Food Stamp Program: Retailer Application Processing

DEPARTMENT OF AGRICULTURE

Food and Nutrition Service

7 CFR Part 278

[Amendment No. 380]

RIN 0584-AC05

Food Stamp Program: Retailer Application Processing

AGENCY: Food and Nutrition Service, USDA.

ACTION: Proposed rule.

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SUMMARY: This action proposes to revise the initial application

processing timeframe for retail food stores and wholesale food concerns

that apply for authorization to accept and redeem food stamp benefits

and clarify verification requirements. In addition to lengthening the

time allowed for processing applications, this rule would clarify Food

and Nutrition Service (FNS) regulatory authority to require specific

documentation from an applicant to verify a firm's eligibility. This

rule will also incorporate two provisions of the Personal

Responsibility and Work Opportunity Reconciliation Act (PRWORA) of

1996, related to the collection of tax information from applicant firms

or from firms being reauthorized in the program, and the provision of

written permission for FNS to verify such information with appropriate

agencies. These changes are being proposed as a means to ensure that

only legitimate food stores are allowed to participate in the Food

Stamp Program.

DATES: Comments must be received on or before January 3, 2000 to be

assured of consideration.

ADDRESSES: Comments should be submitted to Karen J. Walker, Chief,

Redemption Management Branch, Benefit Redemption Division, Food and

Consumer Service, USDA, 3101 Park Center Drive, Alexandria, Virginia

22302. Comments may also be data faxed to the attention of Ms. Walker

at (703) 605-0232. All written comments will be open for public

inspection during regular business hours (8:30 a.m. to 5 p.m., Monday

through Friday) at 3101 Park Center Drive, Alexandria, Virginia, Room

706.

FOR FURTHER INFORMATION CONTACT: Questions regarding the proposed

rulemaking should be addressed to Ms. Walker at the above address or by

telephone at (703) 305-2418.

SUPPLEMENTARY INFORMATION:

Executive Order 12866

This proposed rule has been determined to be significant for

purpose of Executive Order 12866 and, therefore, has been reviewed by

the Office of Management and Budget.

Executive Order 12372

The Food Stamp Program is listed in the Catalog of Federal Domestic

Assistance under 10.551. For the reasons set forth in the final rule in

7 CFR 3015, Subpart V and related Notice (48 FR 29115), this Program is

excluded from the scope of Executive Order 12372 which requires

intergovernmental consultation with State and local officials.

Regulatory Flexibility Act

This rule has been reviewed with regard to the requirements of the

Regulatory Flexibility Act of 1980 (5 U.S.C. 601-602). The Under

Secretary for Food, Nutrition, and Consumer Services, has certified

that this proposed rule does not have a significant economic impact on

a substantial number of small entities. The rule would have almost no

impact on the majority of applicant firms, most of which are legitimate

food stores.

Paperwork Reduction Act

In accordance with the Paperwork Reduction Act of 1995, this notice

announces our intent to collect additional information associated with

the application completed by retail food stores and meal services to

request approval to participate in the Food Stamp Program (FSP) and to

obtain approval for 3 years on the revised burden estimates.

Comments on this notice must be submitted by January 3, 2000.

Comments are invited on: (a) Whether the proposed collection of

information is necessary for the 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.

Comments may be sent to Lori Shack, Desk Officer, Office of

Information and Regulatory Affairs, Office of Management and Budget

(OMB), Washington, DC 20502 (a copy may also be sent to Karen J.

Walker, Chief, Redemption Management Branch, Benefit Redemption

Division, Food and Nutrition Service, Department of Agriculture, 3101

Park Center Drive, Alexandria, Virginia 22302. For further information,

or for copies of the information collection, please contact Ms. Walker

at the above address.)

All responses to this notice will be summarized and included in the

request for OMB approval, and will become a matter of public record.

Title: Food Stamp Program Store Applications.

OMB Number: 0584-0008.

Expiration Date: October 31, 2002.

Type of Request: Revision of a currently approved collection.

Abstract: The Food and Nutrition Service (FNS) of the Department of

Agriculture is the Federal agency responsible for the FSP. The Food

Stamp Act of 1977, as amended (the Act) (7 U.S.C. 2011-2036), requires

that the Agency determine the eligibility of firms and certain food

service organizations to accept and redeem food stamp benefits and to

monitor them for compliance and continued eligibility.

Part of FNS' responsibility is to accept applications from retail

food establishments and meal service programs that wish to participate

in the FSP, review the applications in order to determine whether or

not applicants meet eligibility requirements, and make determinations

whether to grant or deny authorization to accept and redeem food stamp

benefits. FNS is also responsible for requiring updates to application

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information and reviewing that information to determine whether or not

the firms or services continue to meet eligibility requirements.

There are currently 3 application forms approved under OMB No.

0584-0008. Together these forms are used by retailers, wholesalers,

meal service providers, certain types of group homes, shelters, and

State-contracted restaurants, to apply to FNS for authorization to

participate in the FSP. Form FNS-252, Food Stamp Application For Stores

is generally used by stores, excluding facilities which provide meal

services such as communal dining, shelters and other meal service

programs, which are newly applying for authorization; Form FNS-252R,

Food Stamp Program Application For Stores--Reauthorization is used by

the majority of currently authorized stores to apply for

reauthorization, excluding facilities which provide meal services such

as communal dining, shelters and other meal service programs; and Form

FNS-252-2, Application to Participate in the Food Stamp Program for

Communal Dining Facility/Others generally used by communal dining and

restaurant facilities and other food service programs which are newly

applying or applying for reauthorization. In a few cases, at the

discretion of the FNS field offices, some stores would be required to

complete Form FNS-252 to apply for reauthorization. Section 9(c) of the

Act provides the necessary authorization(s) to collect the information

contained in these forms.

We do not collect information on the number of FSP applications

received annually. Current burden estimates associated with these 3

application forms are determined from information maintained in STARS

(Store Tracking and Redemption System) based on the total number of

currently authorized stores or the number of newly authorized stores.

The number of expected applications is divided between initial

applications from new applicants and applications for reauthorization

from currently authorized stores.

For burden estimates associated with new applicants (initial

authorizations), we used the number of stores (all types) newly

authorized/approved currently estimated at 20,696 (rounded to 20,700)

based on FY 1997 year-end data from STARS and inflated this number by

10% (2,070) to account for denied applications received for a total of

22,770 applications expected to be received and processed from stores

annually. It is estimated that 98% (22,315) of the 22,770 applications

expected to be received would be on Form FNS-252 and 2% (423) would be

on Form FNS-252-2. In addition, an estimated 32 private restaurants

applying for FSP participation in the State-administered special

restaurant program annually will use Form FNS-252 versus Form FNS-252-2

to apply for participation reducing the number of expected applications

for Form FNS-252-2 by 32 and increasing the number of expected

applications using Form FNS-252 by the same amount.

For burden estimates associated with firms applying for

reauthorization, we used the total number of stores (all types)

authorized (184,300) as of December 1997. Generally, authorized stores

are subject to reauthorization at least once every 4 years. Thus, it is

estimated that 25% (46,000) of all authorized stores would be subject

to reauthorization in any given year. Using the number of authorized

stores as of December 1997, it is estimated that 46,000 reauthorization

applications would be expected to be received annually. Of the 46,000

reauthorization applications expected, it is estimated that 96%

(44,160) will be on Form FNS-252R, 3% (1,380) will be on Form FNS-252-

2, and 1% (460) will be on Form FNS-252.

The number of respondents completing at least 1 of the 3

applications in question annually, as currently approved by OMB, is as

follows:

FNS-252

New authorizations........... 22,347 (22,770 x .98 + 32)

Reauthorizations............. 460 (184,000 x .25 x .01)

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22,807

FNS-252-2

New authorizations........... 423 (22,770 x .02 - 32)

Reauthorizations............. 1,380 (184,000 x .25 x .03)

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1,803

FNS-252R

Reauthorizations............. 44,160 (184,000 x .25 x .01

1,380-460)

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Total responses.......... 68,770

It should be noted that the number of applicant and authorized

stores has been declining over the past few years due to several

program changes, such as changes in eligibility requirements, stronger

sanctions against violators, and implementation of Electronic Benefit

Transfer systems. These declines have resulted in a reduction in the

overall number of applications expected to be received annually.

Hourly burden time per response varies by type of application and

includes the time to review instructions, search existing data

resources, gather and copy the data needed, complete and review the

application, and submit the form and documentation to FNS.

As currently approved by OMB, the hourly burden rate per response

for: (1) Form FNS-252 is 20 to 68 minutes, with the average being 27.5

minutes; (2) 10 to 20 minutes for Form FNS 252-2, with the average

being 12 minutes; and, (3) 7 to 8 minutes, with the average being 7.5

minutes for Form FNS-252R.

Information Collection--Proposed Rule

This proposed rule at Sec. 278.1(b) requires that applicant firms

submit copies of income and sales tax filing documents to the FNS if

requested during the application or reauthorization process. The

proposed rule further provides that FNS can deny a firm's application

if they do not supply requested documentation. Lastly, the proposed

rule would require firms to sign a release form which will authorize

FNS to verify all relevant business related tax filings with

appropriate agencies, and to obtain corroborating documentation from

other sources as deemed necessary. These new requirements will not

result in changes to current burden estimates or

[[Page 59667]]

methodologies used to arrive at current burden estimates as approved by

OMB, because: (1) Currently approved burden estimates already include

time associated with collecting, copying and submitting this type of

documentation, or other sufficient documentation, to FNS. The new

proposal simply allows FNS to mandate the submission of a particular

type of document, such as sales and tax filing documents and to deny

applications which do not provide the specific documentation; and (2)

FNS would design a standard release form for the purpose of the new

requirement to sign a release form. This would be a one-time burden for

new applicants, including applicants for reauthorization. It is

estimated that burden associated with a one-time requirement to affix a

single signature to a standard form would be minimal and is not being

assessed separately.

The burden estimates, as approved by OMB through October 31, 2002,

are shown below:

Affected Public: Food retail and wholesale firms, meal service

programs, certain types of group homes, shelters, and State-contracted

restaurants.

Estimated Number of Respondents: 68,770.

Estimated Number of Responses per respondent: 1.

Estimated Time per Response: 0.229413.

Estimated Total Annual Burden: 15,777.

Summary of Burden Estimates for Forms FNS-252, 252-2 and 252R

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Number of Responses per Total annual Burden hours Total annual

Title respondents respondent responses per response burden hours

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Form FNS-252.................... 22,807 1 22,807 .4500 10,263

Form FNS-252-2.................. 1,803 1 1,803 .2000 361

Form FNS-252R................... 44,160 1 44,160 .1167 5,153

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Totals.................... 68,770 1 68,770 .............. 15,777

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Executive Order 12988

This rule has been reviewed under Executive Order 12988, Civil

Justice Reform. This rule is intended to have a 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'' paragraph of this

preamble. Prior to any judicial challenge to the provisions of this

rule or the application of its provisions, all applicable

administrative procedures are as follows: (1) For Program benefit

recipients--State administrative procedures issued pursuant to 7 U.S.C.

2020(e)(10) and 7 CFR 273.15; (2) For State Agencies--administrative

procedures issued pursuant to 7 U.S.C. 2023 set out as 7 CFR 276.7 (for

rules related to non-quality control liabilities) or part 284 (for

rules related to quality control liabilities: (3) For Program retailers

and wholesalers--administrative procedures issued pursuant to 7 U.S.C.

2023 set out at 7 CFR 278.8.

Unfunded Mandate Analysis

Title II of the Unfunded Mandate Reform Act of 1995 (UMRA) Public

Law 104-04, 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 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 the Department 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) which impose costs on State, local,

or tribal governments or to the private sector of $100 million or more

in any one year. Thus, this rule is not subject to the requirements of

sections 202 and 205 of the URMA.

Background

The authorization of retail food stores and wholesale food concerns

to accept and redeem food stamp benefits is the responsibility of the

Department's FNS Field Offices. This rule makes four changes, two

discretionary and two reflecting additional authorities provided by the

Personal Responsibility and Work Opportunity Reconciliation Act

(PRWORA). The discretionary changes alter the timeframe within which

FNS must approve or reject a firm's application, and specify types of

documents firms might be asked to provide. The PRWORA changes authorize

the Department to require that applicant firms sign a release form

allowing FNS to verify the accuracy of information submitted by firms,

and that FNS may request the submission of tax records.

Application Processing Timeframes

Current rules at 7 CFR 278.1(a) provide that an FNS officer in

charge shall deny or approve authorization, or request more

information, within 30 days of receipt of the firm's application. If

FNS returns an incomplete application and/or requests more

documentation from the applicant, the 30-day time clock then stops

until a fully completed application and/or the additional information

is received from the applicant, at which point FNS has a full 30 days

to approve or deny authorization.

Current rules do not define a completed application. This proposed

rule would clarify what is meant by a completed application. It is

proposed that a completed application means that all information (other

than an on-site visit) that FNS deems necessary in order to make a

determination on the firm's application has been received. This

information includes, but is not limited to a completed application

form, all required information and documentation from the applicant, as

well as all needed third-party verification and documentation. In most

instances, the current rule is adequate to ensure the eligibility of a

firm. Current rules become problematic, however, when the field office

is not familiar with the store, or needs more information about the

firm's qualifications to determine whether it is a legitimate retail

food store. Experience has shown that, in such cases, a visit is

necessary to verify the nature and scope of a firm's

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business in questionable circumstances. FNS is proposing in this rule

that Field Offices have a 45-day time period in order to process

completed applications and to make any needed store visits.

On site-visits may be conducted during the 45-day period by

employees of FNS or by a designee of the Secretary of Agriculture (such

as a firm under contract to USDA) or by an official of a State or local

government. In the interest of efficiency and the responsible use of

resources, on-site visits must be carefully planned and clustered in

geographic areas. Thus, the 45-day period following the receipt of a

completed application is necessary to allow additional time to

effectively plan and carry out these on-site visits, and to allow the

field office to make a determination as to whether the firm qualifies

for authorization.

In order to address this need, FNS is proposing in this rule that

the field office shall have 45 days from the receipt of a completed

application to approve or deny the application. FNS is confident this

will allow sufficient time to conduct an on-site visit if necessary and

to make a final determination as to whether a store qualifies for

authorization to participate in the FSP.

Information for Verifying Eligibility for Authorization

Current rules do not specify the types of documentation which firms

may be required to provide when applying for authorization. In the

interest of program integrity, however, it is necessary that FNS

stipulate its specific authority to require firms to provide

verification and documentation to determine a store's eligibility. This

proposed rule (7 CFR 278.1(b)) identifies the type of documentation

that may be required by FNS by stipulating that such information may

include, but not be limited to, State and local business licenses,

Social Security cards, drivers' licenses, photographic identification

cards, bills of sale, deeds, leases, sales contracts, State

certificates of incorporation, sales records and invoice records.

Tax Records

Section 833 of the PRWORA amends section 9 of the Food Stamp Act

and provides the Secretary with the authority to require applicant

firms to submit copies of relevant income and sales tax filing

documents when applying for participation or continued authorization in

the program. Firms that are applying for initial authorization or

reauthorization in the FSP may now be required to submit copies of

relevant business related income and sales tax filing documents to FNS

as a condition of eligibility for program participation. Failure of a

firm to provide such documentation if requested by FNS would serve as a

basis for the denial of such a firm's application for authorization or

of a firm's reauthorization in the program. This program change is

reflected in 278.1(b). Since this is a statutory provision over which

the Secretary has no authority to amend, implementation of this

provision cannot be affected by public comment.

Authorization To Verify Tax Filings and Other Documentation

Section 833 of PRWORA also permits the Secretary to implement,

through regulations, a requirement that firms provide, upon request,

written authorization to allow FNS to verify all relevant tax filings

and to obtain corroborating documentation from other sources so that

the accuracy of information provided on the application by stores and

concerns may be verified. Section 278.1(b) of the regulation proposes

to require that all firms provide written authorization for FNS to

verify all relevant business tax filings with appropriate agencies and

for FNS to obtain corroborating documentation from other sources so as

to ensure that the accuracy of information provided by stores and

concerns may be verified. Examples of the types of agencies that could

be contacted for the purpose of verifying applicant information

include, but are not limited to wholesale suppliers, State or local

licensing agencies, State or local liquor and lottery control boards,

financial institutions, Federal and State income and sales tax

agencies, and Federal, State or local law enforcement agencies.

Retailers will be requested to complete a general release form that

would provide permission for FNS to access information maintained by

any agency or entity that has information directly related to the

information requested by FNS on FSP application materials.

This authority will greatly enhance the ability of FNS to ensure

that only legitimate stores are authorized to participate in the

program and that no false information is filed on the FSP application.

This is applicable to all firms, whether new or currently participating

firms seeking reauthorization in the program.

List of Subjects in 7 CFR Part 278

Administrative practice and procedure, Banks, Banking, Claims, Food

stamps, Groceries--retail, Groceries, General line--wholesalers,

Penalties.

Accordingly, 7 CFR part 278 is proposed to be amended as follows:

PART 278--PARTICIPATION OF RETAIL FOOD STORES, WHOLESALE FOOD

CONCERNS AND INSURED FINANCIAL INSTITUTIONS

1. The authority citation for part 278 continues to read as

follows:

Authority: 7 U.S.C. 2011-2036.

2. In Sec. 278.1:

a. Paragraph (a) is amended by removing the last sentence and

adding three new sentences in its place; and

b. The introductory text of paragraph (b) is revised.

The revisions read as follows:

Sec. 278.1 Approval of retail food stores and wholesale food concerns.

(a) Application. * * * FNS shall approve or deny the application

within 45 days of receipt of a completed application. A completed

application means that all information (other than an on-site visit)

that FNS deems necessary in order to make a determination on the firm's

application has been received. This information includes, but is not

limited to, a completed application form, all information and

documentation from the applicant, as well as any needed third-party

verification and documentation.

(b) Determination of authorization. An applicant shall provide

sufficient data and information on the nature and scope of the firm's

business for FNS to determine whether the applicant's participation

will further the purposes of the program. Upon request, an applicant

shall provide documentation to FNS to verify information provided on

the application form. Such documentation may include, but is not

limited to, State and local business licenses, Social Security cards,

drivers' licenses, photographic identification cards, bills of sale,

deeds, leases, sales contracts, State certificates of incorporation,

sales records, invoice records and business-related tax records. Retail

food stores and wholesale food concerns and other entities eligible for

authorization also shall be required to sign a release form which will

authorize FNS to verify all relevant business related tax filings with

appropriate agencies, and to obtain corroborating documentation from

other sources as deemed necessary to ensure the legitimacy and

eligibility of applicant firms, as well as the accuracy of information

provided by the stores and concerns. Failure to comply with any request

for information or failure to sign a written release form shall result

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in denial of the application for authorization or withdrawal of a firm

or concern from the program. In determining whether a firm qualifies

for authorization, FNS shall consider all of the following:

* * * * *

Dated: October 25, 1999.

Shirley R. Watkins,

Under Secretary, Food, Nutrition and Consumer Services.

[FR Doc. 99-28547 Filed 11-2-99; 8:45 am]

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