FINES FOR VIOLATING PROGRAM REQUIREMENTS.

SEC. 303. FINES FOR VIOLATING PROGRAM REQUIREMENTS. Section 22 of the Richard B. Russell National School Lunch Act (42 U.S.C. 1769c) is amended by adding at the end the following:“(e) Fines for Violating Program Requirements.—“(1) School food authorities and schools.—“(A) In general.—The Secretary shall establish criteria by which the Secretary or a State agency may impose a fine against any school food authority or school administering a program authorized under this Act or the Child Nutrition Act of 1966 (42 U.S.C. 1771 et seq.) if the Secretary or the State agency determines that the school food authority or school has—“(i) failed to correct severe mismanagement of the program;“(ii) disregarded a program requirement of which the school food authority or school had been informed; or“(iii) failed to correct repeated violations of program requirements.“(B) Limits.—124 STAT. 3241“(i) In general.—In calculating the fine for a school food authority or school, the Secretary shall base the amount of the fine on the reimbursement earned by school food authority or school for the program in which the violation occurred.“(ii) Amount.—The amount under clause (i) shall not exceed—“(I) 1 percent of the amount of meal reimbursements earned for the fiscal year for the first finding of 1 or more program violations under subparagraph (A);“(II) 5 percent of the amount of meal reimbursements earned for the fiscal year for the second finding of 1 or more program violations under subparagraph (A); and“(III) 10 percent of the amount of meal reimbursements earned for the fiscal year for the third or subsequent finding of 1 or more program violations under subparagraph (A).“(2) State agencies.—“(A) In general.—The Secretary shall establish criteria by which the Secretary may impose a fine against any State agency administering a program authorized under this Act or the Child Nutrition Act of 1966 (42 U.S.C. 1771 et seq.) if the Secretary determines that the State agency has—“(i) failed to correct severe mismanagement of the program;“(ii) disregarded a program requirement of which the State had been informed; or“(iii) failed to correct repeated violations of program requirements.“(B) Limits.—In the case of a State agency, the amount of a fine under subparagraph (A) shall not exceed—“(i) 1 percent of funds made available under section 7(a) of the Child Nutrition Act of 1966 (42 U.S.C. 1776(a)) for State administrative expenses during a fiscal year for the first finding of 1 or more program violations under subparagraph (A);“(ii) 5 percent of funds made available under section 7(a) of the Child Nutrition Act of 1966 (42 U.S.C. 1776(a)) for State administrative expenses during a fiscal year for the second finding of 1 or more program violations under subparagraph (A); and“(iii) 10 percent of funds made available under section 7(a) of the Child Nutrition Act of 1966 (42 U.S.C. 1776(a)) for State administrative expenses during a fiscal year for the third or subsequent finding of 1 or more program violations under subparagraph (A).“(3) Source of funding.—Funds to pay a fine imposed under paragraph (1) or (2) shall be derived from non-Federal sources.”.124 STAT. 3242