[Federal Register Volume 60, Number 92 (Friday, May 12, 1995)]
[Proposed Rules]
[Pages 25625-25628]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-11785]



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DEPARTMENT OF AGRICULTURE
Food and Consumer Services

7 CFR Part 278

RIN 0584-AC00


Food Stamp Program: Revisions in Use and Disclosure Rules 
Involving the Sharing of Information Provided by Retail and Wholesale 
Food Concerns With Other Federal and State Agencies

AGENCY: Food and Consumer Service, USDA.

ACTION: Proposed rule.

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SUMMARY: This rulemaking proposes to implement certain provisions in 
two different laws which expand the authority of the United States 
Department of Agriculture's Food and Consumer Service (FCS) to share 
information provided by applicants and firms participating as 
authorized retail food stores or wholesale food concerns in the Food 
Stamp Program (FSP) with other government agencies. The Food Stamp Act 
of 1977, as amended, was amended by section 203 of the Food Stamp 
Program Improvements Act of 1994, and the Social Security Act and the 
Internal Revenue Code were amended by section 316 of the Social 
Security Independence and Program Improvements Act of 1994. This 
proposed rule also includes one technical change to correct an error in 
regulatory reference that does not change the substance of the affected 
provision.
    The proposed rule would implement the authority for FCS to share 
such information, excluding employer identification numbers (EINs) and 
Social Security numbers (SSNs), with Federal and State law enforcement 
and investigative agencies for purposes of administering and enforcing 
the Food Stamp Act of 1977, as amended, or any other Federal or State 
law and regulations issued under this Act or any other Federal or State 
law. It also would provide new criteria to govern the sharing of such 
information and criminal penalties for unauthorized use. Finally, this 
rule would implement the Secretary of Agriculture's new authority to 
share EIN and SSN information of applicants and firms participating in 
the FSP with other Federal agencies.

DATES: Comments on the provisions of this rule must be received no 
later than June 12, 1995, to be assured of consideration.

ADDRESSES: Comments should be addressed to Suzanne Fecteau, Food and 
Consumer Service, Chief, Coupon and Retailer Branch, 3101 Park Center 
Drive, Alexandria Virginia 22302-1594. All written comments will be 
open to public inspection at the office of the Food and Consumer 
Service during regular business hours (8:30 a.m. to 5 p.m., Monday 
through Friday) in room 706, 3101 Park Center Drive, Alexandria, 
Virginia.

FOR FURTHER INFORMATION CONTACT: Questions regarding this rulemaking 
should be addressed to Suzanne Fecteau at the above address or 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 to 7 CFR part 3015 subpart V (48 FR 29115, June 
24, 1983), this Program is excluded from the scope of the Executive 
Order 12372 which requires inter-governmental 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. 601-612). William E. 
Ludwig, the Administrator of the Food and Consumer Service, has 
certified that this proposed rule will not have a significant economic 
impact on a substantial number of small entities. This action may have 
a significant effect on a limited number of small entities found to be 
in violation of State or Federal laws. [[Page 25626]] 

Paperwork Reduction Act

    This rule does not contain reporting or recordkeeping requirements 
subject to approval by the Office of Management and Budget (OMB) under 
the Paperwork Reduction Act of 1980 (44 U.S.C. 3507).

Executive Order 12778

    This 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 intended to have retroactive effect. 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 283 (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

    This rule would expand the use and disclosure of information 
provided by applicants and firms participating as authorized retail 
food stores or wholesale food concerns in the FSP. The provisions of 
this rule will be effective retroactively to August 15, 1994, when Pub. 
L. 103-296 was enacted, and will be implemented 30 days after the final 
rulemaking is published.
    Current regulations restrict FCS' ability to share information 
provided by retailers and wholesalers participating in the Food Stamp 
Program. EINs and SSNs may only be shared with Federal employees whose 
duties or responsibilities require access to those numbers for the 
administration and enforcement of the Food Stamp Act of 1977, as 
amended. The use of EINs and SSNs is only allowed for the maintenance 
of a list of specific individuals and firms that have been sanctioned 
or convicted of Food Stamp Program violations under sections 12 (Civil 
Money Penalties and Disqualification) and 15 (Violations and 
Enforcement) of the Food Stamp Act. Other information provided by 
retailers (e.g. application information, sales and redemption data) can 
be shared with other Federal or State agencies only for the purposes of 
administration or enforcement of the Food Stamp Program, the Special 
Supplemental Food Program for Women, Infants and Children (WIC), and 
for audits by the General Accounting Office.

Use and Disclosure of Information Provided by Retail Food Stores and 
Wholesale Food Concerns

    Section 9(c) of the Food Stamp Act of 1977, as amended (the Act) (7 
U.S.C. 2018(c)) governs the authorization of retailers and wholesalers 
to participate in the Food Stamp Program, based on information those 
retailers and wholesalers provide FCS. Section 203 of the Food Stamp 
Program Improvements Act of 1994, Pub. L. 103-225 (108 Stat. 106) 
amends section 9(c) of the Act, to expand the use and disclosure of 
information provided by applicant and participating retail and 
wholesale food concerns, such as food stamp redemption data, as well as 
information about ownership (excluding EINs and SSNs) and sales data 
included on the initial application, in addition to information 
required to be submitted for purposes of determining whether a firm 
continues to qualify. As authorized by the amendment to section 9(c), 
this rule would allow disclosure of this information to other Federal 
and State law enforcement and investigative agencies for the purposes 
of administering and enforcing the Food Stamp Act, as well as the 
enforcement of any other Federal or State laws and the regulations 
issued under this Act and such laws.
    This rule proposes other safeguards in addition to new penalties 
for unauthorized use and disclosure of information. It would limit the 
use and disclosure of this information to the purpose of effectively 
administering and enforcing the Food Stamp Act or for investigating 
violations of other State or Federal laws, or enforcement of such laws 
and regulations. Federal and State agencies authorized to have access 
to this information would be required to submit a request in writing. 
The request must set forth specifically which law is being enforced and 
must also demonstrate how the requested information is relevant to the 
enforcement of that law. The Department will base its determination 
whether or not to disclose the requested information upon such a 
showing by the requesting agency. The Department expects such 
information to be requested most frequently by taxation authorities 
such as the Internal Revenue Service and State income and sales tax 
agencies. The information may also be useful to law enforcement and 
investigative agencies which seek to verify the income and sources of 
income of a retailer.
    In addition to responding to specific requests from other Federal 
and State agencies, FCS would periodically initiate cross matches of 
retailer data against other agencies' files. The purpose of these 
matches is to allow the verification of information reported by 
applicants and participating firms, and to assist in the administration 
and enforcement of the Food Stamp Act and other Federal and State laws.
    The Food Stamp Improvements Act of 1994 also amends section 9(c) of 
the Food Stamp Act to provide criminal penalties for the misuse of any 
information obtained from retail food stores and wholesale food 
concerns. This would apply to any person who publishes, divulges, 
discloses, or makes this information known in any manner or to any 
extent not authorized by Federal law or regulations. A penalty which 
includes a fine of not more than $1,000, or imprisonment of not more 
than one year, or both, is established by law and is reflected in this 
proposed rulemaking.


Cross-Matching of Social Security Account Number Information and 
Employer Identification Number Information Maintained by the Department 
of Agriculture

    Section 1735 of the Food, Agriculture, Conservation, and Trade Act 
of 1990 (Pub. L. No. 101-624, 104 Stat. 3359) amended section 
205(c)(2)(C) of the Social Security Act (42 U.S.C. 405(c)(2)(C)) and 
added section 6109(f) to the Internal Revenue Code of 1986 (26 U.S.C. 
6109(f)) to permit the Secretary of Agriculture to collect the Social 
Security numbers of individual retailers who apply for FSP 
authorization and those of the officers of corporate applicants, as 
well as employer identification numbers assigned by the Internal 
Revenue Service. Section 316 of the Social Security Independence and 
Program Improvements Act of 1994 (Pub. L. No. 103-296, 108 Stat. 1464) 
expands FCS' authority to share the EINs and SSNs of food stamp 
retailers and wholesalers with other agencies or instrumentalities of 
the United States for verification purposes to more effectively 
administer and enforce the Food Stamp Program, as well as other Federal 
laws. [[Page 25627]] 
    This rulemaking proposes to permit the Department to share the list 
of names and identifying numbers of food concerns with other Federal 
agency personnel who otherwise have access to EINs and SSNs, for the 
purpose of effectively administering and enforcing the Food Stamp Act 
or for investigating violations of other Federal laws, or enforcement 
of such laws. The use of such lists would be limited to cross-matching 
employer identification number information and Social Security account 
number information maintained by the Department of Agriculture for the 
purpose of verifying information provided by applicants and firms 
participating in the Food Stamp Program.
    Under the amendments, the Department must restrict access to 
officers and employees of the United States government whose duties or 
responsibilities require access to EINs and SSNs. To obtain such 
information, a Federal agency must already have access to EINs and 
SSNs, and must submit a written request that demonstrates the need for 
such information. The applicable law shall be clearly identified as the 
relevant basis for a request to assist FCS in determining whether 
retailer data can be released to the requesting agency. The Department 
anticipates such information to be requested most frequently by the 
Internal Revenue Service. The information may also be useful to other 
Federal agencies which seek to verify the income and sources of income 
for a given retailer, in conjunction with an EIN or SSN.
    In addition to responding to specific requests from other Federal 
agencies under this proposed rule, FCS would periodically initiate 
cross matches of retailer data against other Federal agencies' files. 
The purpose of these matches is to allow the verification of 
information reported by applicant and participating firms, and to 
assist in the administration and enforcement of other Federal laws.
    The provisions of this rule do not extend to private actions 
against the authorized entities, either contemplated or ongoing, as 
private litigants are not law enforcement agencies.

Technical Correction

    This rule proposes to implement a technical change to correct a 
regulatory reference error in Sec. 278.1 (q)(iv), whereby a paragraph 
dealing with privacy that should have been referenced as ``278.1 (q)'' 
was mistakenly referenced as ``278.1 (s)''. This correction does not 
change the intent of this provision.
    Finally, it is anticipated that changes to Department of Treasury 
references used in this proposed rule will be made in the final rule to 
reflect changes made by the Department of Treasury in a proposed rule 
dealing with information sharing that was printed in the Federal 
Register on May 10, 1995.

List of Subjects

7 CFR Part 278

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

    Accordingly, 7 CFR part 278 is proposed to be amended as follows:
    1. The authority citation for 7 CFR part 278 continues to read as 
follows:

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

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

    2. In Sec. 278.1:
    a. The introductory text of paragraph (q) is revised;
    b. Paragraphs (q)(1) and (q)(2) are redesignated as paragraphs 
(q)(2) and (q)(3), respectively, and a new paragraph (q)(1) is added;
    c. Newly redesignated paragraphs (q)(2)(i), (q)(2)(ii), (q)(3)(i), 
and (q)(3)(ii) are revised;
    d. Newly redesignated paragraph (q)(2)(iii) is amended by adding 
after the word ``Department'' in the first sentence the words ``or any 
agency or instrumentality of the United States'' and by removing the 
designation ``(c)(2)'' following the references to ``Sec. 301.6109-2'' 
and ``(26 CFR Sec. 301.6109-2)'';
    e. Newly redesignated paragraph (q)(2)(iv) is amended by adding 
after the word ``Department'' the words ``or maintained by any agency 
or instrumentality of the United States'', by removing the references 
to ``Sec. 278.1(s)(1)(ii)'' and ``Sec. 278.1 (q)(1)(iv)'' and adding in 
their place references to ``paragraph (q)(2)(ii) of this section'' and 
``paragraph (q)(2)(iv) of this section'', and by removing the 
designation ``(d)'' following the references to ``Sec. 301.6109-2'' and 
``(26 CFR 301.6109)'';
    f. Newly redesignated paragraph (q)(2)(v) is amended by removing 
the designation ``(e)'' after the references to ``Sec. 301.6109-2'' and 
``(26 CFR 301.6109-2)'';
    g. Newly redesignated paragraph (q)(3)(iv) is amended by removing 
the reference ``Sec. 278.1(q)(2)(iv)'' and adding in its place the 
reference ``paragraph (q)(3)(iv) of this section''; and
    h. A new paragraph (q)(4) is added. The revisions and additions 
read as follows:


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

* * * * *
    (q) Safeguarding privacy. With the exception of EINs and SSNs, the 
use and disclosure of the contents of an initial application or other 
information required to be submitted to determine whether an applicant 
continues to qualify, including ownership information and sales and 
redemption data provided by retail food stores and wholesale concerns 
by Federal and State law enforcement and investigative agencies, is 
limited to the purposes of administering or enforcing the Food Stamp 
Act or any other Federal or State law, and the regulations issued under 
the Food Stamp Act or such other law. Such information may also be 
disclosed to and used by State agencies that administer the Special 
Supplemental Food Program for Women, Infants and Children (WIC). Such 
purposes shall not exclude the audit and examination of such 
information by the Comptroller General of the United States authorized 
by any other provision of law. Any person who publishes, divulges, 
discloses, or makes known in any manner or to any extent not authorized 
by Federal law or regulations any information obtained under this 
paragraph shall be fined not more than $1,000 or imprisoned not more 
than 1 year, or both. Additional safeguards with respect to employee 
identification numbers (EINs) are contained in paragraph (q)(2) of this 
section. Additional safeguards with respect to Social Security numbers 
(SSNs) are contained in paragraph (q)(3) of this section.
    (1) Criteria for requesting information. Except for EINs and SSNs, 
information provided by firms participating in the Food Stamp Program 
may be requested by Federal or State law enforcement or investigative 
agencies for purposes of administering or enforcing specified Federal 
or State laws, or regulations issued under those laws. Release of 
information under this paragraph shall be limited to information 
relevant to the administration or enforcement of the specified laws and 
regulations, as determined by FCS. The request must be submitted in 
writing and must clearly indicate the specific provision of law or 
regulations which would be administered or enforced by access to 
requested information and the relevance of the information to those 
purposes. [[Page 25628]] FCS may require additional information, if 
needed to clarify a request. Requests under this paragraph are limited 
to authorized entities authorized on and after August 15, 1994. 
However, unauthorized firms redeeming food stamps in violation of the 
Food Stamp Act, as amended, on and after August 15, 1994 shall be 
subject to provisions of this Section.
    (2) Employer identification numbers. (i) The Department may have 
access to the EINs obtained pursuant to paragraph (b)(5) of this 
section for the purpose of establishing and maintaining a list of the 
names and EINs of the stores and concerns for use in determining those 
applicants who previously have been sanctioned or convicted under 
sections 9 and 12 of the Food Stamp Act of 1977, as amended, (7 U.S.C. 
2018, 2021). The Department may share EINs with other Federal agencies 
and instrumentalities if the Department determines that such sharing 
would assist in verifying and matching such information against 
information maintained by such other agency or instrumentality. Any 
such information shared pursuant to this paragraph may be used by such 
other agency or instrumentality for the purpose of effective 
administration and enforcement of the Food Stamp Act of 1977, as 
amended, or for the purpose of investigation of violations of other 
Federal laws or enforcement of such laws. See Treas. Reg. 
Sec. 301.6109-2 (26 CFR 301.6109-2).
    (ii) The only persons permitted access to EINs obtained pursuant to 
paragraph (b) of this section are officers and employees of the United 
States who otherwise have access and whose duties or responsibilities 
require access to the EINs for the administration or enforcement of the 
Food Stamp Act of 1977, as amended, or for the purpose of investigation 
of violations of other Federal laws or enforcement of such laws. See 
Treas. Reg. Sec. 301.6109-2 (26 CFR 301.6109-2).
* * * * *
    (3) Social Security numbers. (i) The Department may have access to 
SSNs obtained pursuant to paragraph (b)(5) of this section for the 
purpose of establishing and maintaining a list of names and SSNs for 
use in determining those applicants who previously have been sanctioned 
or convicted under section 12 and 15 of the Food Stamp Act of 1977, as 
amended, (7 U.S.C. 2021 or 2024). The Department may use this 
determination of sanctions and convictions in administering sections 9 
and 12 of the Food Stamp Act of 1977 (7 U.S.C. 2018, 2021). The 
Department may share SSNs with other Federal agencies and 
instrumentalities if the Department determines that such sharing would 
assist in verifying and matching such information against information 
maintained by such other agency or instrumentality. Any such 
information shared pursuant to this paragraph may be used for the 
purpose of effective administration and enforcement of the Food Stamp 
Act of 1977, as amended, or for the purpose of investigation of 
violations of other Federal laws or enforcement of such laws.
    (ii) The only persons permitted access to SSNs obtained pursuant to 
paragraph (b) of this section are officers and employees of the United 
States who otherwise have access and whose duties or responsibilities 
require access to the SSNs for the administration or enforcement of the 
Food Stamp Act of 1977, as amended, or for investigations of violations 
of other Federal laws or enforcement of such laws.
* * * * *
    (4) FCS initiated matches. Under the restrictions noted in 
paragraph (q) of this section, FCS will periodically initiate cross 
matches of retailer data against other Federal and State agencies' 
files for the purpose of verifying information provided by applicant 
and participating firms, and for the purposes of administering and 
enforcing other Federal or State laws.
* * * * *
William E. Ludwig,
Administrator, Food and Consumer Service.
[FR Doc. 95-11785 Filed 5-11-95; 8:45 am]
BILLING CODE 3410-30-U