[Federal Register Volume 81, Number 31 (Wednesday, February 17, 2016)]
[Proposed Rules]
[Pages 8015-8021]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-03006]


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DEPARTMENT OF AGRICULTURE

Food and Nutrition Service

7 CFR Parts 271 and 278

RIN 0584-AE27


Enhancing Retailer Standards in the Supplemental Nutrition 
Assistance Program (SNAP)

AGENCY: Food and Nutrition Service (FNS), USDA.

ACTION: Proposed rule.

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SUMMARY: The Food and Nutrition Service (FNS) proposes to make changes 
to the Supplemental Nutrition Assistance Program (SNAP) regulations 
pertaining to the eligibility of SNAP retail food stores. The 
Agricultural Act of 2014 (2014 Farm Bill) amended the Food and 
Nutrition Act of 2008 (the Act) to increase the requirement that 
certain SNAP authorized retail food stores have available on a 
continual basis at least three varieties of items in each of four 
staple food categories, to a mandatory minimum of seven varieties. The 
2014 Farm Bill also amended the Act to increase, for certain SNAP 
authorized retail food stores, the minimum number of categories in 
which perishable foods are required from two to three. This proposed 
rule would codify these mandatory requirements.
    Further, using existing authority in the Act and feedback from a 
Request for Information that included five listening sessions in urban 
and rural locations across the nation and generated 233 public 
comments, FNS is proposing several additional changes. Among other 
items, these proposed changes address depth of stock, amend the 
definition of staple foods, and amend the definition of ``retail food 
store'' to clarify when a retailer is a restaurant rather than a retail 
food store. The rulemaking also proposes that FNS begin disclosing to 
the public specific information about retailers who have violated SNAP 
rules.

DATES: To be assured of consideration, comments on this proposed rule 
must be received by the Food and Nutrition Service on or before April 
18, 2016.

ADDRESSES: The Food and Nutrition Service (FNS), USDA, invites 
interested persons to submit comments on this proposed rule. Comments 
may be submitted by one of the following methods:
     Federal e-Rulemaking Portal: Go to http://www.regulations.gov. Preferred method; follow the online instructions 
for submitting comments on docket [insert docket number].
     Mail: Comments should be addressed to Vicky Robinson, 
Chief, Retailer Management and Issuance Branch, Retailer Policy and 
Management Division, Room 418, 3101 Park Center Drive, Alexandria, 
Virginia 22302.

All comments submitted in response to this rulemaking will be included 
in the record and will be made available to the public. Please be 
advised that the substance of the comments and the identity of the 
individuals or entities submitting the comments will be subject to 
public disclosure. FNS will make the comments publicly available on the 
internet via: http://www.regulations.gov.
    All submissions will be available for public inspection at the 
address above during regular business hours (8:30 a.m. to 5:30 p.m.), 
Monday through Friday.

FOR FURTHER INFORMATION CONTACT: Address any questions regarding this 
rulemaking to Vicky Robinson, Chief, Retailer Management and Issuance 
Branch, Retailer Policy and Management Division at the Food and 
Nutrition Service, USDA, 3101 Park Center Drive, Alexandria, Virginia 
22302. Ms. Robinson can also be reached by telephone at 703-305-2476 or 
by email at [email protected] during regular business hours 
(8:30 a.m. to 5:30 p.m.) Monday through Friday.

SUPPLEMENTARY INFORMATION:

Background

    This proposed rulemaking is the result of two separate 
developments. First are statutory changes included in the 2014 Farm 
Bill. The second is the effort initiated by FNS in 2013 to look at 
enhancing the eligibility standards for SNAP retailers to better 
enforce the intent of the Act to permit low-income individuals to 
purchase more nutritious foods for home preparation and consumption.
    The 2014 Farm Bill increases the requirement that certain SNAP 
authorized retail food stores have available on a continuous basis at 
least three varieties of items in each of four staple food categories 
to a mandatory statutory minimum of seven varieties. Further, the 2014 
Farm Bill increases the minimum number of categories in which 
perishable foods are required from two to three. This proposed rule

[[Page 8016]]

would codify these mandatory requirements.
    In addition, on August 20, 2013, FNS published a notice entitled, 
``Request for Information: Supplemental Nutrition Assistance Program 
(SNAP) Enhancing Retail Food Store Eligibility'' at 78 FR 51136. The 
Request for Information (RFI), which included fourteen specific 
questions, focused on ways to enhance the definitions of retail food 
store and staple foods, and overall eligibility requirements to 
participate in SNAP, in order to improve access to healthy foods and 
ensure that only retailers that effectuate the purposes of SNAP are 
authorized to accept benefits. FNS received a total of 211 comments 
from a diverse group, including retailers, academics, trade 
associations, policy advocates, professional associations, government 
entities, and the general public. RFI comments were considered in 
drafting this proposed rule and a copy of the comment summary can be 
viewed at: http://www.fns.usda.gov/rfi-retailer-enhancement.
    In this rulemaking, based in part on feedback received via the RFI, 
FNS is proposing further revisions to SNAP regulations pertaining to 
the eligibility of retailers to participate in SNAP as retail food 
stores. Using the authorities in Sections 3 and 9 of the Act, these 
proposed revisions are intended to limit retailers that do not further 
the purposes of the Program from participating in SNAP without 
negatively impacting access for beneficiaries. This proposed rule would 
not impact eligible foods that can be purchased with SNAP benefits.
    Over the years, a growing number of retailers have become 
authorized to participate in the Program as retail food stores. Some of 
these retailers operate primarily as restaurants, not retail food 
stores. Nothing in current regulations specifically prohibits items 
sold for SNAP benefits that are cold at the point-of-sale from being 
heated or cooked in the store after purchase. Further, current rules 
allow foods to be classified as staple or non-staple by their first 
ingredient; therefore some pizza restaurants, for example, have been 
deemed eligible with pizza as the qualifying staple food based on the 
primary ingredient (bread). After selling a cold pizza to SNAP 
customers, these firms subsequently heat the pizza and then have 
ultimately sold hot food from their pizza-restaurant location. Except 
for limited exceptions set forth under Section 3(k) of the Act and 7 
CFR 278.1(d)(3), which permit State agencies to enter into contracts 
with restaurants to prepare and serve low-cost meals to homeless 
persons, elderly persons and SSI recipients, Congress specified in 
Section 3(k) and Section 3(o)(1) of the Act that SNAP-authorized 
retailers must sell food for home preparation and consumption, which 
does not include hot foods or hot food products ready for immediate 
consumption. This proposed rulemaking would clarify and strengthen 
current regulations to ensure that SNAP retailer policy is aligned with 
this statutory intent.
    The rulemaking also proposes to make ownership information tied to 
program violations available to the public, which will assist in 
maintaining program integrity.
    Unless otherwise specified, the Agency proposes to implement the 
changes described in this rulemaking upon the effective date of the 
final rule.

Retail Food Store

    In order to be eligible to accept SNAP benefits, under Section 
3(o)(1) of the Act, a retailer must ``sell food for home preparation 
and consumption'' as well as meet other criteria in the Act and SNAP 
regulations. Section 3(k)(1) of the Act defines ``food'' to include 
``any food or food product for home consumption except . . . hot foods 
or hot food products ready for immediate consumption. . . .'' Congress 
specifically did not intend for restaurants to participate in SNAP, 
except under limited circumstances to serve the elderly, disabled, and 
homeless, as set forth in Section 3(k) of the Act and as referenced in 
Section 7(f)(2) of the Act.
    The current SNAP regulations at 7 CFR 278.1(b)(1)(iv) provide that 
ineligible firms include ``firms that are considered to be restaurants, 
that is, firms that have more than 50 percent of their total gross 
retail sales in hot and/or cold prepared foods not intended for home 
preparation and consumption.'' However, nothing in current regulations 
specifically prohibits items sold for SNAP benefits to be sold cold at 
the point-of-sale and heated or cooked in the store after purchase. As 
a result of this gap in existing regulations, some firms are authorized 
to accept SNAP benefits even though they primarily sell cold, uncooked, 
or raw foods and offer to heat or cook those foods for customers for 
free or for cash before the customer leaves the store premises. This 
gap has allowed these entities that in effect sell hot foods ready for 
immediate consumption to participate in SNAP as authorized retailers. 
The changes noted above will not impact farmer's markets, direct-
marketing farmers, military commissaries, and other relevant 
establishments as described in Sec. 4002 of the Act.
    Comments from the RFI involving firms that primarily sell food for 
immediate consumption and that also sell products cold and heat them 
for SNAP customers after purchase were evenly split. Some expressed 
concerns that allowing prepared foods that could be cooked or heated 
after purchase would likely cost more than unprepared foods, pointing 
out that SNAP benefit amounts were based on the Thrifty Food Plan, 
which is a market basket of foods that makes the economic assumption 
that food purchased with SNAP benefits will be foods intended for home 
preparation and not prepared foods. Others expressed concern that SNAP 
recipients without access to a kitchen could benefit by being able to 
have prepared foods cooked in stores where they are purchased.
    Despite this latter comment, the Agency thinks it is important to 
maintain the intent of Congress' restriction on hot food purchases. 
Therefore, the rulemaking proposes to close the existing gap in SNAP 
regulations that allows these types of entities to become authorized 
SNAP retailers by adding language to the definition of retail food 
store in current regulations at 7 CFR 271.2 that would require that at 
least 85 percent of an entity's total food sales must be for items that 
are not cooked or heated on-site before or after purchase. This 
proposed threshold is based on a review of the data submitted by SNAP 
authorized restaurants currently operating outside of the intent of the 
Program. FNS requests comments regarding this threshold and the 
benefits and costs of alternative levels.
    Additionally, this rule would add language to prevent such 
businesses that do not effectuate the purposes of SNAP from 
circumventing SNAP rules by splitting into two separate businesses that 
operate under one roof in order to gain eligibility for one of the 
businesses to participate in SNAP as a retail food store. For example, 
a restaurant purporting to be two separate businesses (one a hot foods 
restaurant and one a cold-prepared foods location) for purposes of SNAP 
authorization but operating from a single location with common 
employees, accounting, and management, is not eligible. FNS would not 
recognize separate businesses operating in one location and eligibility 
determinations would continue to be made based on an evaluation of 
these separate businesses as a single entity. FNS seeks comments 
relative to any unintended adverse effects of this proposed change.
    The Agency proposes to make the requirements detailed above under

[[Page 8017]]

``Retail Food Store'' effective for all new applicants and all 
retailers authorized to participate in SNAP within 120 days of the 
effective date of the final rule.
    The rule also proposes to clarify the use of different terms, such 
as entities, firms, retailers and stores. These are terms used 
interchangeably in regulations and other policy, and they should be 
treated as equivalent terms in SNAP regulations and policies.

Staple Food

    As defined in Section 3(k) of the Act, current regulations define 
staple foods as foods in the following categories: Meat, poultry or 
fish; bread or cereals; vegetables or fruits; and dairy products. 
Current regulations at 7 CFR 271.2 specify that foods with multiple 
ingredients can only be counted in one staple food category, based on 
the main ingredient, when determining retailer eligibility. This is 
sometimes confusing and requires labels on many multiple-ingredient 
products to be examined closely in order to confirm the main ingredient 
when assigning it to the appropriate staple food category. For example, 
the main ingredient in some frozen chicken pot pies is bread and in 
others the main ingredient is chicken; therefore, one brand of chicken 
pot pie might be categorized in the bread or cereals category and 
another brand of chicken pot pie might be categorized in the meat, 
poultry or fish category. In addition, counting foods with multiple 
ingredients has allowed prepared foods sold for carry-out or for on-
site consumption to be counted as staple foods when determining a 
store's eligibility to participate in SNAP, enabling some restaurants 
to inappropriately participate in SNAP as retail food stores.
    In order to prevent confusion and unintended consequences caused by 
foods with multiple ingredients, this rulemaking proposes to amend 7 
CFR 278.1(b) to revise language in 7 CFR 271.2 defining staple food. 
The rulemaking proposes to define staple food as those food items 
intended for home preparation and consumption in each of the following 
four categories: meat, poultry, or fish; bread or cereals; vegetables 
or fruits; and dairy products. Hot foods are not eligible for purchase 
with SNAP benefits and, therefore, do not qualify as staple foods for 
the purpose of determining eligibility under 278.1(b)(1) of this 
chapter. Commercially processed foods and prepared mixtures with 
multiple ingredients that do not represent a single staple food 
category shall not be counted in any staple food category. Examples of 
such foods include cold pizza, macaroni and cheese, multiple ingredient 
soup, sandwiches, TV dinners, and pot pies. Accessory food items 
include foods that are generally consumed between meals and/or are 
generally considered snacks or desserts such as, but not limited to 
chips, dips, crackers, cupcakes, cookies, ready-popped popcorn, 
pastries, and candy, or food items that complement or supplement meals, 
such as, but not limited to coffee, tea, cocoa, carbonated and 
uncarbonated drinks, condiments, spices, salt, and sugar, and shall not 
be considered staple foods for purposes of determining the eligibility 
of any firm. These changes would ensure that those foods that do not 
represent a single staple food category, such as commercially processed 
and prepared mixtures with multiple ingredients are not considered when 
determining eligibility to participate in SNAP as a retail food store. 
Multiple ingredient foods include frozen entrees and prepared 
sandwiches, prepared salads, and pizza. These foods do not include such 
items as yogurt, cheeses, and cereals as the primary staple ingredient 
is clearly represented and easily recognized.
    Multiple ingredient foods and accessory foods would not be counted 
toward variety, perishables, or depth of stock when determining a 
firm's eligibility to participate in SNAP as a retail food store. This 
would not change the eligibility of these foods for purchase with SNAP 
benefits in authorized stores. FNS believes this approach would better 
reflect the intent of Congress that staple foods are those foods used 
primarily for home preparation and consumption that provide the main 
sources of nutrition intake for households.
    The rulemaking also proposes changes to the Agency's interpretation 
of accessory foods, which are not considered to be staple foods, but 
are eligible foods that can be purchased with SNAP benefits. The Agency 
currently treats any food items for home preparation and consumption 
not specifically listed as an accessory food in Section 3(q)(2) of the 
Act as a staple food. Section 3(q)(2) of the Act states that staple 
foods do not include ``accessory food items, such as coffee, tea, 
cocoa, carbonated and un-carbonated drinks, candy, condiments and 
spices.'' This language in Section 3(q)(2) indicates that the list of 
accessory foods in the Act is an illustrative list, not a complete 
list. Therefore, under the proposed changes, FNS is clarifying that in 
addition to the examples of accessory foods provided in Section 3(q)(2) 
of the Act, accessory foods also include items such as chips, dips, 
cookies, cakes and pastries that are commonly recognized as snack foods 
and desserts and/or that are typically consumed between meals. Similar 
to candy, carbonated and un-carbonated drinks, and condiments, which 
are examples of accessory foods provided in the Act, chips, ready-
popped popcorn, cookies, cakes and pastries and similar foods are 
examples of snack foods or desserts, with limited nutritional value. 
FNS believes counting such foods as accessory items will ultimately 
encourage stores to offer more nutritious options and provide SNAP 
recipients access to a larger selection of healthy foods. Stores that, 
until now, have relied on these types of accessory foods to count as 
staple foods may need to expand their offerings of proper staple foods 
to continue to be eligible. FNS remains concerned that those stores 
that sell predominantly accessory foods do not further the purposes of 
SNAP. FNS is interested in public comments as to additional foods that 
should be categorized as accessory items and/or standards and criteria 
to determine whether a food is a staple food or an accessory; for 
example, popcorn that is already popped and has added salt or butter 
would be considered an accessory food. FNS is interested in whether and 
how the public would make a distinction between dried corn as a grain 
and popcorn (popped or un-popped) as a snack food. Accessory foods 
would remain eligible for purchase with SNAP benefits but would not be 
counted as staple foods for purposes of determining a store's 
eligibility to participate in SNAP.
    FNS understands there are challenges in making clear distinctions 
in the areas of multi-ingredient foods and accessory foods. FNS plans 
to issue specific guidance on the changes proposed in this rulemaking. 
In the past, FNS has issued questions and answers following a final 
rule. FNS is seeking comments on what specific aspects of the proposed 
changes should be addressed in guidance and whether guidance should 
again be issued after the rule is final or concurrent to issuance of 
the final rule.
    There was mixed reaction from commenters on the RFI with respect to 
counting multiple ingredient foods as staple foods when determining 
store eligibility. Approximately half the submissions, including 
retailer groups and food manufacturers, support the current 
requirements to count foods with multiple ingredient foods in one 
staple food category based on the main ingredient. Other commenters, 
including farmers markets, professional associations, government 
agencies and

[[Page 8018]]

policy advocates, supported changing FNS' current rules on multiple 
ingredient foods.
    However, there was strong support, and little opposition, from 
those submitting comments to the RFI for the notion that enhancing the 
standards for staple foods would lead to healthier food options that 
would help prevent obesity and reduce food insecurity. Consequently, 
most supported changes to the current definition of ``staple foods.''

Determination of Authorization

    Changes proposed for regulations at 7 CFR 271.2 would also require 
clarification in 7 CFR 278.1 to conform to those changes. Current 
regulations at 7 CFR 278.1(b)(1)(ii)(C) include language about multiple 
ingredient foods and, as stated above, this rulemaking proposes to 
revise and add language to clarify that such foods are not counted as 
staple foods for purposes of determining store eligibility. Therefore, 
conforming changes to this paragraph are being proposed as well.
    In addition, the rule proposes to codify in 7 CFR 278.1 mandatory 
requirements from the 2014 Farm Bill. The 2014 Farm Bill amended 
Section 3(o)(1)(A) of the Food and Nutrition Act to increase the 
required minimum variety of foods in each staple food category from 
three to seven different varieties and require perishables in three 
staple food categories instead of two, in order to be eligible to 
participate in SNAP as a retail food store. The rulemaking also 
proposes a minimum number of six stocking units per variety to ensure 
that retailers can meet the statutory requirement to offer for sale, on 
a continuous basis, staple foods in each staple food category. This 
stocking depth ensures that stores offer the minimum number of 
varieties on a continuous basis, as required by law without 
complicating collection of information that store visit contractors now 
collect for FNS to use in determining store eligibility. FNS requests 
comments on this stocking depth requirement. This new requirement only 
affects establishments and house-to-house trade routes that meet the 
definition of a retail food store in accordance with Section 3(o)(1)(A) 
of the Act; it does not affect establishments and house-to-house trade 
routes that have over 50 percent of their total sales in staple foods 
and would meet the definition of retail food store under Section 
3(o)(1)(B) of the Act (i.e. stores that currently participate under 
criteria B generally include, for example, specialty food meat, fruit 
and vegetable, or seafood markets with 50% or more of their sales in a 
specific staple food category. These firm types will not be affected by 
the changes in this rule.).
    The rule also proposes to revise in 7 CFR 278.1(b)(1)(ii)(B) what 
constitutes a variety of staple foods in order to clear up any 
confusion that may exist with current regulations and to conform to 
earlier changes in 7 CFR 271.2 to the definition of staple foods 
pertaining to multiple ingredient foods.
    Responses to the RFI questions mostly indicated support, though 
there was limited opposition, for the now mandatory, statutory changes 
to increase the minimum number of staple foods by increasing variety 
requirements. Most felt the minimum of twelve items currently required 
was too few. There was also support for the now mandatory, statutory 
change that requires perishable items in more than two staple food 
categories.
    The Agency proposes to make the requirements detailed above under 
``Staple Food'' and ``Determination of Authorization'' effective for 
all new applicants within 120 days of the effective date of a final 
rule. Further, FNS proposes that once these requirements become 
effective for new applicants, a retailer that is withdrawn or 
disqualified for a term and is subsequently reinstated, must meet these 
new requirements prior to reinstatement. Finally, this rule proposes 
that SNAP retailers authorized to participate in the Program on the 
effective date of the final rule will have one year (365 days) from the 
effective date of the final rule to comply with the new requirements.

Need for Access

    The 2014 Farm Bill amended Section 9(a) of the Act to allow the 
Agency to consider whether an applicant retailer is located in an area 
with significantly limited access to food when determining the 
qualifications of that applicant. Pursuant to that change, FNS proposes 
to amend 278.1(b) to allow the Agency to consider need for access when 
a retailer does not meet all of the requirements for SNAP 
authorization.
    FNS is interested in comments and suggestions regarding this 
proposed change. In considering need for access, at both authorization 
and reauthorization, the Agency would consider factors such as distance 
from the nearest SNAP authorized retailer, transportation options to 
other SNAP authorized retailer locations, the gap between store's stock 
and SNAP required stock for authorization eligibility, and whether the 
store furthers the purposes of the Program. FNS is particularly 
interested in comments to help the Agency refine the language in the 
proposed change.

Public Disclosure of SNAP Information

    With the exception of employment identification numbers (EINs) and 
social security numbers (SSNs), the Act allows information collected 
from retail food stores to be disclosed for purposes directly connected 
with the administration and enforcement of the Act and SNAP 
regulations. This rulemaking proposes to allow FNS to disclose to the 
public specific information about retailers that have been disqualified 
or otherwise sanctioned for SNAP violations. The information would be 
disclosed only after the time for administrative and judicial appeals 
has expired and would be limited to the name and address of the store, 
the owner name(s) and information about the sanction itself. Public 
disclosure of this information may include the posting of a list of 
sanctioned retailers on a public Web site. Public disclosure of such 
information would assist the Department in its efforts to combat SNAP 
fraud by providing an additional deterrent. The information would also 
provide the public with valuable information about the integrity of 
these businesses and individuals for future dealings. Therefore, public 
disclosure of this information would be for purposes directly connected 
with the administration and enforcement of the Act and its regulations.

Regulatory Impact Analysis

Executive Order 12866 and Executive Order 13563

    Executive Orders 12866 and 13563 direct agencies to assess all cost 
and benefits of available regulatory alternatives and, if regulation is 
necessary, to select regulatory approaches that maximize net benefits 
(including potential economic, environmental, public health, and safety 
effects, distributive impacts, and equity). Executive Order 13563 
emphasizes the importance of quantifying both cost and benefits, of 
reducing cost, of harmonizing rules, and of promoting flexibility. This 
proposed rule has been determined to be significant and was reviewed by 
the Office of Management and Budget. The RIA for this rulemaking was 
published as part of the docket in Supporting Documents on 
www.regulations.gov. A summary of the regulatory impact analysis (RIA) 
follows.

Need for Action

    The proposed rule is needed to codify mandatory provisions of the 
2014 Farm

[[Page 8019]]

Bill, and to clarify and enhance current regulations governing the 
eligibility of retail food stores participating in SNAP.

Benefits

    This rulemaking will codify mandatory provisions of the 2014 Farm 
Bill, and strengthen provisions in current regulations, to conform to 
the intent of the statutory requirements. Proposed changes will improve 
SNAP recipient access to a variety of healthy food options. It reflects 
the Department's commitment to provide vital nutrition assistance to 
our most vulnerable Americans, protect taxpayer dollars and build on 
aggressive efforts to ensure program integrity. The proposed rule would 
allow FNS to ensure that retailers authorized to participate in SNAP as 
retail food stores are consistent with the purposes of the Program. It 
would reinforce the intent of SNAP, that participants use their 
benefits to purchase more nutritious foods intended for home 
preparation and consumption. FNS requests information on any other 
benefits of this rule.

Costs

    There will be minor costs to the Federal government as a result of 
the rule, as it does not change benefit levels, and existing retailer 
authorization and oversight resources would be used to enforce it. FNS 
anticipates that this rule may result initially in a small increase in 
requests for administrative reviews, but the estimated cost for 
additional reviews is less than $150,000. With respect to the cost 
impact to retailers, the rule would mainly impact those firms that are 
minimally stocked and those that are primarily restaurants and 
therefore are inconsistent with the intent of Congress to make foods 
available to SNAP participants for home preparation and consumption. 
Firms that do not stock sufficient staple foods to meet the new 
requirements will have the opportunity to modify their staple food 
stock in order to be eligible to participate in SNAP. In the course of 
store reviews, FNS has observed that stores that are determined to not 
be eligible typically expand their food offerings to participate in 
SNAP. FNS requests comments on the costs to retailers from this rule.

Regulatory Flexibility Act

    This proposed rule has been reviewed with regard to the 
requirements of the Regulatory Flexibility Act of 1980 (5 U.S.C. 601-
612). Pursuant to that review, FNS believes that the rulemaking does 
not present a significant economic impact to a substantial number of 
small businesses; although the number of stores impacted is large, we 
estimate that the cost to those small businesses for stocking 
additional inventory would be nominal, on average about $140. However, 
FNS has prepared this Regulatory Flexibility Analysis to provide the 
opportunity for comment and input from the public. The complete 
Regulatory Flexibility Analysis for this rule was published as part of 
the docket in Supporting Documents on www.regulations.gov. A summary of 
the analysis follows: This proposed rule will impact nearly 200,000 
small grocery stores and convenience stores by requiring that these 
stores make changes to their inventory in order to comply with the new 
minimum inventory requirement mandated in this rule. FNS estimates that 
for the vast majority of stores the changes needed will be minimal and 
represent less than one-tenth of one percent of a store's total gross 
sales.

Public Law 104-4

    Title II of the Unfunded Mandate Reform Act of 1995 (UMRA), Public 
Law 104-4, 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 proposed rule contains 
no Federal mandates (under the regulatory provisions of Title II of the 
UMRA) for State, local and Tribal governments or the private sector of 
$100 million or more in any one year. This rulemaking is, therefore, 
not subject to the requirements of sections 202 and 205 of the UMRA.

Executive Order 12372

    SNAP is listed in the Catalog of Federal Domestic Assistance under 
Number 10.551 and is subject to Executive Order 12372, which requires 
intergovernmental consultation with State and local officials. (See 2 
CFR chapter IV.)

Federalism Summary Impact Statement

    Executive Order 13132 requires Federal agencies to consider the 
impact of their regulatory actions on State and local governments. 
Where such actions have Federalism implications, agencies are directed 
to provide a statement for inclusion in the preamble to the regulations 
describing the agency's considerations in terms of the three categories 
called for under Section (6)(b)(2)(B) of the Executive Order 13132. FNS 
has determined that this rulemaking does not have Federalism 
implications. This proposed rule does not impose substantial or direct 
compliance costs on State and local governments. Therefore, under 
Section 6(b) of the Executive Order, a Federalism summary impact 
statement is not required.

Executive Order 12988

    This proposed rule has been reviewed under Executive Order 12988, 
Civil Justice Reform. This proposed rule is intended to have preemptive 
effects 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 proposed rule is not intended to 
have retroactive effects unless so specified in the Effective Date 
paragraph of the final rule. Prior to any judicial challenge to the 
provisions of the final rule or the application of its provisions, all 
applicable administrative procedures must be exhausted.

Executive Order 13175

    Executive Order 13175 requires Federal agencies to consult and 
coordinate with tribes on a government-to-government basis on policies 
that have Tribal implications, including regulations, legislative 
comments or proposed legislation, and other policy statements or 
actions that have substantial direct effects on one or more Indian 
tribes, on the relationship between the Federal Government and Indian 
tribes, or on the distribution of power and responsibilities between 
the Federal Government and Indian tribes.
    Currently, FNS provides regularly scheduled quarterly consultation 
sessions as a venue for collaborative conversations with Tribal 
officials or their designees. Reports from these consultations are part 
of the USDA annual reporting on Tribal consultation and collaboration. 
FNS will respond in timely and meaningful manner to Tribal government 
requests for consultation concerning this proposed rule. The policies 
contained in this rulemaking

[[Page 8020]]

should not have Tribal implications that preempt Tribal law.

Civil Rights Impact Analysis

    FNS has reviewed this rule in accordance with Departmental 
Regulations 4300-4, ``Civil Rights Impact Analysis'' and 1512-1, 
``Regulatory Decision Making Requirements.'' After a careful review of 
the proposed rule's intent and provisions, FNS has determined that this 
rulemaking will not in any way limit or reduce the ability of protected 
classes of individuals to receive SNAP benefits on the basis of their 
race, color, national origin, sex, age, disability, religion or 
political belief nor will it have a differential impact on minority 
owned or operated business entities, and woman owned or operated 
business entities that participate in SNAP. The regulation affects or 
may potentially affect certain retail food stores that participate in 
(accept or redeem) SNAP. The only retail food stores that will be 
directly affected, however, are those retailers that participate in 
SNAP in accordance with Section 3(o)(1)(A) of the Act and that do not 
stock at the newly required and proposed levels, or whose hot food 
(heated before or after purchase) sales exceed 15 percent. FNS does not 
collect data from retail food stores regarding any of the protected 
classes under Title VI of the Civil Rights Act of 1964. FNS 
specifically prohibits retailers that participate in SNAP to engage in 
actions that discriminate based on race, color, national origin, sex, 
age, disability, religion or political belief. This proposed rule will 
not change any requirements related to the eligibility or participation 
of protected classes or individuals, minority owned or operated 
business entities, or woman owned or operated business entities in 
SNAP. As a result, this rulemaking will have no differential impact on 
protected classes of individuals, minority owned or operated business 
entities, or woman owned or operated business entities.

Paperwork Reduction Act

    The Paperwork Reduction Act of 1995 (44 U.S.C. Chap. 35; see 5 CFR 
part 1320) requires that the Office of Management and Budget (OMB) 
approve all collections of information by a Federal agency from the 
public before they can be implemented. Respondents are not required to 
respond to any collection of information unless it displays a current 
valid OMB control number. There is no new information collection burden 
associated with this proposed rule.

E-Government Act Compliance

    FNS is committed to complying with the E-Government Act, to promote 
the use of the Internet and other information technologies to provide 
increased opportunities for citizen access to government information 
and services, and for other purposes.

Lists of Subjects

7 CFR Part 271

    Food stamps, Grant programs--Social programs, Reporting and 
recordkeeping requirements.

7 CFR Part 278

    Approval and participation of retail food stores and wholesale food 
concerns, food stamps; Participation of financial institutions, 
disqualification and imposition of civil penalties or fines for retail 
food stores and wholesale food concerns; and Disposition of claims; 
penalties.

    Accordingly, for reasons set forth in the preamble, 7 CFR parts 271 
and 278 are proposed to be amended as follows:

0
1. The authority citation for 7 CFR 271 and 278 continue to read as 
follows:

    Authority: 7 U.S.C. 2011-2036.

PART 271--GENERAL INFORMATION AND DEFINITIONS

0
2. In Sec.  271.2:
0
a. Add a definition for Firm.
0
b. Amend the definition of Retail food store by adding two sentences at 
the end of paragraph (1).
0
c. Revise the definition of Staple food.
    The additions and revision read as follows:


Sec.  271.2  Definitions.

* * * * *
    Firm (1) Means:
    (i) A retail food store that is authorized to accept or redeem SNAP 
benefits;
    (ii) A retail food store that is not authorized to accept or redeem 
SNAP benefits; or
    (iii) An entity that does not meet the definition of a retail food 
store.
    (2) For purposes of the regulations and SNAP policies, the terms 
firm, entity, retailer, and store are used interchangeably.
* * * * *
    Retail food store means:
    (1) * * * In addition, at least 85 percent of an entity's total 
food sales must be for items that are not cooked or heated on-site 
before or after purchase. Establishments that include separate 
businesses that operate under one roof and have commonalities, such as 
sale of similar foods, single management structure, shared space, 
logistics, bank accounts, employees, and/or inventory, are considered 
to be a single establishment when determining eligibility to 
participate in SNAP as retail food stores.
* * * * *
    Staple food means those food items intended for home preparation 
and consumption in each of the following four categories: Meat, 
poultry, or fish; bread or cereals; vegetables or fruits; and dairy 
products. Hot foods are not eligible for purchase with SNAP benefits 
and, therefore, do not qualify as staple foods for the purpose of 
determining eligibility under Sec.  278.1(b)(1) of this chapter. 
Commercially processed foods and prepared mixtures with multiple 
ingredients that do not represent a single staple food category shall 
not be counted in any staple food category. Examples of such foods 
include cold pizza, macaroni and cheese, multiple ingredient soup, 
sandwiches, TV dinners, and pot pies. Accessory food items include 
foods that are generally consumed between meals and/or are generally 
considered snacks or desserts such as, but not limited to chips, dips, 
crackers, cupcakes, cookies, popcorn, pastries, and candy, or food 
items that complement or supplement meals, such as, but not limited to 
coffee, tea, cocoa, carbonated and uncarbonated drinks, condiments, 
spices, salt, and sugar, and shall not be considered staple foods for 
purposes of determining the eligibility of any firm.
* * * * *

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

0
3. In Sec.  278.1:
0
a. Revise the first sentence in paragraph (b)(1)(ii)(A);
0
b. Amend the first sentence in paragraph (b)(1)(ii)(B) by removing the 
word ``two'' and adding in its place the word ``three''.
0
c. Revise paragraph (b)(1)(ii)(C);
0
d. Amend paragraph (b)(1)(iv) by adding a new sixth sentence;
0
e. Redesignate paragraph (b)(6) as paragraph (b)(7);
0
f. Add new paragraph (b)(6).
0
g. Add paragraph (q)(5).
    The additions and revisions read as follows:


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

* * * * *
    (b) * * *
    (1) * * *

[[Page 8021]]

    (ii) * * *
    (A) Offer for sale and normally display in a public area, 
qualifying staple food items on a continuous basis, evidenced by 
having, on any given day of operation, no fewer than seven different 
varieties of food items in each of the staple food categories, with a 
minimum of six stocking units for each food item. * * *
* * * * *
    (C) Offer a variety of staple foods which means different types of 
foods within each staple food category. For example: apples, cabbage, 
tomatoes, bananas, melons, broccoli, and squash in the vegetables or 
fruits category; or animal-based milk, plant-based milk, hard cheese, 
soft cheese, butter, sour cream, and yogurt in the dairy category; or 
rice, couscous, quinoa, bread, cold cereals, oatmeal, and flour 
tortillas in the bread or cereals category; or chicken, turkey, duck, 
beef, pork, salmon, and tuna in the meat and fish category. Variety of 
foods is not to be interpreted as different brands, nutrient values, 
packaging types or package sizes of the same or similar foods. Similar 
food items such as, but not limited to, link sausages and sausage 
patties, different types of cold breakfast cereals, whole milk and skim 
milk, or different types of apples (e.g., Empire, Jonagold and 
McIntosh), shall count as depth of stock but shall not each be counted 
as more than one staple food variety for the purpose of determining the 
number of varieties in any staple food group. Accessory foods and 
processed multiple ingredient foods shall not be counted as staple 
foods for purposes of determining eligibility to participate in SNAP as 
a retail food store.
* * * * *
    (iv) * * * Firms that do not have 85 percent or more of their total 
food sales in items that are not cooked or heated on-site, before or 
after purchase, are ineligible. * * *
* * * * *
    (6) FNS will consider whether the applicant is located in an area 
with significantly limited access to food. In determining whether an 
applicant is located in such an area, FNS will consider factors such as 
distance from the nearest SNAP authorized retailer, transportation 
options to other SNAP authorized retailer locations, the gap between a 
store's stock and SNAP required stock for authorized eligibility, and 
whether the store furthers the purpose of the Program.
* * * * *
    (q) * * *
    (5) Public disclosure of firms sanctioned for SNAP violations. FNS 
may disclose information to the public when a retail food store has 
been disqualified or otherwise sanctioned for violations of the Program 
after the time for administrative and judicial appeals has expired. 
This information is limited to the name and address of the store, the 
owner names(s) and information about the sanction itself.

    Dated: February 8, 2016.
Kevin Concannon,
Under Secretary, Food Nutrition and Consumer Services.
[FR Doc. 2016-03006 Filed 2-16-16; 8:45 am]
BILLING CODE 3410-30-P