[Federal Register Volume 59, Number 224 (Tuesday, November 22, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-28750]


  Federal Register / Vol. 59, No. 224 / Tuesday, November 22, 1994 /
  
[[Page Unknown]]

[Federal Register: November 22, 1994]


                                                   VOL. 59, NO. 224

                                         Tuesday, November 22, 1994

DEPARTMENT OF AGRICULTURE

Food and Consumer Service
[Amendment No. 331]

7 CFR Chapter II and Parts 271 and 278

 

Food Stamp Program: Revision of the Definition of Insured 
Financial Institutions and Modification of Food Stamp Redemption 
Procedures

AGENCY: Food and Consumer Service, USDA.

ACTION: Final rule.

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SUMMARY: This rule amends Food Stamp Program regulations relative to 
food stamp redemption and changes the definition of ``insured financial 
institution''. This change is necessary because of statutory revisions 
to the Federal bank insurance system. Financial institutions formerly 
insured by the Federal Savings and Loan Insurance Corporation (FSLIC) 
are now insured by the Savings Association Insurance Fund (SAIF), which 
is administered by the Federal Deposit Insurance Corporation (FDIC). 
This rule also modifies the procedures for financial institutions which 
deposit food stamps at Federal Reserve Banks in order to be consistent 
with changes in Federal Reserve requirements.
    In addition, this rule amends 7 CFR chapter II to reflect the 
abolishment of the Food and Nutrition Service and the establishment of 
the Food and Consumer Service in the recent Department of Agriculture 
reorganization.

DATES: The amendments to parts 271 and 278 are effective December 22, 
1994. The amendments to the heading of 7 CFR Chapter II and to the 
references in the chapter are effective November 22, 1994.

FOR FURTHER INFORMATION CONTACT: Suzanne Fecteau, Chief, Coupon and 
Retailer Branch, Benefit Redemption Division, by telephone at (703) 
305-2418.

SUPPLEMENTARY INFORMATION:

Executive Order 12866

    This rule has been determined to be not significant for purposes of 
Executive Order 12866, and therefore, has not 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 No. 10.551. For the reasons set forth in the final 
rule and related Notice(s) to 7 CFR part 3015, subpart V (48 FR 29115, 
June 24, 1983 or 48 FR 54317, December 1, 1983, as appropriate, and any 
subsequent notices that may apply), this program is excluded from the 
scope of Executive Order 12372 which requires intergovernmental 
consultation with State and local officials.

Regulatory Flexibility Act

    This action has been reviewed with regard to the requirements of 
the Regulatory Flexibility Act of 1980 (Pub. L. 96-354). The 
Administrator of the Food and Consumer Service has certified that this 
action does not have a significant economic impact on a substantial 
number of small entities. The rule makes only slight technical changes 
to the Food Stamp Program coupon redemption procedures to improve 
system accountability, while also revising the definition of ``insured 
financial institution''.

Paperwork Reduction Act

    The reporting requirements relating to the provisions on the 
redemption of food stamps at 7 CFR 278.5 have been approved under OMB 
number 0584-0085. The public reporting burden for this collection of 
information is estimated to average .020 hours per response, including 
the time for reviewing instructions, searching existing data sources, 
gathering and maintaining the data needed, and completing and reviewing 
the collection of information. Send comments regarding this burden 
estimate or any burden, to the U.S. Department of Agriculture, 
Clearance Officer, OIRM, Room 404-W, Washington, D.C., 20250; and to 
the Office of Management and Budget, Paperwork Reduction Project (OMB 
#0584-0085), Washington, D.C., 20503.

Executive Order 12778

    This final rule has been reviewed under Executive Order 12778, 
Civil Justice Reform. This rule is intended to have 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 must be exhausted. In the Food Stamp Program the 
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 at 7 CFR 276.7 (for rules related to non-
quality control (QC) liabilities) or part 284 (for rules related to QC 
liabilities);
    (3) For program retailers and wholesalers--administrative 
procedures issued pursuant to 7 U.S.C. 2023 set out at 7 CFR 278.8.

Background

    Current regulations at 7 CFR part 278 contain requirements that 
firms authorized by the Food and Consumer Service to accept food stamps 
may redeem them only at financial institutions which are insured by the 
FDIC or the FSLIC; or at financial institutions which are insured under 
the Federal Credit Union Act and which have retail food stores or 
wholesale food concerns in their field of membership (7 CFR 278.5). On 
August 9, 1989, the FSLIC, along with its parent organization, the 
Federal Home Loan Bank Board, ceased to exist. These institutions have 
been consolidated into the SAIF pursuant to sections 211(6) and 401 of 
the Financial Institution Reform, Recovery and Enforcement Act of 1989 
(FIRREA) (Pub. L. 101-73, 103 Stat. 183). The SAIF is administered by 
the FDIC. This rule amends the Food Stamp Program regulations to delete 
FSLIC wherever that reference appears.
    The Department is also amending the regulations to be consistent 
with the Federal Reserve requirements that financial institutions 
submit only balanced deposits to the Federal Reserve and use Magnetic 
Ink Character Recognition (MICR) to encode on the Food Stamp Redemption 
Certificate the verified amount of coupons received from authorized 
firms. The redemption certificate is the deposit document that 
authorized firms use to deposit coupons with financial institutions for 
credit.

Deposit Balancing Requirements

    In an effort to improve the accountability in the food coupon 
redemption process and reduce the likelihood of fraud, the Department 
enlisted the cooperation of the Federal Reserve to modify its 
depositing requirements for food coupons to facilitate reconciliation 
of coupons deposited with deposit documents and redemption 
certificates. Financial institutions are now required by the Federal 
Reserve to submit balanced deposits, which means that the face value of 
coupons deposited must match both the amount of coupons entered on the 
financial institution's deposit document and the total amount of 
coupons entered by authorized firms on the redemption certificates 
accompanying the deposit.

MICR-Encoding Requirement

    Requiring financial institutions, or retailers with MICR-encoding 
capability, to MICR-encode the verified coupon amount on redemption 
certificates allows redemption data to be electronically captured at 
the Federal Reserve Banks and transmitted directly to the Department's 
computer processing center. It also allows the Federal Reserve Banks 
and the Department to achieve greater accuracy and accountability in 
the coupon deposit reconciliation system while using standard banking 
technology.
    A proposed rule dealing with these requirements was published at 56 
FR 13,601 on April 3, 1991 and provided the public with a 60-day period 
to submit comments on the proposed provisions. The Department received 
no public comments on the proposed rule and this rule is being 
finalized without change.

Establishment of the Food and Consumer Service

    Pursuant to Pub. L. 103-354, The Federal Crop Insurance Reform and 
Department of Agriculture Reorganization Act of 1994, the Secretary of 
Agriculture issued Secretary's Memorandum 1010-1, Reorganization of the 
Department of Agriculture, on October 20, 1994. SM 1010-1 orders the 
abolishment of the Food Nutrition Service (FNS), and the establishment 
of the Food and Consumer Service, which assumes the functions 
previously performed by FNS. This rule includes amendments to 7 CFR 
chapter II which are necessary to bring Agency regulations into 
alignment with the Departmental reorganization.

List of Subjects

7 CFR Part 271

    Administrative practice and procedure, Food stamps, Grant 
programs--social programs.

7 CFR Part 278

    Administrative practice and procedure, Banks, Banking, Claims, Food 
stamps, Groceries--retail, Groceries, general line--wholesaler, 
Penalties.

    Accordingly, 7 CFR chapter II and parts 271 and 278 are amended as 
follows:

Chapter II--Food and Consumer Service, Department of Agriculture

    1. The heading of 7 CFR chapter II is revised to read as set forth 
above.


Chapter II  [Amended]

    2. In 7 CFR chapter II (consisting of parts 210-299) all references 
to ``Food and Nutrition Service'' are revised to read ``Food and 
Consumer Service'', and all references to ``FNS'' are revised to read 
``FCS''.
    3. The authority citation for parts 271 and 278 continues to read 
as follows:

    Authority: 7 U.S.C. 2011-2032.

PART 271--GENERAL INFORMATION AND DEFINITIONS


Sec. 271.2  [Amended]

    4. In Sec. 271.2 the definition of Insured financial institution is 
amended by removing the words ``or the Federal Savings and Loan 
Insurance Corporation (FSLIC)''.

PART 278--PARTICIPATION OF RETAIL FOOD STORES, WHOLESALE FOOD 
CONCERNS AND INSURED FINANCIAL INSTITUTIONS

    5. In Sec. 278.5:
    a. Paragraph (a)(1) is amended by removing the words ``or the 
Federal Savings and Loan Insurance Corporation (FSLIC)'' in the first 
sentence, and adding two new sentences to the end of the paragraph.
    b. Paragraph (a)(2) is revised.
    The revision and additions read as follows:


Sec. 278.5  Participation of insured financial institutions.

    (a) Accepting coupons. (1) * * * All verified and encoded 
redemption certificates accepted by insured financial institutions 
shall be forwarded with the corresponding coupon deposits to the 
Federal Reserve Bank along with the accompanying Food Coupon Deposit 
Document (Form FNS-521). In accordance with Federal Reserve 
requirements, the coupon deposit value entered on the Food Coupon 
Deposit Document must be equal to the actual value of coupons being 
deposited and to the total value of verified amounts encoded on the 
corresponding redemption certificates.
    (2) An insured financial institution shall verify the amount of the 
coupons being redeemed and record the amount in the designated space on 
the redemption certificate. In order to conform with Federal Reserve 
requirements, the verified amount shall be recorded in the appropriate 
field on the redemption certificate using Magnetic Ink Character 
Recognition (MICR) encoding. Redemption certificates accepted by 
insured financial institutions shall be forwarded with the 
corresponding coupon deposits to the Federal Reserve Bank along with 
the Food Coupon Deposit Document (Form FNS-521).
* * * * *
    6. In Sec. 278.9, a new paragraph (k) is added to read as follows:


Sec. 278.9  Implementation of amendments relating to the participation 
of retail food stores, wholesale food concerns and insured financial 
institutions.

* * * * *
    (k) Amendment No. 331. The program changes made to Secs. 271.2 and 
278.5 by this amendment are effective December 22, 1994.

    Dated: November 4, 1994.
William E. Ludwig,
Administrator, Food and Consumer Service.
[FR Doc. 94-28750 Filed 11-21-94; 8:45 am]
BILLING CODE 3410-30-U