To amend the Richard B. Russell National School Lunch Act to improve the nutrition of students served under child nutrition programs.

Amends the Richard B. Russell National School Lunch Act (NSLA) to direct the Secretary of Agriculture (Secretary) to establish a program of competitive incentive grants to selected local educational agencies to create healthy school nutrition environments and assess the impact of such environments on the health and well-being of children enrolled in selected elementary and secondary schools of such agencies.

Amends the Child Nutrition Act of 1966 (CNA) to revise requirements relating to the Secretary's CNA and NSLA regulation of competitive foods in schools. Eliminates a provision which barred such regulations from prohibiting the sale of competitive foods approved by the Secretary in food service facilities or areas during the time of service of food under CNA or NSLA, if the proceeds from the sales of such foods would inure to the benefit of the schools or of organizations of students approved by the schools. Allows such regulations to include provisions that regulate the service of competitive foods. Requires regulations regarding competitive foods to: (1) apply to all school grounds during the duration of the school day; (2) not supersede or otherwise affect State and local regulations on competitive foods that the Secretary determines conform to CNA and NSLA nutritional goals; (3) if such sales are allowed, require proceeds to be used for the benefit of schools or school-approved student organizations; (4) take into account differing needs of elementary, middle and junior high, and high schools; and (5) implement recommendations the Institute of Medicine will make to the Secretary regarding regulation of competitive foods in schools.