[Federal Register Volume 64, Number 212 (Wednesday, November 3, 1999)]
[Proposed Rules]
[Pages 59665-59669]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-28547]


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 Proposed Rules
                                                 Federal Register
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 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
 
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 

  Federal Register / Vol. 64, No. 212 / Wednesday, November 3, 1999 / 
Proposed Rules  

[[Page 59665]]


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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

[[Page 59666]]

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)
                                  ------------
                                       22,807
FNS-252-2
    New authorizations...........         423  (22,770  x  .02 - 32)
    Reauthorizations.............       1,380  (184,000  x  .25  x  .03)
                                  ------------
                                        1,803
FNS-252R
    Reauthorizations.............      44,160  (184,000  x  .25  x  .01
                                                1,380-460)
                                  ------------
        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
----------------------------------------------------------------------------------------------------------------
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

[[Page 59669]]

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]
BILLING CODE 3410-30-U