[Federal Register Volume 61, Number 250 (Friday, December 27, 1996)]
[Rules and Regulations]
[Pages 68119-68122]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-32998]
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DEPARTMENT OF AGRICULTURE
Food and Consumer Service
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: Final rule.
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SUMMARY: This rulemaking implements 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 Federal and State government agencies.
The intent of this final rule is to enable better administration
and enforcement of the Food Stamp Act of 1977, as amended (the Act), or
any other Federal or State law and regulations issued under the Act or
any other Federal or State law. This rule provides new criteria to
govern the sharing of such information and new criminal penalties for
unauthorized use. It also implements the Secretary of Agriculture's new
authority to share employer identification numbers (EINs) and Social
Security numbers (SSNs) of applicants and firms participating in the
FSP with other Federal agencies.
Finally, this rule makes technical changes to correct an error in
regulatory reference and also to reflect changes made by the Department
of the Treasury
[[Page 68120]]
in a parallel rule that does not change the substance of the affected
provisions.
EFFECTIVE DATE: Provisions in this rule are effective and will be
implemented beginning February 25, 1997.
FOR FURTHER INFORMATION CONTACT: Questions regarding this final rule
should be addressed to Suzanne Fecteau, Food and Consumer Service,
Chief, Redemption Management Branch, 3101 Park Center Drive,
Alexandria, Virginia 22302-1594, or by telephone at (703) 305-2418.
SUPPLEMENTARY INFORMATION:
Executive Order 12866
This final 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 Executive Order
12372, which requires inter-governmental consultation with State and
local officials.
Regulatory Flexibility Act
This final rule has been reviewed with regard to the requirements
of the Regulatory Flexibility Act of 1980 (5 U.S.C. Sec. 601-612).
William E. Ludwig, the Administrator of the Food and Consumer Service,
has certified that this rule will not have a significant economic
impact on a substantial number of small entities; however, it may have
a significant effect on a limited number of small entities that violate
State or Federal laws.
Paperwork Reduction Act
This final rule does not contain reporting or recordkeeping
requirements subject to approval by the Office of Management and Budget
under the Paperwork Reduction Act of 1980 (44 U.S.C. 3507).
Executive Order 12778
This final rule has been reviewed under Executive Order 12778,
Civil Justice Reform. This rule has 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 also has 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
On May 12, 1995, the Department published a proposed rule at 60 FR
25625, to implement section 203 of the Food Stamp Program Improvements
Act of 1994, Public Law 103-225. Section 203 revises section 9(c) of
the Food Stamp Act of 1977, as amended, to expand FCS' authority to
share information provided by applicants and participating retail food
concerns--including information about food stamp redemptions, retail
food sales, and store ownership--with other Federal and State law
enforcement and investigative agencies. It covers certain information
provided on authorization applications, as well as additional
supporting information submitted to document store eligibility to
participate in the FSP. This information can be shared for the purpose
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 or such other laws.
The sharing of EINs and SSNs is not covered by Public Law 103-225
or by Section 9(c) of the Food Stamp Act of 1977, as amended. The
sharing of EINs and SSNs is covered in section 316 of the Social
Security Independence and Program Improvements Act of 1994, Public Law
103-296, and is also implemented by this rule. Section 316 revises
section 6109(f) of the Internal Revenue Code of 1986, and section
205(c)(2)(C) of the Social Security Act, to expand FCS' authority to
verify and match SSNs and EINs with other Federal agencies or
instrumentalities of the United States to more effectively administer
and enforce the FSP, as well as other Federal laws and regulations.
For currently authorized firms, the provisions of this rule are
effective February 25, 1997 and will be implemented beginning February
25, 1997. Because of the legal notice requirements related to the use
of EINs and SSNs, currently authorized firms will receive notices of
the expanded information sharing provisions of this rule, and will be
given the opportunity to withdraw from FSP participation if they do not
want to be subject to these new provisions. Firms that remain
authorized 60-days after the date of the notice, will be subject to the
information sharing provisions. However, firms that withdraw or were
disqualified from FSP participation prior to the implementation date on
the notice will not be subject to the expanded information sharing
provisions of this rule, unless such firms participate in the FSP at a
future date subsequent to implementation of this rule.
Comments were solicited on the provisions of the proposed
rulemaking through June 12, 1995. This final action addresses the
commentors' concerns. Readers should refer to the proposed rule for a
more complete understanding of this final action.
The Department received three comment letters on the proposed rule,
two representing Federal agencies and one representing a State agency.
All three commentors were supportive of the proposed provisions, and
two offered constructive suggestions to clarify certain provisions of
the proposed rule.
A State agency commented that the proposed rule will assist law
enforcement and investigative agencies in their efforts to investigate
food stamp trafficking, as well as other crimes associated with
trafficking.
A Federal agency commented on the need to clarify certain
requirements in the proposed rule regarding how information is
requested. The proposed rule required that requests be submitted in
writing and include the specific provisions of laws and regulations
being enforced. The recommendation was that written requests include
electronic communications. This commentor also recommended that the
final rule allow standing agreements between FCS and other agencies to
document that such information is being accessed for bona fide law
enforcement purposes, without citing specific provisions of law.
It is the view of the Department that written requests include
electronic communications. The Department also believes that formal
agreements between government agencies may be a better way to document
the bona fide need for the information. In such situations, individual
written requests for access to FCS information may not be necessary.
The Department has made this clear in the final rule by adding the
appropriate language.
[[Page 68121]]
The Department of Agriculture's Office of Inspector General (OIG)
expressed concern that the proposed rule restricted its authority to
share information for enforcement of the Food Stamp Act, while other
government entities could access information to enforce all laws and
regulations under their respective jurisdictions. OIG also requested
that the final rule include language to give it special authority to
release information in certain circumstances.
The Department agrees that OIG and other USDA agencies may be
allowed access to information needed to enforce Departmental laws and
regulations. Appropriate clarifying language is included in the final
rule. Authority for OIG or other agencies to release FCS information
will be addressed in written agreements with individual agencies.
OIG was also concerned about the effective date of this rule. The
proposed rule provides that stores authorized to participate in the FSP
on August 15, 1994, and stores authorized after that date will be
subject to the rule. OIG was concerned that a possible interpretation
might be that stores initially authorized before August 15, 1994, that
continue participating after implementation, would not be subject to
this rule. This was not the Department's intent; thus, the final rule
states that all stores participating in the FSP after implementation
shall be subject to the provisions in this rule. This rule also affects
unauthorized entities and individuals accepting and redeeming food
stamps illegally, except that the sharing of EINs and SSNs for such
firms will be limited to those firms which were previously sanctioned
or convicted under section 12 or 15 of the Food Stamp Act of 1977, as
amended (7 U.S.C. 2021 or 2024).
The Department has made minor revisions to clarify the meaning of a
few provisions in the proposed rule in order to avoid any confusion. A
reference to ``applicant'' under paragraph (q) that was inappropriate
has been replaced with the appropriate term, ``retail food store.'' The
Department also clarified a reference in the proposed rule involving
the Special Supplemental Food Program for Women, Infants and Children
(WIC). Current regulations afford WIC special information sharing
status. This rule's expanded information sharing negates the need to
treat WIC as a special situation; therefore, the sentence involving the
treatment of WIC in the proposed rule has been removed.
The Department has also added clarifying language to clearly
distinguish between the two different laws implemented by this rule.
One law (amending the Food Stamp Act) addresses information, excluding
SSNs and EINs, provided by applicants and participating firms that can
be shared with both Federal and State law enforcement or investigative
agencies. The other law (amending the Social Security Act and the
Internal Revenue Code) addresses information involving SSNs and EINs
that can only be shared with certain Federal agencies and
instrumentalities of the United States. Clarifying language has also
been added to the final rule to define ``a law enforcement or
investigative agency'' and ``an FCS initiated match.'' Editorial
changes in the final rule were also made to provide a more orderly
presentation.
Finally, because a regulation published on October 15, 1996
redesignated paragraph (q) to (r) in Sec. 278.1, this rule makes the
conforming changes.
List of Subjects in 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 amended as follows:
PART 278--[AMENDED]
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 heading and the introductory text of paragraph (r) is
revised;
b. Paragraphs (r)(1) and (r)(2) are redesignated as paragraphs
(r)(2) and (r)(3), respectively, and a new paragraph (r)(1) is added;
c. Newly redesignated paragraphs (r)(2)(i), (r)(2)(ii), (r)(3)(i),
and (r)(3)(ii) are revised;
d. Newly redesignated paragraph (r)(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 301.6109-2)'' and adding in its place the designation
(d)(2);
e. Newly redesignated paragraph (r)(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 (r)(1)(iv)'' and adding in
their place references to ``paragraph (r)(2)(ii) of this section'' and
``paragraph (r)(2)(iv) of this section'', and by removing the
designation ``(d)'' following the references to ``Sec. 301.6109-2'' and
``(26 CFR 301.6109)'' and adding in its place the designation (e);
f. Newly redesignated paragraph (r)(2)(v) is amended by removing
the designation ``(e)'' after the references to ``Sec. 301.6109-2'' and
``(26 CFR 301.6109-2)'' and adding in its place the designation (f);
g. Newly redesignated paragraph (r)(3)(iv) is amended by removing
the reference ``Sec. 278.1(q)(2)(iv)'' and adding in its place the
reference ``paragraph (r)(3)(iv) of this section''; and
h. A new paragraph (r)(4) is added.
The revisions and additions read as follows:
Sec. 278.1 Approval of retail food stores and wholesale food concerns.
* * * * *
(r) Use and disclosure of information provided by firms. With the
exception of EINs and SSNs, the contents of an initial application, or
other information required to be submitted by retail food stores and
wholesale food concerns to determine continued eligibility, such as
ownership information and sales and redemption data, may be disclosed
to and used by Federal and State law enforcement and investigative
agencies for the purpose 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 disclosure and use shall
also include companies or individuals under contract for the operation
by, or on behalf of FCS to accomplish an FCS function. Such purposes
include 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. Safeguards with respect to employee identification numbers (EINs)
are contained in paragraph (r)(2) of this section. Safeguards with
respect to Social Security numbers (SSNs) are contained in paragraph
(r)(3) of this section.
(1) Criteria for requesting information. FCS shall determine what
information can be disclosed and which government
[[Page 68122]]
agencies have access to that information based on the following
criteria:
(i) Federal and State law enforcement or investigative agencies or
instrumentalities administering or enforcing specified Federal and
State laws, or regulations issued under those laws, have access to
certain information maintained by FCS. Such agencies or
instrumentalities must have among their responsibilities the
enforcement of law or the investigation of suspected violations of law.
However, only certain Federal entities have access to information
involving SSNs and EINs in accordance with paragraph (r)(1)(ii) of this
section;
(ii) Except for SSNs and EINs, information provided to FCS by
applicants and authorized firms participating in the FSP may be
disclosed and used by qualifying Federal and State entities in
accordance with paragraph (r)(1)(i) of this section. The disclosure of
SSNs and EINs is limited only to qualifying Federal agencies or
instrumentalities which otherwise have access to SSNs and EINs based on
law and routine use. 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;
(iii) Requests for information must be submitted in writing,
including electronic communication, 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. If a formal agreement exists between FCS
and another agency or instrumentality, individual written requests may
be unnecessary. FCS may request additional information if needed to
clarify a request;
(iv) Disclosure by FCS is limited to: Information about applicant
stores and concerns with applications on file; information about
authorized stores participating in the FSP; and information about
unauthorized entities or individuals illegally accepting or redeeming
food stamps;
(v) Requests for information disclosure by FCS may involve a
specific store or concern, or some or all stores and concerns covered
by paragraph (r)(1)(iv) of this section. In addition, FCS may sign
agreements allowing certain government entities direct access to
appropriate FCS data, with access to EINs and SSNs limited only to
other Federal agencies and instrumentalities that otherwise have access
to such numbers.
(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 12 and 15 of the Food Stamp Act of 1977, as amended, (7 U.S.C.
2021 or 2024). The Department also may share EINs with other Federal
agencies and instrumentalities that otherwise have access to EINs 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 the Department or 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 investigating violations of other Federal laws or enforcing
such laws. See Treas. Reg. Sec. 301.6109-2 (b) and (c) (26 CFR
301.6109-2 (b) and (c)).
(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 investigating
violations of other Federal laws or enforcing such laws. See Treas.
Reg. Sec. 301.6109-2(d)(1) (26 CFR 301.6109-2(d)(1)).
* * * * *
(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 of
stores and concerns for use in determining those applicants who
previously have been sanctioned or convicted under section 12 or 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 12 and 15 of the Food Stamp Act of 1977, as
amended, (7 U.S.C. 2018, 2021). The Department also 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 the Department or
such other agency or instrumentality. Any such information shared
pursuant to this paragraph shall be used for the purpose of effective
administration and enforcement of the Food Stamp Act of 1977, as
amended, or for the purpose of investigating violations of other
Federal laws or enforcing 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 the purpose of investigating
violations of other Federal laws or enforcing such laws. Such access
shall also include companies or individuals under contract for the
operation by, or on behalf of FCS to accomplish an FCS function.
* * * * *
(4) FCS initiated matches. Under the restrictions noted in
paragraph (r) of this section, FCS will periodically initiate cross
matches of retailer data with 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. Such matches could involve all
firms participating after implementation for the purpose of verifying
information such as, but not limited to, SSNs and retail sales data.
* * * * *
3. In Sec. 278.9, a new paragraph (l) 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.
* * * * *
(l) Amendment No. 335. Expanded authority to use and disclose
information about firms participating in the FSP under CFR 278.1(r) for
currently authorized firms is effective and will be implemented
beginning February 25, 1997 but not before 60-days after the date of
notices to such firms, notifying them of the changes. The only
exception to the above is that such disclosure of information shall not
apply to firms that are withdrawn or are disqualified from FSP
participation prior to implementation, unless such firms participate in
the FSP at a future date subsequent to the implementation date.
Dated: December 18, 1996.
William E. Ludwig,
Administrator, Food and Consumer Service.
[FR Doc. 96-32998 Filed 12-26-96; 8:45 am]
BILLING CODE 3410-30-U