[Federal Register Volume 64, Number 130 (Thursday, July 8, 1999)]
[Proposed Rules]
[Pages 36978-36999]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-17160]
[[Page 36977]]
_______________________________________________________________________
Part II
Department of Agriculture
_______________________________________________________________________
Food and Nutrition Service
_______________________________________________________________________
7 CFR Parts 250 and 251
Food Distribution Programs: Implementation of the Personal
Responsibility and Work Opportunity Reconciliation Act of 1996 (Welfare
Reform); Proposed Rule
Federal Register / Vol. 64, No. 130 / Thursday, July 8, 1999 /
Proposed Rules
[[Page 36978]]
DEPARTMENT OF AGRICULTURE
Food and Nutrition Service
7 CFR Parts 250 and 251
RIN 0584-AC49
Food Distribution Programs: Implementation of the Personal
Responsibility and Work Opportunity Reconciliation Act of 1996 (Welfare
Reform)
AGENCY: Food and Nutrition Service, USDA.
ACTION: Proposed rule.
-----------------------------------------------------------------------
SUMMARY: This rule proposes to amend provisions of the Food
Distribution Program regulations and the Emergency Food Assistance
Program (TEFAP) regulations to implement the Personal Responsibility
and Work Opportunity Reconciliation Act of 1996, commonly known as
Welfare Reform, while generally streamlining and clarifying these
regulations. In accordance with the Welfare Reform legislation, the
proposals contained in this rule would address various changes required
by the repeal of Section 110 of the Hunger Prevention Act of 1988,
which authorized the former Soup Kitchens/Food Banks Program, the
former beneficiaries of which are now served by an expanded TEFAP. It
amends the definitions relating to organizational eligibility in TEFAP
to reflect the program consolidation, and to achieve consistency with
the Emergency Food Assistance Act of 1983 as amended by Welfare Reform.
Changes to these and other definitions are also proposed in order to
provide greater clarity to the regulations. As mandated by Welfare
Reform, this rule also proposes changes in the required content and
frequency of submission of the TEFAP State plan of operation, and
encourages State agencies to create advisory boards comprised of public
and private entities with an interest in the distribution of TEFAP
commodities. In addition, this rule proposes to broaden the allowable
uses of TEFAP administrative funds at the State and local levels, and
provide greater flexibility for State agencies in meeting the TEFAP
maintenance-of-effort requirement. Finally, in order to reduce the
paperwork burden and afford State agencies greater flexibility, this
rule proposes discretionary changes in TEFAP recordkeeping, monitoring,
and reporting requirements.
DATES: To be assured of consideration, comments must be postmarked on
or before September 7, 1999.
ADDRESSES: Comments should be sent to: Lillie Ragan, Assistant Branch
Chief, Household Programs Branch, Food Distribution Division, Food and
Nutrition Service, U.S. Department of Agriculture, Room 612, 4501 Ford
Avenue, Alexandria, Virginia 22302. Comments in response to this rule
may be inspected at 4501 Ford Avenue, Room 612, Alexandria, Virginia,
during normal business hours (8:30 a.m. to 5 p.m., Mondays through
Fridays).
FOR FURTHER INFORMATION CONTACT: Lillie Ragan at the above address or
telephone (703) 305-2662.
SUPPLEMENTARY INFORMATION:
Executive Order 12866
This proposed rule has been determined to be not significant for
purposes of Executive Order 12866 and, therefore, has not been reviewed
by the Office of Management and Budget.
Regulatory Flexibility Act
This action has been reviewed with regard to the requirements of
the Regulatory Flexibility Act of 1980 (5 U.S.C. 601-612). The
Administrator of the Food and Nutrition Service (FNS) has certified
that this action will not have a significant economic impact on a
substantial number of small entities. The procedures in this rulemaking
would primarily affect FNS regional offices, and the State distributing
and recipient agencies that administer food distribution programs.
Private enterprises that enter into agreements for the storage of
donated food or meal service management would also be affected. While
some of these entities constitute small entities, a substantial number
will not be affected. Furthermore, any economic impact will not be
significant.
Unfunded Mandate Reform Act
Title II of the Unfunded Mandate Reform Act of 1995, Public Law
104-4 (UMRA), establishes requirements for Federal agencies to assess
the effects of their regulatory actions on State, local, and tribal
governments and the private sector. Under section 202 of the UMRA, FNS
generally must prepare a written statement, including a cost-benefit
analysis, for proposed and final rules with ``Federal mandates'' that
may result in expenditures to State, local or tribal governments, in
the aggregate, or to the private sector, of $100 million or more in any
one year. When such a statement is needed for a rule, section 205 of
the UMRA generally requires FNS to identify and consider a reasonable
number of regulatory alternatives and adopt the least costly, more
cost-effective or least burdensome alternative that achieves the
objectives of the rule.
This rule contains no Federal mandates (under the regulatory
provisions of Title II of the UMRA) for State, local, and tribal
governments or the private sector of $100 million or more in any one
year. Thus this proposed rule is not subject to the requirements of
sections 202 and 205 of the UMRA.
Executive Order 12372
These programs are listed in the Catalog of Federal Domestic
Assistance under 10.550, 10.568 and 10.569 and are subject to the
provisions of Executive Order 12372, which requires intergovernmental
consultation with State and local officials (7 CFR part 3015, Subpart V
and final rule-related notices published at 48 FR 29114, June 24, 1983
and 49 FR 22676, May 31, 1984).
Executive Order 12988
This proposed rule has been reviewed under Executive Order 12988,
Civil Justice Reform. This rule is intended to have preemptive effect
with respect to any State or local laws, regulations or policies which
conflict with its provisions or which would otherwise impede its full
implementation. This rule is not intended to have retroactive effect
unless so specified in the ``Effective Date'' section of the preamble.
There are no administrative procedures which must be exhausted prior to
any judicial challenge to the provisions of this rule or the
application of its provisions.
Paperwork Reduction Act
In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C.
3507), FNS is submitting for public comment the changes in the
information collection burden that would result from the adoption of
the proposals in the rule.
Comments are invited on: (a) Whether the proposed collection of
information is necessary for the proper performance of the functions of
the agency, including whether the information will have practical
utility; (b) the accuracy of the agency's estimate of the burden of the
proposed collection of information, including the validity of the
methodology and assumptions used; (c) ways to enhance the quality,
utility, and clarity of the information to be collected; and (d) ways
to minimize the burden of the collection of information on those who
are to respond, including through the use of appropriate automated,
electronic, mechanical, or other technological collection techniques or
other forms of information technology. To be assured of
[[Page 36979]]
consideration, comments must be postmarked on or before September 7,
1999. Comments may be sent to Lori Schack, Desk Officer, Office of
Information and Regulatory Affairs, Office of Management and Budget
(OMB), Washington, D.C. 20503. All comments will be summarized and
included in the request for OMB approval of the proposed changes in the
information collection burden. All comments will become a matter of
public record. For further information, or for copies of the
information collections discussed below, please contact Lillie Ragan,
Assistant Branch Chief, Household Programs Branch, Food Distribution
Division, Food and Nutrition Service, U.S. Department of Agriculture,
Room 612, 4501 Ford Avenue, Alexandria, Virginia 22302, or telephone
703-305-2662.
Title: Food Distribution Regulations and Forms.
OMB Number: 0584-0293.
Expiration Date: 1/31/01.
Type of Request: Revision of a currently approved collection.
Abstract: State plans of operation, household participation
reports, monitoring reviews, and review reports. The rule proposes to:
(1) require State agencies to submit the TEFAP plan of operation to FNS
only once every four years instead of the present annual requirement,
with amendments made as necessary; (2) eliminate the requirement that
State agencies report semiannually the number of households served
through TEFAP; (3) reduce the number of TEFAP agencies required to be
reviewed each year by State agencies from one-third or 50, whichever is
fewer, to one-tenth or 20, whichever is fewer; and (4) require State
agencies to submit review reports to TEFAP agencies they review only if
a review discloses deficiencies.
Plans of Operation
Section 202A(a) of the Emergency Food Assistance Act of 1983 (7
U.S.C. 612c note (EFAA), as amended by Section 871(b) of the Personal
Responsibility and Work Opportunity Reconciliation Act of 1996, Pub. L.
104-193, (Welfare Reform), mandates that each State agency submit
certain information to FNS in a TEFAP State plan of operation once
every four years. Present regulations specify an annual submission of
the State plan. Changes made by Welfare Reform in the required contents
of the plan and implemented by this rule are discussed below. It is
expected that changes in the amount of time required to prepare the
plan will be negligible. Thus, for the purposes of the calculations
below, response times are unaltered. The proposed decrease in burden
hours reflects only the decreased frequency of response.
Respondents: State agencies administering TEFAP.
Estimated Number of Respondents: State agencies administering TEFAP
number 56.
Estimated Number of Responses per Respondent: Frequency of response
for the States to submit plans would be every four years, or at a
frequency of 0.25 per year.
Household Participation Reports
Present regulations require State agencies to report household
participation figures on the FNS-155, Inventory Management Report,
semiannually. This rule proposes to eliminate this requirement, thus
reducing the time required for completion of the FNS-155.
Respondents: State agencies administering TEFAP.
Estimated Number of Respondents: State agencies administering TEFAP
number 56.
Estimated Number of Responses per Respondent: Frequency of response
for State agencies to submit the FNS-155 remains 2 per year, but
household participation reports would no longer be included, reducing
this component of the FNS-155 burden to zero.
Review Reports Submitted to Emergency Feeding Organizations
This rule proposes no changes in the present regulatory requirement
that State agencies annually review 25 percent of all emergency feeding
organizations, and review all such organizations no less frequently
than once every four years. Such organizations are, however, renamed
``eligible recipient agencies which have signed an agreement with the
State.'' This rule proposes to require State agencies to conduct an
annual review of one-tenth or 20, whichever is fewer, of eligible
recipient agencies which have signed an agreement with another eligible
recipient agency, rather than the current one-third or 50, whichever is
fewer, of ``distribution sites.'' In addition, this rule proposes to
require State agencies to submit review reports to those organizations
reviewed only if the review discloses deficiencies, rather than the
current requirement that a report be submitted for each review
conducted. Current specific content requirements for the report would
be eliminated. These changes are expected to reduce the number of
reviews State agencies conduct each year, and the number of those
reviews which will require reports.
Respondents: State agencies administering TEFAP.
Estimated Number of Respondents: State agencies administering TEFAP
number 56.
Estimated Number of Responses per Respondent: Frequency of response
for the States to submit reviews to emergency feeding organizations
would be 1 per year.
----------------------------------------------------------------------------------------------------------------
Respndnts. Freq. Hrs./Resp. Total hrs.
----------------------------------------------------------------------------------------------------------------
TEFAP State Plan:
Present..................................... 56 1 19 1064
Proposed.................................... 56 0.25 19 266
Submission of TEFAP Household Participation Data
on Inventory Reports (FNS-155):
Present..................................... 56 2 0.25 28
Proposed.................................... 56 2 0.00 0
TEFAP Review Reports Submitted to Eligible
Recipient Agencies:
Present..................................... 56 7 2 784
Proposed.................................... 56 1 2 112
----------------------------------------------------------------------------------------------------------------
Estimated Total Annual Burden on Respondents: The total annual
burden under OMB Control Number 0584-0293 would be reduced from
1,190,971 hours to 1,189,473 hours: a difference of 1,498 hours.
Background
On August 22, 1996, President Clinton signed into law the Personal
Responsibility and Work Opportunity
[[Page 36980]]
Reconciliation Act of 1996, (hereinafter ``Welfare Reform''). Welfare
Reform amended legislation authorizing Department of Agriculture
(hereinafter ``USDA'' or ``Department'') food distribution programs
operated by FNS. It consolidated the Soup Kitchens/Food Banks Program
(SK/FB) and TEFAP under the EFAA and repealed previous authorization
for SK/FB under Section 110 of the Hunger Prevention Act of 1988, Pub.
L. 100-435, (HPA), (7 U.S.C. 612c note). It also amended the
definitions regarding organizational eligibility in TEFAP, as contained
in Section 201A(3) of the EFAA, to ensure that organizations formerly
served by SK/FB would be eligible to participate in TEFAP. Welfare
Reform also made changes in the following areas: (1) allowable uses of
TEFAP administrative funds; (2) content and frequency of submission of
the TEFAP State plan of operation; (3) the annual date by which TEFAP
commodities must be delivered to States; (4) the TEFAP maintenance-of-
effort requirement; and (5) the distribution of commodities to aliens.
To assist State agencies in implementing the provisions contained
in Welfare Reform, the Department issued a policy memorandum on January
14, 1997, which was sent to all FNS Regional Offices for dissemination
to their respective State agencies. The guidance contained in the
memorandum generated questions from several State agencies concerning
the eligibility of certain types of organizations to receive TEFAP
commodities. In response to these questions, the Department once again
reviewed the legislative provisions and issued additional supplementary
guidance through a policy memorandum dated July 23, 1997.
This proposed rule would incorporate Welfare Reform's legislative
mandates into the appropriate regulations. Changes are also proposed as
part of the Department's effort to clarify the regulations and reduce
the burden associated with the administration of TEFAP. With the latter
goal in mind, this rule proposes changes in TEFAP recordkeeping,
monitoring, and reporting requirements. Welfare Reform also amended the
National School Lunch Act to eliminate the requirement that State
education agencies maintain advisory councils for the purpose of
advising FNS on schools' needs relative to the selection and
distribution of commodities, and to instead require that distributing
agencies consult with representatives of schools on this subject. The
substance of this provision is being addressed in a separate
rulemaking, but this rulemaking removes references to the advisory
councils in Food Distribution Program regulations. Provisions contained
in Welfare Reform relative to the distribution of commodities to aliens
which require a change in current regulations will be addressed under a
separate rulemaking. The specific changes proposed in this rule are
discussed in detail below.
Absorption of SK/FB into TEFAP
Repeal of Section 110 of the Hunger Prevention Act of 1988
The major change in Food Distribution Programs brought about by
Welfare Reform was consolidation of TEFAP and SK/FB. This consolidation
was accomplished by Section 873(1) of Welfare Reform, repealing Section
110 of the HPA, which authorized funds specifically for the purchase of
commodities for SK/FB. Its authorizing legislation repealed, SK/FB
ceased to exist. This rule proposes to amend current Food Distribution
Program regulations (7 CFR part 250) by removing Section 250.52, which
contained the requirements of Section 110 of the HPA, as well as all
other references to Section 110, wherever they appear, in 7 CFR parts
250 and 251.
Definitions
This rule proposes to add definitions of several terms not
currently found in Section 251.3 and to change the definitions of some
currently existing terms. The accompanying chart graphically represents
the existing and proposed definitions in a side-by-side format to
assist readers in understanding the changes. A detailed explanation of
the changes follows. It should be noted, however, that neither the
chart nor the following detailed explanation contain the definitions of
``formula,'' ``state agency,'' and ``value of commodities
distributed.'' These definitions are set forth in the proposed
regulatory text at the end of this rule. Although definitions of these
terms are contained in the current Section 251.3 and are not proposed
to be changed, it is easier, given the extensive surrounding additions
and changes, to set forth the revised text of the section in its
entirety.
BILLING CODE 3410-30-U-
[[Page 36981]]
[GRAPHIC] [TIFF OMITTED] TP08JY99.003
[[Page 36982]]
[GRAPHIC] [TIFF OMITTED] TP08JY99.004
BILLING CODE 3410-30-C
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Eligible recipient agency. Accompanying the repeal of Section 110
of the HPA, Section 871(a) of Welfare Reform slightly altered the
definition of ``eligible recipient agency'' (ERA) contained in Section
201A of the EFAA. The alteration emphasizes that organizations formerly
receiving commodities under SK/FB are eligible to receive TEFAP
commodities. Soup kitchens and food banks had always been listed as
eligible recipient agencies under Section 201A of the EFAA and in TEFAP
regulations, but were not specifically defined, as they were in Section
110 of the HPA. Most States served soup kitchens exclusively under SK/
FB. In addition to amending the definition of ERA itself, Welfare
Reform incorporated into Section 201A specific definitions for ``food
banks'' and ``soup kitchens'' similar to those found in the former
Section 110 of the HPA. The term ``food pantry'' had never been listed
or defined in the EFAA; Welfare Reform both added food pantries as a
type of ERA and added to the EFAA the definition for this term formerly
found in section 110 of the HPA. The net result of these changes is
that more detailed and specific authority now exists in the EFAA for
the distribution of TEFAP commodities to food banks, food pantries, and
soup kitchens. Therefore, no organization formerly receiving
commodities under SK/FB lost eligibility for food due to this program
consolidation.
Section 871(a) of Welfare Reform amended Section 201A of the EFAA
to explicitly prohibit the participation of penal institutions in
TEFAP. It also removed school lunch programs and Commodity Supplemental
Food Program (CSFP) sites from the list of eligible recipient agencies,
while not categorically prohibiting their participation. All other
types of organizations may participate as long as they meet the
organizational eligibility criteria. While mention of school lunch
programs as a specific category was removed, child nutrition programs
as a category remains, and thus school lunch programs remain eligible.
And while the removal of the reference to CSFP sites means that such
sites may not receive TEFAP commodities for the sole purpose of serving
CSFP participants, CSFP sites may receive TEFAP commodities if they
meet the organizational eligibility criteria described below. The
result of these changes is that penal institutions are the only type of
organization which can be termed categorically ineligible for TEFAP.
Since TEFAP commodities have never, in fact, been provided to penal
institutions, school lunch programs or CSFP sites, this change has had
no practical effect.
Although the changes wrought by Welfare Reform in the definition of
ERA were minor, the January 14, 1997 guidance memorandum, discussed
above, generated questions from several State agencies regarding the
eligibility of certain types of organizations to receive TEFAP
commodities. Based on an analysis of these questions, it appears that
much of the need for clarification can be attributed to the fact that
current TEFAP regulations (7 CFR part 251) do not contain a definition
of ERA, instead employing the term ``emergency feeding organization''
(EFO). Thus, current regulations do not address the distribution of
commodities to all of the various types of organizations specifically
encompassed by the definition of ERA as set forth in the EFAA. These
organizations include summer camps for children, child nutrition
programs providing food service, nutrition projects operating under the
Older Americans Act of 1965 (42 U.S.C. 3001 et seq.), and disaster
relief programs. These organizations have always been eligible to
receive commodities under the EFAA. However, 7 CFR part 251 does not
currently address the distribution of TEFAP commodities to such
organizations because they have traditionally received assistance
through other commodity programs.
Another source of misunderstanding appears to be associated with
the eligibility of certain adult correctional institutions. As
discussed above, Welfare Reform explicitly prohibits penal institutions
from receiving TEFAP commodities. Similarly, penal institutions are
ineligible to receive commodities as charitable institutions under 7
CFR part 250. However, certain adult correctional institutions are
eligible to receive commodities that are made available to States for
distribution to charitable institutions under other donation
authorities if they meet the requirements for rehabilitation programs
set forth in Section 250.41(a)(2).
Therefore, to clarify the types of organizations eligible to
receive TEFAP commodities, this rule proposes to amend Section 251.3 to
add the following definition of ERA, which specifically includes all
the various types of organizations eligible to receive TEFAP
commodities that are included under the definition of ERA set forth in
the EFAA: ``eligible recipient agency means an organization which--(1)
is public, or (2) is private, possessing tax exempt status pursuant to
Sec. 251.5(a)(3); and (3) is not a penal institution; and (4) provides
food assistance--(i) exclusively to needy persons for household
consumption, pursuant to a means test established pursuant to
Sec. 251.5(b), or (ii) predominantly to needy persons in the form of
prepared meals pursuant to Sec. 251.5(a)(2); and (5) has entered into
an agreement with the designated State agency pursuant to Sec. 251.2(c)
for the receipt of commodities or administrative funds, or receives
commodities or administrative funds under an agreement with another
eligible recipient agency which has signed such an agreement with the
State agency or another eligible recipient agency within the State
pursuant to Sec. 251.2(c); and (6) falls into one of the following
categories: (i) emergency feeding organizations (including food banks,
food pantries and soup kitchens); (ii) charitable institutions
(including hospitals and retirement homes); (iii) summer camps for
children, or child nutrition programs providing food service; (iv)
nutrition projects operating under the Older Americans Act of 1965
(Nutrition Program for the Elderly), including projects that operate
congregate nutrition sites and projects that provide home-delivered
meals; and (v) disaster relief programs.''
The only material differences between this definition of ERA and
that contained in the EFAA are intended to render the definition more
useful to State and local agencies making day-to-day organizational
eligibility determinations. Language regarding the execution of
agreements between the State and eligible recipient agencies has been
added. The term ``needy persons'' and related language have also been
included, since the EFAA limits the distribution of commodities to
organizations that provide food assistance to the needy. In addition,
the proposed rule's ERA definition lists all of the types of EFOs for
which Welfare Reform provides a specific, separate definition, i.e.,
food banks, food pantries, and soup kitchens. The proposed definition
of ERA does not, however, limit EFOs to these organizational types,
because, as discussed below, any type of ERA may qualify as an EFO, as
long as it meets the criteria.
Emergency feeding organization. As discussed above, current
regulations contain no definition of ERA. Instead, the regulations use
the term ``emergency feeding organization'' and in Section 251.3 define
it to mean ``any public or nonprofit private organization which has
entered into an agreement with the designated State agency to provide
nutrition assistance to relieve situations of emergency and distress
through the
[[Page 36984]]
provision of food to needy persons, including low-income and unemployed
persons, and which receives commodities under agreements pursuant to
Sec. 251.2(c). Emergency feeding organizations include charitable
institutions, food banks, hunger centers, soup kitchens, and similar
public or private nonprofit eligible recipient agencies.''
The program consolidation and the need for greater clarity require
that the regulatory definition of EFO be revised to further sharpen the
legislative distinction between ERAs which are also EFOs on one hand,
and on the other, ERAs which are not also EFOs. This distinction is
crucial under the consolidated TEFAP, because it forms the basis of the
priority system discussed below, which State agencies must employ in
allocating TEFAP commodities. It also affects the requirement that
State agencies pass down at least 40 percent of their administrative
grants. This requirement, too, is discussed in detail below. Welfare
Reform stresses this distinction in Section 201A(1) of the EFAA by
removing the definition of EFO from within the definition of ERA, and
providing a separate definition of EFO in Section 201A(4). The proposed
regulatory definition of EFO removes the present language regarding
agreements, which is neither included in the EFAA's definition of EFO
nor necessary to distinguish EFOs from other ERAs. Instead agreements
are addressed in the definition of ERA, as discussed above. The
proposed definition of EFO also removes references to types of
organizations which may or may not qualify as EFOs, likewise confining
these to the definition of ERA, which is structured to more
appropriately contain them. This change shifts the emphasis from types
of organizations to criteria which ERAs must meet to be considered
EFOs. Under this proposed rule at Section 251.3(e), an EFO would mean
``an eligible recipient agency which provides nutrition assistance to
relieve situations of emergency and distress through the provision of
food to needy persons, including low-income and unemployed persons.
Emergency feeding organizations have priority over other eligible
recipient agencies in the distribution of TEFAP commodities pursuant to
Sec. 251.4(h).'' Examples of EFOs are food banks, food pantries, soup
kitchens, and organizations such as Community Action Programs that
distribute TEFAP commodities occasionally, e.g., monthly or quarterly.
Charitable institution. Section 201A of the EFAA authorizes the
distribution of TEFAP commodities to charitable institutions. However,
Section 251.3 does not currently contain a definition of this term.
While Section 250.3 contains such a definition, it is needlessly
complex given the limited application the term will have in TEFAP.
Therefore, this rule proposes to include a definition of ``charitable
institution'' in Section 251.3 which more accurately describes the
types of organizations that would be considered eligible to participate
in TEFAP and alerts the reader to the fact that the definition differs
from that found in Section 250.3. The following definition of
``charitable institution'' would be included in this proposed rule:
``charitable institution (which is defined differently in this part
than in part 250 of this chapter) means an organization which--(1) is
public, or (2) is private, possessing tax exempt status pursuant to
Sec. 251.5(a)(3); and (3) is not a penal institution (this exclusion
also applies to correctional institutions which conduct rehabilitation
programs); and (4) provides food assistance to needy persons.''
Distribution site. Section 251.3(b) of the current regulations
defines ``distribution site'' as ``the location(s) where the emergency
feeding organization actually distributes commodities to needy persons
under this part.'' To reflect the consolidation of SK/FB into TEFAP,
this rule proposes to revise the definition of ``distribution site'' to
organizations which prepare meals using TEFAP commodities as well as
the traditional distribution of commodities to households for home use.
Also, the proposed definition employs the term ERA, rather than EFO, as
discussed above, even though in practice, most distribution sites are,
and will most likely continue to be, operated by organizations
qualifying as EFOs. Under this proposed rule, ``distribution site''
means ``a location where the eligible recipient agency actually
distributes commodities to needy persons for household consumption or
serves prepared meals to needy persons under this part.''
Food bank, Food pantry, Soup kitchen. Provisions regarding the
distribution of Section 110 commodities as set forth in HPA, including
the definitions of food banks and soup kitchens, are currently
contained in 7 CFR part 250. Since Welfare Reform consolidated SK/FB
into TEFAP, this rule proposes to include the definitions of these
terms, as slightly revised by Welfare Reform, in Section 251.3 and to
remove the corresponding definitions from Section 250.3. While the term
``food pantry'' was also defined in the HPA, the definition was never
included in either 7 CFR part 250 or 7 CFR part 251. This rule also
proposes to include in Section 251.3 the definition of ``food pantry''
as set forth in Welfare Reform. The changes made by Welfare Reform in
the definitions of these terms are in all cases non-material. The
proposed rule sets forth these definitions in Sections 251.3(f),
251.3(g), and 251.3(j) as follows: ``Food bank'' means ``a public or
charitable institution that maintains an established operation
involving the provision of food or edible commodities, or the products
of food or edible commodities, to food pantries, soup kitchens, hunger
relief centers, or other food or feeding centers that, as an integral
part of their normal activities, provide meals or food to feed needy
persons on a regular basis.'' ``Food pantry'' means ``a public or
private nonprofit organization that distributes food to low-income and
unemployed households, including food from sources other than the
Department of Agriculture, to relieve situations of emergency and
distress.'' ``Soup kitchen'' means ``a public or charitable institution
that, as an integral part of the normal activities of the institution,
maintains an established feeding operation to provide food to needy
homeless persons on a regular basis.''
Eligible Recipient Agency Eligibility Criteria
While Section 201A of the EFAA, in its definition of ERA, lists a
broad array of organizations as eligible to participate in TEFAP,
Section 202A(b)(4)(A) of the EFAA continues to require that TEFAP
commodities be used to provide food assistance to those in need.
Organizations applying to participate in TEFAP which distribute foods
to households for home consumption meet this criterion by requiring
that households applying for assistance pass a ``means test,'' i.e.,
the household must meet the TEFAP income eligibility criteria
established by the State agency. Eligibility cannot be established
merely on the basis of a household residing within a specific area.
Organizations which provide food assistance through the preparation of
meals do not employ a means test because such testing would not be
cost-effective, and because people who attend soup kitchens can
reasonably be assumed to be needy. Accordingly, this proposed rule
would require such organizations to demonstrate that they serve
predominantly needy people. The State agency can determine if the
organization meets this criterion by considering the socioeconomic data
(e.g., poverty, unemployment, vagrancy and welfare
[[Page 36985]]
program usage rates) on the area in which the organization is located,
or from which it draws its clientele. In the case of most traditional
soup kitchens, this minimal standard will no doubt be easily and
clearly satisfied. Application of this criterion will, however, render
some organizations of a particular type eligible and others of the same
type ineligible. For example, a hospital which is located in, or draws
its patients from, an economically distressed area could be considered
eligible to participate in TEFAP, whereas a hospital located in an area
with more positive economic characteristics would not qualify. State
agencies remain free to set a higher standard than ``predominantly,''
should they wish to target resources to only their neediest citizens.
This rule proposes to amend Section 251.5(a) to include these criteria.
Section 201A(3) of the EFAA continues to require that eligible
recipient agencies be public or nonprofit organizations, thus
continuing to exclude for-profit organizations. In order to clarify
this legislative mandate, this rule also proposes to incorporate within
part 251 requirements associated with tax-exempt status. Such
requirements are currently contained in Section 250.52(b) which, as
discussed above, is removed under this proposed rule as a result of
Section 110 of the HPA being repealed by Welfare Reform. Under Section
250.52(b), all organizations receiving Section 110 commodities for
distribution under the former SK/FB were required to have obtained tax-
exempt status under the Internal Revenue Code (26 U.S.C. 501) (IRC) or
to have made application for such status. However, under Section
501(c)(3) of the current IRC, organizations are automatically tax-
exempt if they are ``organized or operated exclusively for religious *
* * purposes. * * *'' Such organizations are not precluded from seeking
Internal Revenue Service (IRS) recognition of their tax-exempt status,
but they are not required to do so. Therefore, the Department does not
intend to require organizations that are ``organized or operated
exclusively for religious * * * purposes. * * *'' to obtain tax-exempt
status in order to participate in TEFAP.
These tax exempt status requirements of current Section 250.52(b)
also contain a ``moving toward'' exemption that allows an organization
which has applied for, but has yet to obtain, IRS recognition of its
tax-exempt status to receive Section 110 commodities for 12 months from
the date of its approval for participation in TEFAP, and for an
indefinite period thereafter, if the organization ``documents to the
distributing agency's satisfaction that it has made good faith efforts
to obtain recognition of its tax-exempt status and that such
recognition has not been provided due to no fault of the
organization.'' The Department has learned through experience that this
requirement is not strict enough to be consonant with program
accountability, and recent legislation has set forth a higher standard.
Section 107(d) of the William F. Goodling Child Nutrition
Reauthorization Act of 1998, Pub. L. 105-336, amended Section 17(d)(1)
of the National School Lunch Act (42 U.S.C. 1766(d)(1)) (NSLA) to limit
the ``moving toward'' exemption for the Child and Adult Care Food
Program to ``not more than 180 days, except that a State agency may
grant a single extension of not to exceed an additional 90 days if the
institution demonstrates, to the satisfaction of the State agency, that
the inability of the institution to obtain tax-exempt status within the
180-day period is due to circumstances beyond the control of the
institution.'' This rule proposes to amend Section 251.5(a)(3) to add
tax-exempt requirements consistent with the above discussion. Prior to
shipping TEFAP commodities, the State agency or ERA would be required
to ensure that a recipient agency (1) possesses documentation from the
IRS recognizing tax-exempt status under the IRC, or (2) if not in
possession of such documentation, is automatically tax-exempt as
``organized or operated exclusively for religious purposes'' under the
IRC, or if required to file an application under the IRC to obtain tax-
exempt status, has made application for recognition of such status and
is moving toward compliance with the requirements for recognition of
tax-exempt status, or (3) is currently operating another Federal
program requiring such tax-exempt status. In instances in which an
organization's application for tax-exempt status is denied or has not
been obtained within 180 days of the effective date of the
organization's approval for participation in TEFAP, the State agency or
ERA must terminate the organization's participation until such time as
recognition of tax-exempt status is actually obtained. However the
State agency or ERA may grant a single extension of not to exceed 90
days if the organization can demonstrate, to the State agency's or
ERA's satisfaction, that its inability to obtain tax-exempt status
within the 180 day period is due to circumstances beyond its control.
In sum, to be eligible to receive TEFAP commodities, organizations
must be public or nonprofit organizations providing food assistance to
needy persons. If they distribute commodities for household
consumption, they must administer a means test to ensure that only
needy persons receive TEFAP commodities. If they serve prepared meals,
they must demonstrate that they serve predominantly needy persons.
State agencies cannot require organizations to conduct a means test of
individuals receiving prepared meals. Section 871(b) of Welfare Reform
amended the EFAA to require that State agencies set forth the standards
of eligibility for ERAs in the State plan. As discussed in detail
below, this rule proposes to amend Section 251.6(b) to include this
requirement.
This rule also proposes to revise Section 251.5 to address those
instances in which the State agency chooses to delegate authority to
one or more ERAs to determine which organizations they, in turn, will
supply with TEFAP commodities. Section 251.5(a) currently requires
State agencies to determine the eligibility of organizations and enter
into agreements with such organizations prior to making TEFAP
commodities available to them. However, in many instances, State
agencies use ERAs to distribute commodities to other ERAs (e.g., a
central food bank distributing commodities to one or more food
pantries) and depend on those organizations to: (1) Determine the
eligibility of organizations requesting TEFAP commodities from them;
and (2) to make decisions regarding which organizations will receive
TEFAP commodities and the amount of commodities to be provided when
quantities are insufficient to support all requests. This rule proposes
to revise Section 251.5 to clarify a State agency's authority to
delegate such responsibilities to ERAs. If a State chooses to do this,
it must require that such ERAs make decisions regarding an
organization's eligibility to participate in TEFAP in accordance with
the provisions contained in 7 CFR part 251 and the State Plan. However,
responsibility for establishing eligibility criteria for recipient
agencies may not be delegated to an ERA.
Priority System
While the explicit priority system outlined in Section 110 of the
HPA no longer exists, Section 203B(b) of the EFAA requires that, in
instances in which the State agency cannot meet all requests for TEFAP
commodities, the State agency give priority in the
[[Page 36986]]
distribution of such commodities to eligible recipient agencies
``providing nutrition assistance to relieve situations of emergency and
distress through the provision of food to needy persons, including low-
income and unemployed persons.'' [emphasis supplied] As discussed in
detail above, this is the definition of EFO as set forth in the EFAA.
Thus, there is a two-tier priority system. The need to effectively
describe the priority system is the primary reason for amending the
regulatory definition of EFO to conform to the EFAA. The two-tier
priority system provides that organizations which relieve situations of
emergency and distress through the provision of food to needy persons,
i.e., EFOs under the definition discussed above, are of higher priority
and other organizations, which serve the needy, but do not relieve
situations of emergency and distress and, thus, fall into the lower
priority category. A State agency may, within the first priority, set
subpriorities so that, for example, EFOs providing household
distribution have access to resources before EFOs providing prepared
meals, or vice versa. However, the needs of all EFOs must be satisfied
before food is made available to a second-tier organization, i.e., an
ERA which is not also an EFO. The supply of TEFAP commodities may not
be sufficient for States to serve all ERAs. Therefore, some State
agencies may be able to serve only EFOs. This rule proposes to revise
Section 251.4(h) to reflect the legislatively mandated two-tier
priority system.
This rule also proposes to revise Section 251.4(h) to address those
instances in which the State agency chooses to delegate to ERAs, with
which the State agency has an agreement, the responsibility for
choosing ERAs to which they will provide TEFAP commodities. An example
of this would be a central food bank distributing commodities to one or
more food pantries. In such instances, the ERA is responsible for
ensuring that commodities are distributed using the priority system
described above. Though improbable, given the limited supplies of TEFAP
commodities, there may be instances in which one ERA has sufficient
inventories of commodities to serve some second-tier organizations
while another ERA does not have sufficient inventories to serve all of
its EFOs. The added expense and administrative complexity necessary to
prevent this unlikely event would not be justified. Therefore, with
regard to delegated authority, both the State agency and any ERA to
which this authority has been delegated will be considered to be in
compliance with the priority system requirement when the ERA
distributes TEFAP commodities in a manner that ensures the needs of
EFOs under its jurisdiction have been met prior to making commodities
available to non-EFOs under its jurisdiction. The Department would
expect State agencies and EFOs to be sufficiently knowledgeable about
the organizations to which they distribute food to avoid substantial
amounts of commodities being provided to non-EFOs before the needs of
all EFOs have been satisfied.
To further assist States in making the best use of TEFAP
commodities, Section 871(b) of Welfare Reform amended Section 202A of
the EFAA to require the Secretary to encourage States to establish a
State advisory board comprised of public and private entities with an
interest in the distribution of TEFAP commodities. Such advisory boards
can provide valuable guidance on how the State should allocate
resources among various eligible outlet types, what areas have the
greatest need for food assistance, and other important issues that will
help States use their program resources in the most efficient and
effective manner possible. This rule proposes to revise Section
251.4(h) to include language encouraging States to establish an
advisory board and allowing them to use TEFAP administrative funds for
its support. Section 203B(b) of the EFAA, besides establishing the
priority of EFOs, requires that ``[e]ach State agency shall encourage
distribution of TEFAP commodities in rural areas.'' [emphasis supplied]
This encouragement is set forth in Section 251.4(k) of present
regulations and would be retained by this proposed rule. State agencies
are also reminded that, in accordance with Section 251.4(h) of the
current regulations, which reflects the provisions contained in Section
203B(a) of the EFAA, State agencies have the option to give priority to
existing food bank networks and other organizations whose ongoing
primary function is to facilitate the distribution of food to low-
income households. This option is, of course, subject to the two-tier
priority system discussed above.
Recipient Eligibility Criteria
Section 251.5(b) of the current regulations requires that State
agencies establish criteria for determining the eligibility of
households to receive TEFAP commodities for household use. The criteria
must include income-based standards and the methods by which households
may demonstrate eligibility under such standards. Criteria may include
a requirement that the household reside in the State, provided that
length of residency is not used as an eligibility criterion. Section
871(a) of Welfare Reform amended Section 202A(b) of the EFAA to require
that recipients reside in the ``geographic location served by the
distributing agency at the time of applying for assistance.''
Accordingly, this rule proposes to amend Section 251.5(b) to reflect
the fact that State agencies must establish a residency requirement for
households applying to receive commodities for home consumption.
However, State agencies would continue to be prohibited from
establishing a length-of-residency requirement. It should be noted that
Section 251.4(j) of current regulations permits State agencies to enter
into cooperative agreements with other State agencies to provide
commodities jointly to, or to transfer commodities to, an organization
serving needy persons in a contiguous area which crosses their
respective States' borders. Organizations operating under such
agreements may continue to serve persons crossing State lines for
assistance. Section 203B(d) of the EFAA, which authorizes these
cooperative agreements, was unchanged by Welfare Reform. This rule also
proposes to amend Section 251.5(c) to clarify that State agencies may
not delegate the responsibility for establishing eligibility criteria
for program recipients to ERAs.
As was the case under the now defunct SK/FB, individuals seeking
food assistance at prepared meal sites would not be subject to a means
test under the proposed rule, since such a test would obviously be
difficult to implement and regulate, and not at all cost-effective when
compared to the value of the benefit provided. A person may attend a
soup kitchen on a very irregular basis and receive meals of which TEFAP
commodities are only a small part. Rather, as discussed above,
organizations which provide prepared meals would be required to
demonstrate that they serve predominantly needy persons.
State Agreements With Eligible Recipient Agencies
Section 251.2(c) of the current regulations requires State agencies
to enter into an agreement with an EFO receiving TEFAP commodities or
administrative funds. The agreement must provide that EFOs agree to
operate the program in accordance with the requirements of 7 CFR part
251 and, as applicable, 7 CFR part 250. As discussed above, this rule
proposes to amend the definition of the term EFO to conform to the
definition contained in
[[Page 36987]]
Welfare Reform and require that State agencies enter into agreements
with ERAs to which they distribute TEFAP commodities and/or
administrative funds; therefore, Section 251.2(c) would be amended
under this proposed rule to reflect this change.
The final rule, ``Food Distribution Programs--Reduction of the
Paperwork Burden,'' published in the Federal Register on October 16,
1997 (62 FR 53727), amended Sections 250.12(c) and 251.2(c) to make
agreements between State agencies and ERAs permanent, with amendments
to be made as necessary. Although none of those commenting on the rule
at its proposed stage expressed concern, it has since come to the
Department's attention that, while the authority for State agencies and
ERAs to terminate agreements is clearly set forth in Section
250.12(c)(3), no corresponding provision is contained in Section
251.2(c). Therefore, Section 251.2(c) may have been interpreted by some
to mean that State agencies could not terminate agreements with TEFAP
ERAs. Since this was never the Department's intent, this rule proposes
to revise Section 251.2(c) to clarify that agreements must provide
State agencies and ERAs the authority to terminate the agreements upon
30 days' written notice.
In addition, this rule proposes to revise Section 251.2 to address
those instances in which a State agency delegates responsibility to one
or more ERAs to distribute TEFAP commodities and administrative funds
to other ERAs (e.g., a central food bank distributing to one or more
food pantries on the local level). In an effort to ensure that both the
State agency and the ERA are fully cognizant of the responsibilities
being delegated to the ERA, this rule proposes to require that the
State agency specifically identify each function for which the ERA will
be held responsible, and to require that the ERA perform such functions
in accordance with the provisions contained in 7 CFR parts 250 and 251.
Such functions must be identified in the agreement or through other
written documents incorporated by reference in the agreement. In no
case may a State agency delegate responsibility for establishing
recipient or recipient agency eligibility criteria, or responsibility
for ensuring, through State agency reviews, that the program is
administered in accordance with Federal requirements. A State has the
option to delegate both the authority to determine if organizations
meet the State-established criteria for organizations to receive TEFAP
commodities and administrative funds, and the authority to establish
subpriorities consistent with the legislatively mandated priority
system. If the State chooses not to exercise either one of these
options, the State must identify the specific organizations which are
eligible to receive TEFAP commodities and administrative funds in the
agreement or other written documents incorporated by reference in the
agreement.
As discussed in detail below, State agencies may choose to allocate
administrative funds to ERAs for use in paying specific costs. Since
the amount of administrative funds may not be sufficient to cover all
costs allowable under TEFAP regulations, State agencies may also
restrict ERAs' use of these funds to a narrower list of cost types than
is allowed by the regulations. Their reasons for doing so might include
the desire to concentrate these funds on the most important program
functions, such as transport and warehousing of food, rather than on
ancillary expenses, such as office supplies. This rule proposes to
amend Section 251.2 to require that, when the State agency imposes on
its ERAs a more restrictive use of TEFAP administrative funds than
provided in Section 251.8, the restricted list of costs must be
identified in the agreement, or provided to ERAs by other written
documents incorporated by reference in the agreement.
Agreements Between Eligible Recipient Agencies
As discussed above, current regulations require agreements between
States and ERAs to which they provide TEFAP commodities or
administrative funds. There is, however, no requirement that ERAs enter
into agreements with other ERAs to which they distribute TEFAP
commodities or administrative funds on behalf of the State agency. It
is extremely difficult to hold recipient agencies accountable for the
distribution and use of TEFAP commodities and administrative funds
without the existence of an agreement which sets forth the terms and
conditions necessary to ensure that TEFAP commodities and
administrative funds are distributed and used in accordance with
Federal regulations. Therefore, this rule proposes to amend Section
251.2 to require that ERAs distributing TEFAP commodities or
administrative funds to other ERAs on behalf of the State agency enter
into an agreement with those organizations prior to making TEFAP
commodities or administrative funds available. ERAs would have to
receive formal written authorization from the State, either in the
agreement itself or by other written documents incorporated into the
agreement by reference, to enter into agreements with other ERAs for
the further distribution of TEFAP commodities or administrative funds.
While current regulations do not require that such agreements be
entered into, the Department has been advised that this practice is
characteristic of the program and will not, therefore, result in an
increase in the paperwork burden on ERAs. The Department, in its
original calculation of burden hours for part 251, assumed that
agreements would be in place whenever TEFAP commodities or
administrative funds were transferred between State agencies and EFOs
and between EFOs, since ensuring compliance with regulatory
requirements would be extremely difficult if not impossible without
written agreements at all levels. Therefore, the discussion of changes
in burden hours under Paperwork Reduction Act above does not address
these agreements, as their effect on the calculations has already been
taken into consideration.
Distribution Rates
Section 251.4(d)(3) of the current regulations requires that State
agencies establish distribution rates for use by EFOs in distributing
TEFAP commodities to needy households. This requirement was established
when all, or almost all, commodities reached households through mass
distributions, and when distributions of non-USDA commodities along
with TEFAP commodities occurred infrequently. Increased reliance on
food pantries, the growing practice of simultaneously distributing
TEFAP and State or privately donated foods, and absorption of SK/FB
into TEFAP have rendered mandatory distribution rates inappropriate.
Such rates have also become increasingly less useful as the supply of
TEFAP commodities to households has become more variable over time.
Therefore, this rule proposes to revise Section 251.4(d)(3) to remove
this requirement. However, State agencies may choose to develop
distribution rates and require their use by all ERAs or specific types
of ERAs, such as those that distribute TEFAP commodities only through
mass distributions.
TEFAP State Distribution Plan
Section 251.6(b) of the current regulations requires State agencies
to submit a TEFAP distribution plan to the appropriate FNS Regional
Office on an annual basis. This plan is required to contain: (1) a
description of the criteria to be used for determining that applicant
households are in need of
[[Page 36988]]
food assistance; (2) household rates of distribution for commodities;
(3) a description of the program monitoring system, including any
factors which may contribute to requests for approval of exceptions to
conducting the minimum number of reviews; (4) a description of the
State's formula for allocating administrative funds; and (5) a
description of the State's contribution toward the matching
requirement.
Section 871(b) of Welfare Reform amended Section 202A of the EFAA
in a manner that: (1) for the first time codifies the requirement of a
TEFAP State Plan; (2) specifies its contents differently than present
regulations; and (3) requires submittal of the plan once every four
years, instead of the present annual regulatory requirement. Welfare
Reform provides that the plan may be amended at any time. Welfare
Reform also specifies that plans must: (1) designate the State agency
responsible for distributing commodities; (2) set forth a plan of
operation and administration to expeditiously distribute TEFAP
commodities; (3) set forth standards of eligibility for recipient
agencies; and (4) set forth standards of eligibility for individual or
household recipients of commodities, which must require that
individuals or households be comprised of needy persons, and that they
reside in the geographic area served by the distributing agency at the
time of applying for assistance.
State agencies were notified of the changes in Welfare Reform
regarding the State distribution plan in the January 14, 1997
memorandum, which also indicated that they would not be required to
submit a complete plan until Fiscal Year 2001. However, in the interim,
State agencies were required to submit, by March 14, 1997, amendments
to the plan reflecting any changes in program operations or
administration, including those mandated by Welfare Reform. In
accordance with the provisions of Welfare Reform, this rule proposes to
amend Section 251.6 to require the submission of a State distribution
plan once every four years, establishing 2001 as the base year, with
amendments to be added as changes occur in aspects of State program
administration that are described in the plan, or at the request of
FNS.
This rule also proposes to amend Section 251.6 to reflect the
provisions contained in Welfare Reform regarding the specific contents
of the plan. Following is a detailed description of the information
State agencies are required to provide, pursuant to Section 871(b) of
Welfare Reform.
Single State Agency--Welfare Reform requires that the plan identify
the State agency responsible for administration of the program. Thus,
this rule proposes to require States to include the current name and
address of the agency authorized to administer TEFAP, and the name of
the agency official entrusted with binding signature authority. Where
TEFAP and SK/FB were administered by two different State agencies prior
to enactment of Welfare Reform, the January 14, 1997 memorandum
required States to inform FNS of the Governor's selection of a single
State administering agency; otherwise the Department assumed that the
State agency administering TEFAP at the time of enactment would
administer the consolidated TEFAP. The State agency identified in the
plan will be responsible for all aspects of program administration,
including reporting and monitoring requirements, submission of the
State distribution plan, and commodity ordering, storage, and
distribution. The State agency may enter into an agreement with another
State agency or private organization to perform some program functions,
but FNS will deal only with the designated single State agency, which
remains fully responsible for program administration.
Plan of Operation and Administration--Welfare Reform requires that
the State agency ``set forth a plan of operation and administration to
expeditiously distribute'' TEFAP commodities. Therefore, this rule
proposes to reflect the requirement that State agencies include such an
element as part of the State plan.
Standards of Eligibility for Recipient Agencies--Under Welfare
Reform, State agencies are now required to set forth eligibility
standards for recipient agencies in their distribution plan. Within the
minimum standards established by 7 CFR part 251, State agencies are
afforded broad discretionary authority in establishing their
distribution networks. This rule proposes to require State agencies to
describe eligibility criteria established by the State agency,
including any sub-priorities set within the two-tier priority system,
for the receipt of TEFAP commodities and/or administrative funds.
Standards of Eligibility for Individual or Household Recipients--
Welfare Reform requires that State agencies set forth standards of
eligibility in their State plan which ensure that commodities are
provided only to those in need, and that needy persons reside in the
geographic location served by the distributing agency at the time of
application for assistance. Therefore, this rule proposes to retain the
requirement currently found in Section 251.6(a)(1), which requires
State agencies to describe the criteria which must be used in
determining the eligibility of households to receive TEFAP commodities
for household use.
This rule proposes to eliminate the present State plan
requirements, with the exception of the neediness criteria of Section
251.6(a)(1), as mentioned above. Also, as discussed in detail above,
this rule proposes to remove the requirement of Section 251.4(d)(3)
that State agencies develop distribution rates; therefore such rates
will not be included in State plans. The other program requirements
previously mandated to be addressed in State plans would continue to
exist, as they possess an independent regulatory basis, but State
agencies would no longer be required to include proposals for meeting
them in their State plans. State agencies would continue to be required
to comply with the program monitoring provisions contained in Section
251.10(e). They would also be bound by the criteria for allowable uses
of administrative funds contained in Section 251.8(d)(1), redesignated
by this proposed rule as Section 251.8(e)(1), as discussed below, but
would no longer be required to describe the monitoring system or the
formula for allocating administrative funds in the State plan. A
description of the State's contribution toward the matching requirement
contained in Section 251.9(a) would no longer be required. Section
251.9(e), referring to the matching requirement as an element of the
State plan, is therefore proposed to be removed. Of course States must
still meet their matching requirement and report it as required in
Section 251.9(f). Under current regulations, the match is to be
reported on form SF-269, Financial Status Report, which has become
obsolete. Therefore, this rule would remove references to it and
instead refer to form FNS-667, Report of Administrative Costs
throughout Section 251.9(f), which is redesignated as Section 251.9(e)
under this proposed rule. Elimination of the above plan requirements
would reduce the burden associated with the administration of TEFAP at
the State level, while not affecting program accountability.
Formula Adjustments
Section 214(a) of the EFAA mandates the allocation of commodities
purchased with funds appropriated for TEFAP to States through a formula
based 60 percent on the number of persons in the State with incomes
below the poverty line, relative to national figures, and 40 percent on
the average
[[Page 36989]]
monthly number of unemployed persons in the State, again relative to
national figures. Section 204(a)(1) of the EFAA, in turn, mandates that
TEFAP administrative funds be allocated among the States on the same
basis.
Section 251.7 of the regulations implements this legislative
mandate for the allocation of all commodities, including surplus USDA
commodities, made available for distribution through TEFAP. In
accordance with the regulatory provisions, the Department currently
makes adjustments to the allocation formula for each State, based on
updated unemployment statistics. For surplus commodities, adjustment is
to be performed semi-annually, effective January 1 and July 1 of each
fiscal year. For purchased commodities and administrative funds,
adjustments are to be made annually, effective for the entire fiscal
year. In the interest of streamlining program administration, and not
subjecting States to disruptive mid-year formula adjustments, this rule
proposes to revise Section 251.7 to make annual formula adjustments
applicable to all commodities and administrative funds.
Disbursement of Administrative Funds
Disbursement of Funds to States by USDA--Section 251.8(c) provides
for the disbursement of administrative funds to State agencies by means
of U.S. Treasury checks or letters of credit in accordance with FNS
Instruction 407-3 (Grant Award Process). This section currently
requires that U.S. Treasury checks or letters of credit be issued
pursuant to submission of the SF-270, Request for Advance or
Reimbursement, and that State agencies receive funds through a letter
of credit if payments are more than $120,000 for the year. Changes in
financial management procedures and regulations, mainly attributable to
implementation of automated electronic transactions, have rendered
these provisions obsolete. It is now the practice of FNS to make funds
available to States exclusively by means of letters of credit.
Therefore, the above cited references to U.S. Treasury checks and the
$120,000 threshold, would be removed by this proposed rule. FNS
Instruction 407-3 is also obsolete, and in order to prevent part 251
from becoming outdated whenever financial management instructions
change, this reference would be removed and replaced with a general
reference to financial procedures established by FNS. Furthermore, as
the SF-270 is no longer used, this rule would remove reference to it.
Disbursement of funds to ERAs by States--In the two-tiered priority
system discussed in this preamble, not every ERA qualifies as an EFO.
Under this system, State agencies and ERAs to which authority has been
delegated would be required to ensure that the USDA commodity needs of
all first-tier organizations, i.e., EFOs, are met before food is made
available to a second-tier ERA. A similar situation exists with respect
to documenting compliance with the requirement contained in Section
204(a)(2) of the EFAA that each State agency make available to EFOs not
less than 40 percent of the State's share of TEFAP administrative
funding. Although State agencies may disburse administrative funds to
second-tier ERAs, such funds cannot be counted toward meeting the 40
percent pass-through requirement. This rule proposes to amend Section
251.9 to expressly prohibit State agencies from counting any funds
provided by the State agency directly to ERAs that are not EFOs, or
used by the State to pay costs on such ERAs' behalf, toward the 40
percent pass-through requirement. However, in instances in which State
agencies have agreements with EFO intermediaries such as food banks,
which, in turn, may share administrative funds with other EFOs as well
as second-tier ERAs, requiring State agencies to account for the
disposition of administrative funding to EFOs and second-tier ERAs by
the organizations with which they have agreements would create undue
expense and administrative complexity to protect against an unlikely
event, i.e., that EFOs might receive less than 40 percent of the
State's grant. Recent history has shown that administrative funding
will probably not be sufficient to serve very many second-tier ERAs. In
addition, most State agencies currently pass through to EFOs
considerably more than 40 percent of their administrative funds, making
it extremely unlikely that a State agency would fall below the minimum
threshold. Therefore, this rule proposes to amend Section 251.8 to
clarify that, if a State agency passes down to EFOs with which it has
an agreement, or expends on behalf of such organizations, at least 40
percent of its administrative grant, the State agency will be deemed to
have met its pass-through requirement. State agencies would not be
required to account for how these organizations further distribute
administrative funding in order to meet their pass-through requirement.
For example, if a State passes administrative funds down to, or expends
such funds on behalf of, a food bank with which it has an agreement,
and which is an EFO, those funds can be counted toward the pass-through
requirement. The State need not examine the food bank's records for the
purpose of determining if the food bank passed any of the funds on to
an organization which is not an EFO. All ERAs would, of course, be
subject to audit and are accountable for their use of funds for
necessary, reasonable, and allowable costs.
As discussed in detail below, the provisions of Welfare Reform
permit State and local agencies to use TEFAP administrative funds for a
much broader array of costs associated with the distribution of USDA
and non-USDA commodities. This will, of course, intensify competing
demands for funds, and require that additional priorities be set. The
Department believes that TEFAP administrative funds should be available
to leverage the supply of food to the needy, from whatever the source.
However, the Department also expects that those funds should be
available first to distribute the supply of TEFAP commodities. Only
after this need has been fully met should TEFAP administrative funds be
used to distribute non-USDA commodities. However, it would be
impractical to apportion administrative funds within an organization on
the basis of the proportion of USDA and non-USDA commodities it
handles, in an attempt to ensure that administrative expenses
associated with USDA commodities are covered before funds are used for
the distribution of non-USDA commodities. Therefore, this rule proposes
to amend Section 251.8(d) to provide only that State agencies and ERAs
distributing administrative funds shall ensure that the administrative
funding needs of ERAs which receive USDA commodities are met, relative
to both USDA commodities and any non-USDA commodities they may receive,
before such funding is made available to ERAs which distribute only
non-USDA commodities.
Allowable Administrative Costs
Indirect Costs--Over the years, many questions have been raised
about whether indirect costs may be charged against TEFAP
administrative grants. The definition of ``storage and distribution
costs'' in the initial TEFAP regulations issued on April 26, 1983 (48
FR 19004) limited allowable storage and distribution costs to ``direct
costs.'' Subsequent revisions of the TEFAP regulations retained this
limitation, currently found in Section 251.8(d)(1)(i). However, section
204(a)(2) of the EFAA requires States to make available not less than
40 percent of their grants as necessary to meet the ``direct expenses''
of EFOs. This term is
[[Page 36990]]
defined as including ``transporting, storing, handling, repackaging,
processing, and distributing commodities * * * costs associated with
determinations of eligibility, verification, and documentation; costs
of providing information to persons receiving commodities * * *
concerning the appropriate storage and preparation of such commodities;
and costs of recordkeeping, auditing, and other administrative
procedures required for participation in the program under this Act.''
Direct ``expenses'' does not have the same meaning as direct
``costs.'' In fact, many of the items identified in EFAA Section
204(a)(2) as ``direct expenses'' could be charged as either direct or
indirect costs depending on the EFO's accounting system (e.g.,
recordkeeping and auditing costs). To ensure consistency in the
treatment of these expenses, this rule would amend Section 251.8 to
define ``direct expenses'' to include both direct and indirect costs
attributable to TEFAP.
Non-USDA Commodities--Prior to Welfare Reform, States and EFOs were
permitted by Section 203D(b) of the EFAA to use TEFAP administrative
funds to pay costs associated with the storing, handling, and
distributing of non-USDA commodities. In addition, Section 204(a)(2) of
the EFAA permitted EFOs to pay costs associated with the repackaging
and processing of USDA commodities, as well as the costs of
transporting, storing, handling and distributing such commodities.
Welfare Reform amended Section 204(a)(1) of the EFAA to expand the
allowable uses of TEFAP administrative funds to permit States to use
such funds to pay costs associated with the processing of both TEFAP
commodities and commodities secured from other sources. However, no
corresponding change was made to Section 204(a)(2). Nevertheless, upon
further review of the legislative changes made to the EFAA as a result
of Welfare Reform, it has been noted that removing the distinction
between TEFAP commodities and commodities secured from other sources in
Section 204(a)(1) affected Section 204(a)(2) as well. As a result of
this amendment, both States and ERAs may use TEFAP funds to pay costs
associated with the processing, as well as the transporting, storing,
handling, repackaging, and distributing of USDA and non-USDA
commodities. This rule proposes to revise Section 251.8(e)(1)(i) to
reflect the authority of the State agencies and ERAs to use TEFAP
administrative funds to pay such costs.
Interstate Costs--TEFAP regulations have consistently limited
``storage and distribution costs'' to intrastate costs at both the
State and local level. This limitation was based on the language
contained in Section 204(a)(2) of the EFAA which limits allowable EFO
costs of transporting, storing, handling, repackaging, processing and
distributing both USDA and non-USDA commodities to those costs incurred
``after [the commodities] are received by the organization.'' However,
this restriction fails to recognize the increasing instances of
interstate costs associated with the distribution of non-USDA
commodities. The HPA first provided for the use of TEFAP administrative
funds to pay costs associated with the distribution of non-USDA
commodities by ERAs in 1988. Section 871(c) of Welfare Reform extended
the authority to use TEFAP administrative funds for this purpose to
States. These legislative changes have caused the Department to re-
evaluate the prohibition on interstate costs. It has been determined
that the phrase ``incurred after they are received by the
organization'' does not necessarily mean that the ERA must have
physical possession of the commodities. Once a particular commodity has
been earmarked for a particular agency and has become its
responsibility, the proposal would permit TEFAP funds to be used to pay
any associated allowable cost. For example, if a farmer in another
State makes potatoes available to an organization for gleaning, TEFAP
funds could be used to pay the cost of transporting, processing and
storing those potatoes. Therefore, this rule also proposes to amend
Section 251.8(e)(1)(i) to allow interstate expenditures by both State
and local agencies, with the restriction that for such expenditures to
be allowable, the commodities in question must have been earmarked for
the particular local agency and become its responsibility.
While the EFAA gives a more exhaustive list of the types of EFO
costs that may be counted toward the 40 percent pass-through
requirement, the Department considers these costs to be a subset of the
full range of costs for which a State and other types of ERAs may use
TEFAP funds. Included are typical ``local'' costs such as those
associated with determinations of eligibility, verification, and
documentation, costs of providing information to persons receiving
commodities concerning the appropriate storage and preparation of such
commodities, and costs of recordkeeping, auditing, and other
administrative procedures required for participation in the program, as
they are considered legitimate costs associated with program
administration. Therefore, this rule proposes to revise Section
251.8(e)(1) to provide one list of the types of allowable costs for
which TEFAP administrative funds can be used at either the State or
local level.
This rule also proposes to amend Section 251.8(e)(2) to address
those instances in which State agencies limit the use of TEFAP
administrative funds to pay specific types of expenses. In most
instances, there is not a sufficient amount of TEFAP administrative
funds to pay all allowable local level costs. Therefore, some State
agencies choose to limit the use of such funds to ensure that funds are
utilized in a manner that results in TEFAP commodities being made
available to the greatest number of needy possible. As discussed above,
if the State agency chooses to limit the use of TEFAP administrative
funds, the specific types of expenses for which funds can be used by
ERAs must be identified in the agreement or other written documents
incorporated by reference in the agreement.
The accompanying chart has been included in this preamble to assist
readers in understanding the changes to the allowable administrative
cost categories of Section 251.8 set forth in this proposed rule.
BILLING CODE 3410-30-U
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[GRAPHIC] [TIFF OMITTED] TP08JY99.005
BILLING CODE 3410-30-C
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Recordkeeping and Reporting Requirements
Section 251.10(a)(5) currently requires EFOs to retain all records
for a period of 3 years from the close of the Federal Fiscal Year to
which they pertain. This rule proposes to amend Section 251.10(a)(5),
which is redesignated under this proposed rule as Section 251.10(a)(4),
to require records to be kept by the ERA, or the State agency on behalf
of the ERA, as long as such records are reasonably accessible at all
times for purposes of management evaluation reviews, audits or
investigations. This change would serve to clearly state the commonly
accepted rule that once records become the subject of an audit or
investigation, any time limits otherwise permitting their disposal are
suspended until the audit or investigation is concluded. The second
advantage would be greater flexibility in custodial arrangements for
records, e.g., a mass distribution site may not have appropriate record
storage space and may wish to ship its records to the State for
safekeeping. This provision would be further amended to require records
to be kept longer than 3 years if related to an audit or investigation
in progress.
Section 251.10(a)(3) of the regulations currently requires each
TEFAP distribution site to keep records showing the data and method
used to determine the number of eligible households served at that
site. Section 251.10(d)(2) of the regulations in turn currently
requires States to report, on form FNS-155, the total number of
households served in the State under TEFAP. Now that TEFAP and SK/FB
have been consolidated, a significant proportion of TEFAP commodities
are used for prepared meals. The Department does not intend to require
that sites which serve prepared meals report the number of meals
served, as in many instances, some meals would not contain TEFAP
commodities, and in many other situations, such commodities might
comprise a small part of meals. In addition, such a requirement would
impose an unreasonable burden on sites which provide prepared meals.
Therefore, information relative only to the number of households served
through TEFAP is of little value to the Department since it bears no
relationship to the total number of needy receiving assistance through
TEFAP, and does not account for the disposition of all TEFAP
commodities. The Final Rule, ``Food Distribution Programs-Reduction of
the Paperwork Burden,'' published at 62 FR 53727, amended Section
250.17(a) to allow the Department to establish the frequency of
submission of form FNS-155 and, by implication, the information
reported on the form, to conform to program needs. FNS Regional Offices
were notified by means of TEFAP Policy Memorandum No. 12-TEFAP
Household Participation Data, dated December 23, 1997, that the
Department was exercising this authority to eliminate reporting of
household data in TEFAP, and that current regulations would be amended
to reflect this change. Therefore, this rule proposes to remove Section
251.10(a)(3), as it is oriented toward reporting the number of
households served, and to revise Section 251.10(d)(2) to eliminate the
requirement that State agencies report the total number of households
served. Since it remains necessary, for purposes of accountability, to
maintain information specific to each household certified for
participation in the program, the requirements contained in Section
251.10(a)(4) are retained in this proposed rule, and redesignated as
Section 251.10(a)(3).
Monitoring Requirements
Section 251.10(e)(2)(i) of current regulations requires State
agencies to conduct on-site reviews of each participating organization
with which the State has an agreement (i.e., EFO as defined by current
regulations) at least once every four years, with at least 25 percent
of the total number of such institutions reviewed each year. As
discussed above, this rulemaking proposes to change the definition of
EFO so that it corresponds to the legislative definition. Therefore,
this rule proposes to replace the reference to EFO in Section
251.10(e)(2)(i) with ``eligible recipient agency with which the State
agency has executed an agreement.'' However, the applicability of the
requirement remains unchanged in this proposed rule.
Section 251.10(e)(2)(ii) of current regulations requires that the
State agency annually review one-third or 50, whichever is fewer, of
all distribution sites within the State, to be conducted, to the
maximum extent feasible, simultaneously with actual distribution and/or
eligibility determinations. In selecting distribution sites for review,
Sec. 251.10(e)(3) of current regulations requires the State agency to
rank all the sites according to the number of households participating
during the previous Federal fiscal quarter and select for review the
first 25 sites, or first one-sixth of all sites, whichever is fewer,
which served the greatest number of households.
As indicated above, the 25 percent review requirement is proposed
to apply to all ERAs which have an agreement with the State agency. The
remaining review requirement, in Section 251.10(e)(2)(ii), is proposed
to apply to all other ERAs, that is, to all ERAs which have an
agreement with another ERA rather than the State agency. The Department
proposes to reduce the frequency of this requirement. Thus, instead of
annually reviewing the lesser of one-third or 50 of all distribution
sites, the State agency would be required to review the lesser of one-
tenth or 20 of all ERAs which have an agreement with another ERA. With
the absorption of SK/FB into TEFAP, State agencies must actually expand
their monitoring activities to include ERAs which serve prepared meals,
so the total number of ERAs will increase. However, the value of
available USDA commodities has decreased since the current regulatory
requirement was established many years ago, generally reducing the need
for oversight. As such, State agencies should have the flexibility to
direct limited administrative resources where there is the most need
for program oversight and corrective action. This change would decrease
the burden associated with administration currently imposed on State
agencies while maintaining program accountability.
As indicated above, Section 251.10(e)(3) of current regulations
mandates a system for selecting and ranking distribution sites for
review based on the number of households they serve. As previously
noted, the number of households served is no longer meaningful data
since SK/FB has been merged with TEFAP. In addition, it has been
determined that States should be granted more flexibility in selecting
ERAs for review. Therefore, this rule proposes to remove the current
Section 251.10(e)(3) and to amend Section 251.10(e)(2)(ii) to require
that State agencies develop a system for reviewing ERAs which have
signed an agreement with another ERA for the receipt of TEFAP
commodities and/or administrative funds that ensures deficiencies in
program administration are detected and resolved in an effective and
efficient manner. Examples of criteria States might apply include
actual or probable deficiencies in program administration, such as
weakness in inventory management, that have been identified through
audits, investigations of complaints; deficiencies in, or tardiness of,
reports submitted by ERAs; or the dollar value of the TEFAP commodities
received in
[[Page 36993]]
the previous Federal fiscal quarter. Use of such criteria would yield
systematic selection while at the same time providing State agencies
the flexibility necessary to direct limited administrative resources
where oversight and corrective action are most needed.
FNS Instruction 113-3, ``Civil Rights Compliance and Enforcement--
Food Distribution Programs,'' presently includes an on-site review
requirement of recipient agencies every five years to ensure compliance
with civil rights regulations. In accordance with the change in on-site
review requirements for TEFAP proposed above, the Department plans to
revise this provision of the instruction. The revised instruction would
require that on-site reviews of ERAs to ensure compliance with civil
rights provisions be conducted at the frequency established in Section
251.10(e)(2)(i) and (e)(2)(ii) of this proposed rule.
Section 251.10(e)(6) of current regulations requires that the State
agency submit a report of review findings to each EFO, including a
description of each deficiency found and factors contributing to each,
requirements for corrective actions, and a timetable for completion of
corrective action. The State agency must then monitor the
implementation of corrective actions identified in the report. The
Department has determined that this requirement is too prescriptive.
State agencies should be given more flexibility to determine the manner
in which they will work with ERAs to develop corrective action plans to
remedy deficiencies. Therefore, this rule proposes to redesignate
Section 251.10(e)(6) as Section 251.10(e)(5) and to amend it to require
the State agency to submit a report of review findings to an ERA only
if the review discloses deficiencies in program administration. In
addition, the specific requirements for the report would be removed.
State agencies would, however, continue to be responsible for ensuring
that ERAs take corrective action to eliminate the deficiencies
identified during the review.
Maintenance of Effort
Section 871(d)(5) of Welfare Reform amended Section 214(d) of the
EFAA to allow States greater flexibility in complying with the
maintenance-of-effort requirement by removing the mandate that a State
agency maintain the amount of State funds made available to support
other (non-TEFAP) nutrition programs in the State during each fiscal
year. The prohibition against reducing State funding remains only for
TEFAP itself, i.e., it applies only to State agencies that use their
own funds to provide commodities or services to organizations receiving
federal funds or services under TEFAP. This rule proposes to amend
Section 251.10(h) accordingly.
In recent years, some States have been supporting TEFAP with
significant amounts of their own funds, a development that should be
encouraged. Therefore, the maintenance-of-effort requirement should not
be construed to require that State spending on TEFAP within the State
never fall below the highest level achieved in any year. Such an
interpretation would no doubt cause States to become extremely wary of
increasing their support for TEFAP, for fear that they would be forced,
even if unable, to continue to provide the increased level of
contributions in future years. Therefore, in an effort to encourage
States to contribute additional resources to the extent feasible in any
given year, this rule proposes to amend Section 251.10(h) to define the
``base year'' to be used in determining if States are complying with
the maintenance-of-effort requirement as ``the fiscal year when the
State first began administering TEFAP, or Fiscal Year 1988, which is
the fiscal year in which the maintenance-of-effort requirement became
effective, whichever is later.'' The maintenance-of-effort requirement
is independent of the State matching requirement for TEFAP
administrative funds which States retain for State-level administrative
costs, as set forth in Section 251.9.
National School Lunch Program--State Advisory Councils and Consultation
Requirement
Section 707(b) of Welfare Reform amended Section 14(e) of the NSLA
(42 U.S.C. 1762a(e)) to remove the requirement that State educational
agencies-which typically are not involved with decisions relative to
the commodity program-establish an advisory council for the purpose of
advising the agency on schools' needs relative to the selection and
distribution of commodities. Current regulations at 7 CFR 210.28
require State educational agencies to maintain these advisory councils.
State agencies were informed via the January 14, 1997 policy memorandum
that, effective immediately, State educational agencies need not
maintain the formerly required advisory councils. The elimination of
this requirement from the regulations is being addressed by FNS's Child
Nutrition Division in a separate rulemaking covering the implementation
of Welfare Reform relative to child nutrition programs. States should
not interpret this change in the law as a requirement to disband their
advisory councils. To the extent that they have proved useful, States
may wish to retain them. It should be noted that, as mentioned
previously, Section 871(b) of Welfare Reform amended Section 202A(c) of
the EFAA to require the Secretary to encourage States to establish a
State advisory board comprised of public and private entities with an
interest in the distribution of TEFAP commodities. As noted above, this
rule proposes to revise Section 251.4(h) to include language
encouraging States to establish such an advisory board.
Section 707(b) of Welfare Reform also amended section 14(e) of the
NSLA (42 U.S.C. 1762a(e)) to require that State agencies responsible
for the distribution of commodities consult with representatives of
schools in the State that participate in the National School Lunch
Program when making decisions regarding the selection and distribution
of commodities. Food Distribution Program regulations regarding
commodity acceptability reports and information dissemination (Sections
250.13(k) and 250.24(b) respectively) should prove adequate to fulfill
this consultation requirement, especially given Congress' decision to
eliminate the requirement for advisory councils, and the general need
to reduce the burden of program administration. Therefore this rule
proposes no new regulations in furtherance of this legislative mandate.
The above regulatory provisions do, however, include references
(Sections 250.13(k)(2) and 250.24(b)(4)) to the no-longer-required
advisory councils, which this rule proposes to eliminate.
Alien Provisions
The provisions of Welfare Reform affecting aliens do not require
that States in any way restrict access of aliens to TEFAP. States can
continue serving all categories of aliens they served prior to
enactment of Welfare Reform. While Welfare Reform does not require
discontinuation of benefits to aliens, Section 742 does give States the
option to provide, or not provide, program benefits to any individual
who is not a citizen or a qualified alien. However, prior to making any
changes in program administration based on the alien provisions of
Welfare Reform, States are advised to consult with their legal counsel.
States should also be aware that Section 403(a) of Welfare Reform
imposes a five-year waiting period after
[[Page 36994]]
a qualified alien enters the country before s/he is eligible for any
``Federal means-tested public benefit.'' The Department has determined
that FNS's food distribution programs, including TEFAP, are not subject
to this provision. Therefore the five-year waiting period does not
apply. The Department will publish a separate rulemaking to incorporate
the provisions of Welfare Reform regarding eligibility of aliens for
TEFAP and other food distribution programs.
Technical Amendments
This rule proposes to amend part 251 to remove the obsolete word
``Temporary'' from Section 251.1 and to correct outdated references.
List of Subjects
7 CFR Part 250
Aged, Agricultural commodities, Business and industry, Food
assistance programs, Food donations, Food processing, Grant programs-
social programs, Indians, Infants and children, Commodity loan
programs, Reporting and recordkeeping requirements, School breakfast
and lunch programs, Surplus agricultural commodities.
7 CFR Part 251
Aged, Agricultural commodities, Business and industry, Food
assistance programs, Food donations, Grant programs-social programs,
Indians, Infants and children, Commodity loan programs, Reporting and
recordkeeping requirements, School breakfast and lunch programs,
Surplus agricultural commodities.
Accordingly, 7 CFR parts 250 and 251 are proposed to be amended as
follows:
PART 250--DONATION OF FOODS FOR USE IN THE UNITED STATES, ITS
TERRITORIES AND POSSESSIONS AND AREAS UNDER ITS JURISDICTION
1. The authority citation for part 250 continues to read as
follows:
Authority: 5 U.S.C. 301; 7 U.S.C. 612c, 612c note, 1431, 1431b,
1431e, 1431 note, 1446a-1, 1859, 2014, 2025; 15 U.S.C. 713c; 22
U.S.C. 1922; 42 U.S.C. 1751, 1755, 1758, 1760, 1761, 1762a, 1766,
3030a, 5179, 5180.
Sec. 250.3 [Amended]
2. In Section 250.3, the definitions of Food bank and Soup kitchen
are removed.
Sec. 250.13 [Amended]
3. In Sec. 250.13:
a. Paragraph (a)(1)(iv) is amended by removing the words
``emergency feeding organizations'' wherever they appear and adding the
words ``eligible recipient agencies'' in their place.
b. The last sentence of paragraph (k)(2) is amended by removing the
words ``, including, for example, State Food Distribution Advisory
Council Reports''.
Sec. 250.24 [Amended]
4. In Sec. 250.24, paragraph (b)(4) is removed, and paragraphs
(b)(5) and (b)(6) are redesignated as paragraphs (b)(4) and (b)(5),
respectively.
Sec. 250.41 [Amended]
5. In Sec. 250.41, the first sentence of paragraph (a)(1) is
amended by removing the words ``With the exception of section 110
commodities, which are to be distributed in accordance with the
provisions of Sec. 250.52, the'' and adding in their place ``The''.
Sec. 250.52 [Removed]
6. Section 250.52 is removed.
PART 251--THE EMERGENCY FOOD ASSISTANCE PROGRAM
1. The authority citation for part 251 continues to read as
follows:
Authority: 7 U.S.C. 7501-7516.
Sec. 251.1 [Amended]
2. In Sec. 251.1, the word ``Temporary'' is removed.
3. In Sec. 251.2:
a. Paragraph (a) is amended by adding the heading ``Food and
Nutrition Service.'';
b. Paragraph (b) is amended by adding the heading ``State
Agencies.'', by removing the words ``emergency feeding organizations''
and by adding the words ``eligible recipient agencies'' in their place;
c. Paragraph (c) is revised; and
d. Paragraph (d) is added.
The revision and addition read as follows:
Sec. 251.2 Administration.
* * * * *
(c) Agreements. (1) Agreements between Department and States. Each
State agency that distributes donated foods to eligible recipient
agencies or receives payments for storage and distribution costs in
accordance with Sec. 251.8 must perform those functions pursuant to an
agreement entered into with the Department. This agreement will be
considered permanent, with amendments initiated by State agencies, or
submitted by them at the Department's request, all of which will be
subject to approval by the Department.
(2) Agreements between State agencies and eligible recipient
agencies, and between eligible recipient agencies. Prior to making
donated foods or administrative funds available, State agencies must
enter into a written agreement with eligible recipient agencies to
which they plan to distribute donated foods and/or administrative
funds. State agencies must ensure that eligible recipient agencies in
turn enter into a written agreement with any eligible recipient
agencies to which they plan to distribute donated foods and/or
administrative funds before donated foods or administrative funds are
transferred between any two eligible recipient agencies. All agreements
entered into must contain the information specified in paragraph (d) of
this section, and be considered permanent, with amendments to be made
as necessary, except that agreements must specify that they may be
terminated by either party upon 30 days' written notice. State agencies
must ensure that eligible recipient agencies provide, on a timely
basis, by amendment to the agreement, or other written documents
incorporated into the agreement by reference if permitted under
paragraph (d) of this section, any information on changes in program
administration, including any changes resulting from amendments to
Federal regulations or policy.
(d) Contents of agreements between State agencies and eligible
recipient agencies and between eligible recipient agencies. (1)
Agreements between State agencies and eligible recipient agencies and
between eligible recipient agencies must provide:
(i) That eligible recipient agencies agree to operate the program
in accordance with the requirements of this part, and, as applicable,
part 250 of this chapter; and
(ii) The name and address of the eligible recipient agency
receiving commodities and/or administrative funds under the agreement;
and
(iii) The name of the person responsible for administering the
program in the receiving eligible recipient agency.
(2) The following information must also be identified, either in
the agreement or other written documents incorporated by reference in
the agreement:
(i) If the State agency delegates the responsibility for any aspect
of the program to an eligible recipient agency, each function for which
the eligible recipient agency will be held responsible; except that in
no case may State agencies delegate responsibility for establishing
eligibility criteria for organizations in accordance with
[[Page 36995]]
Sec. 251.5(a), establishing eligibility criteria for recipients in
accordance with Sec. 251.5(b), or conducting reviews of eligible
recipient agencies in accordance with Sec. 251.10(e);
(ii) If the receiving eligible recipient agency is to be allowed to
further distribute TEFAP commodities and/or administrative funds to
other eligible recipient agencies, the specific terms and conditions
for doing so, including, if applicable, a list of specific
organizations or types of organizations eligible to receive commodities
or administrative funds;
(iii) If the use of administrative funds is restricted to certain
types of expenses pursuant to Sec. 251.8(e)(2), the specific types of
administrative expenses eligible recipient agencies are permitted to
incur;
(iv) Any other conditions set forth by the State agency.
4. Section 251.3 is revised to read as follows:
Sec. 251.3 Definitions.
(a) The terms used in this part that are defined in part 250 of
this chapter have the meanings ascribed to them therein, unless a
different meaning for such a term is defined herein.
(b) Charitable institution (which is defined differently in this
part than in part 250 of this chapter) means an organization which--
(1) Is public, or
(2) Is private, possessing tax exempt status pursuant to
Sec. 251.5(a)(3); and
(3) Is not a penal institution (this exclusion also applies to
correctional institutions which conduct rehabilitation programs); and
(4) Provides food assistance to needy persons.
(c) Distribution site means a location where the eligible recipient
agency actually distributes commodities to needy persons for household
consumption or serves prepared meals to needy persons under this part.
(d) Eligible recipient agency means an organization which--
(1) Is public, or
(2) Is private, possessing tax exempt status pursuant to
Sec. 251.5(a)(3); and
(3) Is not a penal institution; and
(4) Provides food assistance--
(i) Exclusively to needy persons for household consumption,
pursuant to a means test established pursuant to Sec. 251.5(b), or
(ii) Predominantly to needy persons in the form of prepared meals
pursuant to Sec. 251.5(a)(2); and
(5) Has entered into an agreement with the designated State agency
pursuant to Sec. 251.2(c) for the receipt of commodities or
administrative funds, or receives commodities or administrative funds
under an agreement with another eligible recipient agency which has
signed such an agreement with the State agency or another eligible
recipient agency within the State pursuant to Sec. 251.2(c); and
(6) Falls into one of the following categories:
(i) Emergency feeding organizations (including food banks, food
pantries and soup kitchens);
(ii) Charitable institutions (including hospitals and retirement
homes);
(iii) Summer camps for children, or child nutrition programs
providing food service;
(iv) Nutrition projects operating under the Older Americans Act of
1965 (Nutrition Program for the Elderly), including projects that
operate congregate nutrition sites and projects that provide home-
delivered meals; and
(v) Disaster relief programs.
(e) Emergency feeding organization means an eligible recipient
agency which provides nutrition assistance to relieve situations of
emergency and distress through the provision of food to needy persons,
including low-income and unemployed persons. Emergency feeding
organizations have priority over other eligible recipient agencies in
the distribution of TEFAP commodities pursuant to Sec. 251.4(h).
(f) Food bank means a public or charitable institution that
maintains an established operation involving the provision of food or
edible commodities, or the products of food or edible commodities, to
food pantries, soup kitchens, hunger relief centers, or other food or
feeding centers that, as an integral part of their normal activities,
provide meals or food to feed needy persons on a regular basis.
(g) Food pantry means a public or private nonprofit organization
that distributes food to low-income and unemployed households,
including food from sources other than the Department of Agriculture,
to relieve situations of emergency and distress.
(h) Formula means the formula used by the Department to allocate
among States the commodities and funding available under this part. The
amount of such commodities and funds to be provided to each State will
be based on each State's population of low-income and unemployed
persons, as compared to national statistics. Each State's share of
commodities and funds shall be based 60 percent on the number of
persons in households within the State having incomes below the poverty
level and 40 percent on the number of unemployed persons within the
State. The surplus commodities will be allocated to States on the basis
of their weight (pounds), and the commodities purchased under section
214 of the Emergency Food Assistance Act of 1983 will be allocated on
the basis of their value (dollars). In instances in which a State
determines that it will not accept the full amount of its allocation of
commodities purchased under section 214 of the Emergency Food
Assistance Act of 1983, the Department will reallocate the commodities
to other States on the basis of the same formula used for the initial
allocation.
(i) State agency means the State government unit designated by the
Governor or other appropriate State executive authority which has
entered into an agreement with the United States Department of
Agriculture under Sec. 251.2(c).
(j) Soup kitchen means a public or charitable institution that, as
an integral part of the normal activities of the institution, maintains
an established feeding operation to provide food to needy homeless
persons on a regular basis.
(k) Value of commodities distributed means the Department's cost of
acquiring commodities for distribution under this part.
5. In Sec. 251.4:
a. The words ``emergency feeding organization'', ``emergency
feeding organizations'' and ``emergency feeding organization's'' are
removed wherever they appear in the section, and the words ``eligible
recipient agency'', ``eligible recipient agencies'' and ``eligible
recipient agency's'' respectively are added in their place;
b. Paragraph (c)(1) is amended by removing the reference to
``Sec. 251.3(d)''and adding a reference to ``Sec. 251.3(h)'' in its
place;
c. Paragraph (d)(3) is removed;
d. Paragraph (f)(5) is amended by removing the reference
``Sec. 250.15'' and adding in its place the reference ``Sec. 250.30'';
e. Paragraphs (g) and (h) are revised;
f. Paragraph (j) is amended by adding the words ``that has signed
an agreement with the respective State agencies'' after the words
``eligible recipient agency'';
The revisions read as follows:
Sec. 251.4 Availability of commodities.
* * * * *
(g) Availability and control of donated commodities. Donated
commodities will be made available to State agencies only for
distribution and use in accordance with this part. Except as otherwise
provided in paragraph (f) of this section, donated commodities not so
distributed or used for any reason may not be sold, exchanged, or
otherwise disposed of
[[Page 36996]]
without the approval of the Department. However, donated commodities
made available under section 32 of Pub. L. 74-320 (7 U.S.C. 612c) may
be transferred by eligible recipient agencies receiving commodities
under this part, or recipient agencies, as defined in Sec. 250.3 of
this chapter, to any other eligible recipient agency or recipient
agency which agrees to use such donated foods to provide without cost
or waste, nutrition assistance to individuals in low-income groups.
Such transfers will be effected only with prior authorization by the
appropriate State agency and must be documented. Such documentation
shall be maintained in accordance with Sec. 251.10(a) of this part and
Sec. 250.16 of this chapter by the distributing agency and the State
agency responsible for administering TEFAP and made available for
review upon request.
(h) Distribution to eligible recipient agencies-priority system and
advisory boards.--(1) State agencies must distribute commodities made
available under this part to eligible recipient agencies in accordance
with the following priorities:
(i) First priority. When a State agency cannot meet all eligible
recipient agencies' requests for TEFAP commodities, the State agency
must give priority in the distribution of such commodities to emergency
feeding organizations as defined under Sec. 251.3(e). A State agency
may, at its discretion, concentrate commodity resources upon a certain
type or types of such organizations, to the exclusion of others.
(ii) Second priority. After a State agency has distributed TEFAP
commodities sufficient to meet the needs of all emergency feeding
organizations, the State agency must distribute any remaining program
commodities to other eligible recipient agencies which serve needy
people, but do not relieve situations of emergency and distress. A
State agency may, at its discretion, concentrate commodity resources
upon a certain type or types of such organizations, to the exclusion of
others.
(2) Delegation. When a State agency has delegated to an eligible
recipient agency the authority to select other eligible recipient
agencies, the eligible recipient agency exercising this authority must
ensure that any TEFAP commodities are distributed in accordance with
the priority system set forth in paragraphs (h)(1)(i) and (h)(1)(ii) of
this section. State agencies and eligible recipient agencies will be
deemed to be in compliance with the priority system when eligible
recipient agencies distribute TEFAP commodities to meet the needs of
all emergency feeding organizations under their jurisdiction prior to
making commodities available to eligible recipient agencies which are
not emergency feeding organizations.
(3) Existing networks. Subject to the constraints of paragraphs
(h)(1)(i) and (h)(1)(ii) of this section, State agencies may give
priority in the distribution of TEFAP commodities to existing food bank
networks and other organizations whose ongoing primary function is to
facilitate the distribution of food to low-income households, including
food from sources other than the Department.
(4) State advisory boards. Each State agency receiving TEFAP
commodities is encouraged to establish a State advisory board
representing all types of entities in the State, both public and
private, interested in the distribution of such commodities. Such
advisory boards can provide valuable advice on how resources should be
allocated among various eligible outlet types, what areas have the
greatest need for food assistance, and other important issues that will
help States to use their program resources in the most efficient and
effective manner possible. A State agency may expend TEFAP
administrative funds to support the activities of an advisory board in
accordance with Sec. 251.8 of this part.
* * * * *
6. Section 251.5 is revised to read as follows:
Sec. 251.5 Eligibility determinations.
(a) Criteria for determining eligibility of organizations. Prior to
making commodities available, State agencies or eligible recipient
agencies to which the State agency has delegated responsibility for the
distribution of TEFAP commodities, must ensure that an organization
applying for participation in the program meets the definition of an
``eligible recipient agency'' under Sec. 251.3(d). In addition,
applicant organizations must meet the following criteria:
(1) Agencies distributing to households. Organizations distributing
commodities to households for home consumption must limit the
distribution of commodities provided under this part to those
households which meet the eligibility criteria established by the State
agency in accordance with paragraph (b) of this section.
(2) Agencies providing prepared meals. Organizations providing
prepared meals must demonstrate, to the satisfaction of the State
agency or eligible recipient agency to which they have applied for the
receipt of commodities, that they serve predominantly needy persons.
State agencies may establish a higher standard than ``predominantly''
and may determine whether organizations meet the applicable standard by
considering socioeconomic data of the area in which the organization is
located, or from which it draws its clientele. State agencies may not,
however, require organizations to employ a means test to determine that
recipients are needy, or to keep records solely for the purpose of
demonstrating that its recipients are needy.
(3) Tax-exempt status. Private organizations must--
(i) Be currently operating another Federal program requiring tax-
exempt status under the Internal Revenue Code (IRC), or
(ii) Possess documentation from the Internal Revenue Service (IRS)
recognizing tax-exempt status under the IRC, or
(iii) If not in possession of such documentation, be automatically
tax exempt as ``organized or operated exclusively for religious
purposes'' under the IRC, or
(iv) If not in possession of such documentation, but required to
file an application under the IRC to obtain tax-exempt status, have
made application for recognition of such status and be moving toward
compliance with the requirements for recognition of tax-exempt status.
If the IRS denies a participating organization's application for
recognition of tax-exempt status, the organization must immediately
notify the State agency or the eligible recipient agency, whichever is
appropriate, of such denial, and that agency will terminate the
organization's agreement and participation immediately upon receipt of
such notification. If documentation of IRS recognition of tax-exempt
status has not been obtained and forwarded to the appropriate agency
within 180 days of the effective date of the organization's approval
for participation in TEFAP, the State agency or eligible recipient
agency must terminate the organization's participation until such time
as recognition of tax-exempt status is actually obtained, except that
the State agency or eligible recipient agency may grant a single
extension of not to exceed 90 days if the organization can demonstrate,
to the State agency's or eligible recipient agency's satisfaction, that
its inability to obtain tax-exempt status within the 180 day period is
due to circumstances beyond its control. It is the responsibility of
the organization to document that it has complied with all IRS
requirements and has provided all
[[Page 36997]]
information requested by IRS in a timely manner.
(b) Criteria for determining recipient eligibility. Each State
agency must establish uniform Statewide criteria for determining the
eligibility of households to receive commodities provided under this
part for home consumption. The criteria must:
(1) Enable the State agency to ensure that only households which
are in need of food assistance because of inadequate household income
receive TEFAP commodities;
(2) Include income-based standards and the methods by which
households may demonstrate eligibility under such standards; and
(3) Include a requirement that the household reside in the
geographic location served by the State agency at the time of applying
for assistance, but length of residency shall not be used as an
eligibility criterion.
(c) Delegation of authority. A State agency may delegate to one or
more eligible recipient agencies with which the State agency enters
into an agreement the responsibility for the distribution of
commodities and administrative funds made available under this part.
State agencies may also delegate the authority for selecting eligible
recipient agencies and for determining the eligibility of such
organizations to receive commodities and administrative funds. However,
responsibility for establishing eligibility criteria for organizations
in accordance with paragraph (a) of this section, and for establishing
recipient eligibility criteria in accordance with paragraph (b) of this
section, may not be delegated. In instances in which State agencies
delegate authority to eligible recipient agencies to determine the
eligibility of organizations to receive commodities and administrative
funds, eligibility must be determined in accordance with the provisions
contained in this part and the State plan. State agencies will remain
responsible for ensuring that commodities and administrative funds are
distributed in accordance with the provisions contained in this part.
7. Section 251.6 is revised to read as follows:
Sec. 251.6 Distribution plan.
(a) Contents of the plan. The State agency must submit for approval
by the appropriate FNS Regional Office a plan which contains:
(1) A designation of the State agency responsible for distributing
commodities and administrative funds provided under this part, the
address of such agency, and the name of the agency official entrusted
with binding signature authority;
(2) A plan of operation and administration to expeditiously
distribute commodities received under this part;
(3) A description of the standards of eligibility for recipient
agencies, including any subpriorities within the two-tier priority
system; and
(4) A description of the criteria established in accordance with
Sec. 251.5(b) which must be used by eligible recipient agencies in
determining the eligibility of households to receive TEFAP commodities
for home consumption.
(b) Plan submission. A complete plan will be required for Fiscal
Year 2001, to be submitted no later than August 15, 2000. Thereafter, a
complete plan must be submitted every 4 years, due no later than August
15 of the fiscal year prior to the end of the 4 year cycle.
(c) Amendments. State agencies must submit amendments to the
distribution plan to the extent that such amendments are necessary to
reflect any changes in program operations or administration as
described in the plan, or at the request of FNS, to the appropriate FNS
Regional Office.
8. Section 251.7 is revised to read as follows:
Sec. 251.7 Formula adjustments.
(a) Commodity adjustments. The Department will make annual
adjustments to the commodity allocation for each State, based on
updated unemployment statistics. These adjusted allocations will be
effective for the entire fiscal year, subject to reallocation or
transfer in accordance with this part.
(b) Funds adjustments. The Department will make annual adjustments
of the funds allocation for each State based on updated unemployment
statistics. These adjusted allocations will be effective for the entire
fiscal year unless funds are recovered, withheld, or reallocated by FNS
in accordance with Sec. 251.8(f).
9. In Sec. 251.8:
a. Paragraph (a) is amended by removing the reference
``Sec. 251.3(d)'' and adding in its place the reference
``Sec. 251.3(h)'';
b. Paragraph (b) is amended by removing the reference ``part 3015''
and adding in its place the reference ``part 3016 or part 3019, as
applicable.'';
c. Paragraph (c)(1) is amended by removing the words ``U.S.
Treasury Department checks or'';
d. Paragraph (c)(2) is amended by:
1. removing the words ``FNS Instruction 407-3 (Grant Award
Process)'' and adding in their place the words ``procedures established
by FNS'';
2. removing from the first sentence the words ``either'' and ``or a
U.S. Treasury check pursuant to submission of the SF-270, Request for
Advance or Reimbursement'';
3. removing the second sentence; and
4. removing reference to ``Sec. 251.8(e)'' and in its place adding
reference to ``Sec. 251.8(f)'';
e. Paragraphs (d) and (e) are redesignated as paragraphs (e) and
(f), and new paragraph (d) is added; and
f. Newly redesignated paragraph (e) is revised.
The addition and revision read as follows:
Sec. 251.8 Payment of funds for administrative costs.
* * * * *
(d) Priority for eligible recipient agencies distributing USDA
commodities. State agencies and eligible recipient agencies
distributing administrative funds must ensure that the administrative
funding needs of eligible recipient agencies which receive USDA
commodities are met, relative to both USDA commodities and any non-USDA
commodities they may receive, before such funding is made available to
organizations which distribute only non-USDA commodities.
(e) Use of funds. (1) Allowable administrative costs. State
agencies and eligible recipient agencies may use funds made available
under this part to pay the direct expenses associated with the
distribution of USDA commodities and commodities secured from other
sources to the extent that the commodities are ultimately distributed
by eligible recipient agencies which have entered into agreements in
accordance with Sec. 251.2. Direct expenses include the following,
regardless of whether they are charged to TEFAP as direct or indirect
costs:
(i) The intrastate and interstate transport, storing, handling,
repackaging, processing, and distribution of commodities; except that
for interstate expenditures to be allowable, the commodities must have
been specifically earmarked for the particular State or eligible
recipient agency which incurs the cost;
(ii) Costs associated with determinations of eligibility,
verification, and documentation;
(iii) Costs of providing information to persons receiving USDA
commodities concerning the appropriate storage and preparation of such
commodities;
(iv) Costs involved in publishing announcements of times and
locations of distribution; and
[[Page 36998]]
(v) Costs of recordkeeping, auditing, and other administrative
procedures required for program participation.
(2) State restriction of administrative costs. A State agency may
restrict the use of TEFAP administrative funds by eligible recipient
agencies by disallowing one or more types of expenses expressly allowed
in paragraph (e)(1) of this section. If a State agency so restricts the
use of administrative funds, the specific types of expenses the State
will allow eligible recipient agencies to incur must be identified in
the State agency's agreements with its eligible recipient agencies, or
set forth by other written notification, incorporated into such
agreements by reference.
(3) Agreements. In order to be eligible for funds under paragraph
(e)(1) of this section, eligible recipient agencies must have entered
into an agreement with the State agency or another eligible recipient
agency pursuant to Sec. 251.2(c).
(4) Pass-through requirement-local support to emergency feeding
organizations. (i) Not less than 40 percent of the Federal Emergency
Food Assistance Program administrative funds allocated to the State
agency in accordance with paragraph (a) of this section must be:
(A) Provided by the State agency to emergency feeding organizations
that have signed an agreement with the State agency as either
reimbursement or advance payment for administrative costs incurred by
emergency feeding organizations in accordance with paragraph (e)(1) of
this section, except that such emergency feeding organizations may
retain advance payments only to the extent that they actually incur
such costs; or
(B) Directly expended by the State agency to cover administrative
costs incurred by, or on behalf of, emergency feeding organizations in
accordance with paragraph (e)(1) of this section.
(ii) Any funds allocated to or expended by the State agency to
cover costs incurred by eligible recipient agencies which are not
emergency feeding organizations shall not count toward meeting the
pass-through requirement.
(iii) State agencies must not charge for commodities made available
under this part to eligible recipient agencies.
* * * * *
10. In Sec. 251.9:
a. The words ``emergency feeding organization'' and ``emergency
feeding organizations'' are removed wherever they appear in the
section, and added in their place are the words ``eligible recipient
agency'' and ``eligible recipient agencies'' respectively;
b. Paragraph (a) is revised;
c. In paragraph (c) introductory text, the reference
``3016.24(b)(1)'' is removed, and in paragraph (c)(2)(i) the reference
``3016.24(c) through 3016.24(f)'' is removed, and the reference ``part
3016 or 3019, as applicable'' is added in both places.
d. Paragraph (e) is removed, and paragraphs (f) and (g) are
redesignated as paragraphs (e) and (f), respectively;
e. Newly redesignated paragraph (e) is amended by removing the
words ``SF-269, Financial Status Report,'' and adding the words ``FNS-
667, Report of TEFAP Administrative Costs,'' in their place.
f. Newly redesignated paragraph (f) is amended by removing the
reference ``SF-269'' wherever it appears and adding the reference
``FNS-667'' in its place.
The revision reads as follows:
Sec. 251.9 Matching of funds.
(a) State matching requirement. The State must provide a cash or
in-kind contribution equal to the amount of TEFAP administrative funds
received under Sec. 251.8 and retained by the State agency for State-
level costs or made available by the State agency directly to eligible
recipient agencies that are not emergency feeding organizations as
defined in Sec. 251.3(e). The State agency will not be required to
match any portion of the Federal grant passed through for
administrative costs incurred by emergency feeding organizations or
directly expended by the State agency for such costs in accordance with
Sec. 251.8(e)(4) of this part.
* * * * *
11. In Sec. 251.10:
a. Paragraph (a) is revised;
b. Paragraph (b) is amended by adding the words ``commodities
distributed for home consumption and meals prepared from'' after the
word ``law,'';
c. Paragraph (c) is amended by adding the words ``for home
consumption or availability of meals prepared from commodities'' after
the word ``foods''.
d. Paragraphs (d) and (e) are revised;
e. Paragraph (f) is amended by:
1. removing the words ``emergency feeding organizations and
distribution sites'', ``emergency feeding organization or distribution
site'' and ``emergency feeding organization's or distribution site's''
wherever they appear, and adding in their place the words ``eligible
recipient agencies'', ``eligible recipient agency'' and ``eligible
recipient agency's'' respectively;
2. adding the words ``or meal service'' after the word ``foods'' in
paragraph (f)(1) introductory text;
3. adding the words ``for home consumption or prepared meals
containing TEFAP commodities'' after the word ``commodities'' in
paragraph (f)(1)(ii);
4. adding the words ``or meal service'' at the end of paragraph
(f)(1)(iii);
5. adding the words ``or meal service'' after the word ``foods'' in
paragraph (f)(2); and
6. removing the words ``the distribution of commodities by'' in
paragraph (f)(4);
f. Paragraph (g) is amended by removing the words ``emergency
feeding organizations'' and adding in their place ``eligible recipient
agencies'';
g. Paragraph (h) is revised.
The revisions read as follows:
Sec. 251.10 Miscellaneous provisions.
(a) Records. (1) Commodities. State agencies must maintain records
to document the receipt, disposal, and inventory of commodities
received under this part in accordance with requirements of Sec. 250.16
of this chapter. State agencies must also ensure that eligible
recipient agencies maintain such records.
(2) Administrative funds. In addition to maintaining financial
records in accordance with 7 CFR part 3016, State agencies must
maintain records to document the amount of funds received under this
part and paid to eligible recipient agencies for allowable
administrative costs incurred by such eligible recipient agencies.
State agencies must also ensure that eligible recipient agencies
maintain such records.
(3) Household information. Each distribution site must collect and
maintain on record for each household receiving TEFAP commodities for
home consumption, the name of the household member receiving
commodities, the address of the household (to the extent practicable),
the number of persons in the household, and the basis for determining
that the household is eligible to receive commodities for home
consumption.
(4) Record retention. All records required by this section must be
retained for a period of 3 years from the close of the Federal Fiscal
Year to which they pertain, or longer if related to an audit or
investigation in progress. State agencies may take physical possession
of such records on behalf of their eligible recipient agencies.
However, such records must be reasonably accessible at all times for
use during management evaluation reviews, audits or investigations.
* * * * *
[[Page 36999]]
(d) Reports. (1) Submission of Form FNS-667. Designated State
agencies must identify funds obligated and disbursed to cover the costs
associated with the program at the State and local level. State and
local costs must be identified separately. The data must be identified
on Form FNS-667, Report of Administrative Costs (TEFAP) and submitted
to the appropriate FNS Regional Office on a quarterly basis. The
quarterly report must be submitted no later than 30 calendar days after
the end of the quarter to which it pertains. The final report must be
submitted no later than 90 calendar days after the end of the fiscal
year to which it pertains.
(2) Reports of excessive inventory. Each State agency must complete
and submit to the FNS Regional Office reports to ensure that excessive
inventories of donated foods are not maintained, in accordance with the
requirements of Sec. 250.17(a) of this chapter.
(e) State monitoring system. (1) Each State agency must monitor the
operation of the program to ensure that it is being administered in
accordance with Federal and State requirements.
(2) Unless specific exceptions are approved in writing by FNS, the
State agency monitoring system must include:
(i) An annual review of at least 25 percent of all eligible
recipient agencies which have signed an agreement with the State agency
pursuant to Sec. 251.2(c), provided that each such agency must be
reviewed no less frequently than once every four years; and
(ii) An annual review of one-tenth or 20, whichever is fewer, of
all eligible recipient agencies which receive TEFAP commodities and/or
administrative funds pursuant to an agreement with another eligible
recipient agency. Reviews must be conducted, to the maximum extent
feasible, simultaneously with actual distribution of commodities and/or
meal service, and eligibility determinations, if applicable. State
agencies must develop a system for selecting eligible recipient
agencies for review that ensures deficiencies in program administration
are detected and resolved in an effective and efficient manner.
(3) Each review must encompass, as applicable, eligibility
determinations, food ordering procedures, storage and warehousing
practices, inventory controls, approval of distribution sites, and
reporting and recordkeeping requirements.
(4) Upon concurrence by FNS, reviews of eligible recipient agencies
which have been conducted by FNS Regional Office personnel may be
incorporated into the minimum coverage required by paragraph (e)(2) of
this section.
(5) If deficiencies are disclosed through the review of an eligible
recipient agency, the State agency must submit a report of the review
findings to the eligible recipient agency and ensure that corrective
action is taken to eliminate the deficiencies identified.
* * * * *
(h) Maintenance of effort. The State may not reduce the expenditure
of its own funds to provide commodities or services to organizations
receiving funds or services under the Emergency Food Assistance Act of
1983 below the level of such expenditure existing in the fiscal year
when the State first began administering TEFAP, or Fiscal Year 1988,
which is the fiscal year in which the maintenance-of-effort requirement
became effective, whichever is later.
Dated: June 24, 1999.
Samuel Chambers, Jr.,
Administrator.
[FR Doc. 99-17160 Filed 7-7-99; 8:45 am]
BILLING CODE 3410-30-U
