[Congressional Record Volume 145, Number 139 (Thursday, October 14, 1999)]
[Senate]
[Pages S12643-S12645]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. FITZGERALD (for himself, Mr. Leahy, Mr. Lugar, Mr. Harkin, 
        and Mr. Craig):
  S. 1733. A bill to amend the Food Stamp Act of 1977 to provide for a 
national standard of interoperability and portability applicable to 
electronic food stamp benefit transactions; to the Committee on 
Agriculture, Nutrition, and Forestry.


THE ELECTRONIC BENEFIT TRANSFER INTEROPERABILITY AND PORTABILITY ACT OF 
                                  1999

  Mr. FITZGERALD. Mr. President, I rise today with my Colleagues to 
introduce the Electronic Benefit Transfer Interoperability and 
Portability Act of 1999. This legislation addresses the problem of food 
stamp beneficiaries being unable to redeem their benefits in authorized 
stores that may be located outside their state of residence.
  As you may know, Congress passed legislation in 1996 that required 
the federal government to deliver food stamp benefits electronically, 
rather than using the paper coupons. Most states have started the 
process of issuing plastic cards, very similar to ATM cards to access 
these benefits. The federal government termed this new process, 
electronic benefits transfer (EBT).
  You may have noticed a separate button on the payment terminal in 
your local supermarket with the designation ``EBT'' or a separate 
stand-alone payment terminal to handle these new transactions.
  More than half of the country has already switched from the paper 
coupons to this new EBT card. However, one significant issue is causing 
problems in the program for retailers, states and recipients. That 
issue is the inability for recipients to use their state-issued cards 
across state lines. This is especially true in communities that are 
near a state border.
  Under the old paper system, recipients could use the coupons in any 
state in the country. Under the new electronic system, that is 
currently not the case. Customers go into a food store expecting to use 
their federal benefits to purchase food and when they cannot use their 
EBT cards, they become frustrated and dissatisfied with the food stamp 
program.
  For example, under the old system, a food stamp recipient living in 
Palmyra, MO could use their food stamp coupons in their favorite 
grocery store in Quincy, IL just over the Illinois border. Similarly, a 
recipient living in Illinois could visit family in Tennessee and still 
purchase food for their children. Food stamp beneficiaries are not 
unlike the average shopper. Cross border shopping occurs for a variety 
of reasons. One reason is convenience; another equally important one is 
the cost of groceries. The supermarket industry is very competitive. 
Customers paying with every type of tender except EBT have the ability 
to shop around for the best prices. Shouldn't recipients of our 
nation's federal food assistance benefits be able to stretch their 
dollars without regard to state borders?
  Another reason is convenience. While one of my constituents may live 
in the metro east area, they might work in St. Louis. Under the current 
situation, if the only grocery store between their work and their home 
is in Missouri, the recipient cannot purchase food without traveling 
out of their way.
  The legislation I am introducing today would once again, provide for 
the portability of food assistance benefits and allow food stamp 
recipients the flexibility of shopping at locations that they choose.

[[Page S12644]]

  Interoperability works well today with ATM/Debit cards, the type of 
cards that EBT was modeled after. Consumers and merchants are confident 
that when a MAC card issued by a bank in Pittsburgh is presented, 
authorization and settlement of that transaction will work the same as 
when a Star card, issued by Bank of America in California is presented. 
This occurs regardless of where the merchant is located.
  Unfortunately, this is currently not the case with EBT cards. If 
every state operated their EBT program under a standard set of 
operating rules as this legislation requires, companies operating in 
multiple states could be more efficient, resolve any discrepancies in 
customer accounts more quickly and ultimately hold down the price of 
groceries for all consumers.
  This legislation I am introducing is very straightforward. 
Specifically, the legislation:
  Requires interoperability by October 1, 2002, with a few exceptions 
needing a waiver;
  Requires USDA to ``adopt'' the national standard used by the majority 
of the States;
  Requires USDA to pay for all interoperability costs (currently 
estimated by Benton International to be no more than a maximum of 
$500,000 annually when all states are on EBT systems or $160,000 for 
the current year), significantly less than the $20 million USDA pays 
annually to the Federal Reserve to redeem coupons;
  Requires contracts entered into after the date when the national 
standard is adopted to use the standard, and for USDA to pay the 
interoperability costs;
  Includes transitional funding for states currently using a national 
standard. Upon enactment, FNS will pay 100 percent of the costs of 
interoperability fees for current states using a national standard 
(While the interoperability pilot sponsored by NACHA is due to expire 
in September, this would allow those states and beneficiaries in states 
participating in the pilot to continue to have interoperable 
transactions beyond the pilot period without interruption.);
  Requires current contracts that are not using the national standard 
to convert at the point of a new contract;
  Includes a waiver process for current states with significant 
technological challenges to provide time to convert to the national 
standard (This is intended to cover current smart card states).
  This legislation is more about good government than it is about food 
stamps. Since 1996, the transition from paper coupons to electronic 
benefit transfer has saved the federal government a significant amount 
of money. For example, while the food stamp caseload decreased 24 
percent from fiscal year 1995 to 1998, food stamp production and 
redemption costs dropped by an impressive 39 percent. While it is 
estimated that the bill's implementation will cost the federal 
government no more than $500,000 annually, it will save at least $20 
million per year when paper coupons are a thing of the past.
  This legislation is sound public policy that enjoys bipartisan 
support. I thank my Colleagues, Senators Leahy, Lugar, Harkin and 
Craig, for joining me as co-sponsors of this bill. I would stress to my 
fellow Senators that this legislation is vitally important to every 
food stamp recipient, every state food stamp program administrator and 
every grocery store nationwide. I ask each of you to join me as co-
sponsors of this important legislation.
  I ask unanimous consent that the bill be printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1733

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Electronic Benefit Transfer 
     Interoperabilty and Portability Act of 1999''.

     SEC. 2. PURPOSES.

       The purposes of this Act are--
       (1) to protect the integrity of the food stamp program;
       (2) to ensure cost-effective portability of food stamp 
     benefits across State borders without imposing additional 
     administrative expenses for special equipment to address 
     problems relating to the portability;
       (3) to enhance the flow of interstate commerce involving 
     electronic transactions involving food stamp benefits under a 
     uniform national standard of interoperability and 
     portability; and
       (4) to eliminate the inefficiencies resulting from a 
     patchwork of State-administered systems and regulations 
     established to carry out the food stamp program

     SEC. 3. INTEROPERABILTY AND PORTABILITY OF FOOD STAMP 
                   TRANSACTIONS.

       Section 7 of the Food Stamp Act of 1977 (7 U.S.C. 2016) is 
     amended by adding at the end the following:
       ``(k) Interoperabilty and Portability of Electronic Benefit 
     Transfer Transactions.--
       ``(1) Definitions.--In this subsection:
       ``(A) Electronic benefit transfer card.--The term 
     `electronic benefit transfer card' means a card that provides 
     benefits under this Act through an electronic benefit 
     transfer service (as defined in subsection (i)(11)(A)).
       ``(B) Electronic benefit transfer contract.--The term 
     `electronic benefit transfer contract' means a contract that 
     provides for the issuance, use, or redemption of coupons in 
     the form of electronic benefit transfer cards.
       ``(C) Interoperabilty.--The term `interoperability' means a 
     system that enables a coupon issued in the form of an 
     electronic benefit transfer card to be redeemed in any State.
       ``(D) Interstate transaction.--The term `interstate 
     transaction' means a transaction that is initiated in 1 State 
     by the use of an electronic benefit transfer card that is 
     issued in another State.
       ``(E) Portability.--The term `portability' means a system 
     that enables a coupon issued in the form of an electronic 
     benefit transfer card to be used in any State by a household 
     to purchase food at a retail food store or wholesale food 
     concern approved under this Act.
       ``(F) Settling.--The term `settling' means movement, and 
     reporting such movement, of funds from an electronic benefit 
     transfer card issuer that is located in 1 State to a retail 
     food store, or wholesale food concern, that is located in 
     another State, to accomplish an interstate transaction.
       ``(G) Smart card.--The term `smart card' means an 
     intelligent benefit card described in section 17(f).
       ``(H) Switching.--The term `switching' means the routing of 
     an interstate transaction that consists of transmitting the 
     details of a transaction electronically recorded through the 
     use of an electronic benefit transfer card in 1 State to the 
     issuer of the card that is in another State.
       ``(2) Requirement.--Not later than October 1, 2002, the 
     Secretary shall ensure that systems that provide for the 
     electronic issuance, use, and redemption of coupons in the 
     form of electronic benefit transfer cards are interoperable, 
     and food stamp benefits are portable, among all States.
       ``(3) Cost.--The cost of achieving the interoperability and 
     portability required under paragraph (2) shall not be imposed 
     on any food stamp retail store, or any wholesale food 
     concern, approved to participate in the food stamp program.
       ``(4) Standards.--Not later than 120 days after the date of 
     enactment of this subsection, the Secretary shall promulgate 
     regulations that--
       ``(A) adopt a uniform national standard of interoperability 
     and portability required under paragraph (2) that is based on 
     the standard of interoperability and portability used by a 
     majority of State agencies.
       ``(B) require that any electronic benefit transfer contract 
     that is entered into 30 days or more after the regulations 
     are promulgated, by or on behalf of a State agency, provide 
     for the interoperability and portability required under 
     paragraph (2) in accordance with the national standard.
       ``(5) Exemptions--
       ``(A) Waiver.--At the request of a State agency, the 
     Secretary may provide 1 waiver to temporarily exempt, for a 
     period ending on or before the date specified under clause 
     (iii), the State agency from complying with the requirements 
     of paragraph (2), if the State agency--
       ``(i) establishes to the satisfaction of the Secretary that 
     the State agency faces unusual technological barriers to 
     achieving by October 1, 2002, the interoperability and 
     portability required under paragraph (2);
       ``(ii) demonstrates that the best interest of food stamp 
     benefit households and of the food stamp program would be 
     served by granting the waiver with respect to the electronic 
     benefit transfer system used by the State agency to 
     administer the food stamp program; and
       ``(iii) specifies a date by which the State agency will 
     achieve the interoperability and portability required under 
     paragraph (2).
       ``(B) Smart card systems.--The Secretary shall allow a 
     State agency that is using smart cards for the delivery of 
     food stamp program benefits to comply with the requirements 
     of paragraph (2) at such time after October 1, 2002, as the 
     Secretary determines that a practicable technological method 
     is available for interoperability with electronic benefit 
     transfer cards.
       ``(6) Funding.--
       ``(A) In general.--In accordance with regulations 
     promulgated by the Secretary, the Secretary shall pay 100 
     percent of the costs incurred by a State agency under this 
     Act for switching and settling interstate transactions--
       ``(i) incurred after the date of enactment of this 
     subsection and before October 1, 2002, if

[[Page S12645]]

     the State agency uses the standard of interoperability and 
     portability adopted by a majority of State agencies; and
       ``(ii) incurred after September 30, 2002, if the State 
     agency uses the uniform national standard of interoperability 
     and portability adopted under paragraph (4)(A).
       ``(B) Limitation.--The total amount paid to State agencies 
     for each fiscal year under subparagraph (A) shall not exceed 
     $500,000.''.

     SEC. 4. STUDY OF ALTERNATIVES FOR HANDLING ELECTRONIC BENEFIT 
                   TRANSACTIONS INVOLVING FOOD STAMP BENEFITS.

       Not later than 1 year after the date of enactment of this 
     Act, the Secretary of Agriculture shall study and report to 
     the Committee on Agriculture of the House of Representatives 
     and the Committee on Agriculture, Nutrition, and Forestry of 
     the Senate on alternatives for handling interstate electronic 
     benefit transactions involving food stamp benefits provided 
     under the Food Stamp Act of 1977 (7 U.S.C. 2011 et seq.), 
     including the feasibility and desirability of a single hub 
     for switching (as defined in section 7(k)(1) of that Act (as 
     added by section 3)).

  Mr. LEAHY. Mr. President, I am proud to join Senator Fitzgerald in 
cosponsoring the Electronic Benefit Interoperability and Portability 
Act of 1999.
  The Food Stamp Program has been critical to diminishing hunger and 
improving nutrition and health throughout our country. As the country's 
largest source of food aid, approximately 18 million people--half of 
which are children--receive food stamp benefits every month. In my home 
State of Vermont, more than 20,000 households depend on food stamps to 
help feed their families.
  In an effort to strengthen and streamline the Food Stamp Program, 
three years ago Congress mandated that every State switch to an 
Electronic Benefits Transfer system for distributing food stamp 
benefits. Operating like ATM or credit card machines at cash registers, 
EBT streamlines food stamps by eliminating the cumbersome paper system.
  The implementation of the EBT system was left up to the States, and 
nearly 40 States currently have switched to this new system. EBT has 
already demonstrated itself to be a more efficient system for 
distributing food stamp benefits, and it promises to help reduce food 
stamp fraud.
  However, three years into the implementation of EBT, a problem has 
arisen--some State EBT systems do not match up with neighboring State 
EBT systems, leaving residents of border communities unable to utilize 
their food stamp benefits across State lines. This Federal benefit 
program has always been recognized and redeemable in every State, 
irrespective of where the actual food stamps were issued.
  For some of our more rural States, the inability to access food stamp 
benefits across State lines could mean the difference between traveling 
a few miles to a grocery store in the next State to traveling an hour 
or more to the closest grocery store in one's home State. Clearly, this 
creates quite a burden.
  The bill which we are introducing today would correct this oversight 
by requiring the U.S. Department of Agriculture to adopt a national EBT 
standard, and requiring that all States be EBT interoperable by 2002.
  Vermont Commissioner of Social Welfare Jane Kitchel has voiced her 
support for this bill, as has the New England Convenience Store 
Association.
  Mr. President, I would like to thank Senator Fitzgerald for all of 
his work on this issue. I believe that this bill will help make the 
Food Stamp Program more streamlined and efficient, and I am proud to 
cosponsor this legislation.
                                 ______