SUPPLEMENTARY INFORMATION:

Section I: Background

Purpose of This Direct Final Rule

The National School Lunch Program (NSLP), School Breakfast Program (SBP), Special Milk Program for Children (SMP), Child and Adult Care Food Program (CACFP), and Summer Food Service Program (SFSP) are collectively referred to as the Child Nutrition Programs (CNPs) and offer opportunities for children across the nation to access nutritious, well-balanced meals while supporting local farmers and agriculture. USDA's current geographic preference option regulations provide flexibilities that CNP operators may use to purchase unprocessed foods that are locally grown, caught, or raised; this direct final rule clarifies the existing strategies available through the geographic preference option. This direct final rule reflects Secretary of Agriculture Brooke Rollins' February 2025 commitments to clarify statutory, regulatory, and administrative requirements; create new opportunities to connect America's farmers to nutrition assistance programs; and strengthen strategies to encourage healthy choices, healthy outcomes, and healthy families.^[1] The changes in this direct final rule do not alter the meaning of the regulations or their implementation; rather, they are intended to clarify existing regulatory requirements.

USDA expects that clearer regulations will help CNP operators use the geographic preference option, resulting in the procurement of more local, unprocessed agricultural products in CNP meals and snacks. This will also support the Make Our Children Healthy Again Strategy Report, which emphasizes the need to improve access to whole, healthy foods in government-funded nutrition programs and ensure the availability of nutritious food for populations in need.^[2] Furthermore, this clarification will help local agricultural producers, food vendors, and food processors—many of them small businesses—by increasing market opportunities and sales to CNP operators.

Statutory Authority

Section 4302 of the Food, Conservation, and Energy Act of 2008 (Pub. L. 110-246) amended the National School Lunch Act to direct the Secretary of Agriculture to encourage institutions operating child nutrition programs to purchase unprocessed, locally grown and locally raised agricultural products.^[3] Effective October 1, 2008, institutions receiving funds through the child nutrition programs could apply an optional geographic preference for the procurement of unprocessed, locally grown or locally raised agricultural products. This provision applies to institutions operating any of the child nutrition programs, including the NSLP, SBP, SMP, Fresh Fruit and Vegetable Program, CACFP, and SFSP, as well as to purchases made for these programs by the USDA Department of Defense Fresh Fruit and Vegetable Program. The provision also applies to State agencies making purchases on behalf of any of the aforementioned child nutrition program operators.

Description of the Direct Final Rule

With this direct final rule, USDA is clarifying the geographic preference option regulations revised by the 2024 ( printed page 57246) final rule titled, Child Nutrition Programs: Meal Patterns Consistent With the 2020-2025 Dietary Guidelines for Americans (the “2024 rule”).^[4] The 2024 rule expanded the scope of the geographic preference option by allowing CNP operators to use local ( e.g., “locally grown,” “locally raised,” or “locally caught”) as a procurement specification ( i.e., the written description of a product or service that a vendor must meet to be considered responsive to a solicitation) in addition to using geography as a preference or “selection criteria,” as already allowed in solicitations for unprocessed agricultural products purchased for CNP meals and snacks. Prior to the 2024 rule, CNP operators were only allowed to apply local as a preference, now known as a defined scoring advantage. A defined scoring advantage allows CNP operators to preference local products by awarding additional credits or points to unprocessed agricultural products that are locally grown, caught, or raised, during the evaluation of responses to a solicitation. With the 2024 rule, CNP operators may use both geographic preference option strategies:

• Using local as a procurement specification; and/or
• Applying a defined scoring advantage.

The 2024 rule regulatory language maintained that CNP operators, or State agencies purchasing on their behalf, have maximum flexibility to adopt their own definitions of “local” and did not prescribe a Federal definition for the purpose of procuring local foods for CNPs. The 2024 rule explanatory language also maintained flexibility for CNP operators by continuing to note that Federal regulations do not prescribe the way that geographic preference ( i.e., the defined scoring advantage) may be applied or the amount of preference, such as additional credits or points, that can be given to local products. However, the 2024 rule did not add language to program regulations affirming to CNP operators that this flexibility was available to them.

Since the 2024 rule went into effect, USDA has published both implementation guidance and anticipatory policy guidance to support program operators implementing the provision.^[5] This guidance has helped prevent and address many technical assistance questions related to implementation. This direct final rule codifies clarifying aspects from that guidance by removing unnecessary language, clearly outlining geographic preference option strategies, and making nonsignificant copy edits.

This direct final rule:

1. Replaces “procurement specification” with “product specification” to align with industry terminology.

2. Replaces “selection criteria” with “defined scoring advantage” to align with policy guidance.

3. Affirms that CNP operators have the flexibility to prescribe the way that a defined scoring advantage is applied and the amount of preference given to a product that meets their definition of local.

4. Reformats the regulatory text to clearly describe how geographic preference strategies may be applied during the procurement process as a product specification, a defined scoring advantage during bid evaluation, or a mix of both strategies.

5. Clarifies that CNP operators may use, but are not limited to, the phrases “local,” “locally grown,” “locally raised,” and “locally caught” in their solicitations.

6. Removes the undefined term “minimally processed” since all allowable food handling and preservation techniques are specified in the definition of “unprocessed agricultural products.”

7. For SBP, SMP, CACFP, and SFSP, revises regulations to refer back to NSLP geographic preference option regulations for consistency.

Accordingly, this direct final rule amends 7 CFR 210.21(g), 215.14a(e), 220.16(f), 225.17(e), and 226.22(c) to clarify how to apply the geographic preference option for the procurement of local, unprocessed agricultural products.

This direct final rule is not subject to the requirement to provide notice and an opportunity for public comment because it falls under the good cause exception at 5 U.S.C. 553(b)(B). The good cause exception is satisfied when notice and comment is “impracticable, unnecessary, or contrary to the public interest.” As stated before, the changes in this direct final rule do not alter the meaning of the regulations or their implementation; rather, they are intended to clarify existing regulatory requirements. It is unnecessary to provide notice and an opportunity for public comment because there is no change to regulations that impact the public.

If a significant adverse comment applies to a part of the direct final rule and that part can be severed from the remainder of the rule, USDA may adopt as final those provisions of the rule that are not the subject of the significant adverse comment.

Procedural Matters

Regulatory Impact Analysis

This rule is necessary to correct inadequate information in the existing regulatory language that has hitherto been clarified via agency-issued guidance, which is less formal and binding than a rule and may be overlooked by some program operators despite the agency's best efforts to promulgate the information. By formalizing these clarifications in regulation, the government will ensure that all program operators have access to the same information in determining geographic preference.

USDA assessed possible benefits of the final rule, assuming a baseline counterfactual in which the agency continues to clarify geographic preference via guidance. Because the direct final rule merely clarifies existing guidance and codifies available practices, it does not alter the baseline regulatory environment. Formal clarification of ambiguities through edits to the regulatory language may help reach those who were not aware of the guidance, increase Federal government efficiency by removing the need to re-circulate the guidance or provide redundant technical assistance to those who were unaware of the guidance, and reduce administrative burden for program operators who wish to procure local foods. Any such benefits are likely to be minimal, however, because these clarifications were already officially available from USDA to program operators, posted on the agency website and sent via PartnerWeb so all operators have access.

USDA also assessed possible cost impacts. To the extent that these clarifications induce any marginal shift in procurement patterns—which, as noted, we believe unlikely—purchasing decisions by program operators remain bounded by price-reasonableness standards. As a result, any induced substitution toward geographically preferred vendors is expected to be cost- ( printed page 57247) neutral, generating no incremental costs relative to the baseline.

Executive Order 12866, 13563, and 14192

Executive Orders 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This rule is considered an Executive Order 14192 deregulatory action.

This direct final rule has been determined to be significant and was reviewed by the Office of Management and Budget (OMB) in conformance with Executive Order 12866.

Regulatory Flexibility Act

The Regulatory Flexibility Act (5 U.S.C. 601-612) requires Agencies to analyze the impact of rulemaking on small entities and consider alternatives that would minimize any significant impacts on a substantial number of small entities. Pursuant to that review, it has been certified that this rule would not have a significant impact on a substantial number of small entities.

While the clarifications made with this rulemaking may help some small businesses increase market opportunities and sales, this direct final rule would not have an impact on small entities because it does not change the meaning of the regulations or their implementation.

Congressional Review Act

Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq.), the Office of Information and Regulatory Affairs designated this rule as not a major rule, as defined by 5 U.S.C. 804(2).

Unfunded Mandates Reform Act

Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public Law 104-4, establishes requirements for Federal agencies to assess the effects of their regulatory actions on State, local and Tribal governments and the private sector. Under section 202 of the UMRA, the Department generally must prepare a written statement, including a cost benefit analysis, for proposed and final rules with “Federal mandates” that may result in expenditures by State, local or Tribal governments, in the aggregate, or the private sector, of $146 million or more (when adjusted for inflation; GDP deflator source: Table 1.1.9 at www.bea.gov/​iTable) in any one year. When such a statement is needed for a rule, Section 205 of the UMRA generally requires the Department to identify and consider a reasonable number of regulatory alternatives and adopt the most cost effective or least burdensome alternative that achieves the objectives of the rule.

This direct final rule does not contain Federal mandates (under the regulatory provisions of Title II of the UMRA) for State, local and Tribal governments or the private sector of $146 million or more in any one year. Thus, the rule is not subject to the requirements of sections 202 and 205 of the UMRA.

Executive Order 12372

The SBP, NSLP, SMP, CACFP, and SFSP are listed in the Catalog of Federal Domestic Assistance under SBP No. 10.553, NSLP No. 10.555, SMP No. 10.556, CACFP No. 10.558, and SFSP No. 10.559, respectively, and are subject to Executive Order 12372, which requires intergovernmental consultation with State and local officials. (See 2 CFR chapter IV.) Since the Child Nutrition Programs are State-administered, USDA's FNA Regional Offices have formal and informal discussions with State and local officials, including representatives of Indian Tribal Organizations, on an ongoing basis regarding program requirements and operations. This provides USDA with the opportunity to receive regular input from program administrators and contributes to the development of feasible program requirements.

Federalism Summary Impact Statement

Executive Order 13132 requires Federal agencies to consider the impact of their regulatory actions on State and local governments. Where such actions have Federalism implications, agencies are directed to provide a statement for inclusion in the preamble to the regulations describing the agency's considerations in terms of the three categories called for under Section (6)(b)(2)(B) of Executive Order 13132.

The Department has determined that this rule does not have Federalism implications. This rule does not impose substantial or direct compliance costs on State and local governments. Therefore, under Section 6(b) of the Executive Order, a Federalism summary impact statement is not required.

Executive Order 12988, Civil Justice Reform

This direct final 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 and timely implementation. This rule is not intended to have retroactive effect unless so specified in the EFFECTIVE DATES section of the final rule. Prior to any judicial challenge to the provisions of the final rule, all applicable administrative procedures must be exhausted.

Civil Rights Impact Analysis

USDA has reviewed the direct final rule, in accordance with the Agriculture Improvement Act of 2018 (the 2018 Farm Bill), Section 12403, Civil Rights Analyses, to identify and address any major civil rights impacts the direct final rule may have on specific groups. The promulgation of this direct final rule will expand local food access in all CNPs for all participants. It is unlikely that this direct final rule will have a civil rights impact on State agencies, Program operators, program participants, or food producers as the changes are customer-focused and intended to simplify program regulation language.

USDA will continue engaging with State agencies and Program operators to address any needs and/or challenges associated with the updated geographic preference option regulatory language. In accordance with applicable laws, regulations and directives, USDA will also propose further outreach and mitigation strategies to alleviate any unforeseen impacts, if deemed necessary.

Executive Order 13175

Executive Order 13175 requires Federal agencies to consult and coordinate with Tribes on a government-to-government basis on policies that have Tribal implications, including regulations, legislative comments or proposed legislation, and other policy statements or actions that have substantial direct effects on one or more Indian Tribes, on the relationship between the Federal Government and Indian Tribes, or on the distribution of power and responsibilities between the Federal Government and Indian Tribes. We are unaware of any Tribal implications of this rule.

Paperwork Reduction Act

The Paperwork Reduction Act of 1995 (44 U.S.C. Chap. 35; 5 CFR 1320) requires the Office of Management and Budget (OMB) approve all collections of information by a Federal agency before ( printed page 57248) they can be implemented. Respondents are not required to respond to any collection of information unless it displays a current valid OMB control number.

This rule contains information collections that have been approved by OMB under OMB numbers 0584-0006, 0584-0012, 0584-0055, 0584-0280, and 0584-0005. The rule does not add new information collection requirements, nor does it alter the burden associated with existing requirements.

E-Government Act Compliance

The Department is committed to complying with the E-Government Act, to promote the use of the internet and other information technologies to provide increased opportunities for citizen access to Government information and services, and for other purposes.

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

91 FR 57245