Schools awarded money from the Food and Nutrition Service (FNS), an agency within USDA, must specify in their policies that discrimination based on gender identity and sexual orientation is prohibited, the department announced in May. It also said allegations of such discrimination must be investigated.

"What you're seeing here is really the Biden administration saying ‘you're going to do what I want or I'm going to take your lunch money,’" Fight for Schools Executive Director Ian Prior told Fox News. "For the federal government to come in and really tie school nutrition and school lunch programs to this radical ideology is terrifying, and it's appalling."

FNS administers several nutrition-related programs, including WIC and the Supplemental Nutrition Assistance Program (SNAP). It also runs the National School Lunch Program, which provides free or low-cost lunches for children and on average fed nearly 30 million kids per day prior to the COVID-19 pandemic.

The announcement "essentially amounts to the Biden administration holding states and local school districts hostage with school lunch money that goes to underprivileged youth in order to pass transgender non-discrimination policies," Prior told Fox News.

The USDA said its announcement is part of President Biden's executive order extending Title IX to include discrimination based on sexual orientation and gender identity.

"Children should be able to learn without worrying about whether they will be denied access to the restroom, the locker room, or school sports," the order states.

Prior told Fox News: "I honestly have no idea how providing food to children in schools is somehow connected to transgender policies. What we see here is the Biden administration using children as pawns in this social justice, gender ideology game that they are playing."

The National School Lunch Program's free and reduced meals help ensure impoverished students receive necessary nutrition.

The LGBTQ community has historically "faced striking economic and social disparities, such as higher rates of poverty, unemployment and nutrition insecurity," USDA's announcement states. Food insufficiency is "three times as common among transgender individuals as compared to cisgender individuals."

"Whether you are grocery shopping, standing in line at the school cafeteria, or picking up food from a food bank, you should be able to do so without fear of discrimination," Food, Nutrition, and Consumer Services Deputy Under Secretary Stacy Dean said in a statement.

But Prior said low-income students would suffer if funding is withheld from schools, though USDA's announcement didn't state what consequences schools would face if they didn't comply.

"They discuss equity nonstop in the Biden administration," Prior told Fox News. "But in reality, if you want to talk about equity or equal opportunity, the best way to do that is to make sure that every child has the opportunity to succeed."

"One way to do that is to make sure that they are properly fed," he continued.

Prior also said the USDA's intended action is a "vast overreach of federal power." 

"It is clear what they are trying to do here, which is a federal takeover of school systems throughout the country based on this radical gender ideology," he told Fox News.

The USDA is set to formerly propose the regulation this month. It will then be open for public comment for several months before it can be implemented. 

"I think what the Biden administration is doing here is going to be subject to significant legal challenges," Prior said. "They are going to find themselves in litigation over these issues for years, perhaps until the end of Biden's term."

Neither FNS nor USDA responded to a request for comment.