based on 
currently available data from studies conducted by USDA, which showed 
that over 80 percent of sponsors operate 10 sites or fewer. However, 
given the number of varying conditions under which sponsors operate the 
program, USDA agrees with respondents that the number of sites a 
sponsor manages is not always indicative of its ability to fulfill this 
requirement. The changes under the proposed rule only provided 
flexibility in the timeframe for larger sponsors and were not 
sufficiently responsive to the needs of smaller sponsors that face 
logistical challenges with completing monitoring requirements within 
the first week of operations. In response, the final rule extends the 
flexibility in the timeframe to conduct site visits to all sponsors in

[[Page 57314]]

an effort to alleviate the logistical challenges and other factors that 
impact the ability of sponsors to meet this requirement.
    USDA learned through many years of implementing the nationwide 
waiver of first week site visit requirements that this flexibility 
eased the burden for sponsors in good standing in the NSLP, SBP, or 
CACFP, and sites that had operated successfully the previous summer. 
While experienced multi-program sponsors in good standing have 
demonstrated that they can operate Child Nutrition Programs 
successfully and with integrity, site visits facilitate good sponsor 
management and ensure that site supervisors and staff are receiving the 
technical assistance needed to operate the SFSP in compliance with all 
program requirements, particularly among new sites and sites with prior 
operational problems. Therefore, this final rulemaking codifies a risk-
based approach that incorporates a modification to the flexibilities 
previously provided by the nationwide waiver. This approach allows 
sponsors to prioritize monitoring resources and technical assistance to 
sites most at risk of operational issues while reducing the 
administrative burden of operating the SFSP.
    Furthermore, in an effort to be responsive to the need for 
significant flexibilities without compromising program integrity, this 
final rulemaking codifies the State agency's discretion to require a 
site visit during the first two weeks of program operations for any or 
all sites under any sponsor the State agency deems necessary. The rule 
also requires that sponsors must follow criteria established by the 
State agency to identify sites with operational problems that require a 
site visit during the first two weeks of operation. Commenters 
emphasized concerns about the administrative burden associated with 
visiting all sites and noted that monitoring resources would be better 
spent on sites at higher risk of operational problems. Accordingly, 
USDA believes that establishing criteria in advance will reduce this 
concern and improve regulatory certainty by providing sponsors notice 
of relevant criteria for determining which of their returning sites are 
required to receive a site visit so that they can plan how best to use 
their monitoring resources. In addition, these changes empower State 
agencies to set the appropriate level of monitoring that balances 
administrative flexibility with consideration of sponsor operations and 
capability. For example, State agencies may require a site visit for 
sites that have significant staff turnover, had findings on prior 
monitoring reviews, are under a sponsor that has had significant 
issues, or exhibit anything else of concern to the State agency. By 
permitting State agencies to set a responsive and manageable monitoring 
schedule in the State, sponsors may be encouraged to take on additional 
sites, thereby increasing program access without compromising 
integrity.
    Sponsors are still required to conduct a full review of food 
service operations at each site within the first four weeks of 
operation, and thereafter, maintain a reasonable level of site 
monitoring. Consistent with the proposed rule, this final rule allows 
the food service review to occur at the same time as the site visit 
during the first two weeks of operation. This option provides sponsors 
with the opportunity to manage their resources in a way that best suits 
their program operations. Combining reviews allows sponsors to focus 
resources on site reviews where more aspects of the site and meal 
service can be assessed. In addition, given the nature of the program 
and the short duration under which many sites operate, a full review 
earlier in the start of program operations would be most effective at 
identifying and promptly addressing all operational issues that may 
arise, thereby protecting program integrity. A few comments point to 
concerns that combining reviews only results in a duplication of 
paperwork and recordkeeping. While Sec.  225.15(d)(3) requires that 
sponsors complete a monitoring form developed by the State agency 
during the conduct of these reviews, this rulemaking gives State 
agencies the discretion to use their resources in the most efficient 
way, and State agencies have the option to streamline systems and 
documentation as they deem appropriate.
    Under this final rule, in cases where the site operates for seven 
calendar days or fewer, the site visit must be conducted during the 
period of operation, as applicable. USDA acknowledges the challenges of 
conducting site visits for sites that operate for a short duration. 
However, monitoring is an effective tool for program management, and 
direct observation of certain operational activities is necessary to 
ensure compliance with program requirements.
    With this final rule, USDA establishes minimum monitoring 
requirements while empowering State agencies to determine the 
appropriate level of monitoring that balances administrative 
flexibility and program integrity. If follow up is required, additional 
visits may be necessary to verify whether corrective action has been 
implemented. Even for sites that are not required to receive a site 
visit during the first two weeks of program operations under this final 
rule, as a best practice, USDA encourages sponsors to maintain a 
partnership that fosters open communication with all sites in order to 
identify and correct issues early and share best practices from sites 
that are operating successfully and within program requirements.
    Accordingly, this rule amends Sec.  225.15(d)(2) of the regulations 
to require a site visit during the first two weeks of program 
operations for all new sites, sites with operational problems in the 
prior year, and any site for which the State agency determines a visit 
is needed. In addition, this rule adds a new Sec.  225.7(o) which 
provides that State agencies must establish criteria for sponsors to 
use in determining which sites with operational problems noted in the 
prior year are required to receive a site visit during the first two 
weeks of program operations. This rule also amends Sec.  225.15(d)(3) 
to allow sponsors to conduct the site visit and a food service review 
at the same time.
ii. Establishing the Initial Maximum Approved Level of Meals for Sites 
of Vended Sponsors
    Current regulations at Sec.  225.6(d) require that each site must 
have an approved level for the maximum number of children's meals which 
may be served under the Program. This limit, which is commonly known as 
a `site cap' is intended to encourage sponsors and State agencies to 
work closely together to develop reasonable estimates of anticipated 
site attendance. Site caps for sites that prepare their own meals may 
be no more than the number of children for which its facilities are 
adequate. Sponsors of vended sites determine the site cap using 
historical attendance, or another procedure developed by the State 
agency if no accurate record from prior years is available.
    The process of determining the site caps provides State agencies 
and sponsors the opportunity to work together to assess a site's 
capacity and the needs of the community. Effective site caps prevent 
sites from purchasing or producing more meals than the site will serve 
or has the capacity to handle, and are an important tool for State 
agencies to monitor program management and determine if there is need 
for technical assistance or corrective action to ensure program 
integrity. In some cases, the capability of a site or the full needs of 
a community may be difficult to accurately assess before operations

[[Page 57315]]

begin, historical data needed to accurately forecast participation 
levels may be unavailable, or participation may change over the summer. 
If necessary, site caps can be adjusted based upon information 
collected during site reviews or other evidence presented to the State 
agency by the site's sponsor. Current requirements at Sec.  
225.11(e)(3) provide that State agencies must disallow payment on any 
meals served over the site cap at vended sites.
    In recognition of the fact that site caps are sometimes revised to 
respond to conditions at the site, USDA issued policy guidance 
clarifying that sponsors may request an increase to an existing site 
cap at any time prior to the submission of the meal claim for 
reimbursement that includes meals served in excess of the site cap 
(SFSP 16-2015, Site Caps in the Summer Food Service Program--Revised, 
April 21, 2015). Under this guidance, State agencies have the 
discretion to approve such a request.
    USDA proposed to amend Sec.  225.6(h)(2)(iii) of the regulations, 
as redesignated through this rule, to clarify that sponsors of vended 
sites may request an adjustment to the maximum approved level of meal 
service at any time prior to submitting a claim for reimbursement. USDA 
also proposed to amend Sec.  225.6(h)(2)(i), as redesignated through 
this rule, to clarify that State agencies may consider participation at 
other similar sites located in the area, documentation of programming 
taking place at the site, or statistics on the number of children 
residing in the area when determining the site cap.
Public Comments
    USDA received 24 comments on this provision, including three form 
letter copies. Of those who commented specifically on the timing of a 
sponsor's request to adjust a site cap, 18 were supportive and two were 
opposed. Of those who commented specifically on the proposed guidance 
for determining the site cap for sites lacking accurate historic 
records, all six were supportive, one of whom offered additional 
recommendations.
    Proponents of the proposal to allow an adjustment to the site cap 
at any time prior to submitting a claim for reimbursement were largely 
State agencies who appreciated that the change would allow sponsors to 
be responsive to the needs of their communities. Some offered 
suggestions to improve the process, such as providing advance notice of 
special events that could temporarily increase participation.
    Two State agencies opposed this provision, saying that adjustments 
to the site cap should be approved by the State agency because site 
caps are an important tool for the State agency to monitor program 
integrity. One of these opponents said that sponsors should be aware of 
their site operations and able to update their site cap during the same 
month that the adjustment is needed. Four State agencies also 
questioned why self-prep sites are not subject to the same site cap 
rules as vended sites.
    Proponents of the proposal to provide guidance for determining the 
site cap for sites lacking accurate records from prior years 
appreciated this guidance and said that it would be helpful because 
making such determinations can be difficult. One State agency requested 
the flexibility to allow the sponsor to initially self-certify their 
site cap and revise the caps after operations begin based on meal 
counts from the first week of meal service.
USDA Response
    This final rule codifies the proposed changes with one 
clarification. This rulemaking adds criteria for establishing the site 
cap for sites with no accurate historical information in order to aid 
State agencies and sponsors in determining appropriate site caps. 
However, USDA did not intend for the criteria provided to be finite. 
The regulations are revised to make clear that States may consider 
other relevant information when determining the site cap for sites 
lacking accurate historical information.
    The site cap should be based on the State agency and the sponsor's 
mutual understanding of the true capacity and capability of its sites, 
while allowing for potential participation growth. When done correctly, 
a site cap is a key tool to prevent sponsors and sites from purchasing 
or producing meals outside the capability of the site and the need of 
the community. This type of early planning is especially important for 
vended sites, which may enter into contracts to purchase meals before 
program operations begin. There is nothing to prevent a sponsor from 
requesting an adjustment to a site cap after operations begin. However, 
an initial site cap must still be established at the time that the 
sponsor's application is approved, in accordance with Sec.  225.6(h)(2) 
of the regulations, as redesignated through this rule.
    USDA agrees that State agencies should have discretion whether to 
approve a sponsor's request to adjust an established site cap; the 
current regulations and the policy memoranda that initially allowed 
this flexibility are clear on this point. This final regulation 
provides that sponsors may request a revision to a site cap, which 
requires approval, as opposed to notifying the State agency, which 
would not require approval.
    With regard to site caps for self-preparation sites, current 
regulations require site caps for these sites to be based on the 
capacity of the site to prepare and distribute meals, and on the number 
of children for which their facilities are adequate. It is possible 
that the site's capacity to prepare meals and accommodate a meal 
service could change during the summer, but this is less likely to 
occur and poses less of a risk to program integrity than with a vended 
site. A self-preparation site should have a stronger basis for 
establishing a site cap--its own capacity--and should be able to 
correct production to meet demand in real time, as opposed to a vended 
sponsor that may already have contracted for food. As such, holding 
self-preparation sites to these requirements would be burdensome and 
would not have a significant impact on program integrity.
    USDA understands the concerns of the commenter who said that 
sponsors should be required to request an adjustment to a site cap 
within the same month as the claim for which the cap must be adjusted. 
This final rule allows the flexibility for requests to be approved up 
until a claim is submitted for the impacted reimbursement period. 
However, the State agency may determine that it is in the best interest 
of the Program to require a sponsor to submit a request during the 
impacted month if, for example, the State has concerns about the 
sponsor's operations.
    Accordingly, this final rule amends Sec.  225.6(h)(2)(iii) of the 
regulations, as redesignated through this rule, to clarify that 
sponsors of vended sites may request an adjustment to the maximum 
approved level of meal service at any time prior to submitting a claim 
for reimbursement. This rule would also amend Sec.  225.6(h)(2)(i), as 
redesignated through this rule, to include further guidance for 
determining the maximum approved level of meal service for sites 
lacking accurate records from prior years.
iii. Statistical Monitoring Procedures, Site Selection, and Meal Claim 
Validation for Site Reviews
    Current regulations in Sec.  225.7(d) provide requirements for how 
State agencies review sponsors to ensure their compliance with program 
requirements. This section includes the requirement that States 
conducting a sponsor review must review at least 10 percent of the

[[Page 57316]]

sponsor's sites or one site, whichever number is greater (current Sec.  
225.7(d)(2)(ii)(E)). Further, USDA guidance instructs State agencies to 
validate 100 percent of all meal claims from all sites under a sponsor 
that is being reviewed. USDA proposed three changes to these 
requirements, which are related to site selection criteria, the method 
for conducting meal claim validations, and the option for statistical 
monitoring. In addition, USDA proposed to renumber and rephrase 
portions of Sec.  225.7 to make the regulations easier to understand.
    Section 225.7(d)(8) allows State agencies the option to use 
statistical monitoring procedures in lieu of the site monitoring 
requirements found in Sec.  225.7(d)(2). USDA is not aware of any 
States that currently use this option and has determined through 
research and feedback from State agencies that it is not possible to 
create standard statistical monitoring procedures that will meet the 
needs of the Program. Accordingly, USDA proposed to remove the 
provision in Sec.  225.7(d)(8) that allows the use of statistical 
monitoring for site reviews.
    USDA also proposed to provide guidance in Sec.  225.7(e)(5), as 
redesignated in this rule, to assist State agencies and sponsors in 
selecting a sample of sites to review that will be generally reflective 
of the variety of all a sponsor's sites. Site characteristics that will 
be reflected in a sponsor's sample include:
     The maximum number of meals approved to serve under 
Sec. Sec.  225.6(h)(1)(iii) and 225.6(h)(2), as redesignated through 
this rule;
     Method of obtaining meals (i.e., self-preparation, vended 
meal service);
     Time since last review by the State agency;
     Site type (i.e., open, closed enrolled, camp);
     Type of physical location (e.g., school, outdoor area, 
community center);
     Rural designation (i.e., rural, as defined in Sec.  225.2, 
non-rural);
     Affiliation with the sponsor, as defined in Sec.  225.2; 
and
     Additional criteria that the State agency finds relevant 
including, but not limited to: recommendations from the sponsoring 
organization, findings of other audits or reviews, or any indicators of 
potential error in daily meal counts (e.g., identical or very similar 
claiming patterns, or large changes in meal counts).
    Finally, USDA proposed a new, incremental approach for conducting 
meal claim validations as a part of the sponsor review in Sec.  
225.7(e)(6). This approach is intended to use State agency resources 
more efficiently and provide State agencies with a more targeted method 
for review. USDA requested specific comments on this process, including 
the anticipated impact on State agencies and burden, the accuracy of 
claim validations under this process, and the stepped increases and the 
percentage expanded at each step.
    Rather than requiring that State agencies validate 100 percent of 
meal claims for all sites under the sponsor being reviewed, which may 
be burdensome for some State agencies, USDA proposed a multi-step 
approach to site-based meal claim validation. State agencies would 
initially validate a small sample of claims and would only be required 
to validate additional claims if they detect errors over the threshold. 
Included as part of the approach, USDA explained how State agencies 
should calculate the error percentage which would trigger the expanded 
validation sample.
Public Comments
    USDA received 34 comments on these proposals. Of these comments, 13 
were generally supportive, three offered partial or conditional 
support, three were opposed, and 15 had mixed opinions. Specific 
comments are addressed in the respective sections below.
Statistical Monitoring
    USDA received 15 comments, including three form letter copies that 
addressed statistical monitoring procedures in lieu of site monitoring 
requirements. Of these comments, nine were supportive and six, 
including three form letters, were opposed.
    Overall, proponents wholly supported the elimination of this 
provision and stated that they were not aware of the provision being 
used by State agencies. A commenter wrote that their agency had opted 
to review a minimum of 10% of each sponsor's sites or one site, 
whichever number is greater instead of using the statistical monitoring 
option.
    Opponents of this provision included three unique comments and one 
form letter, all from one State agency. Commenters opposed these 
changes, writing that their State has used statistical monitoring for 
over 10 years and removing these requirements would hinder State 
agencies' ability to review sponsors in good standing through 
statistical monitoring. They further suggested that USDA provide 
guidance for how to develop and implement statistical monitoring 
procedures to provide State agencies this monitoring option.
Site Selection
    USDA received 21 comments, including three form letter copies about 
site selection criteria. Of these, 16 were supportive of the proposal, 
two offered partial support, one was opposed, and two were mixed. 
Proponents supported the addition of site selection criteria as 
proposed to assist State agencies in selecting a sample of sites that 
would be reflective of the variety of a sponsor's sites when completing 
sponsor reviews. Two States offered partial support, agreeing in part 
to the characteristics put forth, but stated that some of the 
characteristics such as rural designation and sponsor affiliation are 
not as important as other indicators when selecting a site for review. 
These commenters stated that the proposed list of site selection 
criteria was a good-faith effort to compel States to incorporate 
diversity into their site review selection decisions. However, they 
further added that the most effective way to identify fraud would be to 
incorporate a review of questionable site claiming patterns, previous 
findings, and other irregularities in site claiming. These commenters 
also stated that it is a good idea to allow States the discretion to 
use additional site characteristics in their site selection decisions.
    One commenter was opposed to this provision and stated that the 
provision would cause an additional burden on the State agency by 
creating additional labor and technology expenses. The commenter 
further stated that the site characteristics proposed are not 
information that State agencies are required to collect and are 
insignificant as indicators of risk to the Program. In addition, while 
neither expressing support nor opposition to the site selection 
criteria as proposed, one commenter stated that they were currently 
using a similar set of characteristics to determine which sites are 
selected for review. Another commenter stated that the list of site 
characteristics could be viewed as targeting certain sponsors or sites.
Meal Claim Validation
    USDA received 33 comments, including three form letter copies, 
about the proposed meal claim validation methodology. Of these, 18 were 
supportive, three provided partial support, six were mixed or other, 
and six were in opposition. Overall, proponents supported the meal 
claim validation method, but requested training materials and tools to 
support the implementation of a new process.
    Proponents that supported the meal claim validation methodology 
cited the

[[Page 57317]]

decrease in administrative burden in comparison to validating 100 
percent of a sponsor's claim. Two States offered partial support, 
agreeing in part to the validation of meals based on reviewing a sample 
of sites as opposed to all sites, but stated the desire to add an 
additional step of validation all claims for 75 percent of the 
sponsor's sites.
    Of the six commenters with mixed support or other comments, one 
commenter stated that the proposed methodology would not add additional 
burden as the State already completes a similar process during the 
sponsor review. One commenter stated that if minimal errors are 
initially identified in the process, the proposed methodology would 
provide accuracy for the review. A commenter also noted the desire to 
address errors discovered in the review without validating additional 
sites. In addition, one commenter noted that the error rate of five 
percent was too low and use of the step increases should be at the 
State's discretion. An additional comment stated that the stepped 
increases and percentages were appropriate.
    Of the six commenters in opposition, three opposed the sampling 
approach and instead supported continuing to validate 100 percent of a 
sponsor's claim during the sponsor review. Two commenters in opposition 
stated that the multistep approach was complicated and unnecessary to 
determine integrity of a sponsor. The commenters were also opposed 
continuing to validate 100 percent of a sponsor's sites if issues were 
observed. One State agency noted that the proposed methodology would 
create additional labor and technology costs. One State agency 
referenced aligning the reviews in the SFSP to characteristics in the 
NSLP in order to reduce burden.
USDA Response
Statistical Monitoring
    This final rule codifies as proposed the removal of the option for 
statistical monitoring in lieu of site monitoring requirements. 
Commenters overwhelmingly supported the removal of this option and USDA 
found through feedback from States agencies that this option is not 
being used by any State agency. USDA determined that the State agency 
opposed to the option's removal because they were using this method, 
was not in fact using statistical monitoring as outlined in Sec.  
225.7(d)(8).
    Accordingly, this final rule removes the option at Sec.  
225.7(d)(8) for statistical monitoring in lieu of site monitoring 
requirements.
Site Selection
    This final rule codifies the proposed site selection criteria with 
one change to specify that State agencies must develop criteria for 
site selection. USDA recognizes that State agencies are in the best 
position to identify which sponsors' sites to review based on a wide 
variety of characteristics. Although one State agency was opposed to 
this provision due to concerns over burden and costs, creating criteria 
for site selection will increase program integrity by ensuring States 
select a variety of sites to review. Therefore, USDA codifies the 
proposed approach to site selection which emphasizes identifying a 
variety of sites to be reviewed. In order to promote diversity among 
sites that are reviewed, States must create criteria for site selection 
using the site characteristics suggested by USDA as a guide. 
Additionally, State agencies may, in selecting sites for review, use 
additional criteria including, but not limited to, findings of other 
audits or reviews, or any indicators of potential error in daily meal 
counts (e.g., identical, questionable, or very similar claiming 
patterns, or large changes in meal counts).
    Accordingly, Sec.  225.7(e)(5), as redesignated in this rule, 
includes site selection criteria.
Meal Claim Validation
    This final rule codifies the proposed changes to meal claim 
validation requirements, and adds additional clarifications to confirm 
that State agencies have the discretion to exceed the minimum number of 
required claim validations, and to provide a chart to aid State 
agencies in complying with this provision.
    Most commenters affirmed that USDA's proposal to initially validate 
a small sample of claims and expand the validation sample if errors 
over the threshold are detected would decrease administrative burden in 
comparison to requiring that State agencies validate 100 percent of 
meal claims for all sites under the sponsor being reviewed. While some 
State agencies stated that the proposed approach would increase their 
administrative burden when deficiencies are found, USDA believes it is 
in the best interest of program integrity to provide a standardized 
method to complete meal claim validations and decrease administrative 
burden for a majority of sponsor reviews.
    Based on comments on the proposed rule, USDA is providing several 
clarifications. First, if the meal claim validation sample is expanded, 
it does not require the State agency to complete an additional review 
of the sites included in the expanded validation sample. The State 
agency may complete a more thorough review at their discretion.
    Second, when expanding the sample size, the State agency is only 
required to validate the claims of the additional number of sites to 
reach 25, 50, and 100 percent of the sponsor's sites, and can count the 
sites reviewed in the initial sample toward the number of sites needed 
to be reviewed in the expanded sample. For example: A sponsor has 35 
sites. The State agency is required by Sec.  225.7(e)(4)(v) to review 
10 percent of the sponsor's sites. The State agency calculates the 
sample size required for the initial validation by multiplying the 
total number of sites (35) by 10 percent (.10), which equates to 3.5; 
after rounding up, the number of sites required to be reviewed is 4. 
Step 1 of the meal claim validation process requires that the State 
agency validate all meals served by these 4 sites during the month of 
review. After step 1 of validation, it is determined that the 
percentage of error is over 5 percent. The State agency must now 
validate 25 percent of the sponsor's total sites. In order to satisfy 
this requirement, the State agency only needs to review the additional 
number of sites in the expanded sample. To determine the sample size 
required in the next step of validation, the State agency multiplies 35 
by .25, which equates to 8.75. After rounding up, the number of sites 
to be reviewed is 9. To reach 25 percent of the total number of sites, 
or 9 sites, the State agency would only need to validate 5 additional 
sites (9 minus the 4 sites validated in step 1).
    Third, the percentage of error is not a rolling average and is 
calculated based on the sample of sites included in each step of the 
validation. To ensure clarity, USDA has revised the explanation of how 
to calculate percentage error included in the proposed rule. USDA has 
also provided additional formulas to clarify how to calculate: the 
total meals claimed for the validation sample in each step, the 
individual meal count validation discrepancies for each site, total 
meal count validation discrepancy for the validation sample in each 
step, and the percentage of error. The clarifications below are meant 
to ensure all discrepancies in meal counting and claiming, whether an 
overclaim or underclaim, are equally accounted for in the percentage of 
error as both are signs of potential problems in the operation and 
administration of the Program.
    To calculate the percentage error for each step, first determine 
the meal

[[Page 57318]]

counting and claiming discrepancy for each site validated by 
subtracting the total meals validated from the total meals claimed by 
the sponsor for each reviewed site. Then, determine the absolute value 
of each discrepancy. By using the absolute value, the numbers will be 
expressed as positive numbers. Add together all discrepancies from each 
site to calculate the total discrepancies for sites reviewed in the 
given step. Divide the total discrepancies by the total meals claimed 
by the sponsor for all reviewed sites within the validation sample for 
the given step and multiply by 100 to calculate the percentage of error 
in the given step. In determining the percentage of error, fractions 
must be rounded up (>=0.5) or down (<0.5) to the nearest whole number. 
Refer to the equations below for clarification.
BILLING CODE 3410-30-P

[[Page 57319]]

[GRAPHIC] [TIFF OMITTED] TR19SE22.002


[[Page 57320]]


[GRAPHIC] [TIFF OMITTED] TR19SE22.003

BILLING CODE 3410-30-C
    Finally, USDA recognizes that States agencies have their own best 
practices to ensure integrity during the sponsor review and has 
included in this final rule that the codified methodology is the 
minimum requirement and that sampling steps can be forgone at any point 
to reach 100 percent validation of the sponsor's claim. This provides 
the flexibility requested by commenters to use the step increases or to 
continue validating the entirety of a sponsor's claim for reimbursement 
without utilizing a sampling methodology.
    Accordingly, USDA is codifying in section 225.7(e)(6), as 
redesignated in this rule, a method for conducting meal claim 
validations along with a chart to explain the validation process. In 
addition, this final rule renumbers and rephrases portions of Sec.  
225.7 to make the regulations easier to understand.

D. Providing a Customer-Service Friendly Meal Service

i. Meal Service Times
    Section 225.16(c) of the current regulations sets forth 
restrictions on when meals can be served in the SFSP. Three hours are 
required to elapse between the beginning of one meal service, including 
snacks, and the beginning of another, with the exception that four 
hours must elapse between the service of a lunch and supper when no 
snack is served between lunch and supper. Further, the regulations 
state that the service of supper cannot begin later than 7 p.m., unless 
the State agency has granted a waiver of this requirement due to 
extenuating circumstances; however, in no case may the service of 
supper extend beyond 8 p.m. The duration of the meal service is limited 
to two hours for lunch or supper

[[Page 57321]]

and one hour for all other meals. These restrictions do not apply to 
residential camps.
    These strict requirements did not provide sufficient control at the 
State agency and sponsor level to allow for planned meal services that 
meet the needs of the community. Dating as far back as 1998, USDA has 
issued guidance that waives these requirements at certain sites where 
the requirements proved to create significant barriers to efficient 
program operations and good customer service for the communities 
served. USDA heard consistent feedback from stakeholders that the 
restrictions presented challenges to aligning meal services with access 
to public transportation and community services. Therefore, in 2011, 
USDA published guidance that waived the meal service time restrictions 
for all SFSP sites while still requiring sponsors to submit meal 
service times to the State agency for approval (originating guidance 
has since been superseded and incorporated into SFSP 06-2017, Meal 
Service Requirements in the Summer Meal Programs, with Questions and 
Answers--Revised, December 05, 2016). These waivers were rescinded in 
2018, as discussed in the background section of this final rule. 
Between 2019 and 2020, 51 States requested an individual waiver under 
section 12(l) of the NSLA of meal time restrictions to allow them to 
continue implementation of what had previously been in effect through 
guidance. Of those that applied in 2019, 39 asserted that the waiver 
would result in improved program operations and, therefore, efficient 
use of resources. Because increased flexibility in setting meal times 
proved to be a useful tool for program operations, USDA proposed to 
remove existing meal service time restrictions, and add a requirement 
that a minimum of one hour must elapse between the end of a meal 
service and the beginning of another.
    Sponsors have also expressed the need for flexibilities to conduct 
meal services in the event of an unforeseen circumstance, such as a 
delayed delivery. Therefore, USDA also proposed allowing a State agency 
to approve for reimbursement meals served outside of the approved meal 
service time if an unanticipated event, outside of the sponsor's 
control, occurs. The State agency may request documentation to support 
approval of meals claimed when unanticipated events occur.
    In recent years, it has come to USDA's attention that some sponsors 
have served a meal, which meets the meal pattern requirements for 
breakfast, in the afternoon after a lunch service was provided and 
claimed this meal as a reimbursable ``breakfast.'' The SFSP is 
statutorily designed to support ``programs providing food service 
similar to food service made available to children during the school 
year'' under the NSLP and SBP (42 U.S.C. 1761(a)(1)(D)). Currently, 
regulations governing the SBP define breakfast as a meal which is 
served to children in the morning hours and must be served ``at or 
close to the beginning of the child's day at school'' (7 CFR 220.2). As 
such, the service of a reimbursable, three component meal, or 
``breakfast,'' in the afternoon following the service of lunch is not 
supported by the statute. Therefore, USDA proposed that a meal 
otherwise meeting the requirements for a breakfast meal is not eligible 
for reimbursement as a breakfast if it is served after any lunch or 
supper has been served and claimed for reimbursement.
    Finally, USDA proposed to amend Sec.  225.16(c) to make it easier 
for users to locate and understand key information. Section 
225.16(c)(1) will consolidate meal service time requirements currently 
referenced in other sections of part 225. This would specify that meal 
service times must be established by the sponsor for each site, be 
included in the sponsor's application, and be approved by the State 
agency. Current regulations at Sec.  225.16(c)(6), which specifies that 
a sponsor may claim for reimbursement only the type(s) of meals for 
which it is approved to serve, will move to Sec.  225.16(b). In 
addition, a reference to approved meal service times will be added to 
the State-sponsor agreement information in redesignated Sec.  
225.6(i)(7)(iv).
Public Comments
    USDA received 47 comments about meal service times, including three 
form letter copies. Of these, 31 were supportive, 10 expressed partial 
support, and six comments had mixed or neutral opinions regarding the 
proposal.
    Proponents stated that a one-hour time gap would support sponsors 
in providing meal services at times that better align with community 
needs, as opposed to four hours. Additionally, proponents asserted that 
the proposed change in meal service time requirements would help SFSP 
meal services to mirror NSLP meal service times, so that children eat 
at similar intervals throughout the year. These commenters also 
expressed support for the reimbursement of meals served outside of the 
approved meal times, and disapproval of serving a reimbursable 
breakfast after lunch has been served.
    Proponents who partially supported the provision stated that a one-
hour limit between a lunch and supper when no snack is served was still 
too restrictive. These commenters asserted that a time limit of 30 
minutes or less would grant more flexibility to sponsors that offer a 
variety of summer activity programs during similar hours. Additionally, 
commenters requested clarification on what circumstances would 
constitute an ``unanticipated event'' for the purposes of serving meals 
outside of the approved meal service time. Further, one comment from a 
sponsor organization stated that USDA's clarifications on breakfast 
meal services would create limitations on their ability to serve meals 
because their site opens in the afternoon.
    Mixed comments on the proposal expressed an opinion that was 
unclear based on a common reading of the language used in the comment. 
For example, some of these comments expressed disagreement with the 
rule, but requested actions that the provision proposed as a remedy. 
Other comments requested clarification on the meaning of 
``unanticipated event'' and whether the requirement for one-hour to 
elapse between meals will apply to camps.
USDA Response
    This final rule codifies changes to meal service times as proposed. 
The waiver of meal time restrictions has helped decrease administrative 
burden and provided more local level control to sponsors to plan the 
most effective meal services, thereby improving program operations and 
better serving the community. USDA seeks to balance these benefits with 
the maintenance of program purpose and integrity. The purpose of the 
SFSP is to provide children with meal services when school is not in 
session. Further, to uphold program integrity, meal services should be 
clearly distinguishable from each other to enable accurate claiming and 
recordkeeping. USDA has determined that it would be beneficial to SFSP 
participants and sponsors for the timing of meals that students have 
when school is not in session to more closely align with the meal 
service that students have when school is in session. USDA recognizes 
that some sponsors have found it useful to serve breakfast at 
unconventional hours. However, having summer meal services that mirror 
those held during the school year, such as holding breakfast service 
before lunch, reduces confusion in program operations and provides 
program participants with a consistent meal service experience year-
round.

[[Page 57322]]

    USDA also recognizes that State agencies would benefit from further 
examples of what may constitute an unanticipated event for the purposes 
of providing meals outside of the approved meal time. Examples of such 
events include, but are not limited to: delayed meal deliveries, 
inclement weather that delays the start of the meal service, delayed 
public transportation utilized by participants, and other incidents as 
deemed appropriate by the State agency.
    Additionally, comments requested clarification on whether the one-
hour requirement between meals will apply to camps. This rulemaking 
will not modify the exemption at Sec.  225.16(b)(1)(ii) which excludes 
residential camps from meal service time restrictions.
    Accordingly, this final rule modifies Sec.  225.16(c) to remove 
existing meal service requirements, and codifies the requirement that 
all sites, except residential camps, must allow a minimum of at least 
one hour to elapse between the end of one meal and the beginning of 
another. Additionally, this final rule allows a State agency to approve 
for reimbursement meals served outside of the approved meal service 
time if an unanticipated event occurs. This rule will also clarify that 
meals claimed as a breakfast must be served at or close to the 
beginning of a child's day, and prohibit a three component meal from 
being claimed for reimbursement as a breakfast if it is served after a 
lunch or supper is served. Finally, this rule will reorganize Sec.  
224.16(c) to improve the clarity of the regulations.
ii. Off-Site Consumption of Food Items
    Providing a meal service for children in a group setting, a concept 
known as ``congregate feeding,'' has been a part of the SFSP since its 
inception. Congregate feeding has many benefits, including providing an 
opportunity for children to socialize, creating time for sites to offer 
activities, and allowing adults to monitor food safety and encourage 
healthy eating practices. Current SFSP regulations provide that 
sponsors must agree to ``maintain children on site while meals are 
consumed'' (Sec.  225.6(e)(15)).
    However, over the years, USDA has heard from stakeholders that, 
because the SFSP operates in a wide variety of settings, including 
sites that do not offer activities or programming separate from the 
meal service, keeping children on site for consumption of the entire 
meal offered is sometimes challenging. Some children, particularly 
those who are younger, are unable to eat all of the meal components in 
one sitting, which sponsors note can result in children not receiving 
vital nutrition and contributes to plate waste. Thus, USDA proposed to 
amend Sec.  225.16 to codify the previously granted flexibility to 
allow participants to take one item (i.e., either a fruit, vegetable or 
grain item) off-site for later consumption.
Public Comments
    USDA received 63 comments regarding the codification of the 
flexibility to allow off-site consumption of certain food items, 
including nine form letter copies. There were 41 comments in support of 
the proposal, six comments in partial support of the proposal, 16 
comments with mixed or neutral opinions, and zero comments opposing the 
proposal.
    USDA also received responses to specific questions posed in the 
proposed rule. Ten comments addressed State agencies' ability to 
monitor the effective implementation of the provision, and 12 comments 
addressed whether States agencies would prohibit certain sponsors from 
utilizing the option.
    Proponents of the proposal stated that allowing participants to 
take food off-site increased State agencies' and sponsors' ability to 
administer and operate the SFSP more effectively, and would increase 
program access. Several sponsors also asserted that the proposal would 
minimize food waste, and support children eating portions that are 
appropriate for their appetite at meal services. Sponsors further noted 
that taking food off-site would allow children to derive the health 
benefits from being able to eat the entire meal, rather than needing to 
throw a portion away. Supportive comments from State agencies 
highlighted that training and technical assistance for successfully 
implementing this provision is available to eligible sponsors in their 
State. State agency comments further noted that sponsors need to ensure 
that they have adequate staffing available to monitor the provision.
    Proponents who partially supported the provision expressed a desire 
for all shelf-stable milk options to be permitted to be taken off-site, 
or suggested that participants be permitted to take multiple items off-
site. A State agency commenter requested the authority to prohibit a 
sponsor from utilizing this option if the State agency finds that the 
sponsor is incapable of adequately monitoring its implementation.
    Opponents of the provision requested removal of the congregate 
feeding requirement due to a belief that it hinders program access. 
Other comments expressed concerns regarding the ability of State 
agencies and sponsors to effectively monitor the implementation of the 
provision. These comments noted that the provision may be difficult to 
monitor, particularly in rural areas with transportation limitations. 
However, other State agencies stated that they had successfully 
monitored the use of the flexibility in the past, and found that 
sponsors were implementing it correctly.
    State agency comments on whether they would prohibit certain 
sponsors from allowing an item to be taken off-site centered on if the 
State agency anticipated patterns of non-compliance from a sponsor, and 
if a sponsor was in good standing. State agencies that had observed 
patterns of non-compliance from a particular sponsor would prohibit 
that sponsor from utilizing the provision. Other State agencies noted 
that they would not prohibit sponsors from using the flexibility, but 
would assign corrective action to sponsors as needed if the provision 
was not implemented correctly. A commenter requested a delay in 
implementation to update training and resources necessary to 
successfully utilize this provision.
USDA Response
    This final rule codifies, as proposed, the flexibility for off-site 
consumption of food items. USDA appreciates the attention to program 
integrity provided by comments on the feasibility of monitoring this 
provision. It is important for program integrity and the safety of 
children that site staff appropriately monitor this flexibility to 
ensure that children only bring home the correct types and quantities 
of food items, and that such items are not at risk of spoiling before 
they can be consumed. Previously published USDA guidance on the 
implementation of this flexibility permitted State agencies to approve 
sponsors to use this provision on a case-by-case basis, and also 
provided State agencies with a non-appealable decision-making authority 
to prohibit sponsors from using this option when there are concerns 
about adequate site monitoring. This final rule does not change that 
authority; therefore, State agencies retain the discretion to prohibit 
sponsors from using this flexibility if the State finds that the 
provision cannot be adequately monitored. However, USDA encourages 
State agencies to explore options for successfully implementing this 
provision including updating training, procedures, and relevant 
systems.
    USDA seeks to ensure that program meals are accessible to even the 
youngest of the SFSP demographic,

[[Page 57323]]

while still ensuring that participants can enjoy their meals in a safe, 
supervised setting in accordance with program requirements. USDA 
appreciates that some commenters would like children to be permitted to 
take multiple items off-site for later consumption. However, taking a 
single item off-site is the amount already allowed through policy 
memoranda for the SFSP and the at-risk afterschool component of the 
CACFP, in part because it is straightforward for a site to monitor 
children taking home a single non-perishable item, and more complex to 
oversee children taking other combinations of items off-site. In 
addition, this rulemaking proposed to allow children to take a single 
item off-site for later consumption, and solicited comments 
specifically on this programmatic option. Therefore, suggestions to 
allow more food items or entire meals to be consumed off-site are 
outside the scope of this rulemaking.
    Accordingly, this final rule codifies the flexibility for sponsors 
to allow children to take a single fruit, vegetable, or grain item off-
site for later consumption by amending Sec.  225.6(i)(15), as 
redesignated through this rule, and adding a new Sec.  225.16(h).
iii. Offer Versus Serve
    Current regulations in Sec.  225.16(f)(1)(ii) allow SFAs that are 
program sponsors to ``permit a child to refuse one or more items that 
the child does not intend to eat.'' This provision is known as ``Offer 
versus Serve'' (OVS). The regulations also require that an SFA using 
the OVS option must follow the meal pattern requirements for the NSLP, 
as set out in Sec.  210.10. Finally, the regulations state that the 
sponsor's reimbursement must not be reduced if children do not take all 
required food components of the meal that is offered.
    The goals of OVS are to simplify program administration and reduce 
food waste and costs while maintaining the nutritional integrity of the 
SFSP meal that is served. The use of OVS was first extended to SFSP 
operations through the Personal Responsibility and Work Opportunity Act 
of 1996 (Pub. L. 104-193), which permitted SFAs sponsoring the SFSP to 
use OVS on school grounds. Because the option is regularly implemented 
during the school year, it was thought that these sponsors could 
successfully implement the option during the summer. Recognizing that 
OVS was a useful tool to reduce food waste and food costs, the William 
F. Goodling Child Nutrition Reauthorization Act of 1998 (Pub. L. 105-
336) extended the use of OVS to all SFSP sites sponsored by SFAs. In 
the years since, OVS has proved to be a useful tool for program 
operators.
    After observing SFA sponsors successfully utilizing the option for 
many years and receiving significant feedback from stakeholders, 
including Congressional testimony about the positive effects of OVS on 
reducing food waste and containing program costs, USDA extended the 
option to use OVS to non-SFA sponsors through policy guidance in 2011 
(SFSP 11-2011, Waiver of Meal Time Restrictions and Unitized Meal 
Requirements in the Summer Food Service Program, October 31, 2011). 
USDA continued to clarify policies surrounding OVS, including 
guidelines for required meal service components under the SFSP meal 
pattern (SFSP 08-2014, Meal Service Requirements, November 12, 2013) 
and extending the use of the SFSP OVS meal pattern guidelines to SFA 
sponsors that had previously been required to follow the OVS 
requirements for the NSLP (SFSP 05-2015 (v.2), Summer Meal Programs 
Meal Service Requirements Q&As--Revised, January 12, 2015). This 
guidance highlighted the distinguishing aspects of the SFSP and NSLP, 
including variations in settings and resources, and adjusted the OVS 
requirements for use in the SFSP accordingly.
    As mentioned in the background of this rule, these waivers of 
statutory and regulatory requirements pertaining to OVS were rescinded 
in 2018. Between 2019 and 2020, 39 States requested individual waivers 
of program requirements through section 12(l) of the NSLA to allow them 
to continue utilizing OVS as had previously been permitted through 
guidance. FNS granted these requests to provide continuity to States 
and sponsors while the agency completed this rulemaking.
    The proposed rule sought to retain the regulatory requirement that 
only SFA sponsors may utilize the OVS option. In addition, the rule 
proposed to allow SFA sponsors electing to use the SFSP meal pattern to 
use SFSP OVS guidelines. This would align the regulations with the 
NSLA, which only authorizes SFA sponsors to use OVS. Through on-site 
reviews, USDA has also observed meal pattern violations tied to the 
improper use of the OVS guidelines specifically at sites sponsored by 
non-SFAs. In light of these observations, maintaining OVS for the types 
of sponsors that are most likely to implement it correctly would 
promote program integrity while also operating the program in 
accordance with statutory intent.
    Finally, the proposed rule sought the following specific comments 
on OVS:
     What level of training do non-SFA sponsors receive in 
order to be able to properly implement OVS?
     Do non-SFA sponsors have the resources needed to properly 
implement OVS?
     What level of technical assistance do non-SFA sponsors 
receive?
     How would non-SFA sponsors be impacted if OVS were no 
longer an available option?
     What are the specific benefits to sponsors that use OVS?
Public Comments
    USDA received 62 comments regarding OVS, including nine form letter 
copies. Of the 62 comments, seven supported the proposal as written, 49 
expressed support for OVS as an option and for the use of the SFSP meal 
pattern, while also expressing concerns with the overall proposal, six 
held a mixed opinion, and zero opposed it entirely. Thirteen 
stakeholders also submitted comments directly responding to all or some 
of the specific questions posed in the proposed rule.
    Proponents of this provision included State agencies that have 
observed improper implementation of OVS from non-SFAs, or otherwise 
believed that SFAs are better equipped with the knowledge and resources 
to correctly utilize OVS. Additionally, these comments supported 
allowing SFA sponsors that elect to use OVS during SFSP operations to 
follow the SFSP meal pattern.
    The majority of commenters supported continuing the flexibility for 
SFAs, but requested that this meal service option also be extended to 
non-SFA sponsors, including those that operate the CACFP and use OVS 
during the school year in their At-Risk Afterschool Meals programs. 
These comments highlighted that OVS benefits sponsors through decreased 
operation and administrative costs and reduced food waste. Commenters 
noted that training and technical assistance are generally offered to 
all SFSP sponsors that wished to use OVS and some stated that they have 
not witnessed implementation errors from non-SFA sponsors. Multiple 
State agencies said that not all non-SFA sites are equipped to 
successfully use OVS, and thus recommended it should be limited to 
those sponsors that have adequate resources or on a case-by-case basis. 
Other commenters echoed the suggestion that the use of OVS by non-SFA 
sponsors could be limited to those that are capable of using it 
correctly.
    Mixed comments largely offered general support for OVS or focused 
on answering the specific questions posed

[[Page 57324]]

in the proposed rule. In response to USDA's questions about the level 
of OVS training and technical assistance that non-SFA sponsors receive 
and whether non-SFA sponsors have the resources needed to properly 
implement OVS, State agencies said that OVS is included in their 
regular training regimen, with non-SFAs receiving as much training as 
SFA sponsors. These commenters also expressed that sponsors presently 
have the resources needed to properly implement OVS, and are provided 
technical assistance by request or when needs are identified by State 
agency representatives. In response to USDA's questions about the 
benefits of OVS and the impact of it no longer being available for non-
SFA sponsors, commenters said that OVS decreases program waste and 
cost, while providing more food choices to program participants. Non-
SFA sponsors who previously implemented OVS would not realize these 
benefits and would need to retrain staff if OVS is no longer available 
to them. A few indicated that this change could have a negative impact 
on sponsor participation. These commenters included State agencies, 
sponsor organizations, and school districts.
USDA Response
    This final rule codifies the proposed changes to OVS regulations. 
USDA understands that OVS has been a popular flexibility among SFSP 
sponsors and, for many years, sponsors of all types have used OVS to 
increase cost efficiency and provide more food choice for children 
during meal services. However, section 13(f)(7) of the NSLA only 
authorizes SFAs to use OVS. The flexibilities that allowed non-SFAs to 
utilize OVS were pursuant to policy guidance that was rescinded in 
2018, or COVID-19-related waiver authority which was not permanent and 
was intended to aid program operators during the public health 
emergency and as they transition back to normal operations. As 
previously discussed in the background section of this rule, a 2018 OIG 
report led USDA to determine that offering waivers under 42 U.S.C. 
1760(l) on a nationwide basis is not supported by the statute. As such, 
the use of nationwide waivers is no longer a viable option to address 
OVS. USDA exercised its discretion in 2019 to issue individual waivers 
under section 12(l) of the NSLA for 37 State agencies in order to 
bridge the gap between when the nationwide waiver was rescinded and 
this rulemaking was completed. As discussed in the proposed rule, the 
operation of OVS by non-SFA sponsors has also raised some program 
integrity concerns. Information obtained from site visits, and some 
State agency comments have indicated improper OVS implementation among 
non-SFA sponsors. Therefore, limiting OVS to only SFA sponsors, which 
generally have experience with OVS in the NSLP, will ensure that 
program regulations and operations remain in agreement with the statute 
and promote program integrity. As a result, this final rule continues 
the current regulatory requirement that only SFA sponsors may utilize 
the OVS option, while revising the regulations to allow the use of the 
SFSP meal pattern with OVS.
    USDA does not expect a significant impact on program participation 
as OVS is an optional flexibility that functions to modify meal 
component offerings at meal services; SFA and non-SFA sponsors alike 
may operate meal services without OVS. USDA stands ready to provide 
technical assistance, as needed, to support this transition. Further, 
FNS data indicate that a relatively small share of all sponsors will be 
affected; fewer than 10% of SFSP sponsors are non-SFAs that used OVS 
under the waivers.\1\ With regard to food waste, section D ii of this 
rule codifies the option for participants to take one fruit, vegetable, 
or grain item off-site for later consumption. Similarly, the use of 
share tables, where children may return whole food or beverage items 
they choose not to eat for other children to take, is also an option 
for sponsors to reduce food waste.
---------------------------------------------------------------------------

    \1\ According to the most recently available USDA administrative 
data, approximately 60% of sites were SFA sites in July 2021. 
According to the Summer Meals Study (Report Volume 3, page 3-15), 
only 24% of non-SFA sites used OVS in 2018. This gives a total of 
9.6% of all sites who will need to transition to meal service 
without the use of OVS as a result of this rule (40% x 24% = 9.6%). 
The Summer Meals Study is available online at https://www.fns.usda.gov/cn/usda-summer-meals-study.
---------------------------------------------------------------------------

    Accordingly, this final rule retains the requirement at Sec.  
225.16(f)(1)(ii) that only SFA sponsors may utilize the OVS option. 
Further, this rule allows SFA sponsors electing to use the SFSP meal 
pattern to use SFSP OVS guidelines.

E. Clarification of Program Requirements

i. Reimbursement Claims for Meals Served Away From Approved Locations
    Under current regulations, meals are reimbursable only when served 
at sites approved by the State agency. As defined in Sec.  225.2, a 
site is ``a physical location at which a sponsor provides a food 
service for children and at which children consume meals in a 
supervised setting.'' Site approval applies only to the specific 
location approved, not to meals removed from that site for service at 
another location that has not been approved. The State agency must 
approve any changes in site service time or location after the initial 
site approval. However, USDA granted State agencies the flexibility to 
approve exceptions to this requirement for the operation of field trips 
under USDA Instruction 788-13: Sub-Sites in the Summer Food Service 
Program and policy guidance, Field Trips in the Summer Food Service 
Program (SFSP), February 3, 2003.
    USDA proposed codifying the flexibility to allow sponsors the 
option to receive reimbursement for meals served away from the approved 
site without requiring formal approval from the State agency, and 
establishing conditions that must be met in order for sponsors to 
receive reimbursement for these meals. The proposed rule:
     Requires sponsors to notify the State agency in advance 
that meals will be served away from the site.
     Permits State agencies to set time limits for how far in 
advance of the field trip sponsors would send notification to the 
administering agency.
     Requires sponsors of open sites to continue operating at 
the approved open site location while the field trip occurs, if 
feasible, or notify the community of the change in meal service and 
provide information about alternative open sites where community 
children can receive free summer meals.
    Under these proposed changes, sponsors must be capable of meeting 
program requirements and local health, safety, and sanitation standards 
during the field trip, and meals are required to be served at the 
approved meal service times.
Public Comments
    USDA received 29 comments addressing the proposal to allow 
reimbursement claims for meals served away from approved locations, 
including three form letter copies. Of these comments, 27 were 
supportive, and two were mixed. None of the comments USDA received for 
this provision were opposed. Thirteen of the comments received 
specifically addressed the condition that sponsors of open sites 
continue operating during field trips, or alert the public where 
children can access meals during those times. Of those, one was 
opposed, one was mixed, and the remaining were supportive of the 
condition as proposed.
    Proponents wrote that the proposed changes would simplify the 
process for State agencies and local program operators. A few 
respondents in support also provided recommendations for different 
aspects of the provision for

[[Page 57325]]

USDA to consider. An advocacy group wrote that proposed changes should 
not put undue burden on sites or allow State agencies to set 
unreasonable limits. Another commenter requested that USDA set time 
limits for notice and notification to the community.
    Several proponents also voiced concerns over the condition that 
sponsors of open sites should remain open. These commenters expressed 
concern for children who frequent open sites and rely on the 
availability of meals at these sites, while also acknowledging the 
burden on sponsors, particularly small sponsors, of maintaining a meal 
service at the site while administering a field trip. One of the 
commenters opposed the condition as written, stating that allowing 
sponsors to close sites during field trips would limit access for 
children who lack transportation to alternative sites. A State agency 
suggested that USDA consider a limitation that sites can close for 
field trips for no more than half of their weekly operation. Another 
respondent wrote that sponsors should be able to make the determination 
as to whether a site will remain open while field trips occur. A State 
agency requested clarification on several aspects of this proposal, 
including the appropriate amount of advanced notice, allowable 
circumstances for an open site to close, parameters for selecting 
alternative sites, State agency responsibility in monitoring sponsor 
compliance with this provision, and the requirement for advanced 
notification without formal approval.
    USDA also received two comments that provided suggestions that were 
out of scope for this proposal. One commenter recommended USDA consider 
expanding the definition of site to include a vehicle in order to 
assist in the expansion of the SFSP to rural sites. Another respondent 
wrote that it would be helpful for staff of smaller sites if SFSP staff 
did not necessarily have to attend a field trip to administer a meal.
USDA Response
    Consistent with the proposed rule, this final rule codifies the 
flexibility to allow sponsors the option to receive reimbursement for 
meals served away from the approved site. However, the final rule 
adjusts the requirements for maintaining a meal service at the site 
during a field trip and provides points of clarification in response to 
comments received.
    Sponsors must notify the State agency in advance that meals will be 
served away from the site, but formal approval of the alternative meal 
service is not required. If the State agency is not notified prior to 
the SFSP field trip, meals served may be considered ``consumed off-
site'' and the State agency has the discretion to not reimburse those 
meals. This procedure is similar to the notification requirements for 
field trips in the CACFP, where providers must notify either their 
sponsoring organization or the State agency in advance of a planned 
field trip. However, while obtaining formal approval of the off-site 
meal service for a field trip is not a requirement in order for the 
sponsor to receive reimbursement under this final rulemaking, the State 
agency has the discretion to require formal approval if deemed 
necessary.
    In addition, this final rule gives State agencies the discretion to 
set time limits for how far in advance of the field trip sponsors would 
send notification to the administering agency, as proposed. Though 
comments pointed to concerns over the time limit for advanced 
notification, including one commenter who requested that USDA set the 
limit for the amount of advanced notice needed, USDA prefers to allow 
State agencies to determine their individual notification deadlines in 
this instance.
    This final rule modifies a condition that must be met in order for 
sponsors of open sites to receive reimbursement for meals served away 
from approved locations. This rule requires sponsors of open sites to 
continue operating at the approved open site location while a field 
trip occurs. If this is not possible (for example, if there is limited 
staff coverage), the State agency may permit the sponsor to close the 
open site. In this case, the sponsor must notify the community of the 
change in meal service and provide information about alternative open 
sites that are likely to be accessible to community children so that 
they have continued access to free summer meals.
    In response to comments, USDA modified the condition to allow State 
agencies the discretion to permit sponsors of open sites to close 
operations at the approved location while the field trip occurs. USDA 
acknowledges that field trips are widely supported at sites and by 
sponsors as they are a fun, educational tool for children. On the other 
hand, open sites are intended to serve the community at large and 
closing open sites due to circumstances related to a field trip could 
prevent children in the community from receiving meals. USDA 
understands the importance of this flexibility for the occasional field 
trip, but emphasizes that this flexibility should not be used in a 
manner that habitually impacts operations at the approved open site 
location. While USDA recognizes the additional burden this stipulation 
may place on some sponsors, sponsors enter into a written agreement 
with State agencies that attests they are capable of operating the 
Program, and the site type they oversee. In consideration of this 
change, administering agencies should work closely with sponsors 
electing to operate a field trip and exercise special care to ensure 
that the sponsors of open sites have developed adequate procedures to 
resolve any potential issues. When it is not possible to continue 
operating at the approved site location, sponsors should have plans to 
ensure that children in the community are provided ample notification 
of changes in meal service and are directed to appropriate alternate 
sites to obtain a meal. In accordance with 7 CFR 225.7(g) and FNS 
Instruction 113-1, State agencies should take reasonable steps to 
assure meaningful access to the program, including providing 
notification of alternate site location in the languages of the 
individuals in the community that the site serves and in alternative 
formats for persons with disabilities. Furthermore, State agencies 
should consider site type during application to make sure sites are 
correctly classified and serving the community as intended.
    Finally, consistent with the proposed rule, in order to operate 
field trips in the SFSP, the sponsor must be capable of successfully 
operating the Program during an outing. When considering if sponsors 
are eligible to receive reimbursement for meals served away from 
approved sites, State agencies must determine that all program 
requirements, including all applicable State and local health, safety, 
and sanitation standards will be met while traveling and at the field 
trip meal service location.
    Accordingly, the final rule addresses meals served away from the 
approved site location during a field trip at redesignated Sec.  
225.6(i)(7)(v) and in a new Sec.  225.16(g).
ii. Timeline for Reimbursements to Sponsors
    Current regulations in Sec.  225.9(d)(4) require that State 
agencies must forward reimbursements to sponsors within 45 calendar 
days of receiving a valid claim. The regulations also require that if a 
sponsor submits a claim for reimbursement that is incomplete or 
invalid, the State agency must return the claim to the sponsor within 
30 calendar days with an explanation of the reason for disapproval. If 
the sponsor submits a complete revised claim, the State agency must 
take final action within 45

[[Page 57326]]

calendar days of receipt. These requirements are necessary to ensure 
that sponsors receive reimbursement for meals served in a timely 
manner.
    However, in recent years, USDA has received numerous inquiries and 
waiver requests to extend the timeline for taking final action on a 
claim for reimbursement beyond 45 calendar days of receiving a revised 
claim, due to concerns that the sponsor may have engaged in unlawful 
acts such as fraud. State agencies have stated that the 45 calendar day 
timeline to complete a final action is not sufficient to conduct a 
thorough review of all the sponsor's records and make a determination 
that the claim is valid.
    While Sec.  225.9(d)(10) of the regulations provides State agencies 
with the ability to use evidence found in audits, reviews, or 
investigations as the basis for nonpayment of a claim for 
reimbursement, the State agency may not be able to make this 
determination within the given timeframe. Therefore, the proposed rule 
exempted the State agency from requirements in Sec.  225.9(d)(4) to 
take final action on a claim within 45 calendar days of receipt of a 
revised claim if the State agency has reason to believe that the 
sponsor has engaged in unlawful acts that would necessitate an expanded 
review. In addition, the proposed rule clarified that even if a State 
agency determines, in accordance with Sec.  225.9(d)(10), that there is 
reason to believe the sponsor has engaged in unlawful acts, the State 
agency must still return the claim to the sponsor within 30 calendar 
days with an explanation of the reason for disapproval.
Public Comments
    USDA received 21 comments on the proposed changes to the timeline 
for reimbursement to sponsors, including three form letter copies. Of 
these, 18 were supportive, and three were mixed. Proponents stated that 
the exemption would allow State agencies the flexibility to further 
investigate questionable sponsor claims, particularly in instances 
requiring thorough and complex reviews.
    Several of the respondents provided comments on specific aspects of 
the provision. One commenter expressed concern about the 30 calendar 
day timeline to disapprove a sponsor's claim, stating that it may lead 
States to deny claims that may be valid and as a result increase 
appeals. Another commenter wrote that the 30 calendar day timeline 
would put State agencies in the position of processing a claim they are 
concerned is invalid to meet a regulatory timeframe. One respondent 
suggested that the State agency be given 45 days from receipt of the 
original claim to approve or deny the claim, rather than 30 days. The 
commenter also suggested that the disapproval be included in the 
exemption as well.
    Two State agencies supported the proposal, but requested 
clarification on the process for requesting an exemption. Another State 
agency asked if State agencies must take final action within the 30 
days of receipt, and if appeal rights must be issued within the 30 day 
timeframe as well even when the State agency elects to conduct an 
expanded review.
USDA Response
    This final rule codifies the proposed changes to the timeline for 
reimbursement to sponsors and adds additional clarity on providing 
notification to the sponsor and to USDA. Consistent with the proposed 
rule, the final rule exempts the State agency from requirements in 
Sec.  225.9(d)(4) to take final action on a claim within 45 calendar 
days of receipt of a revised claim if the State agency has reason to 
believe that the sponsor has engaged in unlawful acts that would 
necessitate an expanded review. In addition, the final rule clarifies 
that even if a State agency determines, in accordance with Sec.  
225.9(d)(10), that there is reason to believe the sponsor has engaged 
in unlawful acts, the State agency must still return the claim to the 
sponsor within 30 calendar days with an explanation of the reason for 
disapproval, and allow the sponsor to submit a revised claim as allowed 
by Sec.  225.9(d)(4). The State agency must complete final action on 
the revised claim once the review has concluded. Once final action is 
taken, the final rule specifies that the State agency must advise the 
sponsor of its rights to appeal consistent with the due process 
provided by the regulations in Sec.  225.13(a).
    In addition, the final rule provides more clarity on the process 
for a State agency to request an exemption provided under this 
provision. Consistent with current guidance on other one-time 
exceptions for claims, State agencies must notify the appropriate FNS 
Regional Office (FNSRO) that they suspect fraud and will be taking the 
exemption to the 45 day timeline to conduct an expanded review by 
submitting to the FNSRO a copy of the claim disapproval at the same 
time as it is provided to the sponsor.
    Some comments expressed concerns that the 30 calendar day timeframe 
forces State agencies to incorrectly process a claim. However, it 
appears that these commenters misunderstood the proposal. The proposed 
rule did not seek to make changes to the current regulations seen at 
Sec.  225.4(d)(4), but rather to clarify the responsibility of the 
State agency in this process, even when they suspect fraud. While USDA 
understands the commenters concerns, the process is consistent with 
other Child Nutrition Programs where the administering agency has a 
period of time in which they must notify the institution of an 
incomplete or incorrect claim that must be revised for payment. The 
purpose of this timeframe is to prevent withholding of a claim without 
notifying the sponsor that the claim is invalid or allowing the sponsor 
to submit a revised claim in a timely manner. After notifying the 
sponsor of disapproval of the claim within 30 calendar days of receipt, 
the State agency can extend the review and meal claims validations to 
determine if it is incomplete or invalid, and if the claim should be 
denied, in order to prevent the potential payment of a suspected 
unlawful claim. To aid sponsors whose claims are initially disapproved, 
this final rule adds additional language to clarify that, when 
returning the claim to the sponsor with an explanation of the reason 
for disapproval, the State agency must indicate how the claim must be 
revised in order for it to be payable.
    Accordingly, this rule amends regulations found in Sec.  
225.9(d)(4) to indicate that if a claim is determined to be potentially 
unlawful based on Sec.  225.9(d)(10), the State agency must still 
disapprove the claim within 30 calendar days with an explanation of the 
reason for disapproval and how the claim must be revised for payment. 
Additional changes to Sec.  225.9(d)(4) specify that the State agency 
notify the sponsor of its right under Sec.  225.13(a) to appeal a 
denied claim. This rule also amends Sec.  225.9(d)(10) to clarify that 
State agencies may be exempt from the 45 calendar day timeframe for 
final action in Sec.  225.9(d)(4) if more time is needed to complete a 
thorough examination of the sponsor's claim. In addition, this rule 
clarifies in Sec.  225.9(d)(10) that a State agency must provide 
notification to the FNSRO that it is taking the exemption to the 45 
calendar day timeframe at the same time as the sponsor's claim is 
disapproved.
iii. Requirements for Media Release
    Current regulations at Sec.  225.15(e) require all sponsors 
operating the SFSP, including sponsors of open sites, camps, and closed 
enrolled sites, to annually announce the availability of free meals in 
the media serving the area from

[[Page 57327]]

which the sponsor draws its attendance. The regulations specify that 
media releases issued by sponsors of camps or closed enrolled sites 
must include income eligibility standards, a statement about automatic 
eligibility to receive free meal benefits at eligible program sites, 
and a civil rights statement. However, USDA received questions from 
State agencies and analyzed data from management evaluations that show 
the current requirements are difficult to understand and implement 
correctly, leaving some State agencies and sponsors to make inadvertent 
errors in fulfilling the requirements. To assist sponsors, USDA issued 
guidance and resources encouraging State agencies to complete this 
requirement on behalf of all sponsors of open sites in their State 
through an all-inclusive Statewide media release (SFSP 07-2014, 
Expanding Awareness and Access to Summer Meals, November 12, 2013).
    USDA proposed codifying current guidance allowing State agencies 
the discretion to issue a media release on behalf of all sponsors 
operating SFSP sites, including camps, in the State. The proposed rule 
clarifies that, in the absence of a Statewide notification, sponsors of 
camps and other sites not eligible under Sec.  225.2, sub-sections (a) 
through (c), in the definition of ``areas in which poor economic 
conditions exist,'' are only required to notify participants or 
enrolled children of the availability of free meals and do not need to 
issue a media release to the public at large. Finally, the proposed 
rule renames the section, ``Notification to the Community,'' to more 
accurately describe the types of activities required of sponsors.
Public Comments
    USDA received 28 comments addressing the proposed changes to 
requirements for media release, including three form letter copies. Of 
these, 21 were supportive, and two were mixed. The remaining five 
comments supported the proposed changes, but expressed concerns with 
certain aspects of the provision.
    Proponents stated that the proposed changes would relieve 
administrative burden for State agencies and sponsors. Proponents also 
agreed that sponsors of camps and other sites not eligible under the 
definition of ``areas in which poor economic conditions exist'' must 
only notify participants or enrolled children of the availability of 
free meals. One respondent wrote that restructuring the language to 
clearly identify that sponsors of closed enrolled and camp sites only 
need to notify participants or enrolled children of the availability of 
free meals would help alleviate some of the current confusion around 
the media release requirement for these types of sites. However, 
several comments expressed concern about aspects of the proposed 
changes for sponsors of closed enrolled sites. One commenter wrote that 
the stipulation should be required for sponsors of all closed enrolled 
sites and not just those that are not eligible under Sec.  225.2, sub-
sections (a) through (c), in the definition of ``areas in which poor 
economic conditions exist.'' Several commenters supported the statewide 
media release, but requested that State agencies be able to use a 
statewide media release without being required to include closed 
enrolled sites and camps since the release is for the public at large.
    Several respondents voiced concerns over the public receiving the 
correct information if site information is released at the state level. 
Two State agencies wrote that a media release should still be required 
for open sites in some format. One State agency reasoned that State 
agencies do not have knowledge of local media outlets needed for a 
successful media release campaign. Another State agency supported the 
proposed provision, but would want to train sponsors on the benefit of 
submitting individual media releases to assist with local level 
promotion efforts.
USDA Response
    In accordance with the proposed rule, this final rule codifies 
current guidance allowing State agencies the discretion to issue a 
media release on behalf of all sponsors operating SFSP sites in the 
State, including camps and closed enrolled sites. In addition, this 
final rule modifies the proposed language to make clear that closed 
enrolled sites are only required to notify participants or enrolled 
children of the availability of free meals and if a free meal 
application is needed. Finally, this final rule renames this section, 
``Notification to the Community,'' to more accurately describe the 
types of activities required of sponsors.
    This final rule requires State agencies using the option to issue a 
statewide media release to ensure that all notification requirements 
for camps and closed enrolled sites are met. USDA acknowledges 
commenters' concerns regarding State agencies' ability to effectively 
communicate information for particular site types in a statewide media 
release, and emphasizes that this is an optional flexibility. State 
agencies have the discretion to require sponsors to follow the 
requirements for notification to the community if deemed appropriate. 
As a best practice, USDA encourages sponsors to maintain promotion and 
outreach efforts at the local level, even when the State agency elects 
to issue a statewide notification. In all cases, State agencies and 
sponsors have a responsibility to take reasonable steps to ensure 
meaningful access to their programs and activities by people with 
limited English proficiency and those with disabilities, in accordance 
with 7 CFR 225.7(g) and FNS Instruction 113-1. This includes providing 
notification in the languages of the individuals in the community that 
a site will serve, and in alternative formats for persons with 
disabilities.
    USDA understands the concerns of commenters who said that it would 
be confusing to require closed enrolled sites that are eligible under 
Sec.  225.2, sub-sections (a) through (c), in the definition of ``areas 
in which poor economic conditions exist,'' (i.e., those that use 
community data to determine area eligibility) to provide notification 
to the public at large in the same manner as an open site. Such 
notifications would not benefit the public because the advertised meal 
service at these sites is not open to the public. The final rule 
clarifies that, in the absence of a Statewide notification, sponsors of 
camps and all closed enrolled sites are only required to notify 
participants or enrolled children of the availability of free meals and 
do not need to issue a media release to the public at large. However, 
closed enrolled sites must also notify participants or enrolled 
children if a free meal application is needed so that the participants 
or their families know if they are expected to submit a free meal 
application. These modifications limit the sponsor's responsibility to 
notify only those who could potentially receive meals at the site.
    A State agency suggested modifying the press release that State 
agencies are required to submit prior to February 1st each year (7 CFR 
225.6(a)(2)) to fulfill the requirement in Sec.  225.15(e) to announce 
the availability of free meals in the media serving the area from which 
the sponsor draws its attendance. While USDA appreciates the 
suggestion, the two releases serve different, but equally important 
purposes, and therefore, it is necessary to issue these releases 
separately. The February 1st press release is used to actively seek 
eligible applicant sponsors to serve priority outreach areas. The 
notification to the community alerts the community about the 
availability of meals, and may provide information about sites that is 
generally unavailable or unknown prior to the February 1st press 
release.

[[Page 57328]]

    Finally, the final rule renames this section, ``Notification to the 
Community,'' to more accurately describe the types of activities 
required of sponsors, including sponsors of camps and closed enrolled 
sites that will no longer be required to issue a media release.
    Accordingly, this rule amends Sec.  225.15(e) by renaming the 
subsection ``Notification to the Community,'' specifying that State 
agencies may issue a media release on behalf of all sponsors operating 
open SFSP sites in the State, and clarifying that sponsors of camps and 
closed enrolled sites must only notify participants or enrolled 
children of the availability of free meals.
iv. Annual Verification of Tax-Exempt Status
    In order to be eligible to participate in the SFSP, sponsors must 
maintain their nonprofit status (Sec. Sec.  225.2 and 225.14(b)(5)). In 
2011, the Internal Revenue Service (IRS) changed its filing 
requirements for some tax-exempt organizations. Failure to comply with 
these requirements could result in the automatic revocation of an 
organization's tax-exempt status. Due to this change, USDA released 
guidance for confirming sponsors' tax-exempt status, which requires 
that State agencies annually review a sponsor's tax-exempt status (SFSP 
04-2017, Automatic Revocation of Tax-Exempt Status--Revised, December 
1, 2016).
    To ensure compliance with the filing requirements, the proposed 
rule amends Sec.  225.14(b)(5) to codify the requirement for annual 
confirmation of tax-exempt status at the time of application.
Public Comments
    USDA received 18 comments addressing the annual verification of 
sponsors' tax-exempt status including three form letter comments. All 
of the comments were supportive of the proposal. One respondent 
supported the proposed provision, but suggested that USDA work with the 
IRS to streamline the process for State agencies to determine an 
applicant's nonprofit status.
USDA Response
    All comment submissions expressed support for the proposal without 
opposition. Thus, this final rule makes no changes from the proposed 
rule. USDA acknowledges that annually verifying the tax-exempt status 
of nonprofit organizations may be time consuming for State agencies, 
however, modifying filing requirements is outside the scope of USDA's 
authority. State agencies are responsible for approving and overseeing 
sponsors to operate the SFSP, and thus play an integral part in 
maintaining program integrity. This requirement is necessary to ensure 
program compliance, protection of Federal funds, and fiscal 
responsibility. Accordingly, this rule codifies the requirement for 
annual confirmation of tax-exempt status at the time of application by 
amending Sec.  225.14(b)(5).

F. Important Definitions in the SFSP

i. Self-Preparation Versus Vended Sites
    Current regulations in Sec.  225.2 define the terms ``self-
preparation sponsor'' and ``vended sponsor.'' These definitions are 
critical to the proper administration of the SFSP because reimbursement 
rates are determined, in part, by the sponsor's classification as 
either self-preparation or vended. Per statutory requirements, 
reimbursement rates are calculated using operating and administrative 
costs (42 U.S.C. 1761(b)(1) and 42 U.S.C. 1761(b)(3)) to determine a 
reimbursement rate for each meal served. Rates are higher for sponsors 
of sites located in rural areas and for ``self-preparation'' sponsors 
that prepare their own meals at sites or at a central facility instead 
of purchasing from vendors. This is due to the higher administrative 
costs associated with program operation in rural areas and preparing 
meals rather than contracting with a food service management company. 
Therefore, correct classification of self-preparation or vended 
sponsors is necessary for proper program management and maintaining the 
fiscal integrity of the Program when site-based claiming is not 
feasible.
    Advances in technology have allowed State agencies and sponsors to 
develop increasingly sophisticated reporting systems that are capable 
of collecting detailed information on the number and type of meals 
being served. Many State agencies have developed the ability to 
classify individual sites as self-preparation or vended, rather than 
classifying a sponsor and all of its sites as one type or the other. 
USDA is aware that some State agencies that have these capabilities 
also provide reimbursements based on the classification of the 
individual sites. This is significant because providing reimbursements 
to sponsors that operate a mix of sites based on the individual site 
classification is more accurate and helps protect the integrity of the 
SFSP.
    In recognition of the advances being made at the State agency and 
local level, USDA proposed to add definitions for ``self-preparation 
site'' and ``vended site,'' and to require that sponsors and sites 
include information about how meals will be obtained for each site in 
their application to participate in the SFSP.
    Further, to better understand the current state of claiming systems 
nationwide and the implications for policy development, including 
potential changes to regulatory requirements, USDA requested specific 
comments on the following questions:
     How many State agencies have systems that are capable of 
receiving claims at the site level? Are any State agencies currently 
receiving claims at the site level and providing reimbursement based on 
the individual site classification?
     What are the costs and benefits of implementing systems 
that can receive claims at the site level?
     How common or uncommon is it for a site to use two 
different methods of obtaining meals (e.g., offering a self-prepared 
breakfast and a vended lunch)?
     Do any State agencies have systems that are able to 
account for different methods of obtaining meals within the same site?
     What would be the impact on claiming and monitoring of 
collecting and paying claims at the site level?
Public Comments
    USDA received 29 comments regarding the addition of these 
definitions, including three form letter copies. Of these comments, 11 
were supportive, two were partially supportive, and 16 comments had 
mixed or neutral opinions regarding the proposal.
    Stakeholders also submitted comments responding to specific 
questions posed in the proposed rule. USDA received:
     22 comments regarding how many State agencies have systems 
that are capable of receiving claims at the site level, and whether any 
State agencies are currently receiving claims at the site level and 
providing reimbursement based on the individual site classification.
     12 comments regarding the costs and benefits of 
implementing systems that can receive claims at the site level.
     17 comments regarding how common or uncommon is it for a 
site to use two different methods of obtaining meals (e.g., offering a 
self-prepared breakfast and a vended lunch).
     17 comments regarding whether any State agencies have 
systems that are able to account for different methods of obtaining 
meals within the same site.
     13 comments regarding the potential the impact on claiming 
and monitoring of collecting and paying claims at the site level.

[[Page 57329]]

    Proponents of these definitions included an advocacy group and 
State agencies, who stated that their systems are already equipped to 
process reimbursement for site-level claims.
    Proponents that partially supported the definitions voiced concerns 
about some of the terminology used. Specifically, these commenters 
highlighted that use of the term ``food service management company'' 
could generate confusion because it is used in other Child Nutrition 
Programs where the meaning is slightly different. A State agency also 
believed that the proposed definition overlooked instances in which a 
self-preparation site received meals that were prepared at a sponsor 
organization's central kitchen.
    State agencies also submitted mixed or neutral opinions on the 
definitions. While some of these comments echoed concerns about the use 
of the term ``food service management company,'' other comments 
centered on the specific requests for comments presented in the 
proposed rule. Most of the responses indicated that State agency 
systems already include mechanisms to receive reimbursement claims at 
the site level. Few State agencies provided information on the cost to 
upgrade systems because many State agencies noted that there would be 
zero cost as their systems can currently collect site-level claims. 
However, others estimated that it could be costly, but that actual 
expenses would ultimately be determined by whether the system is 
developed in-house or by an external entity. Responses also indicated 
that it was not common for sites to utilize two different methods of 
attaining meals, and thus very few State agencies reported having 
systems capable of making this sort of distinction. Finally, State 
agencies noted that they did not anticipate an impact on claiming and 
monitoring from collecting and paying claims at the site level because 
these State agencies already had site-level claiming mechanisms. A 
State agency also expressed that the impact would be positive because 
collecting and paying claims at the site level would increase 
integrity. However, two State agencies wrote that site-level claiming 
posed a significant administrative burden as the agencies would need to 
update their systems and increase monitoring. These comments further 
noted that there may be an increase in claim processing costs due to 
the increase in entities that would need to be paid directly.
USDA Response
    This final rule codifies the definitions of self-preparation and 
vended sites with revisions to provide additional clarity, and codifies 
as proposed the requirement that sponsors provide a summary of how 
meals will be obtained at each site when applying to participate in the 
SFSP.
    USDA seeks to increase program integrity through this rulemaking. 
To satisfy this goal, any added definitions must be as clear as 
possible. In order to avoid the potential terminology confusion cited 
by the comments, USDA re-examined the proposed definitions and has 
modified the language to better reflect the types of arrangements found 
in SFSP operations. While the term ``food service management company'' 
is still used in the definitions, the revised language clarifies its 
applicability. Likewise, the definition of a self-prep site has been 
amended to indicate that these sites may receive meals prepared at 
their sponsor's central kitchen. Establishing clear definitions of 
self-prep and vended sites will help ensure that site-based claims are 
accurate for States that provide reimbursements based on the 
classification of the individual sites.
    Commenters and USDA's own monitoring activities have indicated that 
all but several State agencies have systems that are equipped with 
site-level claiming mechanisms. USDA appreciates the efforts that State 
agencies have made to employ technological advances to modernize agency 
systems. Comments also indicated that there would be no impact on 
program operations in most States to implement site-level claiming 
because of this. However, among several State agencies with systems 
that are not currently configured for site-level claiming, State 
agencies noted a belief that implementation would result in increased 
costs due to additional monitoring and system requirements.
    Collecting information about how sites will obtain their meals as 
part of the sponsor's application will aid State agencies to ensure 
proper accounting during claims processing. States that process claims 
at the site level need this information to determine the rate at which 
meals will be reimbursed for each site. For States that process claims 
at the sponsor level, information on the sponsor's sites is critical to 
determining whether the sponsor should be deemed self-prep or vended. 
Thus, although USDA is not requiring State agencies to collect site-
level claims at this time, sponsors will be required to submit a 
summary of how meals will be obtained by a site as part of their 
application for program participation.
    Finally, USDA is aware that most States are currently able to 
process site-based claims for SFSP sponsors, which makes the 
classification of sponsors as being either self-prep or vended no 
longer relevant for those States. However, sponsor classifications are 
still needed for State agencies that are not yet able to process claims 
at the site level. Therefore, although this rule establishes 
definitions for self-prep and vended sites, USDA is retaining the 
sponsor level definitions, which apply for States that are claiming at 
the sponsor level. However, because site-level claiming is a more 
accurate and efficient means of determining reimbursements, USDA 
encourages all State agencies to work toward adopting that method. USDA 
has created these site definitions to complement existing site-level 
claiming processes and ensure that State agencies categorize sites 
accurately and consistently.
    Accordingly, this rule adds definitions to Sec.  225.2 for ``self-
preparation site'' and ``vended site.'' In addition, this rule amends 
Sec. Sec.  225.6(c)(2)(viii) and 225.6(c)(3)(vi) to require a summary 
of how meals will be obtained at each site as part of the sponsor 
application.
ii. Eligibility for Closed Enrolled Sites
    The current definition of closed enrolled sites included in Sec.  
225.2 requires that at least 50 percent of the enrolled children at the 
site are eligible for free or reduced-price meals under the NSLP and 
the SBP, as determined by approval of applications in accordance with 
Sec.  225.15(f). This provision outlines the requirement to use income 
eligibility forms to ``determine the eligibility of children attending 
camps and the eligibility of sites that are not open sites as defined 
in paragraph (a) of the definition of `areas in which poor economic 
conditions exist' in Sec.  225.2''. To reduce administrative burden on 
sponsors, USDA published guidance in 2002 that permitted closed 
enrolled sites to establish eligibility based on data of children 
eligible for free and reduced-priced meals in the area where the site 
was located (Summer Food Service Program (SFSP) Waiver for Closed 
Enrolled Sites, November 17, 2002). During the 15 years in which this 
nationwide waiver was active, this flexibility was shown to reduce 
administrative burden on sponsors of closed enrolled sites and 
eliminate barriers to participation for children and families enrolled 
at these sites.
    The waiver noted above was rescinded in 2018, as discussed in the 
background section of this final rule. Beginning in summer, 2019 State 
agencies and program operators were allowed to request a waiver on an 
individual basis. Between summers

[[Page 57330]]

2019 and 2020, 43 States requested waivers for area eligibility for 
closed enrolled sites. Feedback received during the waiver process 
confirms that a reduction in administrative burden and elimination of 
barriers to participation remain the principal benefits of permitting 
closed enrolled sites to rely on area eligibility rather than 
applications. Requests from 36 out of 40 State agencies that requested 
waivers in 2019 noted that the reduction in administrative costs can be 
more productively invested in technical assistance and oversight to 
improve the quality of services provided to participants. Further, the 
Healthy, Hunger-Free Kids Act of 2010, Public Law 111-296, amended the 
definition of ``areas in which poor economic conditions exist'' in the 
NSLA. This revised definition allows for enrolled sites to demonstrate 
eligibility through ``other means approved by the Secretary.'' As a 
result, USDA proposed to codify the flexibility allowing use of area 
eligibility to determine eligibility for closed enrolled sites.
Public Comments
    USDA received 52 comments on this provision, including nine form 
letter copies. Of these, 45 were in support, three expressed partial 
support, three were in opposition, and one expressed a mixed opinion.
    Proponents of the provision cited the benefits to program 
participants and administrators, including reduced administrative 
burden and increased program access. Commenters who partially supported 
the provision requested that the 50 percent threshold required in the 
definition of ``area in which poor economic conditions exist'' be 
decreased to 40 percent. A commenter also stated that the proposed 
description of closed enrolled sites in subpart (d) of the definition 
of ``areas in which poor economic conditions exist'' could be confusing 
because closed enrolled sites do not need to be located in such an 
area.
    Opponents voiced concerns that the provision could increase 
incidence of sites that would otherwise have operated as an open site, 
electing to operate as a closed enrolled site, thereby decreasing 
program access for children who live in the community but are not 
enrolled at the site. The commenters also expressed apprehension that 
the reference population used to qualify for closed enrolled status 
would not be the population that is ultimately served by the site.
USDA Response
    This final rule codifies, as proposed, changes allowing closed 
enrolled sites to use area eligibility to determine site eligibility. 
This rule also includes additional changes which require State agencies 
to have criteria for approving closed enrolled sites to ensure 
operation of a site as closed enrolled does not limit access to the 
community at large.
    USDA strives to streamline and reduce administrative burden where 
possible. Codifying guidance permitting closed enrolled sites to 
establish eligibility based on data of local children eligible for free 
and reduced-price meals supports that goal.
    In response to commenters who suggested lowering the threshold for 
area eligibility to 40 percent, changes to how area eligibility is 
determined are beyond the scope of this rulemaking. Further, the 50 
percent threshold outlined in the definition of ``areas where poor 
economic conditions exist'' is a statutory limit found at 42 U.S.C. 
1761(a)(1)(i). USDA is not permitted to regulate against the authority 
delegated to the Department through statute. USDA is obligated to 
observe this threshold and cannot lower it. Therefore, this rule 
codifies previous guidance with no further modifications.
    USDA also understands the concerns associated with the correlation 
between potential increases in closed enrolled site locations and 
decreases in program access. However, in approving sponsor applications 
for SFSP participation, State agencies play a central role in 
safeguarding program access. State agencies should closely examine each 
closed enrolled site application, and assess the effect that approving 
the application could have on program access in the area the site is 
located. Operating as an open site should be encouraged where possible, 
thus State agencies should discuss with the respective sponsoring 
organization whether a closed enrolled designation for a potential site 
is absolutely necessary. As such, USDA is requiring that State agencies 
establish criteria for approving closed enrolled sites to ensure 
operation of a site as closed enrolled does not limit program access to 
the community at large.
    Accordingly, this final rule amends the definitions of ``areas in 
which poor economic conditions exist'' and ``closed enrolled site'' in 
Sec.  225.2 to clarify eligibility requirements and include eligibility 
determination based on area data of children eligible for free and 
reduced-price meals. This final rule also updates redesignated 
Sec. Sec.  225.6(g)(1)(ix) and 225.6(g)(2)(iii) to establish the 
frequency at which the site must re-establish eligibility, if based on 
area data as described in section III. G. ii of this final rule. 
Further, this rule makes a technical correction to Sec.  225.15(f) to 
reflect changes made to the definition of ``areas in which poor 
economic conditions exist.'' Finally, this rule amends Sec.  
225.6(a)(2) to require State agencies to establish criteria for closed 
enrolled sites.
iii. Roles and Responsibilities of Site Supervisors
    The site supervisor plays a critical role in managing and 
maintaining quality at an SFSP site. Although USDA has provided 
technical assistance to aid site supervisors to perform their jobs, 
regulations did not include a definition of site supervisor that 
clearly addresses their core responsibilities, including the 
requirement that the site supervisor is on site during the meal 
service. Providing such a definition would help sponsors and sites 
comply with program requirements and improve program integrity. 
Therefore, USDA proposed to add a definition of ``site supervisor'' to 
clarify this role and its relationship to program operations.
Public Comments
    USDA received 19 comments on this provision, including three form 
letter copies. Of these, 14 were in support, four expressed partial 
support, and one was in opposition.
    Proponents expressed that the addition of this definition would 
provide clarity for State agencies and sponsors. Comments that 
partially supported the provision stated that the proposed definition 
presumed that one person undertakes all activities listed for the site 
supervisor, which may not be the case at some sites. Specifically, 
commenters noticed that the definition requires site supervisors to 
order meals, and noted that, in some instances, meal counts are handled 
by the sponsor or the sponsor's central kitchen. Another commenter 
recommended adding a reference to the term ``site supervisor'' in Sec.  
225.14 of the regulations to prevent relevant parties from failing to 
notice the addition of the definition.
    A State agency opposed the provision citing their belief that the 
requirement that the site supervisor remain on site for the duration of 
the meal service is burdensome. A State agency also expressed concern 
that the definition precluded the site supervisor's ability to delegate 
functions as needed, and asserted that supervisors may be in charge of 
multiple sites with similar meal times that require their attention.

[[Page 57331]]

USDA Response
    This final rule codifies the definition of site supervisor as 
proposed, with a minor change added to the regulations to support the 
definition's inclusion.
    USDA agrees that the roles and responsibilities of sponsor and site 
staff vary across different sites. However, in all cases, the site 
supervisor plays an integral role in supporting the SFSP, and provides 
front-line assistance in maintaining program integrity and efficient 
operations. USDA recognizes that the duties that are included in the 
definition of site supervisor may need to be performed by more than one 
staff member at the site. The site supervisor is the individual 
ultimately responsible for overseeing operations at the site and must 
be on site for the duration of every meal service. However, the site 
supervisor may delegate tasks to another staff member so long as that 
staff member is overseen by the site supervisor and has appropriate 
training for the role that the individual is expected to fill. It is at 
the State agency's discretion whether the sponsor must inform that 
State agency when a site supervisor delegates their duties to another 
staff member.
    Additionally, USDA understands that the site supervisor may not be 
the individual responsible for ordering meals, and has revised the 
definition to more accurately reflect the site supervisor's duties 
including maintaining documentation of meal deliveries, ensuring that 
all meals served are safe, and maintaining accurate point of service 
meal counts.
    USDA also recognizes the usefulness of having a reference to the 
term ``site supervisor'' in a portion of the regulation that is likely 
to be reviewed by relevant parties. Therefore, USDA had added such a 
reference to Requirements for sponsor participation at Sec.  
225.14(c)(4).
    Accordingly, this final rule adds a definition of ``site 
supervisor'' at Sec.  225.2 and adds a reference to ``site supervisor'' 
at Sec.  225.14(c)(4).
iv. Unaffiliated Sites
    SFSP sponsors often have a legal affiliation with their sites, such 
as a Department of Parks and Recreation sponsoring the SFSP at one of 
its recreation centers. However, a sponsor may have no legal 
affiliation with a site that it is sponsoring other than an agreement 
to conduct a meal service at the site. For example, a Department of 
Parks and Recreation sponsoring the SFSP at a church. Section III. C. 
iii. of this final rule codifies new site selection criteria for State 
agencies to use during sponsor reviews, and includes affiliation with 
the sponsor as a characteristic that will be reflected in a sponsor's 
sample of sites. The regulations lacked a definition of an unaffiliated 
site, and so USDA proposed to add a definition that an ``unaffiliated 
site'' means a site that is legally distinct from the sponsor.
Public Comments
    USDA received 29 comments on this provision, including 10 form 
letter copies. Of these, 13 were supportive, one was opposed, and 15 
were mixed. Proponents, all of whom were State agencies, appreciated 
the clarification provided by defining an unaffiliated site. Opponents 
included sponsoring organizations, general advocacy groups, and a few 
State agencies. These commenters expressed concern that the proposal 
would change the way that unaffiliated sites are approved or monitored, 
making it more difficult for sponsors to serve them. Some cited 
challenges for unaffiliated centers to participate in the CACFP, and 
expressed concerns that unaffiliated sites in the SFSP may face similar 
challenges. Commenters noted that the SFSP has many small sites which 
are not capable of administering the Program on their own, but can 
offer a vital service to their communities with the help of sponsors 
with which they have no legal affiliation. A few commenters asked for 
more information about the relationship between unaffiliated sites and 
their sponsors, and how to distinguish unaffiliated sites. One State 
agency that opposed the provision expressed concern about USDA adding 
this definition before publishing a final Child Nutrition Program 
Integrity rule, since the proposed rule included provisions related to 
unaffiliated centers in the CACFP.
USDA Response
    This final rule codifies the definition of ``unaffiliated site'' as 
proposed. The purpose of adding this definition is simply to provide a 
name for a type of business arrangement that currently exists in the 
SFSP. The addition of this definition does not change anything about 
how unaffiliated sites may participate in the SFSP or how they are 
monitored. There are many different ways that a sponsor and the 
unaffiliated sites that it sponsors may structure their relationship, 
none of which will change with the addition of this definition. In 
response to the commenters who asked for guidance on identifying an 
unaffiliated site, in general, affiliated sites are part of the same 
legal entity as the sponsoring organization, while an unaffiliated site 
is not generally part of the same legal entity as its sponsoring 
organization.
    Although the term `unaffiliated site' is used in the CACFP to 
describe a similar type of business arrangement, the CACFP has 
different program requirements that affect a sponsor's relationship 
with its centers. As a result, it does not follow that unaffiliated 
SFSP sites will have the same challenges as unaffiliated centers in the 
CACFP, nor it is necessary for USDA to wait for publication of a final 
Child Nutrition Integrity rule to codify this definition.
    Accordingly, this rule codifies the following definition in Sec.  
225.2 for ``unaffiliated site:'' a site that is legally distinct from 
the sponsor.
v. Unanticipated School Closure
    The primary purpose of the SFSP is to maintain meal service for 
children during the summer months when school is not in session. 
However, the SFSP also plays an important role in serving children 
during the school year in times of emergency or unexpected incidents 
that disrupt school meals programs. The NSLA permits service 
institutions to provide meal services to children who are not in school 
for a period during the months of October through April due to a 
natural disaster, building repair, court order, or similar cause. The 
statute further requires that the meal service must take place at non-
school sites. While the regulations provided requirements for approving 
sponsors to serve during unanticipated school closures, there was not a 
specific regulatory definition of unanticipated school closure. USDA 
proposed adding a definition of ``unanticipated school closure'' that 
aligns with statutory requirements outlined in section 13(c)(1) of the 
NSLA, 42 U.S.C. 1761(c)(1), and existing regulatory provisions related 
to unanticipated school closures. Including this definition would also 
allow regulatory text to be streamlined and remove duplicative and 
repetitive references throughout the regulations. It is important to 
note that the proposed rule was published in January 2020, before the 
COVID-19 public health emergency triggered school closures nationwide, 
causing schools to serve SFSP meals during unanticipated school 
closures, in conjunction with Families First Coronavirus Response Act 
(FFCRA) Nationwide Waiver authority, on a scale and for a duration that 
was without precedent. However, the COVID-19 public health emergency 
was declared at the beginning of the comment period, so some commenters 
discussed the

[[Page 57332]]

impacts of COVID-19 in their submissions.
Public Comments
    USDA received 22 comments on this provision, including four form 
letter copies. Of these, five were in support, 15 expressed partial 
support, and two held a mixed or unclear position.
    Proponents, all of whom were State agencies, expressed a belief 
that the definition aligns with existing policy and would provide 
clarity for program operators and administrators.
    Commenters who partially supported the definition included State 
agencies, sponsors, general advocacy groups, individuals, and a Federal 
elected official. These commenters and a State agency whose comment was 
mixed voiced a desire for schools to be permitted to operate as sites 
during unanticipated school closures. The commenters placed particular 
emphasis on sites sponsored by SFAs in good standing, and schools that 
were not affected by the cause of the school closure. Additionally, 
these commenters suggested that, in recognition of the ongoing pandemic 
and the potential for similar events to occur in the future, the 
definition be modified to include public health emergencies, and State-
level disasters or emergencies as justification for SFSP use.
    One commenter whose feedback was mixed suggested that USDA 
reconsider the proposed definition because it is ill suited for the 
circumstances, without offering specific recommendations for 
improvements.
USDA Response
    This final rule codifies the definition of ``unanticipated school 
closure'' as proposed.
    USDA understands why some commenters requested that sponsors be 
able to serve meals at school sites during unanticipated school 
closures. In some situations, the school site is safe for a meal 
service and would be an efficient place for children to receive a meal. 
However, the NSLA clearly limits meal service locations during an 
unanticipated school closure to ``non-school sites.'' USDA has, at 
times, allowed implementation practices that are contrary to the 
statute. When such practices are discovered, USDA revises program 
guidance and provides training and technical assistance to ensure that 
State agencies and program operators implement the Program in 
accordance with the law. In the past, USDA issued guidance permitting 
SFA sites to serve meals during unanticipated school closures, which 
was inconsistent with the law; this guidance has since been corrected. 
Due to the exceptional circumstances of the COVID-19 pandemic, USDA 
used the authority provided by the Families First Coronavirus Response 
Act (FFCRA), as amended, to allow meal service during unanticipated 
school closures at schools. Likewise, USDA has the ability to issue 
similar waivers on an individual basis through its waiver authority in 
section 12(l) of the NSLA (42 U.S.C. 1760(l)). However, USDA intends 
for SFSP regulations to remain in agreement with the statue and will 
not codify a rule allowing meal service at school sites during 
unanticipated school closures because this practice is not supported by 
the NSLA.
    Some commenters suggested that the definition of ``unanticipated 
school closure'' should be revised to reference public health 
emergencies and State-level disasters or emergencies. USDA does not 
find this specificity is needed as the ``similar cause'' clause of the 
proposed definition provides State agencies the discretion to approve 
program operators to serve SFSP meals during unanticipated school 
closures in circumstances including public health emergencies and 
State-level disasters or emergencies. Therefore, these references are 
not necessary for continued use of the SFSP in this manner. Further, 
FNS did not propose substantive changes to the regulatory requirements 
for meal service during unanticipated school closures in this 
rulemaking. Given the public's strong interest in meal service options 
during school closures after the COVID-19 public health emergency 
caused nationwide school disruptions, USDA has determined that it would 
not be appropriate to make changes to policies on meal service during 
unanticipated school closures without first proposing and soliciting 
comments on such changes. For this reason, USDA is codifying the 
proposed changes, which add a new definition, but otherwise maintaining 
current policy for meal service during unanticipated school closures. 
State agencies and program operators may refer to current guidance on 
meal service during unanticipated school closures (SFSP 04-2020, Meal 
Service During Unanticipated School Closures, November 5, 2019) and on 
the process for requesting a waiver of these requirements as discussed 
in section G.i of this rule. Accordingly, this rule adds to Sec.  225.2 
a definition of ``unanticipated school closure.'' In addition, this 
final rule revises all references to unanticipated school closures in 
Sec.  225.
vi. Nonprofit Food Service, Nonprofit Food Service Account, Net Cash 
Resources
    The proposed rule included definitions of ``nonprofit food 
service,'' ``nonprofit food service account,'' and ``net cash 
resources.'' Proper administration of a nonprofit food service and 
appropriate management of program funds are critical to the integrity 
of the SFSP. Therefore, providing clear and consistent definitions for 
these terms will promote program integrity. To create consistency 
across Child Nutrition Programs, the proposed definitions also align 
with the terms already defined under the NSLP in 7 CFR 210.2.
Public Comments
    USDA received 16 comments on this provision, including three form 
letter copies. Of these, 15 were supportive, one was opposed, and none 
were mixed. Proponents said that State agencies and sponsors will 
benefit from the addition of consistent definitions. However, one State 
Agency asked for additional resources to train sponsors on these 
concepts.
    Several commenters, including one who was opposed, expressed 
concern that the addition of these definitions would impact existing 
requirements related to excess funds and allowable levels of net cash 
resources. One commenter wrote that the proposed definition for net 
cash resources implies that only zero net cash resources are allowable 
and asked USDA to retain the current requirements for net cash 
resources limits.
    One commenter pointed out an inconsistency with the proposed 
definitions: the definition of ``nonprofit food service'' references 
``schoolchildren,'' while the definition of ``nonprofit food service 
account'' references ``children.''
USDA Response
    This final rule codifies the definitions of ``nonprofit food 
service account'' and ``net cash resources'' as proposed. The 
definition of ``nonprofit food service'' is codified with a technical 
correction.
    USDA appreciates the commenter who pointed out that the definition 
of ``nonprofit food service account'' references ``schoolchildren.'' 
This definition should reference ``children'' since the SFSP is not 
available to children when they are in school. This final rule corrects 
the definition.
    The addition of these definitions does not change the requirement 
for a sponsor to maintain a nonprofit food service in accordance with 
redesignated

[[Page 57333]]

Sec.  225.6(i)(1), nor does it change the requirement in Sec.  
225.15(a)(4) that a sponsor may not exceed one month's average 
expenditures for sponsors operating only during the summer months and 
three months' average expenditures for sponsors operating Child 
Nutrition Programs throughout the year. Likewise, the requirements in 
Sec.  225.9(c)(6) related to excess advanced payments remain unchanged.
    Accordingly, this final rule amends regulations found at Sec.  
225.2 to add definitions for ``nonprofit food service,'' ``nonprofit 
food service account,'' and ``net cash resources.''

G. Miscellaneous

i. Authority To Waive Statute and Regulations
    Section 12(l) of the NSLA (42 U.S.C 1760(l)) provides the Secretary 
with the authority to waive program requirements for States or eligible 
service providers if it is determined that the waiver would facilitate 
the ability of the States or eligible service provider to carry out the 
purpose of the Program, and the waiver will not increase the overall 
cost of the Program to the Federal Government. This waiver authority 
applies to statutory requirements under the NSLA or the Child Nutrition 
Act of 1966 (CNA) (42 U.S.C. 1771 et seq.) and any regulations issued 
under either Act. The Secretary does not have the authority to waive 
certain requirements including, but not limited to, the nutritional 
content of the meals served, Federal reimbursement rates, or the 
enforcement of any statutory right of any individual. In addition, the 
Secretary may not waive program requirements that originate in other 
laws such as the Civil Rights Act of 1964. It is important to note 
that, although this rule primarily affects the SFSP, the Secretary's 
waiver authority applies to all Child Nutrition Programs including the 
SFSP, NSLP, SBP, Special Milk Program, Fresh Fruit and Vegetable 
Program, and the CACFP. Although regulations are not needed to continue 
implementing waivers, adding waiver authority to the regulations 
provides clarity for States and program operators.
    The State is responsible for the overall administration of Child 
Nutrition Programs and is in the best position to understand the needs 
of its service providers and communities with regard to the need for a 
waiver of statutory or regulatory requirements. In addition, the State 
is responsible for monitoring program implementation and determining 
when programmatic changes or corrective actions are needed to ensure 
the Child Nutrition Programs are operated with high levels of 
integrity. As such, the State agency plays a critical role in 
requesting and overseeing implementation of a waiver. USDA has long 
relied on State agencies to determine when and how waiver authority can 
best be applied to improve program operations, and if a waiver can be 
implemented with integrity. The responsibilities of the State agency 
were outlined in technical assistance issued in 1996, and again in 2018 
guidance on the process for requesting a waiver and data reporting 
requirements for approved waivers (SFSP 05-2018, Child Nutrition 
Program Waiver Request Guidance and Protocol--Revised, May 24, 2018).
    Under current guidance, State agencies are responsible for 
requesting waivers for the State and submitting waiver requests on 
behalf of eligible service providers. State agencies do not have the 
discretion to deny or approve waivers submitted on behalf of eligible 
service providers but are expected to recommend a course of action to 
USDA. The Department does not have a direct relationship with eligible 
service providers and does not have a reliable means to make final 
determinations on waiver requests absent the input of the State agency. 
As a practical matter, USDA denies waiver requests from eligible 
service providers when the State agency determines that the request 
does not meet the requirements for a waiver or cannot be implemented 
effectively. Therefore, USDA proposed to grant the States the maximum 
administrative discretion possible regarding waiver requests from 
eligible service providers. The proposed rule stated that the State 
agency should review waiver requests from eligible service providers 
and make its own determination as to whether a request meets the 
requirements for a waiver as described in section 12(l) of the NSLA, 
can be implemented with a high level of integrity, can be effectively 
monitored, and will provide data on the impacts of the waiver. 
Concurring requests must be forwarded to the FNSRO with a rationale 
supporting the request for USDA to consider when making the final 
determination.
    USDA also proposed to provide the State agency the discretion to 
deny a waiver submitted by an eligible service provider. In some 
instances, a waiver request may not meet the requirements outlined in 
section 12(l) of the NSLA. In these cases, the State agency must deny 
the request, and should work with the eligible service provider and the 
FNSRO, if necessary, to improve the request, or identify other options 
to meet their programmatic needs without the use of a waiver. In other 
instances, the State agency may deny a waiver request if it determines 
that the waiver could not be properly implemented or monitored, or if 
other measures could be taken to meet the needs of the Program without 
the use of a waiver. USDA relies on State agencies to recommend whether 
a waiver meets statutory requirements and can be implemented 
effectively. If the State determines that a request does not meet this 
standard, there is no reason for USDA to review it.
    To ensure the waiver process is efficient and adheres to the 
statutory requirements for a waiver, USDA specifically requested 
comments on the process of requesting a waiver, monitoring 
implementation of the waiver, and reporting data on waivers issued 
through this authority.
    Accordingly, USDA proposed to add the following new paragraphs to 
codify USDA's authority to waive statutory and regulatory requirements 
for all Child Nutrition Programs:
     Sec.  210.3(d);
     Sec.  215.3(e);
     Sec.  220.3(d);
     Sec.  225.3(d); and
     Sec.  226.3(e).
Public Comments
    USDA received 35 comments on this provision, including nine form 
letter copies. Of these, 11 offered support, six partially supported 
the proposal, 10 opposed, and eight were mixed. Proponents, who were 
all State agencies, supported the inclusion of USDA's waiver authority 
in the regulations, and several voiced specific support for providing 
State agencies the discretion to deny a waiver request from an eligible 
service provider. These commenters said that State agencies are in the 
best position to assess a service provider's ability to properly 
implement a waiver and provide necessary program data, as well as the 
State's own ability to monitor program operations under a waiver. One 
proponent requested that USDA specify that waiver authority is limited 
to requirements under the NSLA and CNA, and not to other laws affecting 
the Child Nutrition Programs.
    Commenters who offered partial support included a State agency, 
sponsors, a general advocacy organization, and an individual. These 
commenters were pleased to see waiver authority added to the 
regulations and generally supported the role of State agencies in 
monitoring and reporting on waivers. However, most expressed opposition 
to providing State agencies the authority to deny waiver requests from 
eligible service providers.

[[Page 57334]]

    Opponents were primarily sponsor and general advocacy 
organizations, and expressed concern about the ability of State 
agencies to deny a waiver request from an eligible service provider. 
Some worried that State agencies could interpret the regulations 
differently, leading to inconsistent implementation within and across 
States. Commenters suggested that the regulations should include 
additional guidelines and specific criteria for States to use when 
evaluating waiver requests, a timeline for State agency reviews, and 
the requirement that States provide objective evidence to support a 
waiver denial. Some requested an appeal process that is decided or 
reviewed by USDA. One commenter objected to providing States the 
discretion to deny a waiver, stating that this authority is not found 
in the statute.
    In response to USDA's request for specific comments, several State 
agencies also remarked on the process of requesting and reporting on a 
waiver. Some of these commenters said that the process for requesting a 
waiver is straightforward and appreciated the template USDA has 
provided, while others found the process to be burdensome and time 
consuming, especially when multiple waivers are being requested. Those 
who commented on monitoring of waivers stated that monitoring is 
conducted during the Administrative Review, technical assistance 
visits, and at the time of data collection. Several commenters said 
that completing data reporting requirements is burdensome and 
difficult. Some requested that USDA simplify reporting requirements and 
provide templates ahead of time to facilitate compliance. One commenter 
suggested that waivers should be renewable for multiple year to reduce 
burden.
USDA Response
    The final rule codifies USDA's waiver authority for Child Nutrition 
Programs with several revisions. In response to a commenter who 
suggested that USDA specify that waiver authority only applies to 
requirements under the NSLA and CNA, the regulations are amended to 
clarify that waivers issued pursuant to these regulations must be 
consistent with current 12(l) requirements, which includes a 
prohibition on waivers relating to the Civil Rights Act of 1964. In 
addition, program requirements that derive from other statutes or 
regulations may not be waived under this authority. For example, USDA 
may not waive standards for financial and program management that are 
required in 2 CFR part 200. With regard to a commenter who requested 
that States provide objective evidence to support a waiver denial, this 
final rule is revised to require that, when States provide written 
notice to an eligible service provider that a waiver is denied, they 
must include the reason for denying the request. USDA is also adding 
language clarifying that the Department may only approve requests for a 
waiver that are submitted by a State agency and comply with the 
requirements at section 12(l)(1) and the limitations at section 
12(l)(4), including that USDA may not grant a waiver that increases 
Federal costs. Finally, other minor revisions will ensure continuity 
with section 12(l).
    As discussed in the background section of this rule, in 2018, USDA 
rescinded several nationwide waivers in response to an audit by the 
USDA OIG. Following that action, USDA approved more than 230 individual 
requests in 2019 from States and eligible service providers for waivers 
primarily related to first week site visits, meal service times, OVS, 
and eligibility for closed enrolled sites. Through this process, USDA 
gained critical insight into the use of these waivers and the ability 
of individual States and eligible service providers to comply with 
waiver requirements. USDA developed the proposed rule based on these 
lessons learned, including the importance of State agency input on the 
viability of waiver requests from eligible service providers.
    Historically, waivers approved through section 12(l) of the NSLA 
have been rare. The statute and regulations are intended to govern all 
Child Nutrition Program operators in a consistent manner. Exceptions to 
the statute and regulations should be limited to exceptional 
circumstances that were not contemplated during development of the 
statute and regulations and for which a timely remedy is needed. USDA 
has approved a large number of waivers of SFSP requirements over the 
last few years to support States and SFSP sponsors that had previously 
used the nationwide waivers that were rescinded in 2018 to administer 
their programs. The four most commonly requested of these waivers are 
being addressed through this rulemaking. Once this rule is finalized, 
the majority of Child Nutrition Program waivers requested in the last 
few years related to typical program operations will no longer be 
needed. USDA anticipates that waivers of statute and regulations will 
again become a rare occurrence.
    USDA understands the concerns of commenters who said that State 
agencies could apply 12(l) wavier regulations inconsistently and 
without recourse for program operators. Many of these commenters 
requested additional guidelines for State agencies and an appeals 
process decided at the Departmental level. State agencies play a 
critical role in vetting requests from eligible service providers and 
USDA relies on their input to determine if a request could be properly 
implemented and appropriately monitored. State agencies are solely 
responsible for approving and monitoring eligible service providers 
such as SFAs, CACFP institutions, and SFSP sponsors. USDA has no direct 
connection with these program operators except through the State agency 
and is not in a position to assess the appropriateness of an eligible 
service provider's waiver request without input from the State agency. 
Because the Department lacks a relationship with, or firsthand 
information about, the service provider, it would be unproductive for 
USDA to review applications that the State does not support. If a State 
agency concludes that a waiver should not be approved, USDA typically 
would not have a basis for determining otherwise, and as such, will 
honor the State's determination. State agencies are required to forward 
concurring requests to the FNSRO with a rationale supporting the 
request, at which point USDA will make the final determination on the 
request. Although the USDA has determined that this approach will best 
enable the Department to fulfill the requirements of the statute, we 
recognize that we must remain actively involved with program 
implementation to ensure the regulations are carried out as intended 
and consistent with the regulations. When used appropriately, section 
12(l) is a tool that allows States and service providers to respond to 
local conditions and meet the needs of the communities they serve. For 
this reason, it is important that States and service providers have 
access to waivers through a transparent and consistent waiver request 
process. USDA is responsible for providing technical assistance to, and 
monitoring of, the State agencies. FNSROs are in regular contact with 
the States to provide support and oversight and are generally aware of 
trends in program implementation at the State level. As with other 
regulatory requirements, FNSROs will work with the State agency to 
correct any misapplication of this provision and support correct and 
consistent implementation of these waiver requirements.
    As stated above, the number of waiver requests is anticipated to 
reduce substantially once this rule goes into

[[Page 57335]]

effect and flexibilities that were previously made available through 
individual section 12(l) waivers are codified. With fewer waiver 
requests from eligible service providers, State agencies should be able 
to provide more technical assistance to the requester to help them 
improve their request or determine alternative approaches to meet the 
needs of the programs without the use of a waiver; technical assistance 
of this type is a core requirement of State agencies. USDA already 
provides a waiver request template and instructions that include the 
type of information USDA needs in order to approve a request. State 
agencies may choose to use that as a guide when reviewing waiver 
requests from eligible service providers. As stated above, waivers are 
intended to provide exemptions from statute and regulations in limited 
circumstances; State agencies and eligible service providers are not 
entitled to waivers of program requirements. Therefore, State agencies 
are not entitled to appeal a waiver denial by USDA, nor are eligible 
service providers entitled to appeal a waiver denial by the State 
agency. In response to commenters who requested timelines for States to 
review waiver requests, the proposed regulatory text already includes 
the requirement that States must forward a waiver request from an 
eligible service provider to USDA within 15 calendar days of receipt, 
or notify the requesting eligible service provider in writing within 30 
calendar days of receipt of the request if the request is denied.
    USDA agrees that improving the process for requesting and reporting 
on waivers will reduce burden at all levels and support proper program 
administration. Processing a high volume of waiver requests and 
collecting data on approved waivers in 2019 highlighted the need to 
refine the waiver process. USDA is using the lessons learned since 2019 
to inform ongoing efforts to streamline the waiver process.
    Neither the regulatory text nor section 12(l) of the NSLA place 
limits on the duration of waivers, meaning that USDA has the authority 
to approve multiyear waivers or extend a waiver if the waiver continues 
to meet all necessary requirements, as requested by one commenter.
    Accordingly, USDA will add the following new paragraphs to codify 
USDA's authority to waive statutory and regulatory requirements for all 
Child Nutrition Programs:
     Sec.  210.3(e);
     Sec.  215.3(e);
     Sec.  220.3(f);
     Sec.  225.3(d); and
     Sec.  226.3(e).
ii. Duration of Eligibility
    Statutory requirements found in the NSLA at 42 U.S.C. 
1761(a)(1)(A)(i)(I-II) authorize the use of school data and census data 
to establish area eligibility in the SFSP. The NSLA also establishes 
that area eligibility determinations made using school or census data 
must be redetermined every five years.
    Regulations at 7 CFR 225.6(c)(3)(i)(B) have required that 
documentation supporting the eligibility of each site as serving an 
area in which poor economic conditions exist be submitted every three 
years for open sites and restricted open sites. Therefore, the proposed 
rule amended the duration of eligibility for open sites and restricted 
open sites based on school and census data from three years to five 
years, in accordance with the NSLA. The proposed rule also extended 
this requirement for closed enrolled sites contingent on the proposed 
changes to eligibility of closed enrolled sites described in section 
III. H. ii. of this final rule.
Public Comments
    USDA received 21 comments, including three form letter copies, 
addressing the proposed changes to duration of eligibility, the 
majority of which were from State agencies. All comment submissions 
were in favor of the proposed changes. Proponents noted that these 
changes minimize administrative burden, align with other eligibility 
determinations, and are consistent with CACFP requirements. One 
commenter underscored that the final rule should extend the changes to 
duration of eligibility to closed enrolled sites if sponsors are able 
to establish area eligibility for closed enrolled sites under this 
rule.
USDA Response
    All comment submissions expressed support for the proposal without 
concern or opposition. Thus, this final rule makes no changes to the 
proposed amendment. Accordingly, this rule changes the regulations in 
redesignated Sec.  225.6(g)(1)(viii) and (g)(2)(ii) for open and 
restricted open sites and Sec.  225.6(g)(1)(ix) and (g)(2)(iii) for 
closed enrolled sites to require submission of eligibility 
documentation every five years.
iii. Methods of Providing Training
    Current regulations at Sec.  225.7(a) require State agencies to 
make training available at convenient locations. As technology has 
advanced, sponsors and State agencies have the capability to provide 
mandatory trainings via the internet. Since 2011, USDA has encouraged 
State agencies to provide multiple options for training, including 
online or by video conference or webinars, in order to accommodate 
varying sponsor needs, while at the same time minimizing the time and 
expense incurred by the State agency (SFSP 14-2011, Existing 
Flexibilities in the Summer Food Service Program, May 9, 2011). 
Therefore, USDA took the opportunity with the proposed rule to update 
the regulations at Sec.  225.7(a) to include the flexibility for 
training to be conducted via the internet.
Public Comments
    USDA received 26 comments, including three form letter copies, 
addressing the methods of providing training. Of these, 25 were 
supportive, and one was mixed. Proponents, who were primarily State 
agencies and included two general advocacy organizations, a sponsor and 
an individual, supported the option for training to be conducted via 
the internet, writing that it provides clarity for State agencies and 
sponsors, accommodates sponsors' needs, and minimizes time and expenses 
to State agencies in providing trainings. A State agency added that 
online training software is more cost-effective, readily available, and 
easy to implement and use. However, the State agency requested USDA 
further clarify whether training must be conducted in ``real time'' 
with live webinars or if trainings could be prerecorded. Another State 
agency asked whether the intent of the provision is to replace in-
person training.
USDA Response
    This final rule makes no changes from the proposed rule. USDA 
agrees with commenters that having a variety of training opportunities 
and formats can accommodate varying sponsor needs, while at the same 
time minimizing the time and expense incurred by the State agency. This 
amendment is intended to update regulations with the advancement of 
technology by codifying flexibilities for training in current guidance 
(SFSP 14-2011, Existing Flexibilities in the Summer Food Service 
Program, May 9, 2011). It is not intended to replace in-person or face-
to-face trainings. State agencies that elect to use this option have 
the discretion to offer online training in any format that best suits 
sponsors' needs provided that it is made available through accessible 
electronic means, is provided in the languages of those for whom the 
training is intended and in alternative

[[Page 57336]]

formats for persons with disabilities in accordance with 7 CFR 225.7(g) 
and FNS Instruction 113-1, and it delivers proper and comprehensive 
training to operate the SFSP.
    Accordingly, this final rule amends regulations in Sec.  225.7(a) 
to include the option for training to be conducted via the internet.
iv. Meal Preparation Facility Reviews
    Current regulations require that as part of any vended sponsor 
review, State agencies must inspect the facilities of any food service 
management company (FSMC) with which a vended sponsor contracts for the 
preparation of meals. The proposed rule renamed the section title from 
``Food Service Management Company Visits'' in current regulations at 
Sec.  225.7(d)(6) to ``Meal Quality Facility Review'' in redesignated 
Sec.  225.7(i), and clarified that each facility should be reviewed at 
least one time during the program year.
Public Comments
    USDA received 18 comments, including three form letter copies, 
addressing the proposed changes to FSMC facility visits, of which, 
eight were supportive, two provided partial support, one was opposed, 
and seven were mixed.
    The majority of proponents provided general support for the 
proposed changes. Several proponents specified that they supported 
renaming the section in order to better clarify the purpose of the 
provision. One commenter supported the proposal but recommended 
amending the section name to read ``Meal Preparation Facility Review.''
    A respondent pointed out that the proposed regulatory language does 
not tie this requirement to a sponsor review, which could result in 
State agencies reviewing these facilities every program year. Other 
commenters pointed out this concern as well. One commenter agreed with 
the proposal but wrote that an annual visit may increase the burden to 
State agencies. A commenter in opposition to the proposed changes 
agreed, writing that an annual visit would place an undue 
administrative burden on State agencies.
    Commenters who provided mixed positions also expressed concerns 
over requirements of this provision, and requested further 
clarification from USDA. Several respondents wrote that the proposed 
rule is unclear as to who is responsible for the facility reviews. One 
commenter wrote that it is the responsibility of state and local health 
agencies to review food safety, so SFSP administering agencies should 
not be responsible for this review. Another commenter asked if funding 
provided for health inspections could be utilized to complete this 
requirement. One respondent asked for clarification on when a facility 
review is necessary as many facilities in their State are inspected 
regularly. Another respondent asked if the facilities are to be 
reviewed at least once per year, could facility reviews in other Child 
Nutrition Programs satisfy these review requirements.
USDA Response
    The final rule addresses oversight in the proposed rule by 
modifying the proposed language to clarify who is required to receive a 
review under this requirement, the purpose of these reviews, how often 
these reviews are required to take place, and who is responsible to 
conduct these reviews. In addition, the final rule renames this section 
to better describe the purpose of this visit.
    Through management evaluations and technical assistance, USDA 
learned that requirements for the FSMC facility visits are unclear and 
place undue burden on State agencies. In an effort to provide clarity 
to this provision, USDA proposed to revise the regulation; however, it 
appears the proposed changes did not adequately address ambiguity 
around the regulation, and perhaps introduced more confusion. 
Therefore, this final rule addresses oversights in the proposed rule.
    The final rule clarifies that, as part of the review of any vended 
sponsor that purchases unitized meals, with or without milk, to be 
served at a SFSP site, the State agency must review the facilities and 
meal production documentation of any FSMC from which the sponsor 
purchases meals. If the sponsor does not purchase meals but does 
purchase management services within the restrictions specified in Sec.  
225.15, the State agency is not required to conduct a facility review. 
In the SFSP, an FSMC is any entity from which a vended sponsor procures 
unitized meals, through either a formal agreement or contract, 
regardless of the type of entity (public agencies including SFAs, 
private, nonprofit organizations; or private, for-profit companies). 
The purpose of the review is to verify that meals being served are 
prepared, stored, and transported in such a manner that complies with 
local health and safety standards, and with SFSP requirements. A 
facility review can include, but is not limited to:
     Observation of unitized meal preparation
     Review of menu planning and meal pattern
     Method of meal packaging
     General health and sanitation practices
     Delivery to SFSP meal sites
     Recordkeeping
    One commenter suggested that USDA rename the section, ``Meal 
Preparation Facility Review,'' to better describe the purpose of this 
visit. USDA agrees, and thus, this final rule renames the section, 
``Meal Preparation Facility Review.''
    In addition, this final rule also clarifies how often the reviews 
are required to take place, particularly, when multiple vended sponsors 
use the same FSMC. As several commenters pointed out, the proposed 
changes mistakenly removed this requirement as part of a vended sponsor 
review, and instead, clarified that the facility should be reviewed at 
least one time during program year. USDA did not intend to change 
current requirements with this rulemaking. Therefore, this final rule 
clarifies that the facility review must be conducted at least one time 
within the appropriate review cycle for each vended sponsor. If 
multiple vended sponsors use the same FSMC and are being reviewed in 
the same review cycle, a single facility review will fulfill the review 
requirements for those vended sponsors.
    Furthermore, comments pointed to concerns over who is responsible 
for these reviews, and questioned why these reviews are required if 
they are already frequently inspected by local health departments. As 
stated above, the purpose of the facility review is to view the FSMC's 
practices of preparing meals for the SFSP. A facility review differs 
from health inspections as the primary purpose of a facility review is 
to ensure that the FSMC facilities are operating at a capacity to 
adequately produce, store, supply, and deliver meals in accordance with 
program requirements. Therefore, State agencies are responsible for 
these reviews and are required to complete the facility review as a 
part of the vended sponsor review. This final rule clarifies that the 
State agency can use funds provided in Sec.  225.5(f) to conduct these 
reviews, however, if the State agency chooses to contract with State or 
local health authorities to complete the facility reviews, the State 
agency must provide adequate training for these individuals as required 
by Sec.  225.7(a).
    Accordingly, this rule renames the section title from ``Food 
Service Management Company Visits'' in current Sec.  225.7(d)(6) to 
``Meal Preparation Facility Review,'' and clarifies the review 
requirements in redesignated Sec.  225.7(i).

[[Page 57337]]

v. Technical Changes
    In this final rule, USDA is including several technical changes to 
update proper program and publication names, and to revise regulatory 
language to provide consistency.
    Current regulations at Sec.  225.2 include a definition of ``Areas 
in which poor economic conditions exist,'' and this definition is 
referenced in numerous places throughout Part 225. The designation of 
subparagraphs in this definition is changed from (a)-(d) to (1)-(4) to 
comply with current paragraph structure requirements for the Code of 
Federal Regulations. Accordingly, the definition of ``Areas in which 
poor economic conditions exist'' is corrected in Sec.  225.2 and 
wherever else it is referenced in Part 225.
    Current regulations in Sec.  225.2 reference the ``Secretary's 
Guidelines for Determining Eligibility for Reduced Price School Meals'' 
in the definition ``needy children.'' The official title of this annual 
publication is the ``Child Nutrition Programs: Income Eligibility 
Guidelines.'' Accordingly, the definition of ``needy child'' is amended 
to reference the correct title of this publication.
    Current regulations at Sec.  225.2 include a definition of the 
``State Children's Health Insurance Program (SCHIP),'' and this program 
is referenced in numerous places throughout part 225. As a result of 
the Children's Health Insurance Program Reauthorization Act of 2009 
(CHIPRA) (Pub. L. 111-3), the official name of SCHIP was revised to the 
``Children's Health Insurance Program (CHIP).'' Accordingly, the title 
of this program is corrected in Sec.  225.2 and wherever else it 
appears in part 225.
    Section 225.6(h)(2)(xvi) references bonding requirements, and 
states that the requirements can be found at Sec.  225.15(h)(6) through 
(8). This citation is inaccurate, as bond requirements are found at 
Sec.  225.15(m)(5) through (7). Additionally, this rulemaking 
redesignated Sec.  225.6(h) as Sec.  225.6(l). Accordingly, the 
reference has been updated to reflect the correct citation at newly 
designated Sec.  225.6(l)(2)(xvi).
    Section 225.7(n)(2), as redesignated in this rule, references 
``handicap discrimination.'' This text is changed to ``disability 
discrimination'' to be consistent with other references in Sec.  225.
    Section 225.16(d) references ``boys and girls.'' This text is 
changed to ``children'' to be consistent with other references in Sec.  
225.
    The terms ``shall'' and ``must'' are used interchangeably in Sec.  
225 to indicate that compliance with a provision is required. In the 
interest of consistency and using plain language, this final rule makes 
a non-substantive technical change from ``shall'' to ``must'' where it 
appears in the subsections of Sec.  225 that are amended by this rule.

IV. Procedural Matters

Executive Orders 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, reducing costs, harmonizing rules, and promoting flexibility. 
This final rule was determined to be significant and was reviewed by 
the Office of Management and Budget (OMB).

Regulatory Impact Analysis

    Economic Summary for ``Streamlining Program Requirements and 
Improving Integrity in the Summer Food Service Program'' Final Rule

Public Comments on the Economic Summary for the Proposed Rule

    USDA did not receive any public comments on the economic summary 
for the proposed rule.
    As described in the preamble to the final rule, changes made by the 
final rule ``streamline requirements among Child Nutrition Programs, 
simplify the application process, enhance monitoring requirements, 
offer more clarity on existing requirements, and provide more 
discretion at the State agency level to manage program operations.''
    We estimate no costs, savings, participation, or program impacts 
beyond the decrease in burden hours outlined in the Paperwork Reduction 
Act (PRA) analysis of this rule and in the associated ICR. This rule is 
estimated to save the affected parties at least $0.5-$1 million 
annually, or at least $2.7-$5.2 million over the next five years. A 
detailed cost estimate is available in table 1 below. (A table with all 
of the burden changes is provided in the PRA analysis of this rule and 
in the associated ICR.)
    The final rule codifies in regulations several operational options 
that have been available through waivers and policy guidance and that 
streamline program requirements. The final rule also includes 
provisions and flexibilities to strengthen SFSP program integrity or 
clarify existing program requirements.
    Although not in regulations prior to the publication of this final 
rule, many of the changes made by the final rule have already been 
implemented in the operation of the SFSP through policy guidance, so 
they will remain available to program operators without interruption. 
Other changes were previously implemented through policy guidance but 
were rescinded in October 2018. These rescinded policies are currently 
in effect through approved individual waivers or nationwide waivers 
authorized in legislation responding to COVID-19. Other changes are new 
and have not been implemented in program operations through policy 
guidance or waivers, as described below. Each provision includes a 
description of the expected impact to the program.
1. Streamlining Program Requirements
a. Application Procedures for New Sponsors
    i. Program Impact: This provision codifies flexibilities currently 
outlined in several policy memoranda for NSLP and CACFP sponsors in 
good standing (SFSP 05-2012, Simplifying Application Procedures in the 
Summer Food Service Program, October 31, 2011 and SFSP 04-2013, Summer 
Feeding Options for School Food Authorities, November 23, 2012). 
Specifically, it codifies flexibilities for school food authorities 
(SFAs) administering the NSLP or SBP and CACFP institutions in good 
standing that are applying to serve SFSP meals at the same sites where 
they provide meal services through the NSLP, SBP, or CACFP during the 
school year. These institutions will be permitted to follow the 
application requirements for experienced SFSP sponsors currently found 
in Sec.  225.6(c)(3) instead of the application requirements for new 
sponsors and sites currently found in Sec.  225.6(c)(2).
    ii. Cost Impact: This flexibility is currently implemented in 
policy guidance, and therefore we do not estimate that this provision 
will affect participation or program costs since it is already in force 
in the program. We do not estimate any savings or costs associated with 
this provision, beyond the burden hour savings as detailed in the table 
in the PRA analysis on p. 161-174. This provision reduces the burden on 
sponsors already participating in other CN programs who also want to 
participate in CACFP; since these sponsors are likely to perform well 
in the operation of the SFSP, this provision reduces burden on these 
experienced

[[Page 57338]]

CN sponsors without compromising program integrity.
b. Demonstration of Financial and Administrative Capability
    i. Program Impact: In order to streamline Child Nutrition Program 
requirements and encourage participation, this provision codifies 
previously-issued policy guidance that provided that NSLP and SBP SFAs 
and CACFP institutions in good standing applying to participate in the 
SFSP are not required to submit further evidence of financial and 
administrative capability, as required in Sec.  225.14(c)(1) (SFSP 05-
2012, Simplifying Application Procedures in the Summer Food Service 
Program, October 31, 2011 and SFSP 04-2013, Summer Feeding Options for 
School Food Authorities, November 23, 2012). NSLP and SBP SFAs and 
CACFP institutions already undergo a rigorous application process in 
order to participate in the NSLP, SBP, and CACFP, and have demonstrated 
that they have the financial and organizational viability, capability, 
and accountability necessary to operate a Child Nutrition Program; 
therefore, they have the capacity to operate the SFSP as well. The 
final rule clarifies that these sponsors are not required to submit a 
management plan unless requested by the State agency. The final rule 
also codifies as proposed a requirement that State agencies develop an 
information sharing process if programs are administered by separate 
agencies within the State.
    ii. Cost Impact: Most of this provision has already been 
implemented through policy guidance, so we do not estimate any 
participation or cost impacts as a result of this provision. The 
information sharing process requirement is new, but USDA does not 
intend for this provision to require States to invest in new 
information technology systems or modify existing IT systems. 
Information can be shared through any method that is mutually agreed 
upon by the participating agencies, which could include a method as 
non-burdensome as agreeing to share the outcome of reviews, corrective 
actions, or other monitoring activities upon request, so we do not 
estimate additional costs as a result of this provision.
c. Clarifying Performance Standards for Evaluating Sponsor Viability, 
Capability, and Accountability
    i. Program Impact: This rule adds performance standards for 
organizations applying to participate as SFSP sponsors that correspond 
to standards currently in place at Sec.  226.6 for organizations 
applying to participate as CACFP sponsoring organizations. These 
standards are provided in response to State agency requests to provide 
additional clarity on application requirements, and in an effort to 
streamline requirements across programs. These detailed performance 
standards under Sec.  225.6(d) must be addressed in a management plan, 
which will assist State agencies in assessing an applicant's financial 
viability and financial management, administrative capability, and 
accountability. Experienced sponsors that have not demonstrated 
significant operational problems in the prior year may submit a 
simplified management plan instead of a full management plan. However, 
a full management plan must be submitted at least once every three 
years to ensure that State agencies periodically conduct a full review 
and assessment of a sponsor's financial and administrative capability. 
The State agency may require submission of a full plan more frequently 
if it determines that more information is needed to evaluate the 
sponsor's capabilities. It is possible that this requirement could 
incentive SFAs and CACFP operators to start a summer program, but the 
potential effects on participation are too speculative to estimate. We 
note that some commenters expressed concern that meeting these detailed 
performance standards will be challenging, particularly for small 
sponsors. According to an internal USDA study of sponsors in 2015, 
approximately 45% of SFSP sponsors were SFAs and 23% of SFSP sponsors 
reported participating in the CACFP, so those sponsors are already 
meeting these requirements and are not required to submit a management 
plan unless requested by the State agency, as discussed in section III. 
B. ii. of this final rule. We are not certain of the exact number of 
sponsors to which this provision applies, but many sponsors either 
already meet this requirement or are certain to be able to meet it with 
minimum additional effort. Finally, as of 2015, the average sponsor has 
participated in SFSP for 9 summers, and the median sponsor for 6 
summers, so the average sponsor has significant experience with the 
SFSP already, and could submit a simplified management plan most years.
    ii. Cost Impact: USDA recognizes that including these detailed 
performance standards in the management plan may require some State 
agencies and sponsors to modify current practices. Although USDA 
prioritizes flexibility for stakeholders to the greatest extent 
possible, these changes will bolster program integrity by supporting 
the ability of State agencies to more efficiently and consistently 
evaluate an applicant sponsor's financial and administrative 
capability. However, we do not estimate any cost or participation 
effects. It is possible that adopting these performance standards could 
generate program efficiencies and potential savings in the long-term, 
as applicants to sponsor the Program must demonstrate their ability to 
meet the performance standards for financial viability, administrative 
capability, and Program accountability to be able to operate the 
program. Cost impacts are difficult to quantify because any savings 
directly tied to the performance standards would be challenging to 
isolate.
2. Facilitating Compliance With Program Monitoring Requirements
a. First Week Site Visits
    i. Program Impact: Existing regulations at Sec.  225.15(d)(2) state 
that sponsors are required to visit each of their sites at least once 
during the first week of operation under the program and must promptly 
take such actions as are necessary to correct any deficiencies. 
Although USDA had previously waived this requirement on a nationwide 
basis for sponsors in good standing in the NSLP or CACFP, and sites 
that had operated successfully the previous year, these waivers were 
rescinded in 2018. USDA has also used COVID-19-related authority to 
waive first week site visit requirements nationwide, but this authority 
is not permanent and is intended to aid program operators during the 
public health emergency and as they transition back to normal 
operations. This final rule increases flexibility by requiring a site 
visit during the first two weeks of program operations for new sites, 
sites with operational problems in the prior year, and any site where 
the State agency determines a visit is needed. In addition, each State 
agency must establish criteria for what constitutes operational 
problems in order to help sponsors determine which of their returning 
sites are required to receive a site visit during first two weeks of 
program operations.
    ii. Cost Impact: We estimate minimal changes in costs due to this 
provision. It provides additional flexibility to sponsors; therefore, 
this provision may create cost savings for sponsors, though we are not 
able to estimate any possible savings. While we are providing more 
flexibility to sponsors, which may appear to relax program integrity, 
this provision is adopting a risk-based approach to identifying sites 
to review,

[[Page 57339]]

an approach that has been recommended by recent research in the school 
meal programs to better target resources.\2\
---------------------------------------------------------------------------

    \2\ Rothstein, Melissa et al., Assessment of the Administrative 
Review Process in School Meal Programs, 2020, available online at 
https://www.fns.usda.gov/cn/assessment-administrative-review-process-school-meal-programs.
---------------------------------------------------------------------------

b. Establishing the Initial Maximum Approved Level of Meals for Sites 
of Vended Sponsors
    i. Program Impact: In order to allow sponsors of vended sites to 
make timely adjustments to program operations, USDA previously issued 
policy guidance clarifying that sponsors may request an increase to 
existing site caps at any time prior to the submission of the meal 
claim forms for reimbursement that includes meals served in excess of 
the site cap (SFSP 16-2015, Site Caps in the Summer Food Service 
Program--Revised, April 21, 2015). This rule codifies this flexibility 
in regulation, though State Agencies have the discretion to approve or 
deny the request.
    ii. Cost Impact: This provision has already been implemented 
through policy guidance, so we do not estimate any participation or 
cost impacts as a result of this provision.
c. Statistical Monitoring Procedures, Site Selection, and Meal Claim 
Validation for Site Reviews
    i. Program Impact: In order to provide flexibility to State 
agencies conducting sponsor and site reviews, current regulations at 
Sec.  225.7(d)(8) provide State agencies with the flexibility to use 
statistical monitoring procedures in lieu of the site monitoring 
requirements found in Sec.  225.7(d)(2). After significant research and 
feedback from State agencies obtained through various workgroups, USDA 
has determined that it is not feasible to develop a measure or formula 
that would be statistically significant and thus provide adequate 
monitoring of site meal claim forms. Accordingly, USDA is removing the 
provision at Sec.  225.7(d)(8) allowing the use of statistical 
monitoring during site reviews and validation of meal claims. This rule 
also codifies the requirement that State agencies must create criteria 
for site selection using the site characteristics suggested by USDA as 
a guide. State agencies may, in selecting sites for review, use 
additional criteria including, but not limited to, findings of other 
audits or reviews, or any indicators of potential error in daily meal 
counts (e.g., identical, questionable, or very similar claiming 
patterns, or large changes in meal counts). Further, the Department 
recognizes that the guidance for conducting 100 percent meal claim 
validations may be burdensome for some State agencies. Therefore, this 
rule recommends a stepped increase for meal claim validations (e.g., if 
the State agency reviews 10 percent of a sponsor's sites and finds a 5 
percent or greater error rate, the State agency must take fiscal action 
and expand the meal validation review to 25 percent of the sponsor's 
sites; if a 5 percent or greater error rate is found, the State agency 
must then review 50 percent of the sponsor's sites; and if a 5 percent 
or greater rate continues to be found, then the State agency must 
review 100 percent of a sponsor's sites). This incremental approach 
will use State agency resources more efficiently, will provide State 
agencies a more targeted method for review, and will serve as the 
baseline for the minimum method of meal claim validation required; 
however, States have the flexibility to complete stricter validations 
as determined necessary, without approval as an additional State agency 
requirement.
    ii. Cost Impact: These changes remove an unused option for site 
monitoring (statistical monitoring procedures) and increase State 
flexibility in how to conduct meal validation reviews. This provision 
impacts sponsors with more than one site (in 2015, 57 percent of 
sponsors had one site, while 43 percent of sponsors had more than one 
site).\3\ The impact of the meal claim validation process will depend 
on the average error rate, which determines how many claims the State 
will ultimately review. USDA does not know the distribution of meal 
claim error rates in SFSP and cannot estimate how many fewer claims 
will be reviewed under this final rule and any corresponding 
administrative savings for the States. We note that there is some small 
potential for increased error in meal claims since this change leads to 
fewer meals being validated by the State agencies that might otherwise 
have chosen to validated all claims; however, this more targeted 
approach is an attempt to reduce burden on State agencies and sponsors 
while still identifying potential systemic issues and maintaining 
program integrity.
---------------------------------------------------------------------------

    \3\ 2015 USDA internal SFSP study.
---------------------------------------------------------------------------

3. Providing a Customer-Service Friendly Meal Service
a. Meal Service Times
    i. Program Impact: Section 225.16(c) of the regulations sets forth 
restrictions on when meals can be served in the SFSP. Dating as far 
back as 1998, USDA has issued guidance that waived these requirements 
at certain sites where the requirements proved to create significant 
barriers to efficient program operations and good customer service for 
the communities served. The waiver of meal time restrictions helped 
decrease administrative burden and provided more local level control to 
sponsors to plan the most effective meal services, thereby improving 
program operations. In 2011, USDA published guidance that waived the 
meal service time restrictions for all SFSP sites while still requiring 
sponsors to submit meal service times to the State agency for approval 
(originating guidance has since been superseded and incorporated into 
SFSP 06-2017, Meal Service Requirements in the Summer Meal Programs, 
with Questions and Answers--Revised, December 05, 2016). These waivers 
were rescinded in 2018, as discussed in the background section of this 
final rule. In 2019, 42 State agencies requested a waiver of meal time 
restrictions to allow them to continue implementation of what had 
previously been in effect through guidance. Similar to the other 
rescinded waivers, USDA has used COVID-19-related authority to waive 
meal service time requirements nationwide during the public health 
emergency and as sponsors transition back to normal operations. This 
final rule amends Sec.  225.16(c) to codify the previously available 
guidance into regulations, specifically to remove meal service time 
restrictions; add a requirement that a minimum of one hour elapse 
between the end of one meal service and the beginning of another 
(except for residential camps); allow a State agency to approve for 
reimbursement meals served outside of the approved meal service time if 
an unanticipated event occurs; and clarify that meals claimed as a 
breakfast must be served at or close to the beginning of a child's day, 
and prohibit a three component meal from being claimed for 
reimbursement as a breakfast if it is served after a lunch or supper is 
served.
    ii. Cost Impact: This provision has already been implemented 
through waivers, so we do not estimate any participation or cost 
impacts as a result of this provision. When originally implemented, 
there did not appear to be major increases in service, but these 
waivers made operations smoother and decreased burden on program 
sponsors and sites.
b. Off-Site Consumption of Food Items
    i. Program Impact: Regulations require that sponsors must agree to

[[Page 57340]]

``maintain children on site while meals are consumed'' (Sec.  
225.6(e)(15)). USDA has heard from stakeholders that, in some cases, 
the congregate feeding requirement poses a barrier to participation and 
compliance with program requirements. USDA initially issued guidance in 
1998 that provided flexibilities for a fruit or vegetable item of the 
meal to be taken off-site for later consumption, with State agency 
approval, for sponsors with adequate staffing to administer this option 
(originating guidance has since been superseded and incorporated into 
SFSP 06-2017--Meal Service Requirements in the Summer Meal Programs, 
with Questions and Answers--Revised, December 5, 2016), which is still 
in effect. USDA subsequently amended this flexibility in response to 
stakeholder feedback that it could be implemented in a way that 
maintained health and safety requirements. This final rule codifies the 
flexibility for sponsors to allow children to take a single fruit, 
vegetable, or grain item off-site for later consumption, subject to 
State Agency approval.
    ii. Cost Impact: This provision has already been implemented 
through policy guidance, so we do not estimate any participation or 
cost impacts as a result of this provision. This guidance (and now this 
provision) has almost certainly decreased food waste and provided 
flexibility for parents of young children participating in the program, 
though we are not able to estimate the value of food saved by this 
provision.
a. Offer Versus Serve
    i. Program Impact: Current regulations in Sec.  225.16(f)(1)(ii) 
allow SFAs that are program sponsors to ``permit a child to refuse one 
or more items that the child does not intend to eat.'' This concept is 
known as ``offer versus serve'' (OVS). The regulations also require 
that an SFA using the OVS option must follow the requirements for the 
NSLP set out in Sec.  210.10. After observing SFA sponsors successfully 
utilizing the option for many years and receiving significant feedback 
from stakeholders, including Congressional testimony about the positive 
effects of OVS on reducing food waste and containing program costs, 
USDA extended the option to use OVS to non-SFA sponsors (SFSP 11-2011, 
Waiver of Meal Time Restrictions and Unitized Meal Requirements in the 
Summer Food Service Program, October 31, 2011). USDA continued to 
clarify policies surrounding OVS, including guidelines for required 
meal service components under the SFSP meal pattern (SFSP 08-2014, Meal 
Service Requirements, November 12, 2013) and extending the use of the 
SFSP OVS meal pattern guidelines to SFA sponsors that had previously 
been required to follow the OVS requirements for the NSLP (SFSP 05-2015 
(v.2), Summer Meal Programs Meal Service Requirements Q&As--Revised, 
January 12, 2015). These waivers and extensions of statutory and 
regulatory requirements pertaining to OVS were rescinded in 2018. In 
2019, 37 State agencies requested a waiver of programs requirements to 
allow them to continue utilizing OVS as had previously been permitted 
through guidance. Nationwide waivers issued pursuant to COVID-19-
related authorities have also been used to allow the continued use of 
these OVS options. However, section 13(f)(7) of the NSLA only 
authorizes SFAs to use OVS. The Department also has some concerns about 
the effective implementation of OVS by non-SFA sponsors based on on-
site reviews and comments received. In light of these findings, and in 
order to ensure that program regulations remain in agreement with 
statute, this rule retains the requirement that only SFA sponsors may 
utilize the OVS option. This rule also allows SFA sponsors electing to 
use the SFSP meal pattern to use SFSP OVS guidelines.
    ii. Cost Impact: It is possible that this provision has resulted in 
a small decrease in reimbursements for ineligible meals (which would 
have decreased improper payments to sponsors, resulting in a cost 
savings to the Federal Government), though we are unable to estimate 
this potential cost savings. Furthermore, it is possible that expanded 
use of OVS would decrease food waste in the SFSP, as recent research 
has found that the use of OVS in the NSLP is associated with decreased 
food waste in elementary schools.\4\ However, no research exists that 
explicitly links the use of OVS to decreased costs, nor does any 
existent research show a link between the use of OVS and participation 
by students in NSLP. Therefore, we do not include any cost or 
participation effects associated with this provision. It is also 
possible that some SFA sponsors who would otherwise operate the SSO may 
switch to the SFSP to receive a higher reimbursement rate after this 
provision is codified, but since this provision has already been 
implemented via waivers, we assume that most sponsors who would want to 
switch to the SFSP have already done so. We do note that a small 
percentage of total sites (9.6% of all sites) who were previously using 
OVS will no longer be eligible to use OVS, though we are not certain of 
the cost impacts on these sites, as we do not have any evidence on the 
cost impacts of OVS on program operators.\5\
---------------------------------------------------------------------------

    \4\ See U.S. Department of Agriculture, Food and Nutrition 
Service, Office of Policy Support, School Nutrition and Meal Cost 
Study, Final Report Volume 4: Student Participation, Satisfaction, 
Plate Waste, and Dietary Intakes by Mary Kay Fox, Elizabeth Gearan, 
Charlotte Cabili, Dallas Dotter, Katherine Niland, Liana Washburn, 
Nora Paxton, Lauren Olsho, Lindsay LeClair, and Vinh Tran, Project 
Officer: John Endahl, Alexandria, VA: 2019, p. 78.
    \5\ According to the most recently available USDA administrative 
data, approximately 60% of sites were SFA sites in July 2021. 
According to the Summer Meals Study (Report Volume 3, page 3-15), 
only 24% of non-SFA sites used OVS in 2018. This gives a total of 
9.6% of all sites who will need to transition to meal service 
without the use OVS as a result of this rule (40% x 24% = 9.6%). The 
Summer Meals Study is available online at https://www.fns.usda.gov/cn/usda-summer-meals-study.
---------------------------------------------------------------------------

4. Clarification of Program Requirements
a. Reimbursement Claims for Meals Served Away From Approved Locations
    i. Program Impact: SFSP meals are reimbursable only at approved 
sites. Via policy guidance, USDA granted State agencies the flexibility 
to approve exceptions to this requirement for the operation of field 
trips. This rule clarifies the regulatory requirements that if an SFSP 
sponsor wishes to serve a meal away from the approved site location, 
they are required to notify the State agency, but formal approval of 
the alternative meal service is not a federal requirement; however, the 
States have the discretion to require formal approval. The final rule 
grants State Agencies discretion on the condition for open sites. For 
example, if the State Agency permits an open site to close, the sponsor 
would still be required to notify the community of the change in meal 
service and provide information about alternative open sites. While 
USDA recognizes the additional burden this stipulation may place on 
some sponsors, sponsors enter into a written agreement with State 
agencies that attests they are capable of operating the program, and 
the site type they oversee. In consideration of this change, 
administering agencies should work closely with sponsors electing to 
operate a field trip and exercise special care to ensure that the 
sponsors of open sites have developed adequate procedures to resolve 
any potential issues. When it is not possible to continue operating at 
the approved site location, sponsors should have plans to ensure that 
children in the community are provided ample notification of changes in 
meal service and are directed to alternate sites to obtain a meal. 
Furthermore, State

[[Page 57341]]

agencies should consider site type during application to make sure 
sites are correctly classified and serving the community as intended.
    ii. Cost Impact: This provision may reduce the burden on both State 
agencies and sponsors, if State agencies had interpreted previous 
guidance to mean that State agencies had to formally approve field 
trips, instead of simply receiving notification of the field trip. 
According to an internal USDA analysis, 76 percent of sponsors and 63 
percent of sites reported serving program meals during off-site field 
trips at some point in time during the summer.\6\ However, estimating 
any potential burden reduction is difficult because prior policy 
guidance on State approval for serving meals at an alternate location 
may have varied. As a result, this provision will provide a minimal 
reduction in burden for some States (i.e., States that currently allow 
for service of field trip meals with just a notice to the State agency) 
and a larger impact for States that move from using a formal approval 
process to a notification-only process. This final rule codifies the 
flexibility to allow sponsors the option to receive reimbursement for 
meals served away from the approved site, and provides clarity on the 
requirement currently provided through policy guidance.
---------------------------------------------------------------------------

    \6\ 2015 USDA internal SFSP study. (In 2015, USDA collected 
information about SFSP operations, sponsors, and sites through a 
nationally representative survey administered to State agencies, 
SFSP sponsors, and SFSP sites.)
---------------------------------------------------------------------------

b. Timeline for Reimbursements to Sponsors
    i. Program Impact: This provision clarifies a point of confusion 
for State agencies not addressed in existing regulations. The final 
rule states that if a sponsor's claim is determined to be potentially 
unlawful based on Sec.  225.9(d)(10), the State agency must still 
disapprove the claim within 30 calendar days with an explanation of the 
reason for disapproval. This rule also amends regulations in Sec.  
225.9(d)(10) to clarify that State agencies may be exempt from the 45 
calendar day timeframe for final action in Sec.  225.9(d)(4) if more 
time is needed to complete a thorough examination of the sponsor's 
claim. Consistent with current guidance on other one-time exceptions 
for claims, State agencies must notify the appropriate FNS Regional 
Office (FNSRO) that they suspect fraud and will be taking the exemption 
to the 45 day timeline to conduct an expanded review by submitting to 
the FNSRO a copy of the claim disapproval at the same time as it is 
provided to the sponsor.
    ii. Cost Impact: We estimate no change in cost associated with this 
provision, as it merely allows States more time to investigate claims, 
which may increase program integrity.
c. Requirements for Media Release
    i. Program Impact: Current regulations at Sec.  225.15(e) outline 
the requirement for each sponsor operating the SFSP to annually 
announce the availability of free meals in the media serving the area 
from which it draws its attendance. However, USDA received questions 
from State agencies and analyzed data from management evaluations that 
show the current requirements are difficult to understand and implement 
correctly, leaving some State agencies and sponsors to make inadvertent 
errors in fulfilling the requirements. In accordance with the proposed 
rule, this final rule codifies current guidance allowing State agencies 
the discretion to issue a media release on behalf of all sponsors 
operating SFSP sites in the State, including camps and closed enrolled 
sites. In addition, this final rule modifies the proposed language to 
make clear that closed enrolled sites are only required to notify 
participants or enrolled children of the availability of free meals and 
if a free meal application is needed.
    ii. Cost Impact: We estimate no change in cost associated with this 
provision. It should be noted that this requirement will likely result 
in a burden reduction, especially for sponsors of closed sites, such as 
camps, and potentially on all sponsors in a State, if the State agency 
issues a compliant statewide notification.
d. Annual Verification of Tax-Exempt Status
    i. Program Impact: In order to be eligible to participate in the 
SFSP, sponsors must maintain their nonprofit status (Sec. Sec.  225.2 
and 225.14(b)(5)). In 2011, the Internal Revenue Service changed its 
filing requirements for some tax-exempt organizations. Failure to 
comply with these requirements could result in the automatic revocation 
of an organization's tax-exempt status. Due to this change, USDA 
released guidance for confirming sponsors' tax-exempt status, which 
requires that State agencies annually review a sponsor's tax-exempt 
status (SFSP 04-2017, Automatic Revocation of Tax-Exempt Status--
Revised, December 1, 2016). Accordingly, this rule codifies the 
requirement for annual confirmation of tax-exempt status at the time of 
application by amending Sec.  225.14(b)(5).
    ii. Cost Impact: This provision has already been implemented 
through policy guidance, so we do not estimate any participation or 
cost impacts as a result of this provision.
4. Important Definitions in the SFSP
a. Self-Preparation Versus Vended Sites
    i. Program Impact: As sponsor sophistication and technology have 
developed, the operation of SFSP has shifted. Most State agencies have 
systems that allow for site-based claiming, which provides more 
granular information about the number and types of meals being served 
at individual sites, rather than aggregating this information at the 
sponsor level. Additionally, as sponsors have grown, many used a mixed 
model of sponsorship, with some sites self-preparing meals and others 
utilizing a vendor contract to receive meals. In light of these 
changes, many State agencies have developed the ability to classify 
individual sites as self-preparation or vended, rather than classifying 
a sponsor and all of its sites as one type or the other. USDA is aware 
that some State agencies that have these capabilities also provide 
reimbursements based on the classification of the individual sites. 
This is important because providing reimbursements to sponsors that 
operate a mix of sites based on the individual site classification is 
more accurate and helps protect the integrity of the SFSP. As such, the 
regulations require updates that reflect the current nature of program 
operations. Accordingly, this rule adds definitions to Sec.  225.2 for 
``self-preparation site'' and ``vended site''. Additionally, this rule 
clarifies requirements at Sec.  225.6(c)(2) to require a summary of how 
meals will be obtained at each site as part of the sponsor application.
    ii. Cost Impact: We estimate no change in cost associated with this 
provision. This change merely updates program definitions to align with 
the current nature of program operations. Commenters and USDA's own 
monitoring activities have indicated that all but several State 
agencies have systems that are equipped with site-level claiming 
mechanisms. USDA appreciates the efforts that State agencies have made 
to employ technological advances to modernize agency systems. Comments 
also indicated that there would be no impact on program operations in 
most States to implement site-level claiming because of this. However, 
among several State

[[Page 57342]]

agencies with systems that are not currently configured for site-level 
claiming, State agencies noted a belief that that implementation would 
result in increased costs due to additional monitoring and system 
requirements. However, sponsor classifications are still needed for 
State agencies that are not yet able to process claims at the site 
level. Therefore, although this rule establishes definitions for self-
prep and vended sites, USDA is retaining the sponsor level definitions, 
which apply for States that are claiming at the sponsor level.
b. Eligibility for Closed Enrolled Sites
    i. Program Impact: The definition of closed enrolled sites included 
in Sec.  225.2 requires that at least 50 percent of the enrolled 
children at the site are eligible for free or reduced-price meals under 
the NSLP and the SBP, as determined by approval of applications in 
accordance with Sec.  225.15(f). To reduce administrative burden on 
sponsors, USDA published guidance in 2002 that permitted closed 
enrolled sites nationwide to establish eligibility based on data of 
children eligible for free and reduced priced meals in the area where 
the site was located (Summer Food Service Program (SFSP) Waiver for 
Closed Enrolled Sites, November 17, 2002). This nationwide waiver was 
rescinded in 2018, as discussed in the background section of this final 
rule. After over 15 years of implementing this waiver, this flexibility 
has been shown to reduce administrative burden on sponsors of closed 
enrolled sites and eliminate barriers to participation for children and 
families enrolled at these sites. State agency requests for individual 
waivers for Program year 2019 confirm that these remain the principal 
benefits of permitting closed enrolled sites to rely on area 
eligibility rather than applications. Nationwide waivers issued 
pursuant to COVID-19-related authorities have also been used to allow 
the continued use of these policy options. Accordingly, this rule 
amends the definitions of ``areas in which poor economic conditions 
exist'' and ``closed enrolled site'' in Sec.  225.2 to clarify 
eligibility requirements and include eligibility determination based on 
area data of children eligible for free and reduced-price meals. This 
rule also includes additional changes which require State agencies to 
have criteria for approving closed enrolled sites to ensure operation 
of a site as closed enrolled does not limit access to the community at 
large.
    ii. Cost Impact: This definition has already been implemented 
through waivers, so we do not estimate any participation or cost 
impacts as a result of this provision. The addition of the provision 
requiring States to ensure community access to meals during the 
approval of a closed site will ensure that program access will not be 
impacted if this provision results in an increase in closed sites; 
indeed, this requirement may lead to slightly more sites operating 
overall, though we are not able to estimate this potential effect.
c. Roles and Responsibilities of Site Supervisors
    i. Program Impact: SFSP regulations did not have a singular 
definition outlining the roles and responsibilities of site 
supervisors. However, USDA does publish guidance specifically for site 
supervisors as a tool to facilitate program operations that are in 
compliance with regulations. The role of the site supervisor is 
critically important to proper management of the SFSP. Using a variety 
of methods (including nationwide studies conducted by the department), 
USDA has received the feedback that clearly defining the role of the 
site supervisor, including requiring that the site supervisor must be 
on site during the meal service, would greatly facilitate sponsors' 
ability to comply with requirements and improve program integrity. 
However, the site supervisor may delegate tasks to another staff member 
so long as that staff member is overseen by the site supervisor and has 
appropriate training for the role that the individual is expected to 
fill. It is at the State agency's discretion whether the sponsor must 
inform that State agency when a site supervisor delegates their duties 
to another staff member. Accordingly, this rule adds a definition at 
Sec.  225.2 for site supervisor, which outlines the role and 
responsibilities required of a site supervisor.
    ii. Cost Impact: We estimate no change in cost associated with this 
provision. This change merely adds a definition to align with the 
current nature of program operations.
d. Unaffiliated Sites
    i. Program Impact: In the SFSP, many sponsors operate sites with 
which they have a legal affiliation. However, there are instances when 
a sponsor will provide meals to a site with which it has no legal 
affiliation other than an agreement to conduct a meal service. Section 
IV. C of this rule includes this type of situation as a characteristic 
that should be taken into consideration when determining which sites a 
State agency should choose to review during a sponsor review in order 
to fulfill requirements set forth in Sec.  225.7(e)(4)(v). The 
regulations under Sec.  225.2 did not include a definition for 
unaffiliated site. Therefore, this rule adds a definition for 
unaffiliated site (i.e., a site that is legally distinct from the 
sponsor) to help State agencies determine which sites should be 
selected for review when conducting a sponsor review.
    ii. Cost Impact: We estimate no change in cost associated with this 
provision. As stated in the rule, this definition is added to clarify 
existing program requirements, not to change program requirements.
e. Unanticipated School Closure
    i. Program Impact: The NSLA allows service institutions to provide 
meal services to children who are not in school for a period during the 
months of October through April due to a natural disaster, building 
repair, court order, or similar cause. The statute further requires 
that the meal service must take place at non-school sites. While the 
regulations currently provide requirements for approving sponsors to 
serve during unanticipated school closures, there is not a specific 
regulatory definition of unanticipated school closure. This rule adds a 
definition of ``unanticipated school closure'' that aligns with 
statutory requirements outlined in section 13(c)(1) of the NSLA, 42 
U.S.C. 1761(c)(1), and existing regulatory provisions related to 
unanticipated school closures.
    ii. Cost Impact: We estimate no change in cost associated with this 
provision. As stated in the rule, this is a change in definition to 
clarify existing program requirements, not to change program 
requirements.
f. Nonprofit Food Service, Nonprofit Food Service Account, Net Cash 
Resources
    i. Program Impact: Financial management in the SFSP is critical to 
the success of the program, especially considering the short duration 
during which most summer programs operate. As such, it is important 
that key terms related to financial management are clearly defined. To 
create consistency across Child Nutrition Programs, this rule includes 
definitions of nonprofit food service, nonprofit food service account, 
and net cash resources that align with the terms already defined under 
the National School Lunch Program in part 210.
    ii. Cost Impact: We estimate no change in cost associated with this 
provision, as this provision is not changing the program requirements.

[[Page 57343]]

Providing these definitions ensures consistency across the SFSP and 
NSLP.
5. Miscellaneous
a. Authority To Waive Statute and Regulations
    i. Program Impact: Section 12(l) of the NSLA, (42 U.S.C 1760(l)), 
provides the Secretary with the authority to waive statutory 
requirements under the NSLA or the Child Nutrition Act of 1966 (42 
U.S.C. 1771 et seq.), and any regulations issued under either Act for 
State agencies and eligible service providers if certain conditions are 
met. Although regulations are not needed to continue implementing 
waivers, this final rule adds waiver authority to the regulations to 
provide clarity for States and program operators. USDA routinely works 
with State agencies to determine when and how waiver authority can best 
be applied to improve program operations, and State agencies are 
responsible for monitoring sponsor activities, including the 
implementation of waivers. Under the changes in this rule, the State 
agency will also have the discretion to deny a waiver submitted by an 
eligible service provider--for example, if statutory requirements are 
not met, if the State agency does not have confidence that the sponsor 
has the capability to implement the waiver while maintaining a high 
level of program integrity, or if the State agency or the sponsor does 
not have the resources to properly implement, monitor, and evaluate the 
impacts of the waiver.
    ii. Cost Impact: We estimate no change in cost associated with this 
provision. As stated in the rule, waiver authority already exists in 
the statute and adding it to the regulations does little to change how 
this process operates.
b. Duration of Eligibility
    i. Program Impact: Statutory requirements found in the NSLA at 42 
U.S.C. 1761(a)(1)(A)(i)(I-II) authorize the use of school data and 
census data to establish area eligibility in the SFSP. The NSLA also 
establishes that area eligibility determinations made using school or 
census data must be redetermined every five years. This rule amends the 
duration of eligibility for open sites and restricted open sites for 
school and census data from three years to five years, in accordance 
with the NSLA. Accordingly, this rule changes the regulations in 
redesignated Sec. Sec.  225.6(g)(1)(ix) and 225.6(g)(2)(iii) to require 
submission of eligibility documentation every five years.
    ii. Cost Impact: We estimate no change in cost associated with this 
provision. The change will decrease the burden on sponsors using school 
or census data for area eligibility determinations of sites. We are not 
able to estimate any potential participation effects, but we note that 
there is very little annual variation in the census data, so any 
participation or eligibility effects are likely to be minimal.
c. Methods of Providing Training
    i. Program Impact: As technology has advanced, sponsors and State 
agencies have the capability to provide mandatory trainings via the 
internet. Accordingly, this rule updates regulations at Sec.  225.7(a) 
to include the option for training to be conducted via the internet.
    ii. Cost Impact: The change may decrease training costs for State 
agencies and sponsors who switch from in-person trainings to online 
trainings, though we are not able to estimate this potential savings.
d. Meal Preparation Facility Review
    i. Program Impact: Current regulations require that part of any 
review of a vended sponsor must include a food service management 
company facility visit. In order to clarify review requirements, this 
rule renames the section titled `Food Service Management Company 
Visits' in current Sec.  225.7(d)(6) to `Meal Preparation Facility 
Review.' This rule also reorganizes the requirements in a more logical 
manner, amends this provision to clarify that each facility should be 
reviewed at least one time within the appropriate review cycle for each 
vended sponsor, and redesignate it as Sec.  225.7(i). The final rule 
addresses oversight in the proposed rule by modifying the proposed 
language to clarify who is required to receive a review under this 
requirement, the purpose of these reviews, how often these reviews are 
required to take place, and who is responsible to conduct these 
reviews. The final rule clarifies that as part of the review of any 
vended sponsor that purchases unitized meals, with or without milk, to 
be served at a SFSP site, the State agency must review the facilities 
and meal production documentation of any food service management 
company from which the sponsor purchases meals. If the sponsor does not 
purchase meals but does purchase management services within the 
restrictions specified in Sec.  225.15, the State agency is not 
required to conduct a facility review. The final rule clarifies that 
State agencies are responsible for these reviews and are required to 
complete the facility review as a part of the vended sponsor review.
    ii. Cost Impact: We estimate no change in cost associated with this 
provision. The change clarifies current requirements; it makes no 
changes to current requirements.
    For the reasons stated above, we estimate that these new changes 
will not measurably impact participation, meal costs, or costs to State 
agencies, sponsors, or sites, beyond accounting for the decreased 
burden needed to fulfill program requirements under the changes, as the 
changes streamline and/or decrease administrative requirements, 
increase flexibilities for State agencies and/or sponsors, and/or 
provide clarity where current program requirements are unclear.
    More generally, this action streamlines SFSP operations for both 
State agencies and program operators. It codifies policies that have 
proven effective in improving efficiencies in the operation of the 
SFSP. These flexibilities have provided significant relief from some 
program administrative burdens and have reduced paperwork for those 
sponsors experienced in other Child Nutrition Programs that wish to be 
SFSP operators. We estimate that there are no measurable increased 
costs to State agencies or SFSP operators and no Federal costs 
associated with implementation of this rule.
    There may be some savings associated with this rule due to the 
reduction in burden associated with streamlining operations and 
reducing SFSP paperwork for experienced sponsors. Depending on the 
position of the staff person submitting the paperwork, this action is 
estimated to save approximately $0.5 million annually if performed by 
an administrative-level position, or about $1 million annually if 
performed by a director-level position. This will result in 
approximately $2.7 million to $5.2 million in savings over five years, 
depending on the position level of the person submitting the 
paperwork.\7\ See the following tables for the detailed savings 
streams.
---------------------------------------------------------------------------

    \7\ These ranges were calculated by taking the hourly total 
compensation from BLS for FY2021 (for all State and Local workers 
for the director-level position estimate, and for a private 
administrative assistant for the administrative-level estimate) and 
inflating that hourly total compensation figure according to the 
CPI-W increase in OMB's economic assumptions for the FY2023 
President's Budget for years FY2023-FY2027. That hourly compensation 
figure was then multiplied by the decrease in burden hours as 
estimated in the ICR to generate the yearly and 5-year savings 
estimate.
---------------------------------------------------------------------------

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Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601-612) requires Agencies 
to analyze the impact of rulemaking on small entities and consider 
alternatives that would minimize any significant impacts on a 
substantial number of small entities. Pursuant to that review, the 
Secretary certifies that this rule will not have a significant impact 
on a substantial number of small entities. The totality of the changes 
made by the final rule aim to decrease overall burden on the affected 
parties, which include the small entities covered by the final rule 
(i.e., small sponsors and sites). However, the majority of the rule's 
provisions are currently in effect via policy guidance or State 
waivers. In addition, changes that will affect burden primarily impact 
State agencies and larger sponsors, such as the requirement

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that State agencies share information and the multi-step approach for 
States conducting claim validations.

Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public 
Law 104-4, establishes requirements for Federal agencies to assess the 
effects of their regulatory actions on State, local and tribal 
governments and the private sector. Under section 202 of the UMRA, USDA 
generally must prepare a written statement, including a cost benefit 
analysis, for proposed and final rules with ``Federal mandates'' that 
may result in expenditures by State, local or tribal governments, in 
the aggregate, or the private sector, of $146 million or more (when 
adjusted for inflation; GDP deflator source: Table 1.1.9 at https://www.bea.gov/iTable) in any one year. When such a statement is needed 
for a rule, section 205 of the UMRA generally requires USDA to identify 
and consider a reasonable number of regulatory alternatives and adopt 
the most cost-effective or least burdensome alternative that achieves 
the objectives of the rule. This final rule does not contain Federal 
mandates (under the regulatory provisions of Title II of the UMRA) for 
State, local and tribal governments or the private sector of $146 
million or more in any one year. Thus, the rule is not subject to the 
requirements of sections 202 and 205 of the UMRA.

Executive Order 12372

    SFSP is listed in the Assistance Listings under the Catalog of 
Federal Domestic Assistance Number 10.559 and is subject to Executive 
Order 12372, which requires intergovernmental consultation with State 
and local officials (see 2 CFR chapter IV). Since SFSP is State-
administered, USDA has formal and informal discussions with State and 
local officials, including representatives of Indian tribal 
organizations, on an ongoing basis regarding program requirements and 
operations. This provides USDA with the opportunity to receive regular 
input from State administrators and local program operators, which 
contributes to the development of feasible requirements.

Federalism Summary Impact Statement

    Executive Order 13132 requires Federal agencies to consider the 
impact of their regulatory actions on State and local governments. 
Where such actions have federalism implications and either impose 
substantial direct compliance costs on State and local governments or 
preempt State law, agencies are directed to provide a statement for 
inclusion in the preamble to the regulations describing the agency's 
considerations in terms of the three categories called for under 
section (6)(b)(2)(B) of Executive Order 13132. USDA has determined that 
this rule does not have Federalism implications. This rule does not 
have substantial direct effects on the States, on the relationship 
between the national government and the States, or on the distribution 
of power and responsibilities among the various levels of government, 
nor does it impose substantial or direct compliance costs on State and 
local governments. Therefore, under section 6(b) of the Executive 
Order, a Federalism summary impact statement is not required.

Executive Order 12988

    This final rule has been reviewed under Executive Order 12988, 
Civil Justice Reform. This rule is not intended to have preemptive 
effect with respect to any State or local laws, regulations or policies 
which conflict with its provisions or which would otherwise impede its 
full and timely implementation. This rule is not intended to have 
retroactive effect. Prior to any judicial challenge to the application 
of the provisions of this rule, all applicable administrative 
procedures must be exhausted.

Civil Rights Impact Analysis

    FNS has reviewed the final rule, in accordance with the Department 
Regulation 4300-004, ``Civil Rights Impact Analysis'' to identify and 
address any major civil rights impacts the final rule might have on 
participants on the basis of age, race, color, national origin, sex, or 
disability. Due to the unavailability of data, USDA is unable to 
determine whether this rule will have an adverse or disproportionate 
impact on protected classes among entities that administer and 
participate in the Child Nutrition Programs. However, FNS Civil Rights 
Division finds that the current mitigation and outreach strategies 
outlined in the regulation and this CRIA are intended to minimize the 
impacts on Child Nutrition program participants if implemented. If 
deemed necessary, the FNS Civil Rights Division will propose further 
mitigation to alleviate impacts that may result from the implementation 
of the final rule.

Executive Order 13175

    This proposed rule has been reviewed in accordance with the 
requirements of 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 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.
    Food and Nutrition Service hosted a listening session to inform 
Tribal Nations about this rulemaking. When considering the promulgation 
of this rule to impact State authority in Tribal issues, the 
fulfillment of tribal treaty rights on the provision of food, and the 
relinquishment of USDA's authority to review tribal waivers as directed 
by Executive Order 13175, Sec. 6, USDA has determined that this rule 
does have substantial direct effects on one or more Tribes. FNS will 
work with the USDA Office of Tribal Relations to ensure that meaningful 
consultation occurs.

Paperwork Reduction Act

    The Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35; see 5 
CFR part 1320) requires the Office of Management and Budget (OMB) to 
approve all collections of information by a Federal agency before they 
can be implemented. Respondents are not required to respond to any 
collection of information unless it displays a current valid OMB 
control number.
    In accordance with the Paperwork Reduction Act of 1995, this final 
rule will create information collection requirements and revise 
existing information collection burdens for OMB Control Number 0584-
0280 7 CFR part 225, Summer Food Service Program, that are subject to 
review and approval by OMB. In connection with the proposed rule, 
``Streamlining Program Requirements and Improving Integrity in the 
Summer Food Service Program'', published in the Federal Register on 
January 23, 2020 (85 FR 4064), USDA submitted an Information Collection 
Request (ICR) discussing the information requirements impacted by the 
rule to OMB for review. The final rule codifies into regulations many 
of the provisions incorporated under the proposed rule, as well as 
modifies some to ensure compliance by State agencies and program 
operators. It also adds additional integrity safeguards that were not 
incorporated under the proposed rule. The majority of the information 
collection requirements and associated burdens will remain the same as 
previously proposed; however, there are a few changes in the 
requirements and

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burden, which are outlined below and in the associated ICR.

Explanatory Note on Existing Information Collection Requirements 
Without OMB Approval and Rounding Revisions (OMB#0584-0280)

    USDA published a 60-day Federal Register Notice (FRN) on July 23, 
2021 (86 FR 38974) for public comment on the proposed revision to 
include existing information collection requirements in use without OMB 
approval into OMB control number 0584-0280. In addition, FNS took the 
opportunity provided by this proposed revision to correct for rounding 
errors in the total estimated burden hours currently approved for the 
collection. The 60-day FRN (86 FR 38974) outlines the previous 
reporting burden being used without OMB approval, and the estimated 
changes in burden to the collection under the revision request. The 
public comment period for the 60-day FRN ended on September 21, 2021. 
USDA is submitting the revision request to OMB for review and approval. 
Once approved, the revision request will establish the baseline burden 
for this final rule ICR, and as such, this PRA summary and associated 
ICR assume approval for the revisions under the standalone revision 
request.
    In addition, this final rule is expected to reduce the reporting 
burden associated with one of the information collection requirements 
being incorporated under the revision request. Under current 
regulations, sponsors are required to visit each of their sites at 
least once during the first week of operation under the Program (7 CFR 
225.15(d)(2)). The burden associated with this existing monitoring 
requirement was overlooked in the previous approval of 0584-0280. A 
revised 0584-0280 package will be submitted that will include the 
burden for the existing monitoring requirement.
    As a result of the program changes and adjustments discussed in the 
aforementioned 60 day FRN, due to the addition of previously omitted 
reporting requirements and the administrative adjustment for rounding 
errors, the revised burden for the collection increased to a total of 
462,699 hours and 391,795 responses. These figures are included in the 
section below entitled ``Summary of OMB Approval Prior to Rule and 
Impact of Final Rule.''
    For transparency and to provide clarity regarding the impact of the 
changes in this rulemaking, the table below shows the impact that the 
final rule will have once the estimated burden changes in the revision 
request are reviewed by OMB and are incorporated into the new baseline 
estimates for OMB control number 0584-0280.
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    Relative to these corrected burden estimates for the site visit 
requirements under 7 CFR 225.15(d)(2) specifically, USDA estimates that 
this final rule will decrease the reporting burden by 11,048 hours 
((8,285-14,913) + (5,525-9,945)) and 22,096 responses ((16,570-29,826) 
+ (11,050-19,890)) from the estimated reporting burden shown in the 
baseline revision to OMB control number 0584-0280.
    The final rule makes other changes to reporting requirements that 
result in increases in burden hours and responses; however, in total, 
the changes codified through this rulemaking will result in a total 
reduction in burden. Under the proposed rule ICR, USDA estimated the 
changes would reduce the burden by 6,590 hours and 21,298 responses. 
With the additional changes under the final rule, USDA estimates the 
rulemaking will reduce the total burden by 17,166 hours and 37,814 
responses. Specific changes to the existing burdens above are explained 
in the summary table for 0584-0280 below, and in the associated ICR.
    Thus, in accordance with the Paperwork Reduction Act of 1995, the 
information collection requirements associated with this final rule, 
which were filed under OMB control number 0584-0280, have been (or will 
be) submitted for approval to OMB. When OMB notifies USDA of its 
decision, USDA will publish a notice in the Federal Register of the 
action.
    Title: 7 CFR part 225, Summer Food Service Program.
    OMB Control Number: 0584-0280.
    Expiration Date: 12/31/2022.
    Type of Request: Revision.
    Abstract: This is a revision of existing information collection 
requirements under OMB Control Number 0584-0280 that are being impacted 
by this final rulemaking as well as new information collection 
requirements. This final rule impacts information reporting burdens for 
State agencies and sponsors in SFSP by codifying into regulations 
changes that have been tested through policy guidance to streamline 
program requirements and facilitate program compliance, and by adding 
additional safeguards to ensure program integrity. Some of the 
provisions modify current regulations, resulting in revisions to 
existing requirement burdens, while other provisions are new and result 
in new mandatory reporting burdens.
    First, at 7 CFR 225.15(d)(2), this final rule amends current 
regulations which require sponsors to visit each of their sites at 
least once during the first week of operation in the program. USDA 
proposed to amend this requirement to provide flexibility in the 
timeframe during which these site visits took place for larger 
sponsors. However, in response to comments on the proposed changes, 
USDA revised its initial proposal in a way that balances program 
integrity and administrative flexibilities. Under this final rule, 
sponsors must conduct a site visit in the first two weeks of operation 
for all new sites, sites that had operational problems in the prior 
year, and any or all sites the State agency determines need a visit. 
Under the proposed rule, the changes were not anticipated to result in 
a change in burden; therefore, the burden associated with this 
requirement was not included in the proposed rule ICR. USDA expects 
this final rule action to decrease the reporting burden for SFSP 
sponsors.
    In addition, this final rule adds the new requirement that each 
State agency must establish criteria for sponsors to follow when 
determining which of their returning sites with operational problems 
noted in the prior year are required to receive a site visit during the 
first two weeks of program operations in a new Sec.  225.7(o). This 
requirement is expected to result in an increase in reporting burden 
for State agencies.
    Second, this final rule codifies new requirements at Sec.  
225.6(i)(7)(v), and adds a new Sec.  225.16(g) to allow sponsors the 
option to receive reimbursement for meals served away from the approved 
site. Consistent with the proposed rule, sponsors are required to 
notify the State agency in advance that meals will be served away from 
the site, but formal approval of the alternative meal service is not a 
requirement. However, the burden associated with the requirement for 
advanced notification was not accounted for in the proposed rule ICR. 
Therefore, USDA is adding this burden in the final rule ICR as a new 
reporting burden for sponsors. The requirement is expected to increase 
the reporting burden for sponsors.
    And third, at Sec.  225.9(d)(10), this final rule will codify that, 
in cases where the State agency needs to complete an extended review of 
a claim submitted for reimbursement due to concerns of unlawful acts, 
the State agency may be exempt from the 45 calendar day timeframe to 
forward reimbursement to sponsors specified in Sec.  225.9(d)(4). In 
such cases, under the final rule, the State agency is required to send 
notification to the FNS Regional Office (FNSRO) that they suspect fraud 
and will be taking the exemption to the timeline to conduct an expanded 
review. This is a change from the proposed rule ICR in response to 
public comments received, and is expected to result in an increase in 
reporting burden for approximately four State agencies annually.
    The final rule codifies the proposed changes that streamline 
application requirements for experienced SFSP sponsors, and school food 
authorities and Child and Adult Care Food Program institutions in good 
standing applying to participate in SFSP, which will

[[Page 57349]]

eliminate duplicative documentation and paperwork and decrease the time 
needed to apply to participate and enter into a written agreement with 
the State. The streamlined application process includes the proposed 
changes to the submission of site information and demonstration of 
financial and administrative capability (Sec. Sec.  225.6(c)(1)-(4), 
225.6(i), 225.14(a), and 225.14(c)). In addition, the rule codifies a 
modification to the proposed meal claim validation method that reduces 
the portion of meal claims that need to be validated as part of the 
sponsor review (based on the amount of error detected) (Sec.  
225.7(e)(6)). The impact of these changes are expected to be consistent 
with the proposed rule ICR burden estimates, and thus, these burden 
estimates have not changed from the proposed rule ICR. However, the 
proposed rule burden chart incorrectly reported an estimated average of 
one hour per response for new and experienced business sponsors to 
submit site information (Sec.  225.6(c)(2)-(3)). The changes under the 
final rule are expected to decrease the time to submit site information 
from one hour to approximately 53 minutes (0.89 hours), as it was 
proposed and correctly reported for local and tribal government 
sponsors in the proposed rule PRA summary and ICR. The estimates for 
these requirements are presented along with the changes due to the 
final rulemaking in the summary tables below, and in the associated 
ICR.
    Furthermore, under this rule, USDA is codifying current guidance 
allowing State agencies the discretion to issue a media release on 
behalf of all sponsors operating SFSP sites, including camps, in the 
State. This burden is reflected in OMB control number 0584-0280. As 
with the proposed rule, USDA does not expect the provisions outlined in 
this rule to have any impact on the burden related to the media 
releases; therefore, as with the proposed rule, they are not included 
as part of rulemaking submission for PRA approval.
    Finally, as noted in the explanatory note above, the standalone 
revision request corrected rounding errors to the baseline burden for 
the collection. Also, some of the estimates presented in the summary 
table of the proposed rule PRA were rounded. Therefore, the totals in 
the summary table below and in the associated ICR may differ slightly 
from those presented in the proposed rule PRA summary and ICR tables.

Summary of OMB Approval Prior to Rule and Impact of Final Rule

    OMB control number 0584-0280 is currently approved with 63,942 
respondents, 391,795 responses, and 462,699 burden hours. USDA 
estimates that the final rule will decrease the reporting burden by 
17,166 hours and 37,814 responses, resulting in a total revised burden 
of 445,533 hours and 353,981 responses for OMB control number 0584-
0280. The total burden inventory for this final rule is 233,537 hours. 
The average burden per response and the annual burden hours are 
explained below and summarized in the charts which follow.

Estimated Annual Burden Change as a Result of Rule

    Affected Public: State, Local, or Tribal Government and Businesses 
or Other For Profit, or Not for Profit. Respondent groups identified 
include State Agencies and local, tribal, and business sponsors.
    Estimated Number of Respondents: 5,577, which includes 53 State 
Agencies and 5,524 sponsors (3,314 Local and Tribal Government sponsors 
and 2,210 business sponsors).
    Estimated Number of Responses per Respondent: 8.65.
    Estimated Total Annual Responses: 48,267.14.
    Estimated Time per Response: 4.84.
    Estimated Burden Hours: 233,537.23.
    Estimated Total Annual Burden on Respondents: 445,533.
    Current OMB Inventory: 462,699.
    Difference (Burden Revisions Requested): -17,166.
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E-Government Act Compliance

    USDA 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 210

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

7 CFR Part 215

    Food assistance programs, Grant programs--education, Grant 
program--health, Infants and children, Milk,

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Reporting and recordkeeping requirements.

7 CFR Part 220

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

7 CFR Part 225

    Food assistance programs, Grant programs--health, Infants and 
children, Labeling, Reporting and recordkeeping requirements.

7 CFR Part 226

    Accounting, Aged, Day care, Food assistance programs, Grant 
programs, Grant programs--health, American Indians, Individuals with 
disabilities, Infants and children, Intergovernmental relations, Loan 
programs, Reporting and recordkeeping requirements, Surplus 
agricultural commodities.

    Accordingly, 7 CFR parts 210, 220, 215, 225, and 226 are amended as 
follows:

PART 210--NATIONAL SCHOOL LUNCH PROGRAM

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

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


0
2. In Sec.  210.3, add paragraph (e) to read as follows:


Sec.  210.3  Administration.

* * * * *
    (e) Authority to waive statute and regulations. (1) As authorized 
under section 12(l) of the Richard B. Russell National School Lunch 
Act, FNS may waive provisions of such Act or the Child Nutrition Act of 
1966, as amended, and the provisions of this part with respect to a 
State agency or eligible service provider. The provisions of this part 
required by other statutes may not be waived under this authority. FNS 
may only approve requests for a waiver that are submitted by a State 
agency and comply with the requirements at section 12(l)(1) and the 
limitations at section 12(l)(4), including that FNS may not grant a 
waiver that increases Federal costs.
    (2)(i) A State agency may submit a request for a waiver under 
paragraph (e)(1) of this section in accordance with section 12(l)(2) 
and the provisions of this part.
    (ii) A State agency may submit a request to waive specific 
statutory or regulatory requirements on behalf of eligible service 
providers that operate in the State. Any waiver where the State concurs 
must be submitted to the appropriate FNSRO.
    (3)(i) An eligible service provider may submit a request for a 
waiver under paragraph (e)(1) of this section in accordance with 
section 12(l) and the provisions of this part. Any waiver request 
submitted by an eligible service provider must be submitted to the 
State agency for review. A State agency must act promptly on such a 
waiver request and must deny or concur with a request submitted by an 
eligible service provider.
    (ii) If a State agency concurs with a request from an eligible 
service provider, the State agency must promptly forward to the 
appropriate FNSRO the request and a rationale, consistent with section 
12(l)(2), supporting the request. By forwarding the request to the 
FNSRO, the State agency affirms:
    (A) The request meets all requirements for waiver submissions; and,
    (B) The State agency will conduct all monitoring requirements 
related to regular Program operations and the implementation of the 
waiver.
    (iii) If the State agency denies the request, the State agency must 
notify the requesting eligible service provider and state the reason 
for denying the request in writing within 30 calendar days of the State 
agency's receipt of the request. The State agency response is final and 
may not be appealed to FNS.

PART 215--SPECIAL MILK PROGRAM FOR CHILDREN

0
3. The authority citation for part 215 continues to read as follows:

    Authority:  42 U.S.C. 1772 and 1779.


0
4. In Sec.  215.3, add paragraph (e) to read as follows:


Sec.  215.3  Administration.

* * * * *
    (e) Authority to waive statute and regulations. (1) As authorized 
under section 12(l) of the Richard B. Russell National School Lunch 
Act, FNS may waive provisions of such Act or the Child Nutrition Act of 
1966, as amended, and the provisions of this part with respect to a 
State agency or eligible service provider. The provisions of this part 
required by other statutes may not be waived under this authority. FNS 
may only approve requests for a waiver that are submitted by a State 
agency and comply with the requirements at section 12(l)(1) and the 
limitations at section 12(l)(4), including that FNS may not grant a 
waiver that increases Federal costs.
    (2)(i) A State agency may submit a request for a waiver under 
paragraph (e)(1) of this section in accordance with section 12(l)(2) 
and the provisions of this part.
    (ii) A State agency may submit a request to waive specific 
statutory or regulatory requirements on behalf of eligible service 
providers that operate in the State. Any waiver where the State concurs 
must be submitted to the appropriate FNSRO.
    (3)(i) An eligible service provider may submit a request for a 
waiver under paragraph (e)(1) of this section in accordance with 
section 12(l) and the provisions of this part. Any waiver request 
submitted by an eligible service provider must be submitted to the 
State agency for review. A State agency must act promptly on such a 
waiver request and must deny or concur with a request submitted by an 
eligible service provider.
    (ii) If a State agency concurs with a request from an eligible 
service provider, the State agency must promptly forward to the 
appropriate FNSRO the request and a rationale, consistent with section 
12(l)(2), supporting the request. By forwarding the request to the 
FNSRO, the State agency affirms:
    (A) The request meets all requirements for waiver submissions; and,
    (B) The State agency will conduct all monitoring requirements 
related to regular Program operations and the implementation of the 
waiver.
    (iii) If the State agency denies the request, the State agency must 
notify the requesting eligible service provider and state the reason 
for denying the request in writing within 30 calendar days of the State 
agency's receipt of the request. The State agency response is final and 
may not be appealed to FNS.

PART 220--SCHOOL BREAKFAST PROGRAM

0
5. The authority citation for part 220 continues to read as follows:

    Authority:  42 U.S.C. 1773, 1779, unless otherwise noted.


0
6. In Sec.  220.3, add paragraph (f) to read as follows:


Sec.  220.3  Administration.

* * * * *
    (f) Authority to waive statute and regulations. (1) As authorized 
under section 12(l) of the Richard B. Russell National School Lunch 
Act, FNS may waive provisions of such Act or the Child Nutrition Act of 
1966, as amended, and the provisions of this part with respect to a 
State agency or eligible

[[Page 57355]]

service provider. The provisions of this part required by other 
statutes may not be waived under this authority. FNS may only approve 
requests for a waiver that are submitted by a State agency and comply 
with the requirements at section 12(l)(1) and the limitations at 
section 12(l)(4), including that FNS may not grant a waiver that 
increases Federal costs.
    (2)(i) A State agency may submit a request for a waiver under 
paragraph (f)(1) of this section in accordance with section 12(l)(2) 
and the provisions of this part.
    (ii) A State agency may submit a request to waive specific 
statutory or regulatory requirements on behalf of eligible service 
providers that operate in the State. Any waiver where the State concurs 
must be submitted to the appropriate FNSRO.
    (3)(i) An eligible service provider may submit a request for a 
waiver under paragraph (e)(1) of this section in accordance with 
section 12(l) and the provisions of this part. Any waiver request 
submitted by an eligible service provider must be submitted to the 
State agency for review. A State agency must act promptly on such a 
waiver request and must deny or concur with a request submitted by an 
eligible service provider.
    (ii) If a State agency concurs with a request from an eligible 
service provider, the State agency must promptly forward to the 
appropriate FNSRO the request and a rationale, consistent with section 
12(l)(2), supporting the request. By forwarding the request to the 
FNSRO, the State agency affirms:
    (A) The request meets all requirements for waiver submissions; and,
    (B) The State agency will conduct all monitoring requirements 
related to regular Program operations and the implementation of the 
waiver.
    (iii) If the State agency denies the request, the State agency must 
notify the requesting eligible service provider and state the reason 
for denying the request in writing within 30 calendar days of the State 
agency's receipt of the request. The State agency response is final and 
may not be appealed to FNS.

PART 225--SUMMER FOOD SERVICE PROGRAM

0
7. The authority citation for part 225 continues to read as follows:

    Authority:  Secs. 9, 13 and 14, Richard B. Russell National 
School Lunch Act, as amended (42 U.S.C. 1758, 1761 and 1762a).


0
8. In part 225, revise all references to ``State Children's Health 
Insurance Program'' and ``SCHIP'' to read ``Children's Health Insurance 
Program'' and ``CHIP'', respectively.

0
9. In Sec.  225.2:
0
a. Revise the definitions of ``Areas in which poor economic conditions 
exist'' and ``Closed enrolled site'', ;
0
b. In the definition of ``Documentation'', redesignate paragraphs 
(a)(1) through (4) as paragraphs (1)(i) through (iv), respectively, and 
redesignate paragraphs (b)(1) and (2) as paragraphs (2)(i) and (ii), 
respectively;
0
c. Revise the definition of ``Needy children'';
0
d. Add in alphabetical order definitions for ``Net cash resources'', 
``Nonprofit food service'', and ``Nonprofit food service account''; and
0
e. Revise the definitions of ``Open site'' and ``Restricted open 
site'';
0
f. Add in alphabetical order definitions for ``Self-preparation site'', 
``Site supervisor'', ``Unaffiliated site'', ``Unanticipated school 
closure'', and ``Vended site''.
    The revisions and additions read as follows:


Sec.  225.2  Definitions.

* * * * *
    Areas in which poor economic conditions exist means:
    (1) The attendance area of a school in which at least 50 percent of 
the enrolled children have been determined eligible for free or 
reduced-price school meals under the National School Lunch Program and 
the School Breakfast Program;
    (2) A geographic area where, based on the most recent census data 
available or information provided from a department of welfare or 
zoning commission, at least 50 percent of the children residing in that 
area are eligible for free or reduced-price school meals under the 
National School Lunch Program and the School Breakfast Program;
    (3) A geographic area where a site demonstrates, based on other 
approved sources, that at least 50 percent of the children enrolled at 
the site are eligible for free or reduced-price school meals under the 
National School Lunch Program and the School Breakfast Program; or
    (4) A closed enrolled site in which at least 50 percent of the 
enrolled children at the site are eligible for free or reduced-price 
school meals under the National School Lunch Program and the School 
Breakfast Program, as determined by approval of applications in 
accordance with Sec.  225.15(f).
* * * * *
    Closed enrolled site means a site which is open only to enrolled 
children, as opposed to the community at large, and in which at least 
50 percent of the enrolled children at the site are eligible for free 
or reduced-price school meals under the National School Lunch Program 
and the School Breakfast Program, as determined by approval of 
applications in accordance with Sec.  225.15(f), or on the basis of 
documentation that the site meets paragraph (1), (2), or (3) of the 
definition of ``Areas in which poor economic conditions exist'' as 
provided in this section.
* * * * *
    Needy children means children from families whose incomes are equal 
to or below the Secretary's published Child Nutrition Programs: Income 
Eligibility Guidelines.
    Net cash resources means all monies, as determined in accordance 
with the State agency's established accounting system that are 
available to or have accrued to a sponsor's nonprofit food service at 
any given time, less cash payable. Such monies may include, but are not 
limited to, cash on hand, cash receivable, earnings on investments, 
cash on deposit and the value of stocks, bonds, or other negotiable 
securities.
* * * * *
    Nonprofit food service means all food service operations conducted 
by the sponsor principally for the benefit of children, all of the 
revenue from which is used solely for the operation or improvement of 
such food services.
    Nonprofit food service account means the restricted account in 
which all of the revenue from all food service operations conducted by 
the sponsor principally for the benefit of children is retained and 
used only for the operation or improvement of the nonprofit food 
service. This account must include, as appropriate, non-Federal funds 
used to support program operations, and proceeds from non-program 
foods.
* * * * *
    Open site means a site at which meals are made available to all 
children in the area and which is located in an area in which at least 
50 percent of the children are from households that would be eligible 
for free or reduced price school meals under the National School Lunch 
Program and the School Breakfast Program, as determined in accordance 
with paragraph (1), (2), or (3) of the definition of ``Areas in which 
poor economic conditions exist.''
* * * * *
    Restricted open site means a site which is initially open to broad 
community participation, but at which the sponsor restricts or limits 
attendance for reasons of security, safety

[[Page 57356]]

or control. Site eligibility for a restricted open site shall be 
documented in accordance with paragraph (1), (2), or (3) of the 
definition of ``Areas in which poor economic conditions exist.''
* * * * *
    Self-preparation site means a site that prepares the majority of 
meals that will be served at its site or receives meals that are 
prepared at its sponsor's central kitchen. The site does not contract 
with a food service management company for unitized meals, with or 
without milk, or for management services.
* * * * *
    Site supervisor means the individual on site for the duration of 
the meal service, who has been trained by the sponsor, and is 
responsible for all administrative and management activities at the 
site, including, but not limited to: maintaining documentation of meal 
deliveries, ensuring that all meals served are safe, and maintaining 
accurate point of service meal counts.
* * * * *
    Unaffiliated site means a site that is legally distinct from the 
sponsor.
* * * * *
    Unanticipated school closure means any period from October through 
April (or any time of the year in an area with a continuous school 
calendar) during which children who are not in school due to a natural 
disaster, building repair, court order, labor-management disputes, or, 
when approved by the State agency, similar cause, may be served meals 
at non-school sites through the Summer Food Service Program.
* * * * *
    Vended site means a site that serves unitized meals, with or 
without milk, that are procured through a formal agreement or contract 
with:
    (1) Public agencies or entities, such as a school food authority;
    (2) Private, nonprofit organizations; or
    (3) Private, for-profit companies, such as a commercial food 
distributor or food service management company.
* * * * *

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10. In Sec.  225.3, add paragraph (d) to read as follows:


Sec.  225.3  Administration.

* * * * *
    (d) Authority to waive statute and regulations. (1) As authorized 
under section 12(l) of the Richard B. Russell National School Lunch 
Act, FNS may waive provisions of such Act or the Child Nutrition Act of 
1966, as amended, and the provisions of this part with respect to a 
State agency or eligible service provider. The provisions of this part 
required by other statutes may not be waived under this authority. FNS 
may only approve requests for a waiver that are submitted by a State 
agency and comply with the requirements at section 12(l)(1) and the 
limitations at section 12(l)(4), including that FNS may not grant a 
waiver that increases Federal costs.
    (2)(i) A State agency may submit a request for a waiver under 
paragraph (d)(1) of this section in accordance with section 12(l)(2) 
and the provisions of this part.
    (ii) A State agency may submit a request to waive specific 
statutory or regulatory requirements on behalf of eligible service 
providers that operate in the State. Any waiver where the State concurs 
must be submitted to the appropriate FNSRO.
    (3)(i) An eligible service provider may submit a request for a 
waiver under paragraph (e)(1) of this section in accordance with 
section 12(l) and the provisions of this part. Any waiver request 
submitted by an eligible service provider must be submitted to the 
State agency for review. A State agency must act promptly on such a 
waiver request and must deny or concur with a request submitted by an 
eligible service provider.
    (ii) If a State agency concurs with a request from an eligible 
service provider, the State agency must promptly forward to the 
appropriate FNSRO the request and a rationale, consistent with section 
12(l)(2), supporting the request. By forwarding the request to the 
FNSRO, the State agency affirms:
    (A) The request meets all requirements for waiver submissions; and,
    (B) The State agency will conduct all monitoring requirements 
related to regular Program operations and the implementation of the 
waiver.
    (iii) If the State agency denies the request, the State agency must 
notify the requesting eligible service provider and state the reason 
for denying the request in writing within 30 calendar days of the State 
agency's receipt of the request. The State agency response is final and 
may not be appealed to FNS.


Sec.  225.4  [Amended]

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11. In Sec.  225.4, amend paragraph (d)(7) by removing the term ``Sec.  
225.6(h)'' and adding in its place the term ``Sec.  225.6(l)''.

0
12. In Sec.  225.6:
0
a. Revise the last sentence of paragraph (a)(2);
0
b. In paragraphs (b)(1) and (4), remove the words ``during the period 
from October through April (or at any time of the year in an area with 
a continuous school calendar)'';
0
c. Revise paragraph (c);
0
d. Redesignate paragraphs (d) through (i) as paragraphs (h) through 
(m), respectively, and add new paragraphs (d) through (g);
0
e. Revise newly redesignated paragraphs (h)(2)(i) and (iii);
0
f. Revise newly redesignated paragraphs (i)(7) and (15);
0
g. In newly designated paragraph (l)(2)(i), remove the term ``(h)(3)'' 
and add in its place the term ``(l)(3)'';
0
h. In newly designated paragraph (l)(2)(iii), remove the term ``Sec.  
225.6(d)(2)'' and add in its place the term ``Sec.  225.6(h)(2)'';
0
i. In newly designated paragraph (l)(2)(xiv), remove the term ``Sec.  
225.6(f)'' and add in its place the term ``Sec.  225.6(j)''; and
0
j. In newly designated paragraph (l)(2)(xvi), remove the phrase ``Sec.  
225.15(h)(6) though (h)(8)'' and add in its place the phrase ``Sec.  
225.15(m)(5) through (7)''.
    The revisions and additions read as follows:


Sec.  225.6   State agency responsibilities.

    (a) * * *
    (2) * * * State agencies must have established criteria for 
approving closed enrolled sites to ensure that operation of a site as 
closed enrolled does not limit Program access in the area that the site 
is located.
* * * * *
    (c) Content of sponsor application--(1) Application form. (i) The 
sponsor must submit a written application to the State agency for 
participation in the Program. The State agency may use the application 
form developed by FNS, or develop its own application form. Application 
to sponsor the Program must be made on a timely basis within the 
deadlines established under paragraph (b)(1) of this section.
    (ii) At the discretion of the State agency, sponsors proposing to 
serve an area affected by an unanticipated school closure may be exempt 
from submitting a new application if they have participated in the 
Program at any time during the current year or in either of the prior 
two calendar years.
    (iii) Requirements for new sponsors and sponsors that have 
experienced significant operational problems in the prior year, as 
determined by the State agency, are found under paragraph (c)(2) of 
this section.
    (iv) Requirements for experienced sponsors are found under 
paragraph (c)(3) of this section.
    (2) Application requirements for new sponsors and sponsors that 
have experienced significant operational problems in the prior year. 
New

[[Page 57357]]

sponsors and sponsors that have experienced significant operational 
problems in the prior year, as determined by the State agency, must 
include the following information in their applications:
    (i) A full management plan, as described in paragraph (e) of this 
section;
    (ii) A free meal policy statement, as described in paragraph (f) of 
this section;
    (iii) A site information sheet for each site where a food service 
operation is proposed, as described in paragraph (g)(1) of this 
section;
    (iv) Information in sufficient detail to enable the State agency to 
determine that the sponsor meets the criteria for participation in the 
Program, as described in Sec.  225.14;
    (v) Information on the extent of Program payments needed, including 
a request for advance payments and start-up payments, if applicable;
    (vi) A staffing and monitoring plan;
    (vii) A complete administrative budget for State agency review and 
approval, which includes:
    (A) The projected administrative expenses that the sponsor expects 
to incur during the operation of the Program, and
    (B) Information in sufficient detail to enable the State agency to 
assess the sponsor's ability to operate the Program within its 
estimated reimbursement;
    (viii) A summary of how meals will be obtained at each site (e.g., 
self-prepared at each site, self-prepared and distributed from a 
central kitchen, purchased from a school food authority, competitively 
procured from a food service management company);
    (ix) If an invitation for bid is required under Sec.  225.15(m), a 
schedule for bid dates and a copy of the invitation for bid; and
    (x) For each sponsor which seeks approval as a unit of local, 
municipal, county or State government under Sec.  225.14(b)(3) or as a 
private nonprofit organization under Sec.  225.14(b)(5), certification 
that the sponsor has administrative oversight, as required under Sec.  
225.14(d)(3).
    (3) Application requirements for experienced sponsors. The 
following information must be included in the applications of 
experienced sponsors:
    (i) A simplified or full management plan, as described in paragraph 
(e) of this section;
    (ii) A site information sheet for each site where a food service 
operation is proposed, as described under paragraph (g)(2) of this 
section;
    (iii) Information on the extent of Program payments needed, 
including a request for advance payments and start-up payments, if it 
is applicable;
    (iv) A staffing and monitoring plan;
    (v) A complete administrative budget for State agency review and 
approval, which includes:
    (A) The projected administrative expenses which a sponsor expects 
to incur during the operation of the Program; and
    (B) Information in sufficient detail to enable the State agency to 
assess the sponsor's ability to operate the Program within its 
estimated reimbursement.
    (vi) If the method of obtaining meals is changed, a summary of how 
meals will be obtained at each site (e.g., self-prepared at each site, 
self-prepared and distributed from a central kitchen, purchased from a 
school food authority, competitively procured from a food service 
management company); and
    (vii) If an invitation for bid is required under Sec.  225.15(m), a 
schedule for bid dates, and a copy of the invitation for bid, if it is 
changed from the previous year.
    (4) Applications for school food authorities and Child and Adult 
Care Food Program institutions. At the discretion of the State agency, 
school food authorities in good standing in the National School Lunch 
Program or School Breakfast Program, as applicable, and institutions in 
good standing in the Child and Adult Care Food Program may apply to 
operate the Summer Food Service Program at the same sites where they 
provide meals through the aforementioned Programs by following the 
procedures for experienced sponsors outlined in paragraph (c)(3) of 
this section.
    (d) Performance standards. The State agency may only approve the 
applications of those sponsors that meet the three performance 
standards outlined in this section: financial viability, administrative 
capability, and Program accountability. The State agency must deny 
applications that do not meet all of these standards. The State agency 
must consider past performance in the SFSP or another Child Nutrition 
Program, and any other factors it deems relevant when determining 
whether the sponsor's application meets the following standards:
    (1) Performance standard 1. The sponsor must be financially viable. 
The sponsor must expend and account for Program funds, consistent with 
this part; FNS Instruction 796-4, Financial Management in the Summer 
Food Service Program; 2 CFR part 200, subpart D; and USDA regulations 2 
CFR parts 400 and 415. To demonstrate financial viability and financial 
management, the sponsor's management plan must:
    (i) Describe the community's need for summer meals and the 
sponsor's recruitment strategy:
    (A) Explain how the sponsor's participation will help ensure the 
delivery of Program benefits to otherwise unserved sites or children; 
and
    (B) Describe how the sponsor will recruit sites, consistent with 
any State agency requirements.
    (ii) Describe the sponsor's financial resources and financial 
history:
    (A) Show that the sponsor has adequate sources of funds available 
to operate the Program, pay employees and suppliers during periods of 
temporary interruptions in Program payments, and pay debts if fiscal 
claims are assessed against the sponsor; and
    (B) Provide audit documents, financial statements, and other 
documentation that demonstrate financial viability.
    (iii) Ensure that all costs in the sponsor's budget are necessary, 
reasonable, allowable, and appropriately documented.
    (2) Performance standard 2. The sponsor must be administratively 
capable. Appropriate and effective management practices must be in 
effect to ensure that Program operations meet the requirements of this 
part. To demonstrate administrative capability, the sponsor must:
    (i) Have an adequate number and type of qualified staff to ensure 
the operation of the Program, consistent with this part; and
    (ii) Have written policies and procedures that assign Program 
responsibilities and duties and ensure compliance with civil rights 
requirements.
    (3) Performance standard 3. The sponsor must have internal controls 
and other management systems in place to ensure fiscal accountability 
and operation of the Program, consistent with this part. To demonstrate 
Program accountability, the sponsor must:
    (i) Demonstrate that the sponsor has a financial system with 
management controls specified in written operational policies that will 
ensure that:
    (A) All funds and property received are handled with fiscal 
integrity and accountability;
    (B) All expenses are incurred with integrity and accountability;
    (C) Claims will be processed accurately, and in a timely manner;
    (D) Funds and property are properly safeguarded and used, and 
expenses incurred, for authorized Program purposes; and

[[Page 57358]]

    (E) A system of safeguards and controls is in place to prevent and 
detect improper financial activities by employees.
    (ii) Maintain appropriate records to document compliance with 
Program requirements, including budgets, approved budget amendments, 
accounting records, management plans, and site operations.
    (e) Management plan--(1) Compliance. The State agency must require 
the submission of a management plan to determine compliance with 
performance standards established under paragraph (d) of this section.
    (i) Requirements for new sponsors and sponsors that have 
experienced significant operational problems in the prior year, as 
determined by the State agency, are found under paragraph (e)(2) of 
this section.
    (ii) Requirements for experienced sponsors are found under 
paragraph (e)(3) of this section.
    (iii) Requirements for school food authorities in good standing in 
the National School Lunch Program or School Breakfast Program, as 
applicable, or institutions in good standing in the Child and Adult 
Care Food Program are found under paragraph (e)(4) of this section.
    (2) Requirements for new sponsors and sponsors that have 
experienced significant operational problems in the prior year. 
Sponsors must submit a complete management plan that includes:
    (i) Detailed information on the sponsor's management and 
administrative structure, including information that demonstrates the 
sponsor's financial viability and financial management described under 
paragraph (d)(1) of this section;
    (ii) Information that demonstrates compliance with each of the 
performance standards outlined under paragraph (d) of this section;
    (iii) A list or description of the staff assigned to perform 
Program monitoring required under Sec.  225.15(d)(2) and (3); and
    (iv) For each sponsor which submits an application under paragraph 
(c)(1) of this section, information in sufficient detail to demonstrate 
that the sponsor will:
    (A) Provide adequate and not less than annual training of sponsor's 
staff and sponsored sites, as required under Sec.  225.15(d)(1);
    (B) Perform monitoring consistent with Sec.  225.15(d)(2) and (3), 
to ensure that all site operations are accountable and appropriate;
    (C) Accurately classify sites consistent with paragraphs (g)(1) and 
(2) of this section;
    (D) Demonstrate the sponsor's compliance with meal service, 
recordkeeping, and other operational requirements of this part;
    (E) Provide meals that meet the meal patterns set forth in Sec.  
225.16;
    (F) Have a food service that complies with applicable State and 
local health and sanitation requirements;
    (G) Comply with civil rights requirements;
    (H) Maintain complete and appropriate records on file; and
    (I) Claim reimbursement only for eligible meals.
    (3) Requirements for experienced sponsors. Experienced sponsors 
must submit a management plan. At the discretion of the State agency, 
experienced sponsors may submit a full management plan or a simplified 
management plan. A full management plan must be submitted at least once 
every 3 years. The simplified management plan must include a 
certification that any information previously submitted to the State to 
satisfy the eligibility requirements, set forth in paragraph (d) of 
this section, for the sponsor, its sites, and all of its current 
principals is current, or that the sponsor has submitted any changes or 
updates to the State. This certification must address all required 
elements of each performance standard.
    (4) Requirements for school food authorities in good standing in 
the National School Lunch Program or School Breakfast Program, as 
applicable, or institutions in good standing in the Child and Adult 
Care Food Program. These sponsors are not required to submit a 
management plan unless requested by the State agency. The State agency 
may request additional evidence of financial and administrative 
capability sufficient to ensure that the school food authority or 
institution has the ability and resources to operate the Program if the 
State agency has reason to believe that this would pose significant 
challenges for the applicant.
    (f) Free meal policy statement--(1) Nondiscrimination statement. 
(i) Each sponsor must submit a nondiscrimination statement of its 
policy for serving meals to children. The statement must consist of:
    (A) An assurance that all children are served the same meals and 
that there is no discrimination in the course of the food service; and
    (B) Except for camps, a statement that the meals served are free at 
all sites.
    (ii) A school sponsor must submit the policy statement only once, 
with the initial application to participate as a sponsor. However, if 
there is a substantive change in the school's free and reduced-price 
policy, a revised policy statement must be provided at the State 
agency's request.
    (iii) In addition to the information described in paragraph (i) of 
this section, the policy statement of all camps that charge separately 
for meals must also include:
    (A) A statement that the eligibility standards conform to the 
Secretary's family size and income standards for reduced-price school 
meals;
    (B) A description of the method to be used in accepting 
applications from families for Program meals that ensures that 
households are permitted to apply on behalf of children who are members 
of households receiving SNAP, FDPIR, or TANF benefits using the 
categorical eligibility procedures described in Sec.  225.15(f);
    (C) A description of the method to be used by camps for collecting 
payments from children who pay the full price of the meal while 
preventing the overt identification of children receiving a free meal;
    (D) An assurance that the camp will establish hearing procedures 
for families requesting to appeal a denial of an application for free 
meals. These procedures must meet the requirements set forth in 
paragraph (f)(2) of this section;
    (E) An assurance that, if a family requests a hearing, the child 
will continue to receive free meals until a decision is rendered; and
    (F) An assurance that there will be no overt identification of free 
meal recipients and no discrimination against any child on the basis of 
race, color, national origin, sex, age, or disability.
    (2) Hearing procedures statement. Each camp must submit a copy of 
its hearing procedures with its application. At a minimum, the camp's 
procedures must provide that:
    (i) A simple, publicly announced method will be used for a family 
to make an oral or written request for a hearing;
    (ii) The family will have the opportunity to be assisted or 
represented by an attorney or other person (designated representative);
    (iii) The family or designated representative will have an 
opportunity to examine the documents and records supporting the 
decision being appealed, both before and during the hearing;
    (iv) The hearing will be reasonably prompt and convenient for the 
family or designated representative;

[[Page 57359]]

    (v) Adequate notice will be given to the family or designated 
representative of the time and place of the hearing;
    (vi) The family or designated representative will have an 
opportunity to present oral or documented evidence and arguments 
supporting its position;
    (vii) The family or designated representative will have an 
opportunity to question or refute any testimony or other evidence and 
to confront and cross-examine any adverse witnesses;
    (viii) The hearing will be conducted and the decision made by a 
hearing official who did not participate in the action being appealed;
    (ix) The decision will be based on the oral and documentary 
evidence presented at the hearing and made a part of the record;
    (x) The family or designated representative will be notified in 
writing of the decision;
    (xi) A written record will be prepared for each hearing, which 
includes the action being appealed, any documentary evidence and a 
summary of oral testimony presented at the hearing, the decision and 
the reasons for the decision, and a copy of the notice sent to the 
family or designated representative; and
    (xii) The written record will be maintained for a period of three 
years following the conclusion of the hearing and will be available for 
examination by the family or designated representative at any 
reasonable time and place.
    (g) Site information sheet. The State agency must develop a site 
information sheet for sponsors.
    (1) New sites. The application submitted by sponsors must include a 
site information sheet for each site where a food service operation is 
proposed. At a minimum, the site information sheet must demonstrate or 
describe the following:
    (i) An organized and supervised system for serving meals to 
children who come to the site;
    (ii) The estimated number of meals to be served, types of meals to 
be served, and meal service times;
    (iii) Whether the site is rural, as defined in Sec.  225.2, or non-
rural;
    (iv) Whether the site's food service will be self-prepared or 
vended, as defined in Sec.  225.2;
    (v) Arrangements for delivery and holding of meals until meal 
service times and storing and refrigerating any leftover meals until 
the next day, within standards prescribed by State or local health 
authorities;
    (vi) Access to a means of communication to make necessary 
adjustments in the number of meals delivered, based on changes in the 
number of children in attendance at each site;
    (vii) Arrangements for food service during periods of inclement 
weather; and
    (viii) For open sites and restricted open sites:
    (A) Documentation supporting the eligibility of each site as 
serving an area in which poor economic conditions exist;
    (B) When school data are used, new documentation is required every 
five years;
    (C) When census data are used, new documentation is required every 
five years, or earlier, if the State agency believes that an area's 
socioeconomic status has changed significantly since the last census; 
and
    (D) At the discretion of the State agency, sponsors proposing to 
serve an area affected by an unanticipated school closure may be exempt 
from submitting new site documentation if the sponsor has participated 
in the Program at any time during the current year or in either of the 
prior 2 calendar years.
    (ix) For closed enrolled sites:
    (A) The projected number of children enrolled and the projected 
number of children eligible for free and reduced-price school meals for 
each of these sites; or documentation supporting the eligibility of 
each site as serving an area in which poor economic conditions exist;
    (B) When school data are used, new documentation is required every 
five years;
    (C) When census data are used, new documentation is required every 
five years, or earlier, if the State agency believes that an area's 
socioeconomic status has changed significantly since the last census.
    (x) For NYSP sites, certification from the sponsor that all of the 
children who will receive Program meals are enrolled participants in 
the NYSP.
    (xi) For camps, the number of children enrolled in each session who 
meet the Program's income standards. If such information is not 
available at the time of application, this information must be 
submitted as soon as possible thereafter, and in no case later than the 
filing of the camp's claim for reimbursement for each session;
    (xii) For sites that will serve children of migrant workers:
    (A) Certification from a migrant organization, which attests that 
the site serves children of migrant workers; and
    (B) Certification from the sponsor that the site primarily serves 
children of migrant workers, if non-migrant children are also served.
    (2) Experienced sites. The application submitted by sponsors must 
include a site information sheet for each site where a food service 
operation is proposed. The State agency may require sponsors of 
experienced sites to provide information described in paragraph (g)(1) 
of this section. At a minimum, the site information sheet must 
demonstrate or describe the following:
    (i) The estimated number of meals, types of meals to be served, and 
meal service times; and
    (ii) For open sites and restricted open sites:
    (A) Documentation supporting the eligibility of each site as 
serving an area in which poor economic conditions exist;
    (B) When school data are used, new documentation is required every 
5 years;
    (C) When census data are used, new documentation is required every 
5 years, or earlier, if the State agency believes that an area's 
socioeconomic status has changed significantly since the last census; 
and
    (D) Any site that a sponsor proposes to serve during an 
unanticipated school closure, which has participated in the Program at 
any time during the current year or in either of the prior 2 calendar 
years, is considered eligible without new documentation.
    (iii) For closed enrolled sites:
    (A) The projected number of children enrolled and the projected 
number of children eligible for free and reduced-price school meals for 
each of these sites; or documentation supporting the eligibility of 
each site as serving an area in which poor economic conditions exist;
    (B) When school data are used, new documentation is required every 
5 years;
    (C) When census data are used, new documentation is required every 
5 years, or earlier, if the State agency believes that an area's 
socioeconomic status has changed significantly since the last census.
    (iv) For NYSP sites, certification from the sponsor that all of the 
children who will receive Program meals are enrolled participants in 
the NYSP.
    (v) For camps, the number of children enrolled in each session who 
meet the Program's income standards. If such information is not 
available at the time of application, this information must be 
submitted as soon as possible thereafter, and in no case later than the 
filing of the camp's claim for reimbursement for each session.
* * * * *
    (h) * * *
    (2) * * *
    (i) The initial maximum approved level must be based upon the 
historical

[[Page 57360]]

record of attendance at the site if such a record has been established 
in prior years and the State agency determines that it is accurate. The 
State agency must develop a procedure for establishing initial maximum 
approved levels for sites when no accurate record from prior years is 
available. The State agency may consider participation at other similar 
sites located in the area, documentation of programming taking place at 
the site, statistics on the number of children residing in the area, 
and other relevant information.
* * * * *
    (iii) The sponsor may seek an upward adjustment in the approved 
level for its sites by requesting a site review or by providing the 
State agency with evidence that attendance exceeds the sites' approved 
levels. The sponsor may request an upward adjustment at any point prior 
to submitting the claim for the impacted reimbursement period.
* * * * *
    (i) * * *
    (7) Claim reimbursement only for the types of meals specified in 
the agreement that are served:
    (i) Without charge to children at approved sites, except camps, 
during the approved meal service time;
    (ii) Without charge to children who meet the Program's income 
standards in camps;
    (iii) Within the approved level for the maximum number of 
children's meals that may be served, if a maximum approved level is 
required under paragraph (h)(2) of this section;
    (iv) At the approved meal service time, unless a change is approved 
by the State agency, as required under Sec.  225.16(c); and
    (v) At the approved site, unless the requirements in Sec.  
225.16(g) are met.
* * * * *
    (15) Maintain children on site while meals are consumed. Sponsors 
may allow a child to take one fruit, vegetable, or grain item off-site 
for later consumption if the requirements in Sec.  225.16(h) are met; 
and
* * * * *

0
13. In Sec.  225.7:
0
a. Revise the last two sentences of paragraph (a);
0
b. Revise paragraph (d);
0
c. Redesignate paragraphs (e), (f), and (g) as paragraphs (l), (m), and 
(n), respectively;
0
d. Add new paragraphs (e) through (k) and paragraph (o); and
0
e. Revise newly designated paragraphs (l), (m), and (n).
    The revisions and additions read as follows:


Sec.  225.7  Program monitoring and assistance.

    (a) * * * Training should be made available at convenient locations 
or via the internet. State agencies are not required to conduct this 
training for sponsors operating the Program during unanticipated school 
closures.
* * * * *
    (d) Pre-approval visits. The State agency must conduct pre-approval 
visits of sponsors and sites, as specified below, to assess the 
applicant sponsor's or site's potential for successful Program 
operations and to verify information provided in the application. The 
State agency must visit prior to approval:
    (1) All applicant sponsors that did not participate in the program 
in the prior year. However, if a sponsor is a school food authority, 
was reviewed by the State agency under the National School Lunch 
Program during the preceding 12 months, and had no significant 
deficiencies noted in that review, a pre-approval visit may be 
conducted at the discretion of the State agency. In addition, pre-
approval visits of sponsors proposing to operate the Program during 
unanticipated school closures may be conducted at the discretion of the 
State agency;
    (2) All applicant sponsors that had operational problems noted in 
the prior year; and
    (3) All sites that the State agency has determined need a pre-
approval visit.
    (e) Sponsor and site reviews--(1) Purpose. The State agency must 
review sponsors and sites to ensure compliance with Program 
regulations, the Department's non-discrimination regulations (7 CFR 
part 15), and any other applicable instructions issued by the 
Department.
    (2) Sample selection. In determining which sponsors and sites to 
review, the State agency must, at a minimum, consider the sponsors and 
sites' previous participation in the Program, their current and 
previous Program performance, and the results of previous reviews.
    (3) School food authorities. When the same school food authority 
personnel administer this Program as well as the National School Lunch 
Program (7 CFR part 210), the State agency is not required to conduct a 
sponsor or site review in the same year in which the National School 
Lunch Program operations have been reviewed and determined to be 
satisfactory.
    (4) Frequency and number of required reviews. State agencies must:
    (i) Conduct a review of every new sponsor at least once during the 
first year of operation;
    (ii) Annually review a number of sponsors whose program 
reimbursements, in the aggregate, accounted for at least one-half of 
the total program meal reimbursements in the State in the prior year;
    (iii) Annually review every sponsor that experienced significant 
operational problems in the prior year;
    (iv) Review each sponsor at least once every three years; and
    (v) As part of each sponsor review, conduct reviews of at least 10 
percent of each reviewed sponsor's sites, or one site, whichever number 
is greater.
    (5) Site selection criteria. (i) State agencies must develop 
criteria for site selection when selecting sites to meet the minimum 
number of sites required under paragraph (e)(4)(v) of this section. 
State agencies should, to the maximum extent possible, select sites 
that reflect the sponsor's entire population of sites. Characteristics 
that should be reflected in the sites selected for review include:
    (A) The maximum number of meals approved to serve under Sec.  
225.6(h)(1) and (2);
    (B) Method of obtaining meals (i.e., self-preparation or vended 
meal service);
    (C) Time since last site review by State agency;
    (D) Type of site (e.g., open, closed enrolled, camp);
    (E) Type of physical location (e.g., school, outdoor area, 
community center);
    (F) Rural designation (i.e., rural, as defined in Sec.  225.2, or 
non-rural); and
    (G) Affiliation with the sponsor, as defined in Sec.  225.2.
    (ii) The State agency may use additional criteria to select sites 
including, but not limited to: recommendations from the sponsor; 
findings from other audits or reviews; or any indicators of potential 
error in daily meal counts (e.g., identical or very similar claiming 
patterns, large changes in free meal counts).
    (6) Meal claim validation. As part of every sponsor review under 
paragraph (e)(4) of this section, the State agency must validate the 
sponsor's meal claim utilizing a record review process.
    (i) The State agency must develop a record review process. This 
process must include, at a minimum, reconciliation of delivery 
receipts, daily meal counts from sites, and the comparison of the 
sponsor's claim consolidation spreadsheet with the meals claimed for 
reimbursement by the sponsor for the period under review.
    (ii) For the purposes of this paragraph (e)(6), the percent error 
includes both overclaims and underclaims. Claims against sponsors as a 
result of meal

[[Page 57361]]

claim validation should be assessed after the conclusion of the meal 
claim validation process in accordance with Sec.  225.12.
    (iii) In determining the sample size for each step of this process, 
fractions must be rounded up (>=0.5) or down (<0.5) to the nearest 
whole number.
    (iv) State agencies must at a minimum follow the process to conduct 
the meal claim validation as described in table 1.
BILLING CODE 3410-30-P
[GRAPHIC] [TIFF OMITTED] TR19SE22.012


[[Page 57362]]


[GRAPHIC] [TIFF OMITTED] TR19SE22.013

BILLING CODE 3410-30-C
    (v) In determining the percentage of error, under paragraphs 
(e)(6)(i) through (iv) of this section, fractions must be rounded up 
(>=0.5) or down (<0.5) to the nearest whole number. Percentage of error 
is calculated for each step as follows:
    (A) Determining the meal counting and claiming discrepancy for each 
site validated. Subtract the total meals validated from the total meals 
claimed by the sponsor for each validated site. Take the absolute value 
of each discrepancy. By applying the absolute value, the numbers will 
be expressed as positive valued numbers.
    (B) Calculating total discrepancy. Add together all discrepancies 
from each site as determined in paragraph (e)(6)(v)(A) of this section 
to calculate the total discrepancies for sites validated in the given 
step.
    (C) Calculating percent error. Divide the total discrepancies as 
determined in paragraph (e)(6)(v)(B) of this section by the total meals 
claimed by the sponsor for all reviewed sites within the validation 
sample for the given step. Multiply by 100 to calculate the percentage 
of error.
    (vi) The State agency may expand the validation of meal claims 
beyond the review period or to include additional sites if the State 
agency has reason to believe that the sponsor has engaged in unlawful 
acts in connection with Program operations.
    (vii) In lieu of the meal claim validation process described in 
table 1 to paragraph (e)(6)(iv) of this section, the State agency may 
complete a validation which includes all meals served on all operating 
days for all sites under a sponsor for the review period.
    (7) Review of sponsor operations. State agencies should determine 
if:
    (i) Expenditures are allowable and consistent with FNS Instructions 
and guidance and all funds accruing to the food service are properly 
identified and recorded as food service revenue;
    (ii) Expenditures are consistent with budgeted costs, and the 
previous year's expenditures taking into consideration any changes in 
circumstances;
    (iii) Reimbursements have not resulted in accumulation of net cash 
resources as defined in paragraph (m) of this section; and
    (iv) The level of administrative spending is reasonable and does 
not affect the sponsor's ability to operate a nonprofit food service 
and provide a quality meal service.

[[Page 57363]]

    (f) Follow-up reviews. The State agency must conduct follow-up 
reviews of sponsors and sites as necessary.
    (g) Monitoring system. Each State agency must develop and implement 
a monitoring system to ensure that sponsors, including site personnel, 
and the sponsor's food service management company, if applicable, 
immediately receive a copy of any review reports which indicate Program 
violations and which could result in a Program disallowance.
    (h) Records. Documentation of Program assistance and the results of 
such assistance must be maintained on file by the State agency 3 years 
after submission in accordance with Sec.  225.8(a).
    (i) Meal preparation facility reviews. As part of the review of any 
vended sponsor that purchases unitized meals, with or without milk, to 
be served at a SFSP site, the State agency must review the meal 
production facility and meal production documentation of any food 
service management company from which the sponsor purchases meals for 
compliance with program requirements. If the sponsor does not purchase 
meals but does purchase management services within the restrictions 
specified in Sec.  225.15, the State agency is not required to conduct 
a meal preparation facility review.
    (1) Each State agency must establish an order of priority for 
visiting facilities at which food is prepared for the Program. The 
facility review must be conducted at least one time within the 
appropriate review cycle for each vended sponsor. If multiple vended 
sponsors use the same food service management company and are being 
reviewed in the same review cycle, a single facility review will 
fulfill the review requirements for those vended sponsors.
    (2) The State agency must respond promptly to complaints concerning 
facilities. If the food service management company fails to correct 
violations noted by the State agency during a review, the State agency 
must notify the sponsor and the food service management company that 
reimbursement must not be paid for meals prepared by the food service 
management company after a date specified in the notification.
    (3) Funds provided in Sec.  225.5(f) may be used for conducting 
meal preparation facility reviews.
    (j) Forms for reviews by sponsors. Each State agency must develop 
and provide monitor review forms to all approved sponsors. These forms 
must be completed by sponsor monitors. The monitor review form must 
include, but not be limited to, the time of the reviewer's arrival and 
departure, the site supervisor's printed name and signature, a 
certification statement to be signed by the monitor, the number of 
meals prepared or delivered, the number of meals served to children, 
the deficiencies noted, the corrective actions taken by the sponsor, 
and the date of such actions.
    (k) Corrective actions. Corrective actions which the State agency 
may take when Program violations are observed during the conduct of a 
review are discussed in Sec.  225.11. The State agency must conduct 
follow-up reviews as appropriate when corrective actions are required.
    (l) Other facility inspections and meal quality tests. In addition 
to those inspections required by paragraph (i) of this section, the 
State agency may also conduct, or arrange to have conducted: 
inspections of self-preparation and vended sponsors' food preparation 
facilities; inspections of food service sites; and meal quality tests. 
The procedures for carrying out these inspections and tests must be 
consistent with procedures used by local health authorities. For 
inspections of food service management companies' facilities not 
conducted by State agency personnel, copies of the results must be 
provided to the State agency. The company and the sponsor must also 
immediately receive a copy of the results of these inspections when 
corrective action is required. If a food service management company 
fails to correct violations noted by the State agency during a review, 
the State agency must notify the sponsor and the food service 
management company that reimbursement must not be paid for meals 
prepared by the food service management company after a date specified 
in the notification. Funds provided for in Sec.  225.5(f) may be used 
for conducting these inspections and tests.
    (m) Financial management. Each State agency must establish a 
financial management system, in accordance with 2 CFR part 200, 
subparts D and E, and USDA implementing regulations 2 CFR parts 400 and 
415, as applicable, and FNS guidance, to identify allowable Program 
costs and to establish standards for sponsor recordkeeping and 
reporting. The State agency must provide guidance on these financial 
management standards to each sponsor. Additionally, each State agency 
must establish a system for monitoring and reviewing sponsors' 
nonprofit food service to ensure that all Program reimbursement funds 
are used solely for the conduct of the food service operation. State 
agencies must review the net cash resources of the nonprofit food 
service of each sponsor participating in the Program and ensure that 
the net cash resources do not exceed one months' average expenditures 
for sponsors operating only during the summer months and three months' 
average expenditure for sponsors operating Child Nutrition Programs 
throughout the year. State agency approval must be required for net 
cash resources in excess of requirements set forth in this paragraph 
(m). Based on this monitoring, the State agency may provide technical 
assistance to the sponsor to improve meal service quality or take other 
action designed to improve the nonprofit meal service quality under the 
following conditions, including but not limited to:
    (1) The sponsor's net cash resources exceed the limits included in 
this paragraph (m) for the sponsor's nonprofit food service or such 
other amount as may be approved in accordance with this paragraph;
    (2) The ratio of administrative to operating costs (as defined in 
Sec.  225.2) is high;
    (3) There is significant use of alternative funding for food and/or 
other costs; or
    (4) A significant portion of the food served is privately donated 
or purchased at a very low price.
    (n) Nondiscrimination. (1) Each State agency must comply with all 
requirements of title VI of the Civil Rights Act of 1964, title IX of 
the Education Amendments of 1972, section 504 of the Rehabilitation Act 
of 1973, the Age Discrimination Act of 1975, and the Department's 
regulations concerning nondiscrimination (7 CFR parts 15, 15a, and 
15b), including requirements for racial and ethnic participation data 
collection, public notification of the nondiscrimination policy, and 
reviews to assure compliance with such policy, to the end that no 
person must, on the grounds of race, color, national origin, sex, age, 
or disability, be excluded from participation in, be denied the 
benefits of, or be otherwise subjected to discrimination under, the 
Program.
    (2) Complaints of discrimination filed by applicants or 
participants must be referred to FNS or the Secretary of Agriculture, 
Washington, DC 20250. A State agency which has an established grievance 
or complaint handling procedure may resolve sex and disability 
discrimination complaints before referring a report to FNS.
    (o) Sponsor site visit. Each State agency must establish criteria 
that sponsors will use to determine which sites with operational 
problems in the

[[Page 57364]]

prior year are required to receive a site visit during the first two 
weeks of program operations in accordance with Sec.  225.15(d)(2).
* * * * *

0
14. In Sec.  225.9:
0
a. Revise paragraphs (d)(4) and (10); and
0
b. Amend paragraph (f), by removing the term ``Sec.  225.6(d)(2)'' and 
adding in its place the term ``Sec.  225.6(h)(2)''.
    The revisions read as follows:


Sec.  225.9  Program assistance to sponsors.

* * * * *
    (d) * * *
    (4) The State agency must forward reimbursements within 45 calendar 
days of receiving valid claims. If a claim is incomplete, invalid, or 
potentially unlawful per paragraph (d)(10) of this section, the State 
agency must return the claim to the sponsor within 30 calendar days 
with an explanation of the reason for disapproval and how such claim 
must be revised for payment. If the sponsor submits a revised claim, 
final action must be completed within 45 calendar days of receipt 
unless the State agency has reason to believe the claim is unlawful per 
paragraph (d)(10) in this section. If the State agency disallows 
partial or full payment for a claim for reimbursement, it must notify 
the sponsor which submitted the claim of its right to appeal under 
Sec.  225.13(a).
* * * * *
    (10) If a State agency has reason to believe that a sponsor or food 
service management company has engaged in unlawful acts in connection 
with Program operations, evidence found in audits, reviews, or 
investigations must be a basis for nonpayment of the applicable 
sponsor's claims for reimbursement. The State agency may be exempt from 
the requirement stated in paragraph (d)(4) of this section that final 
action on a claim must be complete within 45 calendar days of receipt 
of a revised claim if the State agency determines that a thorough 
examination of potentially unlawful acts would not be possible in the 
required timeframe. The State agency must notify the appropriate FNSRO 
of its election to take the exemption from the requirement stated in 
paragraph (d)(4) of this section by submitting to the FNSRO a copy of 
the claim disapproval at the same time as it is provided to the 
sponsor.
* * * * *


Sec.  225.11  [Amended]

0
15. In Sec.  225.11, amend paragraph (e)(3) by removing the term 
``Sec.  225.6(d)(2)'' and adding in its place the term ``Sec.  
225.6(h)(2)''.


Sec.  225.13  [Amended]

0
16. In Sec.  225.13, amend paragraph (c) by removing the term ``Sec.  
225.6(g)'' and adding in its place the term ``Sec.  225.6(k)''.

0
17. In Sec.  225.14:
0
a. Revise paragraphs (a), (b)(5), and (c)(1) and (4); and
0
b. Amend paragraph (c)(7), by removing the term ``Sec.  225.6(e)'' and 
adding in its place the term ``Sec.  225.6(i)''.
    The revisions read as follows:


Sec.  225.14  Requirements for sponsor participation.

    (a) Applications. Sponsors must make written application to the 
State agency to participate in the Program which must include all 
content required under Sec.  225.6(c). Such application must be made on 
a timely basis in accordance with the requirements of Sec.  
225.6(b)(1). Sponsors proposing to operate a site during an 
unanticipated school closure may be exempt, at the discretion of the 
State agency, from submitting a new application if they have 
participated in the program at any time during the current year or in 
either of the prior 2 calendar years.
* * * * *
    (b) * * *
    (5) Private nonprofit organizations as defined in Sec.  225.2, as 
determined annually.
    (c) * * *
    (1) Demonstrates financial and administrative capability for 
Program operations and accepts final financial and administrative 
responsibility for total Program operations at all sites at which it 
proposes to conduct a food service in accordance with the performance 
standards described under Sec.  225.6(d) of this part.
    (i) In general, an applicant sponsor which is a school food 
authority in good standing in the National School Lunch Program or an 
institution in good standing in the Child and Adult Care Food Program 
applying to operate the Program at the same sites where they provide 
meals through the aforementioned Programs, is not required to submit a 
management plan as described under Sec.  225.6(e) or further 
demonstrate financial and administrative capability for Program 
operations.
    (ii) If the State agency has reason to believe that financial or 
administrative capability would pose significant challenges for an 
applicant sponsor which is a school food authority in the National 
School Lunch Program or School Breakfast Program, as applicable, or an 
institution in the Child and Adult Care Food Program, the State agency 
may request a Management plan or additional evidence of financial and 
administrative capability sufficient to ensure that the school food 
authority or institution has the ability and resources to operate the 
Program.
    (iii) If the State agency approving the application for the Program 
is not responsible for the administration of the National School Lunch 
Program or the Child and Adult Care Food Program, the State agency must 
develop a process for sharing information with the agency responsible 
for approving these programs in order to receive documentation of the 
applicant sponsor's financial and administrative capability.
* * * * *
    (4) Has adequate supervisory and operational personnel for overall 
monitoring and management of each site, including a site supervisor, 
and adequate personnel to conduct the visits and reviews required in 
Sec.  225.15(d)(2) and (3), as demonstrated in the management plan 
submitted with the program application described under Sec.  225.6(e);
* * * * *

0
18. In Sec.  225.15:
0
a. Amend paragraphs (b)(2) and (3) by removing the term ``Sec.  
225.6(d)(2)'' and adding in its place the term ``Sec.  225.6(h)(2)'';
0
b. Revise paragraphs (d), (e), and (f)(1); and
0
c. Amend paragraph (m)(2) by removing the term ``Sec.  225.6(h)(3)'' 
and adding in its place the term ``Sec.  225.6(l)(3)''.
    The revisions read as follows:


Sec.  225.15  Management responsibilities of sponsors.

* * * * *
    (d) Training and monitoring. (1) Each sponsor must hold Program 
training sessions for its administrative and site personnel and must 
not allow a site to operate until personnel have attended at least one 
of these training sessions. The State agency may waive these training 
requirements for operation of the Program during unanticipated school 
closures. Training of site personnel must, at a minimum, include: the 
purpose of the Program; site eligibility; recordkeeping; site 
operations; meal pattern requirements; and the duties of a monitor. 
Each sponsor must ensure that its administrative personnel attend State 
agency training provided to sponsors, and sponsors must provide 
training throughout the summer to ensure that administrative personnel 
are

[[Page 57365]]

thoroughly knowledgeable in all required areas of Program 
administration and operation and are provided with sufficient 
information to enable them to carry out their Program responsibilities. 
Each site must have present at each meal service at least one person 
who has received this training.
    (2) Sponsors must visit each of their sites, as specified below, at 
least once during the first two weeks of program operations and must 
promptly take such actions as are necessary to correct any 
deficiencies. In cases where the site operates for seven calendar days 
or fewer, the visit must be conducted during the period of operation. 
Sponsors must conduct these visits for:
    (i) All new sites;
    (ii) All sites that have been determined by the sponsor to need a 
visit based on criteria established by the State agency pertaining to 
operational problems noted in the prior year, as set forth in Sec.  
225.7(o); and
    (iii) Any other sites that the State agency has determined need a 
visit.
    (3) Sponsors must conduct a full review of food service operations 
at each site at least once during the first four weeks of Program 
operations, and thereafter must maintain a reasonable level of site 
monitoring. Sponsors must complete a monitoring form developed by the 
State agency during the conduct of these reviews. Sponsors may conduct 
a full review of food service operations at the same time they are 
conducting a site visit required under (d)(2) in this section.
    (e) Notification to the community. Each sponsor must annually 
announce in the media serving the area from which it draws its 
attendance the availability of free meals. Sponsors of camps and closed 
enrolled sites must notify participants of the availability of free 
meals and if a free meal application is needed, as outlined in 
paragraph (f) of this section. For sites that use free meal 
applications to determine individual eligibility, notification to 
enrolled children must include: the Secretary's family-size and income 
standards for reduced price school meals labeled ``SFSP Income 
Eligibility Standards;'' a statement that a foster child and children 
who are members of households receiving SNAP, FDPIR, or TANF benefits 
are automatically eligible to receive free meal benefits at eligible 
program sites; and a statement that meals are available without regard 
to race, color, national origin, sex, age, or disability. State 
agencies may issue a media release for all sponsors operating SFSP 
sites in the State as long as the notification meets the requirements 
in this section.
    (f) Application for free Program meals--(1) Purpose of application 
form. The application is used to determine the eligibility of children 
attending camps and the eligibility of sites that do not meet the 
requirements in paragraphs (1) through (3) of the definition of ``areas 
in which poor economic conditions exist'' in Sec.  225.2.
* * * * *

0
19. In Sec.  225.16, revise paragraphs (b) introductory text, (c), (d), 
and (f)(1)(ii) and add paragraphs (g) and (h) to read as follows.


Sec.  225.16  Meal service requirements.

* * * * *
    (b) Meal services. The meals which may be served under the Program 
are breakfast, lunch, supper, and supplements, referred to from this 
point as ``snacks.'' No sponsor may be approved to provide more than 
two snacks per day. A sponsor may claim reimbursement only for the 
types of meals for which it is approved under its agreement with the 
State agency. A sponsor may only be reimbursed for meals served in 
accordance with this section.
* * * * *
    (c) Meal service times. (1) Meal service times must be:
    (i) Established by sponsors for each site;
    (ii) Included in the sponsor's application; and
    (iii) Approved by the State agency.
    (2) Breakfast meals must be served at or close to the beginning of 
a child's day. Three component meals served after a lunch or supper 
meal service are not eligible for reimbursement as a breakfast.
    (3) At all sites except residential camps, meal services must start 
at least one hour after the end of the previous meal or snack.
    (4) Meals served outside the approved meal service time:
    (i) Are not eligible for reimbursement; and
    (ii) May be approved for reimbursement by the State agency only if 
an unanticipated event, outside of the sponsor's control, occurs. The 
State agency may request documentation to support approval of meals 
claimed when an unanticipated event occurs.
    (5) The State agency must approve any permanent or planned changes 
in meal service time.
    (6) If meals are not prepared on site:
    (i) Meal deliveries must arrive before the approved meal service 
time; and
    (ii) Meals must be delivered within one hour of the start of the 
meal service if the site does not have adequate storage to hold hot or 
cold meals at the temperatures required by State or local health 
regulations.
    (d) Meal patterns. The meal requirements for the Program are 
designed to provide nutritious and well-balanced meals to each child. 
Sponsors must ensure that meals served meet all of the requirements. 
Except as otherwise provided in this section, the following tables 
present the minimum requirements for meals served to children in the 
Program. Children age 12 and up may be served larger portions based on 
the greater food needs of older children.
* * * * *
    (f) * * *
    (1) * * *
    (ii) Offer versus serve. School food authorities that are Program 
sponsors may permit a child to refuse one or more items that the child 
does not intend to eat. The reimbursements to school food authorities 
for Program meals served under this ``offer versus serve'' option must 
not be reduced because children choose not to take all components of 
the meals that are offered. The school food authority may elect to use 
the following options:
    (A) Provide meal service consistent with the National School Lunch 
Program, as described in part 210 of this chapter.
    (B) Provide breakfast meals by offering four items from all three 
components specified in the meal pattern in paragraph (d)(1) of this 
section. Children may be permitted to decline one item.
    (C) Provide lunch or supper meals by offering five food items from 
all four components specified in the meal pattern in paragraph (d)(2) 
of this section. Children may be permitted to decline two components.
* * * * *
    (g) Meals served away from approved locations. (1) Sponsors may be 
reimbursed for meals served away from the approved site location when 
the following conditions are met:
    (i) The sponsor notifies the State agency in advance that meals 
will be served away from the approved site;
    (ii) The State agency has determined that all Program requirements 
in this part will be met, including applicable State and local health, 
safety, and sanitation standards;
    (iii) The meals are served at the approved meal service time, 
unless a change is approved by the State agency, as required under 
paragraph (c) of this section; and
    (iv) Sponsors of open sites continue operating at the approved 
location. If

[[Page 57366]]

not possible, the State agency may permit an open site to close, in 
which case the sponsor must notify the community of the change in meal 
service and provide information about alternative open sites.
    (2) The State agency may determine that meals served away from the 
approved site location are not reimbursable if the sponsor did not 
provide notification in advance of the meal service. The State agency 
may establish guidelines for the amount of advance notice needed.
    (h) Off-site consumption of food items. Sponsors may allow a child 
to take one fruit, vegetable, or grain item off-site for later 
consumption without prior State agency approval provided that all 
applicable State and local health, safety, and sanitation standards 
will be met. Sponsors should only allow an item to be taken off-site if 
the site has adequate staffing to properly administer and monitor the 
site. A State agency may prohibit individual sponsors on a case-by-case 
basis from using this option if the State agency determines that the 
sponsor's ability to provide adequate oversight is in question. The 
State agency's decision to prohibit a sponsor from utilizing this 
option is not an appealable action.

PART 226--CHILD AND ADULT CARE FOOD PROGRAM

0
20. The authority citation for part 226 continues to read as follows:

    Authority:  Secs. 9, 11, 14, 16, and 17, Richard B. Russell 
National School Lunch Act, as amended (42 U.S.C. 1758, 1759a, 1762a, 
1765 and 1766).


0
21. In Sec.  226.3, add paragraph (e) to read as follows:


Sec.  226.3  Administration.

* * * * *
    (e)(1) As authorized under section 12(l) of the Richard B. Russell 
National School Lunch Act, FNS may waive provisions of such Act or the 
Child Nutrition Act of 1966, as amended, and the provisions of this 
part with respect to a State agency or eligible service provider. The 
provisions of this part required by other statutes may not be waived 
under this authority. FNS may only approve requests for a waiver that 
are submitted by a State agency and comply with the requirements at 
section 12(l)(1) and the limitations at section 12(l)(4), including 
that FNS may not grant a waiver that increases Federal costs.
    (2)(i) A State agency may submit a request for a waiver under 
paragraph (e)(1) of this section in accordance with section 12(l)(2) 
and the provisions of this part.
    (ii) A State agency may submit a request to waive specific 
statutory or regulatory requirements on behalf of eligible service 
providers that operate in the State. Any waiver where the State concurs 
must be submitted to the appropriate FNSRO.
    (3)(i) An eligible service provider may submit a request for a 
waiver under paragraph (e)(1) of this section in accordance with 
section 12(l) and the provisions of this part. Any waiver request 
submitted by an eligible service provider must be submitted to the 
State agency for review. A State agency must act promptly on such a 
waiver request and must deny or concur with a request submitted by an 
eligible service provider.
    (ii) If a State agency concurs with a request from an eligible 
service provider, the State agency must promptly forward to the 
appropriate FNSRO the request and a rationale, consistent with section 
12(l)(2), supporting the request. By forwarding the request to the 
FNSRO, the State agency affirms:
    (A) The request meets all requirements for waiver submissions; and,
    (B) The State agency will conduct all monitoring requirements 
related to regular Program operations and the implementation of the 
waiver.
    (iii) If the State agency denies the request, the State agency must 
notify the requesting eligible service provider and state the reason 
for denying the request in writing within 30 calendar days of the State 
agency's receipt of the request. The State agency response is final and 
may not be appealed to FNS.
* * * * *

Cynthia Long,
Administrator, Food and Nutrition Service.
[FR Doc. 2022-20084 Filed 9-16-22; 8:45 am]
BILLING CODE 3410-30-P