[Federal Register Volume 81, Number 241 (Thursday, December 15, 2016)]
[Rules and Regulations]
[Pages 90675-90699]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-29837]
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Rules and Regulations
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Federal Register / Vol. 81, No. 241 / Thursday, December 15, 2016 /
Rules and Regulations
[[Page 90675]]
DEPARTMENT OF AGRICULTURE
Food and Nutrition Service
7 CFR Parts 271 and 278
[FNS-2016-0018]
RIN 0584-AE27
Enhancing Retailer Standards in the Supplemental Nutrition
Assistance Program (SNAP)
AGENCY: Food and Nutrition Service (FNS), U.S. Department of
Agriculture (USDA or the Department).
ACTION: Final rule.
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SUMMARY: The Food and Nutrition Service (FNS or the Agency) is updating
Supplemental Nutrition Assistance Program (SNAP or the Program)
regulations pertaining to the eligibility criteria for retail food
stores to participate in the Program by finalizing a proposed rule that
was published on February 17, 2016. The Agricultural Act of 2014 (the
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 continuous 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
staple food categories in which perishable foods are required from two
to three. This final rule codifies these mandatory requirements.
In addition, FNS is codifying several other discretionary changes
to the existing eligibility criteria. The first is to address depth of
stock by establishing a minimum of three stocking units per staple food
variety. The rule also amends the definitions of ``staple food,''
``retail food store,'' and ``ineligible firms'', and defines the term
``firm'' as discussed in the Supplementary Information. Finally, this
rule allows FNS to consider the need for food access when making a SNAP
authorization determination for applicant firms that fail to meet
certain authorization requirements and reaffirms FNS's authority to
disclose to the public certain information about retailers who have
violated SNAP rules.
DATES: Effective date: This rule is effective on January 17, 2017.
Implementation dates: See the Supplementary Information.
FOR FURTHER INFORMATION CONTACT: Vicky Robinson, Chief, Retailer
Management and Issuance Branch (RMIB), Retailer Policy and Management
Division (RPMD), Food and Nutrition Service (FNS), U.S. Department of
Agriculture (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:
I. Executive Summary
Purpose of the Regulatory Action
In this final rule, FNS is amending SNAP regulations at 7 CFR parts
271 and 278 to clarify and enhance current regulations governing the
eligibility of firms to participate in SNAP. This rulemaking also
codifies mandatory provisions of the 2014 Farm Bill, as well as other
provisions to strengthen current regulations and conform to statutory
intent. These changes will improve SNAP households' access to a variety
of healthy food options and they reflect the Agency's ongoing
commitments to provide vital nutrition assistance to the most
vulnerable Americans, protect taxpayer dollars, and build on aggressive
efforts to ensure Program integrity. The final rule allows FNS to
ensure that firms authorized to participate in SNAP as retail food
stores are consistent with and further the purposes of the Program.
This final rule reinforces the statutory intent of SNAP--that
participants are able to use their benefits to purchase nutritious
foods intended for home preparation and consumption. In the interests
of preserving SNAP households' food access, minimizing the burden on
participating retail food stores and reflective of the many comments
received in response to the proposed rule, this final rule has been
substantially modified from its proposed form, including to reduce
burden on retailers participating in the program and to help retain
their participation in the program.
Summary of the Main Provisions & Changes From the Proposed Rule
The proposed rule generated a great deal of interest and concern
among a diverse array of Program stakeholders. In consideration of
these comments FNS has clarified, modified, or excised several
provisions contained in the proposed rule. In summary:
Definition of ``Staple Food''--Multiple Ingredient Food Items
The proposed language excluding multiple ingredient food items from
being counted towards any staple food category has been removed from
the final rule.
Definition of ``Staple Food''--Accessory Food Items
The proposed language has been clarified to specify that
``accessory food items'' are not defined by consumption between meals
or package size and that foods with an accessory food main ingredient
(e.g., sugar) are considered accessory foods. Specific examples have
been added to the amendatory language at 7 CFR 271.2 and a longer list
of examples is included in the preamble of the final rule.
Definition of ``Retail Food Store''--85-15% Prepared Foods
Threshold
The proposed language defining ``retail food store'' as a firm with
at least 85 percent of its total food sales in items not cooked or
heated on-site before or after purchase has been removed from the final
rule. However, related to this proposed provision, language was added
to existing regulations on ``ineligible firms'' to specify that a firm
is ineligible for SNAP authorization if at least 50 percent of its
total gross sales come from the sale of hot and/or cold prepared foods,
including foods cooked or heated on-site, before or after purchase.
[[Page 90676]]
Definition of ``Retail Food Store''--Co-located Firms
The proposed language regarding co-located businesses was clarified
and narrowed to specify that multiple businesses that operate under one
roof will only be considered a single firm for purposes of determining
SNAP retailer eligibility if the businesses have common ownership, sale
of similar food, and shared inventory.
Definition of ``Retail Food Store''--Depth of Stock
The proposed depth of stock requirement was halved, from six to
three stocking units per staple food variety. Additionally, language
was added to specify that a firm may not be denied or withdrawn based
on certain stocking shortfalls at the time of the Agency inspection if
that firm can produce documentation proving that, no more than 21 days
prior to the Agency inspection, the firm had ordered and/or received
the required stock.
Definition of ``Retail Food Store''--Breadth of Stock
Per statute, no changes were made to this provision, which
increased the number of varieties required per staple food category
from three to seven and increased the number of staple food categories
required to contain at least one perishable variety from two to three.
Definition of ``Firm''
No changes were made to this provision which defines the term
``firm''.
Need for Access
Language was added to this provision to specify that ``need for
access'' factors would not be limited to those enumerated in the
regulatory language, that ``need for access'' would only be considered
for applicant firms that fail to meet certain authorization
requirements, and that the consideration of ``need for access'' would
be part of the existing SNAP authorization process under 7 CFR
278.1(a).
Definition of ``Staple Food''--Acceptable Varieties in the
Four Staple Food Categories
Language was added to the definition of ``staple food'' to include
in the meat, poultry, or fish staple food category three types of
plant-based protein sources (beans, peas, and nuts/seeds) as well as
plant-based meat analogues (e.g., tofu and seitan) and traditional
animal-based protein sources (e.g., chicken and beef). Language was
also added to the definition of ``staple food'' to include in the dairy
products staple food category plant-based dairy alternatives (e.g.,
rice milk and soy yogurt). Finally, language was added to the
definition of ``staple food'' to specify what constitutes a variety in
all four staple food categories. These changes are in keeping with
USDA's MyPlate nutrition guidelines, allow retailers more flexibility
in stocking sufficient variety in this staple food category and help to
ensure that SNAP households will have access to an array of healthy
food options that meet diverse dietary needs and preferences.
Public Disclosure of Firms Sanctioned for SNAP Violations
Language was added to this provision to specify that the public
disclosure of firms subject to term sanctions would last for the term
of the sanction.
Implementation Dates
The following provisions of this final rule will be implemented on
the effective date of this final rule: The definition of ``firm''
provision (i.e., define ``firm'' at 7 CFR 271.2 so as to clarify that
it also includes retailers, entities, and stores) and the public
disclosure of sanctioned firms provision (i.e., reaffirm at 7 CFR
278.1(q)(5) the Agency's authority and intent to publicly disclose the
store and owner name for firms sanctioned for SNAP violations).
The following provisions of this final rule will be implemented for
all retailers 120 days after the effective date of this final rule: The
co-located firms provision (i.e., establish at 7 CFR 271.2 that
establishments that include separate businesses that operate under one
roof and share the following commonalities: Ownership, sale of similar
foods, and shared inventory are considered to be a single firm) and the
prepared foods threshold provision (i.e., establish at 7 CFR 271.2 and
7 CFR 278.1(b)(1)(iv) that firms that have more than 50 percent of
their total gross sales in hot and/or cold prepared foods, including
foods cooked or heated on-site before or after purchase, shall not
qualify).
The stocking provisions of this final rule will be implemented for
all new applicant firms and all firms eligible for reinstatement 120
days after the effective date of this final rule and 365 days after the
effective date of this final rule for all currently authorized firms.
The stocking provisions of this final rule include: The accessory food
items provision (i.e., amend at 7 CFR 271.2 and 7 CFR
278.1(b)(1)(ii)(C) the definition of ``staple food'' so as to modify
the regulatory definition of ``accessory food items'', to exclude
certain items from being counted in any staple food category), the
depth of stock provision (i.e., establish at 7 CFR 271.2 and 7 CFR
278.1(b)(1)(ii)(A) the requirement that certain firms must stock at
least three stocking units of each staple food variety), the breadth of
stock provision (i.e., codify at 7 CFR 271.2 and 7 CFR
278.1(b)(1)(ii)(A) statutory requirements to increase the number of
varieties required of certain firms in each of the four staple food
category from three to seven and increase the number of staple food
categories that must contain at least one perishable staple food
variety from two to three), the acceptable varieties provision (i.e.,
clarify and amend at 7 CFR 271.2 and 7 CFR 278.1(b)(1)(ii)(C) the
definition of ``variety'' as it pertains to staple food varieties in
the four staple food categories), and the need for access provision
(i.e., allow at 7 CFR 278.1(b)(6) the Agency to consider ``need for
access'' when a retailer does not meet all of the requirements for SNAP
authorization).
As it is used in this document the phrase ``existing policy''
refers to Agency policy in place as of December 15, 2016. Changes to
existing policy included in the final rule will be implemented on or
after the effective date of the final rule, January 17, 2017, as
described above in this section.
Retailer Guidance for Implementation of Final Rule
Many Program stakeholders specifically requested that FNS provide
retailers with detailed guidance and training materials on the rule to
ensure that all retailers fully understand all of the provisions of the
final rule. In addition to the clarifications and lists of examples
provided in the preamble of the final rule, FNS will answer retailer
inquiries and provide retailers with additional notice, guidance, and
training materials during the aforementioned implementation period per
7 CFR 278.1(t). This will include extensive outreach to ensure that the
retailer community is provided with sufficient technical assistance to
ensure that all firms are adequately informed regarding these changes
to SNAP rules.
II. Background
On August 20, 2013, FNS published a notice entitled, ``Request for
Information: Supplemental Nutrition Assistance Program (SNAP) Enhancing
Retail Food Store Eligibility'' in the Federal Register (78 FR 51136).
This Request for Information (RFI), which included 14 specific
questions, focused on ways to enhance the definitions of ``retail food
store'' and ``staple foods'', and overall eligibility requirements to
[[Page 90677]]
participate in SNAP, in order to improve access to healthy foods and
ensure that only firms that effectuate the purposes of SNAP are
authorized to accept SNAP benefits. FNS received a total of 211
comments from a diverse group of commenters, including retailers,
academics, trade associations, policy advocates, professional
associations, government entities, and the general public. These RFI
comments were considered in drafting the proposed rule. A copy of the
RFI comment summary can be viewed at http://www.fns.usda.gov/snap/rfi-retailer-enhancement.
On February 17, 2016, the Agency published a Notice of Proposed
Rulemaking (NPRM) rule in the Federal Register (81 FR 8015), in which
FNS proposed to amend SNAP regulations at 7 CFR parts 271 and 278 in
order to strengthen the criteria for the eligibility of certain SNAP
retail food stores utilizing existing authority in the Act and to
codify statutory provisions in the 2014 Farm Bill. On April 5, 2016,
FNS published a document in the Federal Register (81 FR 19500)
clarifying certain provisions of the proposed rule and extending the
proposed rule's comment period.
The proposed rule included statutory changes to the breadth of
stock (seven varieties in each of the four staple food categories and
at least one variety of perishable foods in at least three staple food
categories) required of certain SNAP retailers which were mandated by
the 2014 Farm Bill. Additionally, the rule proposed discretionary
changes such as provisions to address depth of stock, amend the
definition of ``staple food'', amend the definition of ``retail food
store'', and reaffirm the Agency's authority to disclose to the public
certain information about retailers who have violated SNAP rules.
The 91-day public comment period ended on May 18, 2016. FNS
received 1,284 public comments, including one comment not considered as
it was submitted untimely, and reviewed all 1,283 timely public
comments when drafting this final rule. Of these 1,283 comments, 23
were considered duplicative or non-germane, 738 or about 58% of all
comments were template or form letters, and 522 or about 41% of all
comments were unique submissions. Comments were considered duplicative
only if the actual submission and submitter were identical to those of
a previously received comment (e.g., a comment that was both submitted
to the Agency electronically and by mail) and comments were considered
non-germane only if the contents of the submission had no relation to
the general subject or specific provisions of the proposed rule (e.g.,
comments referencing other disparate rulemaking actions).
III. Summary of Comments and Explanation of Revisions
Summary of Comments
Of the 1,260 germane and non-duplicative comments considered by
FNS, most of the comments received came from retail food store
representatives, owners, managers, or employees (901 or about 72% of
total public comments). This total was largely comprised of retailer
template comments which either repeated boilerplate language verbatim
or with minor modifications and/or personalizations. The retailer
template comments (henceforth Template A) submitted by the employees
and owners of one chain of firms (a national take-and-bake pizzeria
chain which claims over 1,300 locations nationally, about 800 of which
are currently authorized to participate in SNAP) accounted for more
than one quarter of all public comments received and more than one
third of all retailer comments received (333 Template A comments, about
26% of total public comments, or about 37% of all retailer comments).
The retailer template comments (henceforth Template B) submitted by the
employees and owners of another chain of firms (a regional chain of
convenience stores which claims over 600 locations, about 550 of which
are SNAP authorized firms) accounted for about a seventh of all public
comments received and about a fifth of all retailer comments received
(183 Template B comments, about 15% of total public comments, or about
20% of all retailer comments). The comments submitted by the owners,
operators, or representatives of convenience stores using the template
(henceforth Template C) provided by an international convenience store
trade association, which professes to represent more than 1,500
supplier company members and 2,100 retailer company members with over
50,000 convenience store locations nationally, accounted for about a
ninth of all comments received and about a sixth of all retailer
comments received (143 Template C comments, about 11% of total public
comments, or about 16% of all retailer comments). Other retailer
comment templates accounted for about 3% of total public comments
received and about 5% of all retailer comments received (42 other
retailer template comments). In total, retailer template comments (701
total retailer template comments) constitute about 78% of all retailer
comments (901 total retailer comments) and about 56% of all total
comments (1,260 total germane and non-duplicative public comments). The
remaining 200 retailer comments were unique submissions (about 16% of
total public comments, or about 22% of all retailer comments).
The remaining approximately 28% of comments received included
feedback from the following entities: 259 private citizens, 29 industry
trade associations, 28 medical practitioners/organizations, 21 advocacy
or food access organizations, and 22 governmental entities.
Of the 1,260 germane and non-duplicative public comments received,
overall opinions on the rule were mixed. A majority of public comments
(about 54% of all germane and non-duplicative public comments) neither
wholly opposed, nor wholly supported the rule as proposed. This number
includes comments that suggested improvements or modifications to the
proposed provisions. About 40% of public comments specifically opposed
at least one provision of the proposed rule while not voicing support
for any specific provision of the proposed rule or offering any
improvements or modifications to the proposed provisions. About 5% of
public comments specifically supported at least one provision of the
proposed rule while not opposing any specific provision of the proposed
rule or offering any improvements or modifications to the proposed
provisions. Finally, less than 1% of public comments were considered
out of scope (e.g., general comments supporting or opposing the
Supplemental Nutrition Assistance Program). Comments from medical
practitioners/organizations tended to generally support the proposed
rule, while comments from private citizens, advocacy organizations, and
governmental entities were generally divided between those in favor and
opposed to various provisions of the proposed rule. Industry trade
associations, largely representing food retailers, manufacturers, and
distributors, generally opposed some provisions of the proposed rule.
Analysis of the comments which addressed each of the ten provisions in
the proposed rule follows.
Definition of ``Staple Food''--Multiple Ingredient Food Items
This discretionary provision proposed to amend language, at 7 CFR
271.2 and 7 CFR 278.1(b), to exclude multiple ingredient food items
from being
[[Page 90678]]
counted towards any staple food category. This provision was
specifically opposed by more public comments than any other provision
in the proposed rule. Based on the strength of the arguments of these
comments, FNS has stricken this provision from the final rule. Of the
total 1,260 germane and non-duplicative public comments received, 867
comments addressed this provision and 685 comments, or about 54% of all
public comments, specifically opposed this provision. About 69% of
total retailer commenters and a majority of total industry trade group
commenters specifically opposed this provision. Private citizens,
medical groups, advocacy organizations, and governmental entities that
commented on this provision were generally divided and/or expressed
mixed opinions.
About one quarter of the total 1,260 germane and non-duplicative
public comments were Template A comments submitted by the owners and
employees of a take-and-bake pizzeria chain. This chain relies
exclusively on cold pizza, a multiple ingredient food item, for their
SNAP eligibility under Criterion B (this criterion requires firms to
have 50 percent of total gross retail sales in staple food sales).
Template A comments expressed opposition to this provision on the
grounds that it would categorically eliminate them from the Program and
that multiple ingredient foods such as pizza may be healthy and
affordable options for low income Americans. Other retailer template
comments, such as Templates B and C from convenience store owners and
employees, also opposed this provision on similar grounds.
Many of the retailers opposing the multiple ingredient food items
provision were from the convenience store industry. Such commenters
pointed out that the exclusion of these products from eligibility
towards SNAP Criterion A (under this final rule, Criterion A would
require firms to stock on a continuous basis seven varieties in each of
the four staple food categories and at least one variety of perishable
foods in at least three staple food categories) would substantially
increase the difficulty of retailer compliance with concurrent proposed
enhancements in the required depth and breadth of stock, given the
limited space in convenience stores. For example, one comment, jointly
submitted by the international convenience store trade association
noted above and a petroleum marketers trade association which professes
to represent about half of the chain petroleum retailers nationally,
stated that, ``Today, in over 99,000 convenience stores, 75 percent of
the items in stock are multiple ingredient items, including mixed fruit
cups, frozen vegetable meat medley dinners, or canned soups. To comply
with the proposal, these small format retailers would have to
completely overhaul their food offerings--and remove items they now
sell--to remain eligible to participate in SNAP. This will be quite
costly and, for many, will make it too costly to continue participating
in SNAP.''
Several retailer commenters also pointed out that, although this
change was intended to clear up confusion, it would create more
confusion among retailers than under current regulations. As noted by
one commenter, an international chain of convenience stores which
claims over 50,000 convenience store members in 17 countries including
over 7,000 SNAP authorized firms, ``The `main ingredient' for most
items is easily determined from the principal display panel and/or the
FDA-mandated ingredients list.''
Currently, per 7 CFR 271.2 and 7 CFR 278.1(b)(ii)(C), multiple
ingredient food items are assigned to the staple food category of their
main ingredient as determined by FNS. The final rule titled ``Food
Stamp Program: Revisions to the Retail Food Store Definition and
Program Authorization Guidance'', published in the Federal Register on
January 12, 2001 (66 FR 2795) was further clarified by Benefits
Redemption Division Policy Memorandum 01-04, titled, ``Implementation
of Final Retail Store Eligibility Rule'' which was issued on August 14,
2001. In this Agency policy memorandum it is stated that the label may
be read to determine the main ingredient in a multiple ingredient food
item. The label referenced herein is the ingredients list included at
the bottom of the U.S. Department of Health and Human Services (HHS)
Food and Drug Administration (FDA) mandated ``Nutrition Facts'' label.
On this label, ingredients are listed in descending order of weight
(i.e., from most to least). The first listed ingredient, therefore,
makes up the largest share of the product's composition.
Long-standing FNS policy, therefore, holds that a multiple
ingredient food will be assigned to the staple food category of its
first listed ingredient on this label. Under this existing policy, for
example, a product such as canned ravioli, with tomato puree as its
listed main ingredient, is considered a variety (i.e., tomato) in the
vegetables or fruits staple food category. If the main ingredient of a
multiple ingredient food item is an accessory food item (e.g., salt),
then that multiple ingredient food item is considered an accessory food
item. Per Benefits Redemption Division Policy Memorandum 01-04, one
exception to this is the accessory food item water. If the main
ingredient of a multiple ingredient food item is listed as water, then
that item is assigned to the staple food category of its second listed
ingredient. Under this existing policy, for example, a product such as
canned tomato soup, with water and tomato paste as its first and second
listed ingredients respectively, is considered a variety in the
vegetables or fruits staple food category (i.e., tomato). If that
second ingredient is also an accessory food item (e.g., sugar) then
that item is considered an accessory food item.
In general, a majority of industry groups opposed the proposed
multiple ingredient provision. In addition to the concerns about higher
costs for certain types of retailers and greater retailer confusion,
industry groups opposed to this provision were also concerned about the
effect of the provision on SNAP households, which industry groups claim
rely heavily on multiple ingredient food items as part of their
nutritional intake. For example, the international convenience store
trade association and the petroleum marketers' trade association
jointly stated that, ``multiple ingredient items are often the main
sources of nutrition intake for families in the United States''.
Likewise, other industry groups, such as those representing the
manufacturers and distributors of canned and frozen food products,
pointed out that multiple ingredient food items, such as ``frozen pizza
rolls'' or ``canned soup'', can be major sources of important
nutritional intake for SNAP households and all Americans.
In addition, about two thirds of advocacy groups opposed this
provision. Opposed advocacy group commenters were primarily concerned
about the importance of multiple ingredient food items in lower-income
Americans' diets, especially for those unable to prepare meals at home
due to barriers such as time constraints and/or a lack of adequate
kitchen facilities. Additionally, some advocacy groups pointed out that
some multiple ingredient food items may have high nutritional value.
One national, anti-poverty organization stated that:
USDA has recognized before how essential convenient, multiple
ingredient foods are to food purchasing and preparation among SNAP
participants. The Thrifty Food Plan is the government market basket
upon which SNAP benefit amounts are based. In an effort to be more
realistic about the time available for food preparation in the home,
USDA incorporated more convenience foods in the
[[Page 90679]]
2006 revision of the Thrifty Food Plan . . . Therefore, it is
especially odd that many of the foods specifically added to Thrifty
Food Plan market baskets in 2006 would be excluded as staple foods
under the proposed rule. So long as retail food stores are meeting
the increased amounts, variety of staple items and perishable items
called by the statute, there is no compelling purpose to exclude
multiple ingredient items from counting (as they do under current
regulations) under one of the SNAP staple food categories.
However, some advocacy groups, particularly those that are nutrition-
focused, supported this provision. A national non-profit consumer
advocacy group focused on nutrition and food safety which claims over
750,000 members stated that, ``Disallowing multiple ingredient products
to count as a staple food (e.g., pizza because the first ingredient is
bread) ensures that the minimum stocking requirements for SNAP
authorized retailers are for healthier foods''.
Governmental entities were divided on this provision while medical
entities largely supported it. Overall, medical organizations supported
this provision on the grounds that it would compel retailers to stock
healthier food options and help steer SNAP households away from
calorie-dense and nutrient-poor multiple ingredient food items, while
also stressing the need for Agency clarification and guidance of this
proposed provision prior to implementation. A representative of one
such organization, a national, non-profit, medical association which
claims 64,000 pediatrician, pediatric medical subspecialist, and
pediatric surgical specialist members, noted that ``multiple ingredient
foods available in small retail outlets, like pizza and other mixed
dish frozen and boxed entrees like casseroles and macaroni and cheese,
tend to be higher in sodium, saturated fats, and sugar'' and, as a
result, supported this provision adding that ``nutritional profile
should be considered in determining how to define a staple food'' and
that ``FNS [should] provide clear and comprehensive guidance, at the
time the rule is finalized, that includes a list of specific foods that
would qualify as staple foods''.
State and local governmental commenters were divided on this
provision. One mayor of a city of 600,000 containing over 1,000 SNAP
authorized firms supported the provision, stating, ``Currently, the
staple food category determination for foods with multiple ingredients
is very subjective. We support the proposed changes to the definition
of `staple food' in order to bring clarity to a very complex regulatory
process. This is [a] strong policy that will increase the availability
of staple foods in all [of the city's] neighborhoods''. Other
governmental commenters such as the deputy mayor from another city with
a population over 600,000 that contains nearly 500 SNAP authorized
firms opposed this provision, stating, ``Disqualifying all prepared
foods for SNAP eligibility is risky as these are shelf-stable staples
in small stores and can serve as primary foodstuffs for SNAP
families.''
While FNS does agree with the commenters that argued that this
provision would likely increase healthy options for SNAP participants,
the Agency believes that other provisions in this final rule also help
increase healthy options for SNAP participants. The proposed rule would
have increased the required depth and breadth of staple food stock
while simultaneously expanding the list of accessory foods excluded
from the definition of ``staple foods'' and excluding multiple
ingredient food items from the definition of ``staple foods''.
According to some comments received, taken together, these four
provisions would constitute an unreasonably burdensome stocking
requirement for small format retailers. The Agency shares these
concerns and, for these reasons, the proposed multiple ingredient food
items provision has been stricken from this final rule. Multiple
ingredient food items will, therefore, continue to be assigned to the
staple food category of their main listed ingredient per current
regulations at 7 CFR 271.2.
Definition of ``Staple Food''--Accessory Food Items
This discretionary provision proposed to amend the definition of
``staple food'' so as to modify the regulatory definition of
``accessory food items'', to exclude certain items from being counted
in any staple food category, in keeping with statutory intent. The
proposed provision would have expanded the list of accessory foods to
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''.
This proposed provision was specifically addressed by a low number
of public commenters. Of the total 1,260 germane and non-duplicative
public comments received, 65 comments, or approximately 5% of all
public comments, specifically addressed this provision. Of the 65
comments that specifically addressed this provision, about half
supported it, about a quarter opposed it, and about a quarter were
mixed. Less than 1% of total retailer commenters specifically opposed
this provision. Industry trade groups and governmental entities that
commented on this provision were generally divided and/or expressed
mixed opinions. Medical groups, private citizens, and advocacy
organizations that commented on this provision were generally
supportive. FNS has retained this provision in the final rule with some
modifications and clarifications.
Trade group comments, such as a comment jointly submitted by the
international convenience store trade association and the trade
petroleum marketers' trade association, contended that this provision
would incur costs not captured in the Agency's proposed Regulatory
Impact Analysis (RIA) and Regulatory Flexibility Analysis (RFA), as
accessory food items with higher profit margins, such as potato chips,
would need to be replaced with staple food items with lower profit
margins, such as fruits and vegetables. This ``opportunity cost'' is a
significant contributing factor toward compliance cost estimates, such
as the estimate submitted by these trade groups in their joint comment,
which exceed the Agency's estimates in the proposed RIA and RFA. The
Agency appreciates these comments and has incorporated ``opportunity
costs'' into the cost estimates which appear in the final RIA and RFA.
This subject is examined in further detail the final rule's RIA and
RFA.
This provision was largely supported by advocacy, medical, and
local governmental commenters. One State university's nutrition
research institute commented that it ``. . . strongly supports . . .
[the expansion] of the definition of accessory foods to include chips,
desserts, and other snack foods, such that these items are not counted
as staple foods.'' Another international, nutrition-focused, non-profit
organization professing to represent over 1,000 nutrition professionals
stated that, ``We support the proposed changes to the definition of
`accessory foods' that would not qualify as staple foods to include
snack foods and dessert items such as chips, dips, cookies, cakes and
pastries that are typically consumed between meals.'' A city health
department commissioner, representing a city with a population of about
400,000 containing about 450 SNAP authorized firms noted that, ``We
[[Page 90680]]
support the proposed changes to the definition of `accessory foods'
that would not qualify as staple foods to include snack foods and
dessert items such as chips, dips, cookies, cakes and pastries that are
typically consumed between meals. Many of these items have limited
nutritional value, and no longer defining them as staple foods will
support the intent of this rule to encourage SNAP retailers to stock
healthier items.''
The large, international chain of convenience stores stated that it
``. . . does not object to the exclusion of accessory food items from
the definition of `Staple Food' '' and another national food retailer
trade association which professes to represent nearly 40,000 retail
food stores and 25,000 pharmacies stated it, ``. . . supports this
change conceptually, but notes that retailers will need flexibility and
considerable guidance from the agency on the revised definition''.
Finally, a national trade association for the travel plaza and truck
stop industry which professes to represent about 200 corporate members
and over 1,200 locations, acknowledges the validity of this provision,
but like those that had opposed the provision, cautioned that this
could inadvertently eliminate stores ``that market healthy snack food
items such as fruit cups, vegetable-and-dip to go packs, and the like''
and argued that this provision should be ``well tailored [to] prevent
retailers that sell predominantly accessory foods from qualifying to
redeem SNAP benefits''.
Some commenters, however, do not believe that this proposed
provision went far enough in excluding unhealthy foods from being
counted as staple food items for the purposes of SNAP authorization.
One health commissioner from a city of over 8.5 million containing over
10,000 SNAP authorized firms stated that, ``We recommend the USDA avoid
defining accessory food items and concentrate efforts in establishing a
comprehensive list of staple food items that may be used to determine
eligibility to participate in SNAP.''
In their opposition to this provision the comment jointly submitted
by the international convenience store trade association and the
petroleum marketers' trade association noted that ``[this] provision
will drastically limit the number of items that can be counted towards
stocking requirements, effectively knocking out nutrient-dense products
including healthy `to go' packs such as apple slices and cheese . .
.''. Other trade group commenters also pointed out that this provision
should be considered carefully to avoid eliminating from consideration
healthy snacks like dried fruit and yogurt cups, stating that such
healthy snack foods are integral to the diet of the increasing number
of Americans who eat on the go.
As explained in the preamble to the proposed rule, the statutory
language defining ``accessory food items'' was explicitly not intended
to limit this class of food items to the eight items specifically
enumerated in the Section 3(q)(2) of the Act which reads, `` `Staple
foods' do not include accessory food items, such as coffee, tea, cocoa,
carbonated and uncarbonated drinks, candy, condiments, and spices
[emphasis added].'' This language, which creates an illustrative and
not exhaustive list, reflects the original statutory intent in defining
``accessory food items'' as demonstrated in the legislative history of
the Food Stamp Act of 1977. The language in the House Report to the
Food Stamp Act of 1977 indicated that Congress had intended its list of
accessory food items to be an illustrative, but not exhaustive, list.
For example, the House Report stated that ``donut, bakery, and pastry
shops which specialize in donuts and sweet baked goods . . . [that] do
not do a substantial business in the sale of staple foods, such as
bread'' are not authorized to accept and redeem benefits. This language
also indicates that Congress did not consider ``donuts, pastries, and
other sweet baked goods'' to be staple food items. See H. Rep. No. 95-
464 at 328 (June 24, 1977). Similarly, even though snacks and ice cream
were not specifically listed as accessory food items, the House Report
indicated that Congress did not intend for snack-type foods and ice
cream to be considered staple foods. See H. Rep. No. 95-464 at 328
(June 24, 1977) (``Stores whose primary business is the sale of snack-
type foods . . . are not authorized to accept food coupons because they
do not enable recipients to obtain a low-cost nutritious diet and,
therefore, do not effectuate the purpose of the food stamp program.''
and ``Candy stores and ice cream stores and vendors are not authorized
to redeem food stamp coupons because they do not provide recipients
with an opportunity to obtain any basic staples.'').
In response to commenters who expressed concern about needing
flexibility and additional guidance on this provision, FNS has made
some clarification changes to the final rule, has provided a longer
list of examples below in Section IV, and will issue additional Agency
guidance on this subject following promulgation of this final rule
including training materials intended for retail food store owners as
needed per 7 CFR 278.1(t). FNS has removed the language ``generally
consumed between meals'' in order to address concerns that this
language is vague or overly broad. Likewise, the listed example of
``dips'' has been removed as such terminology could be construed to
include potential staple foods such as guacamole, hummus, and salsa as
noted earlier by commenters. Primarily this provision will expand the
definition of ``accessory food items'' to include snack and dessert
foods, as well as specified food items that complement or supplement
meals. These foods are typically deficient in important nutrients and
are high in sodium, saturated fats, and/or sugar. FNS believes that
this approach to excluding typically salty and sugary snack and dessert
foods from counting towards retailer eligibility is a logical extension
of the statute and is consistent with the USDA 2015-2020 Dietary
Guidelines for Americans, which recommend limiting calories from added
sugars and saturated fats and to reduce sodium. For administrative
purposes FNS cannot consider the nutritional contents of individual
products, such as different brands of potato chips, on a case by case
basis. FNS, therefore, must generalize to a certain extent. As a result
FNS has identified a list of accessory foods that generally meet the
criteria above. It will help to ensure that SNAP clients will have
access to a range of healthy food products intended for home
preparation and consumption when they shop with their benefits. This
final rule, however, will not change which products are eligible for
purchase with SNAP benefits.
The list of accessory foods in the final rule now reads:
``Accessory food items include foods that are generally considered
snacks or desserts such as, but not limited to, chips, ice cream,
crackers, cupcakes, cookies, popcorn, pastries, and candy, and 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.''
In response to commenters' concerns regarding the effect of this
proposed provision on small portion size products, FNS notes that
existing regulations at 7 CFR 278.1(b)(1)(ii)(C) specifically state
that the ``package size'' of a product shall not be a determinant of
variety. Both an apple and a single-serving package of apple slices
would count as the same variety of a staple food item (i.e., apple) in
the vegetables or fruits staple food category. Similarly, under
existing regulations, both a tub of yogurt and a single-serving yogurt
cup are counted as the same variety of staple food item (i.e., yogurt)
in the dairy
[[Page 90681]]
products staple food category. Therefore, under existing regulations,
neither a single-serving package of apple slices nor a single-serving
cup of cow milk-based yogurt would be categorized as an accessory food
due to its package size. This sentence in 7 CFR 278.1(b)(1)(ii)(C)
remained substantively the same in the proposed rule, and nothing in
the proposed rule would have classified staple food items sold in
``single-serving'', ``snack-sized'' or ``to-go'' packs as accessory
food items simply on the basis of their packaging size.
However, in response to the confusion expressed by many commenters
regarding packaging size, clarifying language explicitly stating that
items shall not be classified as accessory food items exclusively based
on packaging size has been added in 7 CFR 271.2: ``Items shall not be
classified as accessory food exclusively based on packaging size . .
.'' Small-portion packages of staple food items such as apple slices,
grapefruit cups, carrot sticks, cheese slices, celery sticks, yogurt
cups, bags of nuts, and hummus will continue to be counted as staple
food items in their respective staple food categories.
As described above, some commenters recommended that FNS avoid
defining accessory food items and establish a comprehensive list of
staple food items and that the Agency further exclude unhealthy food
items from being classified as staple foods items. While FNS
appreciates the goals of such suggestions, creating a comprehensive
list of all staple food items is outside of the intended scope of the
Agency's rulemaking action. Per research conducted by the USDA's
Economic Research Service (ERS), about 20,000 new food products are
introduced into the retail marketplace annually. Therefore, the Agency
does not believe it is practical to make an exhaustive list of
acceptable staple varieties. However, to address concerns about
excluding unhealthy foods items from being classified as staple food
items, FNS will be amending the final rule to change existing policy,
which has limited ``accessory food items'' to include only the eight
products explicitly enumerated in regulations at 7 CFR 271.2. Under
existing policy a chocolate hazelnut spread (with the first three
listed ingredients of sugar, oil, and hazelnuts, in that order) can
currently be considered a staple variety in the vegetables or fruits
staple food category (i.e., hazelnuts), for example. The accessory food
items provision will change this policy such that any food product with
an accessory food main ingredient (with the previously mentioned
exception of ``water'') will also be considered an accessory food item
itself. To revise existing policy, the final rule provides that, ``A
food product containing an accessory food item as its main ingredient
shall be considered an accessory food item.''
Because the existing regulations and standing policy on accessory
foods has resulted in potato chips being counted as a variety in the
vegetables or fruits staple food category (i.e., potatoes) and pork
rinds being counted as a variety in the meat, poultry, or fish staple
food category (i.e., pork), this final rule will amend the definition
of staple food in 7 CFR 271.2 to read as set forth in the regulatory
text of this rule. The final rule now provides that accessory food
items include foods that are generally considered snacks or desserts
such as, but not limited to chips, ice cream, crackers, cupcakes,
cookies, popcorn, pastries, and candy, and other 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. The final rule further clarifies that items shall not
be classified as accessory food exclusively based on packaging size but
rather based on the aforementioned definition and as determined by FNS,
consistent with the guidance in this preamble and/or with future
guidance. Additionally, the final rule provides that a food product
containing an accessory food item as its main ingredient shall be
considered an accessory food item and that accessory food items shall
not be considered staple foods for purposes of determining the
eligibility of any firm. This provision will be implemented for all new
applicant firms and all firms eligible for reinstatement 120 days after
the effective date of this final rule and 365 days after the effective
date of this final rule for all currently authorized firms.
Definition of ``Retail Food Store''--85-15% Prepared Foods Threshold
This discretionary provision proposed to redefine ``retail food
store'' so as to consider firms that had more than 15% of their total
food sales coming from the sale of food items that were cooked or
heated on-site, before or after purchase, to be restaurants and to
exclude such restaurants from the Program. Existing regulations at 7
CFR 278.1(b)(1)(iv) currently consider firms that have more than 50% of
their total gross retail sales coming from items that are hot and/or
cold prepared foods not intended for home preparation and consumption
to be restaurants and exclude such restaurants from the Program. The
purpose of the proposed provision was to supplement this existing
regulation and exclude from the Program firms that have circumvented
Congressional intent and achieved SNAP authorization by selling food
cold and offering to cook or heat it on the premises after sale. This
proposed provision received a high number of adverse comments and based
on the strength of the arguments in these comments, FNS has stricken
this provision as proposed from the final rule, instead opting to
modify existing regulations at 7 CFR 278.1(b)(1)(iv) to close this
loophole. The final rule now provides that firms that are considered to
be restaurants, that is, firms that have more than 50 percent of their
total gross retail sales in (1) foods cooked or heated on-site by the
retailer, before or after purchase; and (2) hot and/or cold prepared
foods not intended for home preparation and consumption, including
prepared foods that are consumed on the premises or sold for carryout,
shall not qualify for participation as retail food stores under
Criterion A or B.
For example, a firm has $100,000 in total gross retail sales
consisting of $60,000 (60%) in nonfood sales and $40,000 (40%) in food
sales. The proposed provision would have considered only the food sales
for the purposes of the threshold. Under the proposed provision,
therefore, this example firm would be considered a restaurant if more
than $6,000 (15% of $40,000) of its sales came from the sale of food
items that are were cooked or heated on-site, before or after purchase.
The final provision, however, considers total gross retail sales rather
than only total food sales. Under this final provision, therefore, this
example firm could never be considered a restaurant because more than
50% of the firm's total gross retail sales come from nonfood sales.
Under this final provision a firm with $100,000 in total gross retail
sales could only be considered a restaurant and excluded from the
Program if more than $50,000 of its sales came from the sale of foods
cooked or heated on-site, before or after purchase, and the sale of hot
and/or cold prepared foods not intended for home preparation and
consumption.
It should be noted that existing policy, the proposed rule, and the
final rule do not impact the restaurants authorized by SNAP State
Agencies to participate in the Restaurant Meals Program (RMP). The RMP
is a State-option program active in only a handful of States that
allows eligible homeless, disabled, and/or elderly SNAP recipients to
use their SNAP benefits at
[[Page 90682]]
participating restaurants to purchase prepared meals.
Of the total 1,260 germane and non-duplicative public comments
received, 513 comments, or about 41% of all public comments,
specifically addressed this provision. About 48% of total retailer
commenters specifically opposed this provision. Medical groups and
governmental entities that commented on this provision were generally
divided and/or expressed mixed opinions. Industry trade groups,
advocacy groups, and private citizens that commented on this provision
were generally opposed.
Commenters identifying as retailers and trade associations
generally pointed out that a standard convenience store typically has
less than 85% of their total food sales coming from the sale of food
items that are not cooked or heated on-site before or after purchase.
Such commenters indicated that the average convenience store's hot and/
or cold prepared foods sales, including sales of foods that are cooked
or heated on-site before or after purchase, are closer to 40% of such
firms' total food sales, well beyond the 15% threshold for such hot
and/or cold prepared foods sales, including sales of foods that are
cooked or heated on-site before or after purchase. Commenters opposing
this provision stated that this fact would cause the entire convenience
store industry to be categorically ineligible for SNAP authorization.
Many advocacy groups also expressed opposition to this provision,
noting that this provision could have a deleterious impact on food
access for SNAP households. One national, anti-hunger advocacy group
noted that, ``We remain concerned about access for low-income
consumers, particularly in food desert areas, and for all shoppers with
mobility issues, such as those who are elderly, have disabilities, and/
or lack affordable transportation. We caution the Department against
setting a threshold that would cause stores to drop out of SNAP and
lessen food access, particularly for these particular SNAP consumers.''
Some retailers also noted that determining and documenting what
SNAP household customers did with cold food after purchase would be
impractical, especially for a firm with an accessible microwave or
other heating element. As noted in comments from the international
chain of convenience stores:
. . . the determination of whether an eligible food product
constitutes a food heated on-site, post-purchase is not always easy
to determine. Each . . . store contains a publicly available
microwave available for customer use . . . however, does not monitor
its customers' use of store microwaves and does not have a practical
method of doing so. Any eligibility requirement which would impose
on . . . stores a need to determine, with specificity, which items
were heated by customers post-sale would constitute an unreasonable
imposition, would unduly disrupt its business and would discourage
its customers from using its microwaves. Such monitoring could also
have the unintended effect of customers deciding to shop elsewhere.
[The company's] stores, especially its franchisees, also lack the
technological ability to collect and maintain such data. Imposition
of such a requirement would require each store to incur substantial
software-related costs and could require the hiring of additional
personnel if monitoring of customer activity for SNAP-eligibility
purposes is required.
SNAP authorized firms that primarily sell cold food and then offer
to cook that food on the premises for customers also specifically
opposed this provision. The owner of a SNAP authorized firm that sells
primarily prepared meat products commented, ``Unfortunately, I am
concerned that the FNS proposed rule would jeopardize my future
participation in SNAP. . . Currently, the business has more than 15% of
the total food sales from items that are `cooked or heated on site
before or after purchase.' '' An owner of a SNAP authorized firm that
primarily sells pizza, stated opposition to this provision and noted
that, ``All of our customers are required to pay $1 more than our
posted take-n-bake prices on our menus regardless of method of payment
to bake their take-n-bake pizza for them. For SNAP cardholders, the
products MUST still be unbaked at the point we swipe their card.
[sic]''
Supporters of this provision, namely medical groups and State and
local governmental entities, argue that removing restaurants from the
Program will benefit SNAP households by eliminating a cost-ineffective
source of calorie-dense and nutrient-poor food. One health commission
director, representing a city of 600,000 with about 200 SNAP authorized
firms, commented, ``We support the effort to uphold the original intent
of SNAP to purchase food items intended for home preparation and
consumption . . . The proposed rule adds an additional requirement that
at least 85 percent of an entity's total food sales must be for items
that are not cooked or heated onsite before or after purchase. These
enhancements will help ensure that SNAP retailers offer and sell a
variety of foods consistent with the language defining a `retail food
store' ''. This position was also echoed by two national advocacy
associations, one an organization which claims 37 million members that
advocates on behalf of persons over 50, and one that is a non-profit,
health advocacy organization.
Several industry groups expressed support for the concept of
excluding restaurants as well, but noted that the threshold set by the
Agency was not set appropriately in the proposed rule. As noted by the
international convenience store chain, ``Without question, [our] stores
are not `restaurants.' Our stores do not have tables or chairs at which
our customers can eat and we do not employ servers. Our customers
generally leave the store immediately after completing their purchases.
None of our stores charge the higher sales tax on restaurant meals
found in many jurisdictions. And heated items do not constitute more
than 50% of the food items sold in any of our stores.'' A national,
independent grocery trade association which claims 1,200 members
indicated support for this provision's intent while noting that they
``strongly urge the Agency to lower the proposed threshold.'' Two State
retailer associations, one which claims to represent nearly 400 food
retailers, wholesalers, and suppliers and one which claims to represent
over 800 corporate members operating more than 3,200 retail food
stores, also shared this view. Another national trade association
federation of 47 State and regional trade associations which claims to
represent approximately 8,000 independent petroleum marketers'
nationwide quoted the suggestion of one of their members that the
threshold be set at ``25% of sites' total gross sales instead of 15% of
total food sales.''
Other commenters noted that existing regulations at 7 CFR
278.1(b)(1)(iv) already prohibit the authorization of restaurants with
50% of their gross sales in prepared foods intended for home
consumption and saw this proposed provision as redundant and excessive.
As the international chain of convenience stores commented, ``FNS's
current regulation regarding retailer eligibility provides a clear,
common sense distinction between retail food stores (which have less
than 50% of total sales in hot or cold prepared, ready-to-eat foods for
immediate consumption) and restaurants (which have more than 50% of
total sales in hot or cold prepared, ready-to-eat foods for immediate
consumption).''
As stated in the proposed rule, the Agency's intent in proposing
this provision was to eliminate restaurants which circumvented
Congressional intent and achieved SNAP authorization by selling food
cold and offering to cook or heat it on the premises after the sale.
[[Page 90683]]
For example, a firm accepts SNAP benefits as payment for the purchase
of unpackaged, cold, breaded chicken strips. After making such a sale,
the firm then offers to fry this chicken for SNAP customers at the cost
of one dollar in cash. Such a firm is taking advantage of a loophole in
order to sell hot food and operate as a restaurant within the Program.
The Agency still believes that firms that primarily sell seafood,
pizza, and other food products cold and then offer to heat or cook
these products on the premises are operating as restaurants, not retail
food stores. The intent of this proposed provision was to correct
shortcomings in the existing regulatory language that have allowed for
the authorization of these types of ``you-buy-we-fry''-style
restaurants and pizza restaurants.
FNS reviewed and considered industry data in response to the
concerns from commenters that the 85-15% threshold would have the
unintended effect of precluding small-format retail stores with
marginal sales in foods cooked or heated on-site, before or after
purchase. According to the National Association of Convenience Stores
(NACS) State of the Industry (SOI) 2015 Annual Report (NACS State of
the Industry Annual Report Convenience and Fuel Retailing Totals,
Trends and Analysis of 2015 Industry Data) the average convenience
store's total gross sales are divided between 68.22% outside (i.e.,
fuel) sales and 31.78% inside (i.e., foodservice and merchandise)
sales. The inside sales of the average convenience store include 35.93%
cigarette and other tobacco sales, 7.21% beer sales, 0.87% health and
beauty sales. The remaining 55.99% of inside sales (or about 17.79% of
total gross sales) are food sales (including 9.22% of inside sales
listed under ``All Other''). Of these food sales, about 37.33% come
from ``Foodservice.'' ``Foodservice,'' as used in the NACS SOI 2015
Annual Report, includes ``Prepared Food,'' ``Commissary/Packaged
Sandwiches,'' ``Hot Dispensed Beverages,'' ``Cold Dispensed
Beverages,'' and ``Frozen Dispensed Beverages'' and is defined as
follows: ``Foodservice appears in many different forms in the
convenience store channel. In some cases, it's a coffee program and a
soda fountain, in some it's a roller grill and a condiment bar, and at
the other end of the spectrum it's a full-blown made-to-order quick-
serve restaurant (QSR) or a well-known branded franchise location.''
Based on this definition, ``Foodservice'' sales appear to include
primarily the sale of hot and/or cold prepared foods, including foods
cooked or heated on-site before or after purchase, and/or intended for
immediate consumption (``Foodservice'' constitutes 20.90% of total
inside sales and about 6.64% of total gross sales).
Based on this data, it appears that excluding firms with more than
15% of their food sales in foods cooked or heated on-site before or
after purchase would render the average convenience store ineligible to
participate in the Program. Furthermore, given that hot and/or cold
prepared foods, including foods cooked or heated on-site before or
after purchase, constitutes approximately 6.63% of total gross sales,
this data indicates that a convenience store with more than 50% of its
total gross sales issuing from the sale of hot and/or cold prepared
foods is very far outside of industry norms as such sales figures would
represent a nearly eightfold greater sales amount in hot and/or cold
prepared foods over the average convenience store.
In light of the comments and data, FNS recognizes that this
provision, if implemented as proposed, would likely have sweeping and
unintended consequences for smaller format firms. The Agency never
intended for this provision to categorically preclude convenience
stores and other small retail food stores with marginal sales in foods
cooked or heated on-site, before or after purchase, from SNAP
participation. The stated purpose of this provision was to realign SNAP
regulations with statutory intent and exclude restaurants from SNAP.
Therefore, the Agency is narrowing the scope of this provision in
the final rule and is instead amending existing regulations at 7 CFR
278.1(b)(1)(iv) to specifically exclude from SNAP participation firms
with more than 50 percent of their total gross sales in (1) foods
cooked or heated on-site by the retailer before or after purchase; and
(2) hot and/or cold prepared foods not intended for home preparation or
consumption, including prepared foods that are consumed on the premises
or sold for carryout. Conforming edits were also made to 7 CFR 271.2 to
the definition of ``retail food store.'' This change to existing
regulations will close the existing loophole and align SNAP regulations
with Congressional intent to exclude hot food and restaurants from
SNAP, while achieving the Agency's stated objectives and addressing
concerns that the proposed provision might adversely affect SNAP-
authorized firms, such as convenience stores, that do not operate as
restaurants.
This provision was never intended to exclude from the Program firms
that offer both microwaveable products (e.g., frozen burritos and
packages of popcorn) for sale and self-service microwaves for customer
use. FNS agrees that is it neither feasible, nor desirable that firms
be required to monitor customers' usage of self-service microwaves.
Under this final provision microwaveable food products will not be
considered foods cooked or heated on-site before or after purchase
simply because they could be heated after purchase using a self-service
microwave and eaten on-site. The final provision specifies that this
prepared food threshold will consider those food products that are
cooked or heated ``by the retailer''. Such language excludes self-
service microwaves from consideration under this provision. The purpose
of this provision is to prevent certain types of take-out restaurants
from continuing to circumvent Congressional intent to exclude hot food
and restaurants from SNAP. While many small format retail food stores
may offer some hot and/or cold prepared foods, including foods that are
cooked or heated on-site by the retailer before or after purchase, for
sale, FNS does not expect this provision to affect convenience stores
or similar small format retail food stores as such hot and/or cold
prepared foods typically constitute less than 7% of total gross sales
for the average convenience store as indicated by industry data, per
the aforementioned data in the NACS SOI 2015 Annual Report. While this
provision is unlikely to affect the vast majority of retailers, it
closes existing loopholes that allowed restaurants to participate in
the Program. This provision will be implemented for all retailers 120
days after the effective date of this final rule.
Definition of ``Retail Food Store''--Co-Located Firms
This discretionary provision proposed to redefine the term ``retail
food store'' such that multiple co-located businesses sharing certain
commonalities would be treated as one firm for the purposes of the
Program. As proposed, these commonalities included the sale of similar
foods, single management structure, shared space, logistics, bank
accounts, employees, and/or inventory. In the proposed rule, FNS
specifically sought comments pertaining to any unintended adverse
effects of this proposed change and based on the comments that were
received this provision was modified to specify that co-located
businesses will be treated as one firm by FNS only if they share all of
the three following attributes: (1) Ownership; (2) sale of similar or
same food products; and (3) shared inventory.
[[Page 90684]]
This proposed provision received a moderate number of comments. Of
the total 1,260 germane and non-duplicative public comments received,
228 comments, or approximately 18% of all public comments, specifically
addressed this provision. About 22% of total retailer commenters
specifically opposed this provision. Medical groups that commented on
this provision were generally divided and/or expressed mixed opinions
while private citizens that commented on this provision were generally
supportive. Industry trade groups and advocacy groups that commented on
this provision were generally opposed. Support for or opposition to
this provision was almost universally concomitant with support for or
opposition to the 85-15% prepared foods threshold provision.
Commenters opposing this provision point out that, in conjunction
with the 85-15% prepared foods threshold provision, this provision
would eliminate from the Program any convenience store co-branded and
co-located with a fast food business. The idea of unifying multiple
businesses operating ``under one roof'' for purposes of SNAP
authorization was criticized by trade groups and retailers who stated
that convenience stores and other small format retail food stores
operating in shopping malls, travel plazas, strip malls, truck stops,
and other shared structures could face elimination from the Program due
to their proximity to a totally unaffiliated fast food restaurant. For
example, the national truck stop retailer trade association commented,
``As a practical matter, this rule would result in scenarios where
[our] members' convenience stores would be ineligible to participate in
SNAP simply because they operate adjacent to a separate restaurant.
This is arbitrary and contrary to the Program's objectives.'' Overall
opposed commenters noted that this provision was overly broad and could
result in the unfair treatment of numerous discrete businesses.
The Agency proposed this provision to close a loophole that allows
firms to obtain SNAP authorization in contravention of clear statutory
intent to exclude restaurants from the Program. For example, a firm
applying for SNAP authorization purports to operate two businesses
within one building. The first business sells hot pizza, is considered
a restaurant by FNS, and is, therefore, ineligible for SNAP
authorization. The second business sells only cold pizza and is,
therefore, eligible for SNAP authorization under Criterion B. Both
businesses sell the same product, are managed and owned by the same
individuals, employ the same personnel, operate in the same space, draw
from the same inventory, and handle their finances through the same
accounting mechanisms. The only difference between the two businesses
in this example is that the former does not accept SNAP EBT cards as a
form of payment at its designated cash register, while the latter does.
Firms obtaining SNAP authorization through such a superficial
bifurcation of their businesses are clearly circumventing regulatory
and statutory intent to exclude restaurants from the Program in order
to sell their food, in this example, pizzas. This provision was
proposed in order to close this loophole.
It was never the Agency's intent to treat multiple businesses as
one firm because such businesses simply share a roof and an owner. The
Agency's intent in the proposed provision was not to consider multiple
businesses operating within one truck stop or strip mall as a single
firm even if they shared some commonalities, such as management and
personnel, so long as they were not also engaged in other common
practices as well, such as selling similar or the same products drawn
from the same inventory. In the commenter's example, therefore, the
presence of a fast food restaurant at a travel plaza would not be
likely to have any bearing on the SNAP authorization status of a
convenience store located in the same travel plaza.
FNS appreciates the comments from stakeholders and other members of
the public that highlight the vagueness and possible unintended effects
of the proposed provision. In response to these comments, FNS has
clarified and narrowed this provision in the final rule. As it is
written in the final rule at 7 CFR 271.2, co-located businesses will be
treated as one firm by FNS only if they share all of the three
following attributes: (1) Ownership; (2) sale of similar or same food
products; and (3) shared inventory. This revision clarifies the
vagueness in the proposed language and limits the provision's potential
effects in keeping with its intent. This provision will be implemented
for all retailers 120 days after the effective date of this final rule.
Definition of ``Retail Food Store''--Depth of Stock
This discretionary provision proposed to address depth of stock by
establishing a minimum of six stocking units per staple food variety
which certain SNAP authorized firms must offer for sale and normally
display in a public area on a continuous basis. This provision received
a high number of adverse comments as proposed. Based on the strength of
the arguments made in these comments, in the final rule this depth of
stock requirement has been halved to a minimum of three stocking units
per staple food variety. When combined with the increases in the number
of varieties required per staple food category per the breadth of stock
provision of the rule, the proposed depth of stock provision would have
required a minimum stock for certain SNAP authorized retailers of 168
items, while under the final rule this depth of stock provision
requires 84 items.
Of the total 1,260 germane and non-duplicative public comments
received, 490 comments, or approximately 39% of all public comments,
specifically addressed this provision. About 91% of commenters that
addressed this proposed provision opposed it. About 47% of total
retailer commenters specifically opposed this provision. Medical groups
that commented on this provision were generally supportive while
government entities, private citizens, and advocacy organizations that
commented on this provision were generally divided and/or expressed
mixed opinions.
Most retailers and industry groups opposed this provision on the
grounds that the volume of products required by the proposed depth and
breadth of stock provisions (i.e., 168 total items) are untenable, as
proposed, for small-scale firms to store, display, and stock. As a
representative of an American drug store chain which claims over 8,000
locations, about 7,000 of which are SNAP authorized firms, notes,
``Since the 168 items must be continually stocked, a retailer must, in
reality, stock far more than 168 items to replace any items that are
sold. If a retailer only stocks the required 168 items, they run the
risk of non-compliance with Depth of Stock requirements each time an
item is sold. We request FNS further clarify this concern.'' Other
commenters echoed this concern, stating that they feared the loss of
SNAP authorization could occur as the result of selling a single item
immediately prior to an FNS inspection.
Under existing regulations at 7 CFR 278.1(a), FNS may require an
applicant firm to submit to an inspection, or store visit, as a part of
the SNAP authorization process. FNS understands that firms may sell out
of certain products or experience temporary disruptions to their supply
chain and that such occurrences may result in stocking shortfalls at
the time of an Agency store visit. If a firm has insufficient food
stocked on hand at the time of this store visit, this does not
necessarily preclude the firm from receiving SNAP authorization. Under
[[Page 90685]]
existing regulations at 7 CFR 278.1(b)(1)(ii)(A), if it is not clear
that the firm met the stocking requirements at the time of a store
visit, FNS may offer applicant firms the opportunity to demonstrate
their compliance with such requirements through the submission of
supporting documentation, such as invoices or receipts, indicating that
the firm had recently ordered or received the required staple foods
prior to the store visit.
In order to address the concerns and confusion of the commenters,
the final rule retains and clarifies the language at 7 CFR
278.1(b)(1)(ii)(A) that affords firms the opportunity to submit
supporting documentation in the case of certain stocking shortfalls at
the time of an Agency store visit. Additionally, the final rule
specifies that such supporting documentation must be dated within 21
days of the store visit. This timeframe of 21 calendar days, or three
weeks, reflects the need for retailers to stock perishable staple foods
on a continuous basis. Existing SNAP regulations at 7 CFR
278.1(b)(1)(ii)(B) define ``perishable foods'' as items that ``will
spoil or suffer significant deterioration in quality within 2-3
weeks.'' This language in 7 CFR 278.1(b)(1)(ii)(A) should not be
construed as allowing retailers to submit receipts or invoices to FNS
instead of having sufficient stock on hand; the purpose of this
language is to acknowledge the realities of the retail marketplace and
provide stores that stock sufficient food on a continuous basis some
degree of flexibility. The Agency has amended language in this
provision at 7 CFR 278.1(b)(1)(ii)(A) to provide that, ``Documentation
to determine if a firm stocks a sufficient amount of required staple
foods to offer them for sale on a continuous basis may be required in
cases where it is not clear that the requirement has been met. Such
documentation can be achieved through verifying information, when
requested by FNS, such as invoices and receipts in order to prove that
the firm had purchased and stocked a sufficient amount of required
staple foods up to 21 calendar days prior to the date of the store
visit.''
Under this final rule firms that are SNAP authorized under
Criterion A must offer for sale and display in a public area (e.g., on
store shelves) qualifying staple food items on a continuous basis,
evidenced by having no fewer than seven different varieties of food
items in each of the four staple food categories with a minimum depth
of stock of three stocking units for each staple variety. This means
that, on any given day of operations, such a firm should offer a total
of 84 units for sale (3 stocking units [middot] 7 staple varieties
[middot] 4 staple food categories = 84 units). Generally Agency
determinations of eligibility under Criterion A are guided by store
visit documentation of food items that are being offered for sale and
displayed in a public area at the time of store visits. So, for
example, if a firm is subject to a store visit on the 22nd of January
and is found to have only 83 of the required 84 units on hand, then
that firm may be afforded the opportunity to provide FNS with
supporting documentation. In this case one acceptable form of
supporting documentation would be documentation of order or purchase
(e.g., an invoice) verifying that the firm placed an order for food
stock, including the missing required unit, that is dated no earlier
than the 1st of January and no later than the time of the store visit
on the 22nd of January. Another acceptable form of supporting
documentation would be documentation of receipt or delivery (e.g., a
receipt) verifying that the firm received an order of food stock,
including the missing required unit, that is dated no earlier than the
1st of January and no later than the time of the store visit on the
22nd of January. If the firm in this example was able to provide an
acceptable form of supporting documentation to verify that the firm
stocks the required staple food items on a continuous basis (84 items),
then the firm would be authorized to participate in SNAP. However, if,
for example, a firm had 0 of the required 84 units on hand at the time
of store visit, then that firm would not be given the opportunity to
submit supporting documentation and would instead be denied SNAP
authorization. Such a result clearly demonstrates the firm has not made
a reasonable restocking effort.
Some commenters stated that the failure to meet the stocking
requirements of this provision at the time of a store visit would
result in substantial costs to firms due to the thousands of dollars in
fines FNS would levy against such firms as penalties for failing to
meet stocking requirements. Under existing regulations, a firm that
fails to meet current stocking requirements is denied SNAP
authorization or withdrawn from the Program. Once denied or withdrawn,
such a firm must wait six months to reapply for SNAP authorization. FNS
does not levy fines against retailers who are denied or withdrawn from
the Program on the basis of failing to meet the stocking requirements
as no statute or regulations currently authorizes FNS to levy fines
against retailers for such a failure. Neither the proposed rule, nor
the final rule change this fact. This matter is further examined in the
final rule's RFA and RIA. A civil penalty (i.e., a civil money penalty
or civil monetary penalty) may be applied in lieu of a period of
disqualification when a SNAP authorized retailer violates SNAP rules
(e.g., sale of cigarettes, tobacco, or alcohol for SNAP benefits).
Another objection raised to this provision pertained to food waste.
Some commenters posited that the increase in the number of staple food
categories in which perishable food items are required (a statutorily
mandated increase from two to three staple food categories) coupled
with this depth of stock requirement would result in spoilage, waste,
and exorbitant costs to retailers. As noted by a representative of a
convenience store distributor company that professes to service over
1,000 retail food stores in six States, ``For many non-perishable
items, if [convenience stores] do not sell to the consumer by their
expiration date, we can send those products back to the manufacturer
who will provide certain types of refunds or will replace product. This
practice only applies to select nonperishables and DOES NOT [sic] apply
to most products stipulated under the revised FNS rules for SNAP.
Perishable items are NEVER [sic] refunded by the manufacturer after the
expiration date, so the cost of spoilage on those products is borne
completely by the retailer.'' Under the proposed rule this depth of
stock provision would require a minimum of 18 perishable food items,
while in the final rule this depth of stock provision requires a
minimum of nine perishable food items where ``perishable'' is defined
by existing regulations at 7 CFR 278.1(b)(1)(ii)(B) to include frozen,
fresh, refrigerated, and unrefrigerated food products ``that will spoil
or suffer significant deterioration in quality within 2-3 weeks'' such
as loaves of bread and potatoes.
Another common objection raised to this provision pertained to
space and stocking logistics. Some commenters argued that, in
conjunction with the breadth of stock provision, this depth of stock
provision would require stocking a quantity of food items that simply
exceed the available shelf space at most small format retail food
stores. Some commenters also posited that the quantity of perishable
food items required by this rule would force small-format firms to
purchase additional refrigerator or freezer units for storage. The
regional chain of convenience stores which claims over 600 locations,
about 550 of which are SNAP
[[Page 90686]]
authorized firms, also noted that their ``current stocking needs and
inventory management systems [cannot] guarantee a minimum of six units
at all times for each of the relevant staple foods. At very least, we
would need to revise our planograms and general merchandising
strategies, and revisit our hardware and software applications.''
As discussed in the RIA and RFA, estimates of the final rule's
impacts on retailers are based on an analysis of a nationally
representative sample of 1,392 SNAP authorized small-format firms using
data gathered by FNS during store inspections, or store visits. Based
on this analysis FNS estimates that the average small-format SNAP
authorized firm already stocks over 70% of the stock needed to meet the
requirements of this final rule and the average small-format SNAP
authorized firm will only need to stock an additional 24 items.
Moreover, this analysis indicated that over 98% of small-format SNAP
authorized firms currently stock at least nine perishable staple food
items and, therefore, that the overwhelming majority of small-format
SNAP authorized firms will not need to stock any additional perishable
items to meet the requirements in this final rule.
Moreover, as discussed in the RFA, the Agency has analyzed examples
of stocking units of qualifying staple food varieties to determine the
shelf space that will be occupied by the 84 required items. The Agency
estimates that the 84 items required under the final rule would occupy
approximately 7,500 cubic inches. These 84 items would occupy about 5.6
square feet of non-refrigerated shelf space. Assuming stores choose to
display these non-refrigerated items in a standard manner (i.e., cans
of fruit cocktail are shelved three items deep on the shelf) the Agency
estimates that these non-refrigerated items would occupy less than two
full shelves on standard three-shelf wall shelving unit (84'' height x
48'' length x 16'' depth). While FNS estimates that the refrigerated
items would require about 4.3 linear feet of refrigerated shelf space
(where a refrigerated shelf has a standard 48'' width), 98 percent of
small SNAP-authorized firms already stock sufficient perishable items
to meet the perishables requirement. Therefore, FNS considers it
unlikely that these stores will need additional refrigerated space
beyond their current capacity. Furthermore, as our analysis indicates
that most stores will need to add far fewer than 84 items to meet the
combined stocking requirements of this rule (24 additional items for
the average store); the additional shelf space needed is likely to be
well below these estimates.
Since the average small-format SNAP authorized firm already stocks
most of the items required under this final rule, FNS contends that
this provision, and all of the stocking provisions as a whole, will
have a negligible impact on retailers from a spatial and logistical
perspective. FNS does not anticipate that requiring firms to utilize a
fraction of a shelf to stock an additional 24 items will necessitate
any major changes to the planograms or general merchandising strategies
of the average small-format retailer.
Certain industry groups, such as that national food retail trade
association, had questions regarding the definition of ``stocking
unit'' and requested further clarification. Per commenters' requests, a
list of examples has been added in Section IV of this document which
provides a more complete illustrative, but not exhaustive, examination
of what constitutes a stocking unit, and what does not constitute a
stocking unit for the purposes of this depth of stock provision.
State and local government entities as well as medical and advocacy
groups largely supported this provision, arguing that it would ensure
the availability of staple food items on the shelves of SNAP authorized
firms. One State public health official, representing a State with a
population of 38.8 million that includes over 25,500 SNAP authorized
firms, noted that this provision would help by ``increasing the
likelihood that these foods will be available to SNAP participants on
an ongoing basis'' and a city health department representing 8.5
million people and over 10,000 SNAP authorized firms, noted that, in
concert with other provisions, this provision would increase ``the
overall diversity of foods stocked on a continuous basis''.
On the other hand, several retailer and industry group commenters
stated that the proposed number of required stocking units was simply
too great for small format retailers and recommended scaling back the
number of stocking units required. The petroleum marketers' trade
association federation recommended that, ``[to] help the small retailer
the depth of stock should be cut to three items of each of the seven
varieties in each staple group''. Another State grocer association,
which professes to represent about 400 retailer members, recommended
that ``[reconsideration] of six different units of any food item in a
store at any given time should also be made, dropping that requirement
to a lower number.''
The proposed rule would have increased the required depth and
breadth of staple food stock while simultaneously expanding the list of
accessory foods excluded from the definition of ``staple foods'' and
excluding multiple ingredient food items from the definition of
``staple foods.'' According to some comments received, taken together,
these four provisions would constitute an unreasonably burdensome
stocking requirement for small format retailers. The Agency
acknowledges commenters' concerns about the overall impact of the
various provisions in this final rule on small format retailers.
However, the Agency also agrees with the comments from some State/local
governmental entities and medical groups that having a depth of stock
requirement would increase the likelihood of healthy staple food
options being available to SNAP recipients. Therefore, FNS is
addressing depth of stock by establishing a depth of stock provision,
but amending the provision at 7 CFR 278.1(b)(1)(ii)(A) by reducing the
required number of stocking units from the proposed six units to three
units for each staple food variety in this final rule. Conforming edits
were also made to 7 CFR 271.2 to the definition of ``retail food
store''. As a result of this change the costs and burdens associated
with compliance, perishable spoilage, and shelf space have all been
significantly reduced, as reflected in the RIA and RFA. This provision
will be implemented for all new applicant firms and all firms eligible
for reinstatement 120 days after the effective date of this final rule
and 365 days after the effective date of this final rule for all
currently authorized firms.
Definition of ``Retail Food Store''--Breadth of Stock
As explained in the preamble to the proposed rule, the 2014 Farm
Bill amended the Act to increase the number of staple food varieties
required per staple food category from three to seven and to increase
the staple food categories required to contain at least one perishable
variety from two to three. The proposed rule sought to codify these
mandatory requirements from the 2014 Farm Bill. This proposed breadth
of stock provision received a moderate number of largely supportive or
mixed comments. Of the total 1,260 germane and non-duplicative public
comments received, 482 comments, or approximately 38% of total public
comments, specifically addressed the increase from three to seven
varieties and 288 comments, or about 23% of total public comments,
specifically
[[Page 90687]]
addressed the increase from two to three categories containing at least
one perishable variety. About 56% of comments that specifically
addressed the increase from three to seven varieties supported this
change while approximately 39% were mixed and about 5% opposed this
change. Approximately 90% of comments that specifically addressed the
increase from two to three staple food categories containing at least
one perishable variety supported this change while about 8% opposed
this change and approximately 2% were mixed. Overall less than 1% of
total retailer commenters specifically opposed this provision. Medical
groups, private citizens, and advocacy groups that commented on this
provision were generally supportive while government entities and
industry trade groups that commented on this provision were generally
divided and/or expressed mixed opinions. This provision was included in
the final rule as proposed.
Some governmental, medical, and advocate commenters believed that
this provision did not go far enough to ensure that SNAP authorized
firms stocked sufficient nutritious food options. Such commenters noted
that the SNAP four staple food categories have not kept pace with
changes to the USDA's nutritional recommendations, now represented by
MyPlate. Such commenters suggested that the vegetables or fruits staple
food category should be split into two separate staple food
categories--the fruit staple food category and the vegetable staple
food category. Such commenters went on to argue that seven varieties
should be required for both of these staple food categories (for a
total requirement of 14 fruit and vegetable staple food varieties).
However, the current four staple food categories are statutorily-
mandated in Section 3(q)(1) of the Act and the suggestion of breaking
the four staple food categories into five categories would exceed the
Agency's statutory authority.
There were other commenters who stated that they expected that
retailers would have difficulty reaching seven different varieties in
the meat, poultry, or fish and the dairy products staple food
categories. As one city mayor, representing a city of 600,000 residents
containing 1,000 SNAP authorized firms, pointed out, ``It is difficult
to list off seven common varieties of dairy that all types of stores
will be able to carry. With the majority of dairy products being
perishable, retailers cited lack of cooling infrastructure and cold
storage, and difficulty in procuring and selling at an affordable cost
as barriers to stock seven varieties of dairy.''
FNS acknowledges the difficulties in reaching seven varieties in
certain staple food categories. FNS has amended the final rule to
address this concern, along with other comments specifically regarding
acceptable varieties in the four staple food categories, as explained
in the section on ``Definition of `Staple Food'--Acceptable Varieties
in the Four Staple Food Categories.'' However, because the Act requires
that stores authorized under Criterion A stock seven varieties in each
of the four staple food categories and at least one variety of
perishables in three of those staple food categories; this breadth of
stock requirement remains unchanged in the final rule. Conforming edits
were also made to 7 CFR 271.2 to the definition of ``retail food
store'' and 7 CFR[thinsp]278.1(b)(1)(ii)(A) to reflect the new breadth
of stock requirement. This provision will be implemented for all new
applicant firms and all firms eligible for reinstatement 120 days after
the effective date of this final rule and 365 days after the effective
date of this final rule for all currently authorized firms.
Definition of ``Firm''
This discretionary provision proposed to define ``firm'' so as to
clarify that it also includes retailers, entities, and stores. Only one
comment, a joint comment submitted by the international convenience
store trade association and the petroleum marketers' trade association,
specifically addressed this provision. No other retailer commenters
specifically opposed this provision.
The one comment that addressed this provision opposed it, stating
that ``[to] conflate `store' with `firm' may have far-reaching
ramifications in terms of licensing, enforcement and other policies''
and further added that ``[conflating] all of these terms will only
introduce confusion and lead to unintended results''. The purpose of
this provision is to clarify and unify terms that are currently used
interchangeably throughout current SNAP regulations. Therefore, the
provision at 7 CFR 271.2 remains unchanged in the final rule. This
provision will be implemented on the effective date of this final rule.
Need for Access
In the proposed rule FNS proposed to amend 7 CFR 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 does not
anticipate that large grocery stores and supermarkets will struggle to
meet the stocking requirements of this final rule and FNS only expects
to consider ``need for access'' for small format retailers. The purpose
of this provision, therefore, is to provide a mechanism to safeguard
food access for SNAP recipients especially when an isolated or
underserved community relies heavily on small format retail food stores
for its grocery shopping needs.
FNS understands that small businesses, such as independent
convenience stores, play a vital role in the life of all Americans.
These small businesses enrich both urban and rural communities by
providing economic prosperity, employment opportunities, and
sustainable growth. Very often small format retail food stores are the
only venue available in isolated or underserved areas. When drafting
this final rule FNS carefully considered the comments from the U.S.
Small Business Association Office of Advocacy, as well as the comments
submitted by retailers, trade associations, and other commenting
entities. Concerns expressed regarding proposed provisions were
incorporated into this final rule to minimize potential adverse impacts
on small businesses. In addition to these changes, this need for access
provision additionally accommodates small businesses and serves as a
hedge against potential loss of food access.
With respect to this need for access provision the preamble to the
proposed rule stated that ``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.''
In the proposed rule, FNS specifically requested comments from the
public to help FNS refine the factors used to determine whether a
retailer is located in an area with significantly limited access to
food. This provision received few comments. Of the total 1,260 germane
and non-duplicative public comments received, 48 comments, or about 4%
of total public comments, specifically addressed this provision. About
71% of comments that specifically addressed this provision suggested
modifications or alterations to the proposed factors to be considered
under this provision. This provision has been retained with
modifications based largely on feedback received in the final rule. Few
retailer commenters specifically opposed this provision and all other
commenter types were considered mixed.
[[Page 90688]]
Some retailers opposed this provision on the grounds that the
implementation of this provision would result in inequitable treatment
of firms. The regional convenience store chain that commented noted
that, ``FNS should not be positioning itself to pick winners and losers
in the competitive marketplace.''
As explained in the proposed rule, the 2014 Farm Bill amended
Section 9(a) of the Act to allow FNS to consider whether an applicant
retailer is located in an area with significantly limited access to
food when determining the qualifications of that applicant. The
Manager's Statement accompanying the 2014 Farm Bill indicated that the
intent of Congress was to encourage the Secretary ``to give broad
consideration to the impacts of additional requirements . . . on food
access in food deserts or other areas with limited food access.'' H.
Conf. Rep. 113-333, at 434 (Jan. 27, 2014). As such, this rule is
simply implementing a statutory provision that accommodates areas with
significantly limited access to food and retailers in such areas for
whom the new stocking standards may be a challenge to meet. FNS
specifically requested feedback from the public regarding the proposed
change during the comment period. FNS has reviewed all comments and
will be refining the provision in the final rule as described below.
The Agency also intends to provide Program stakeholders with additional
guidance on this provision.
Some retailers and industry trade groups also opposed this
provision on the grounds that the proposed provision would create
additional delays and administrative burdens for applying firms. The
proposed process would allow FNS to waive certain retailer eligibility
requirements in instances where applying firms served communities with
low food access, as determined by FNS. This provision was always
intended to function internally to the Agency and in tandem with the
existing SNAP authorization process. FNS does not expect to need any
additional information from applicant retailers to assist in the Agency
determination. Instead, FNS will rely on information that the Agency
currently receives as part of the retailer SNAP authorization process
and publicly available information about the area in which the store is
located, such as data in the U.S. Census Bureau's American Community
Survey (ACS). Therefore, FNS does not anticipate any additional
burdens, costs, or delays for retailers that would be created by this
provision.
FNS, however, acknowledges the confusion of commenters regarding
how this provision would work in practice and how it would affect the
timeline for applicant firms' authorization to participate in the
Program. As a result, the Agency has clarified the language of this
provision in the final rule to specify in 7 CFR 278.1(b)(6) that,
``Such considerations will be conducted during the application process
as described in 7 CFR 278.1(a).'' This means that an applicant firm
will still receive an authorization determination within 45 days of
Agency receipt of a firm's completed application for authorization.
During this period need for access will be considered if applicable.
The international convenience store trade association also opposed
this provision on grounds of fairness, stating that ``If, for example,
only one store in a food desert was SNAP authorized, then it could
charge whatever it wanted to a captive consumer base.'' Under the
existing SNAP equal treatment provisions at 7 CFR 278.2(b) and 7 CFR
274.7(f), it is prohibited for firms to treat SNAP households
differently than any other customers; therefore, retailers are
prohibited from charging SNAP customers different prices than non-SNAP
customers for the same products. Such predatory retail price gouging
practices targeting SNAP customers would, therefore, already be
prohibited under existing SNAP regulations.
Some medical and advocacy groups opposed this provision, or the
frequent application of this provision, on the grounds that it would
allow firms to avoid compliance and deprive communities that depend on
small food retail stores as the most convenient and accessible option
for purchasing food of a sufficient variety of healthy food options.
However, most retailer, industry, advocacy, governmental, and
medical entities that referenced this provision did not support or
oppose the provision, but instead suggested additional factors for FNS
to consider. Factors suggested for consideration by commenters, beyond
those put forward by the Agency in the proposed rule, included, but
were not limited to, car ownership rates, public transportation
availability, density of SNAP households, regional food availability,
regional food prices, and underserved ethnic communities. In order to
ensure that the Agency is able to consider some of these suggested
factors, and any other factors needed to determine food access, the
language of this provision in the final rule at 7 CFR 278.1(b)(6)
provides that the factors listed are not exhaustive.
Additionally, the final rule limits the applicability of this
provision to applicant firms that fail to meet both Criterion A (i.e.,
requiring firms to stock qualifying staple food items on a continuous
basis, evidenced by having no fewer than seven different varieties of
food items in each of the four staple food categories with a minimum
depth of stock of three stocking units for each qualifying staple
variety) and Criterion B (i.e., requiring firms to have 50 percent of
total gross retail sales in staple food sales), but meet all other SNAP
authorization requirements. This change is in keeping with
Congressional intent as expressed in the Manager's Statement
accompanying the 2014 Farm Bill which indicated that this need for
access provision is intended to accommodate retailers in low food
access areas for whom the new stocking standards may be a challenge to
meet.
The need for access provision in the final rule also clarifies the
factors that will be considered by the Agency will pertain to either:
(1) Area food access; or (2) firm specific information. Finally, the
proposed rule put forward the Agency's intent to implement this need
for access provision 60 days after publication of this final rule. As
stated earlier, this provision is intended to accommodate small
retailers in low food access areas for whom the new stocking standards
may be a challenge to meet, therefore this provision will be
implemented in tandem with the new stocking standards. This need for
access provision, therefore, will be implemented for all new applicant
firms and all firms eligible for reinstatement 120 days after the
effective date of this final rule and 365 days after the effective date
of this final rule for all currently authorized firms.
This language of this provision in the final rule reads as set
forth in Sec. 278.1(b)(6) in the regulatory text of this rule. The
final rule provides that FNS will consider whether the applicant firm
is located in an area with significantly limited access to food when
the applicant firm fails to meet Criterion A per 7 CFR 278.1(b)(1)(ii)
or Criterion B per 7 CFR 278.1(b)(1)(iii) so long as the applicant firm
meets all other SNAP authorization requirements. The final rule further
provides that, in determining whether an applicant is located in such
an area, FNS will consider access factors such as, but not limited to,
the distance from the applicant firm to the nearest currently SNAP
authorized firm and the availability of transportation in the vicinity
of the applicant firm; and that in determining whether an applicant
should be authorized in the Program despite failure to meet Criterion A
and Criterion B, FNS will also consider firm factors such as, but not
limited to, the extent of the applicant firm's
[[Page 90689]]
deficiencies in meeting Criterion A and Criterion B and whether the
store furthers the purposes of the Program. Furthermore, the final rule
provides that such considerations will be conducted during the
application process as described in 7 CFR 278.1(a). This provision will
be implemented for all new applicant firms and all firms eligible for
reinstatement 120 days after the effective date of this final rule and
365 days after the effective date of this final rule for all currently
authorized firms.
Definition of ``Staple Food''--Acceptable Varieties in the Four Staple
Food Categories
This discretionary provision proposed to clarify and amend the
definition of ``variety'' as it pertains to staple food varieties in
the four staple food categories. This provision received an overall
mixed response. Of the total 1,260 germane and non-duplicative public
comments received, 168 comments, or approximately 13% of all public
comments, specifically addressed this provision. About 16% of total
retailer commenters specifically opposed this provision. Industry
groups largely opposed this provision and other commenter types, such
as advocacy, medical, and governmental entities, were generally divided
and/or expressed mixed opinions.
Some commenters opposed to this provision stated that this
provision did not represent a clarification of existing policy, but
rather a radical change in the definition of ``variety,'' especially
with respect to the definition of ``variety'' for the meat, poultry, or
fish staple food category. A joint comment submitted by the
international convenience store trade association and the petroleum
marketers' trade association, for example, stated that ``FNS has also
proposed to `clarify' the term `variety.' But, the proposed rule
advances not a clarification but a redefinition''. The national trade
association for the travel plaza and truck stop industry echoed this
criticism, asserting that FNS policy currently treats multiple formats
of turkey and pork as discrete varieties and that the proposed rule
would change this supposed standing definition of ``variety'':
For example, under the Proposed regulatory text, ham and salami
would both qualify as one `variety' of item--`pork'--for purposes of
satisfying the seven-variety staple food threshold. Similarly,
turkey burgers, sliced turkey, and ground turkey would all qualify
as one variety--`turkey' rather than different [sic] three different
`varieties' in the meat, poultry, and fish category. The Proposal's
preamble does not attempt to justify this significant shift in
policy beyond saying that it is designed to `clear up confusion that
may exist in current regulations.' [This organization] is not aware
of any such confusion. Indeed, retailer confusion in this area can
be sourced entirely to the language in the proposed regulatory text
that would treat all food items from the same food source (e.g.,
chicken) as a single `variety.' There is little policy justification
for treating all items from the same food source as a single
`variety' of item. [emphasis added]
Additionally, some commenters criticized the standing definition of
``variety'' specifically in the context of the vegetables or fruits
staple food category. As the international convenience store trade
association and the petroleum marketers' trade association stated,
``For the vegetable or fruit category, there is no reason why Fuji
apples and a jar of applesauce should not be considered different
varieties; they are different products from the same food family
(apples).''
Under existing SNAP regulations at 7 CFR 278.1(b)(1)(ii)(C)
multiple formats of the same base product are not construed as
constituting multiple varieties for the purpose of Criterion A
eligibility. Canned chicken, frozen chicken, and fresh chicken, for
example, are currently considered one variety (chicken) under existing
SNAP regulations and policies. That this provision counts multiple
formats of one variety (e.g., chicken) as a single variety represents a
restatement of existing Agency regulation and policy. In fact, the
adoption of the suggestions of the international convenience store
trade association and the petroleum marketers' trade association that
``raw chicken breast, refrigerated grilled chicken, or frozen chicken
and vegetable stir fry should be considered different varieties'' and
that the Agency should ``consider cream cheese and Laughing Cow creamy
Swiss cheese to be two different [varieties]'' would represent a
reversal of the existing definition of ``variety,'' which in accordance
with existing regulations at 7 CFR 278.1(b)(1)(ii)(C), ``. . . is not
to be interpreted as different brands, different nutrient values,
different varieties of packaging, or different package sizes.'' This
existing policy was further examined in the 2001 Benefits Redemption
Division (BRD) Policy Memorandum 01-04 which reads, in part, ``Examples
of unacceptable varieties includes tomato juice, fresh tomatoes and
canned stewed tomatoes in the vegetables or fruits category.'' As is
clear from this memorandum, long-standing Agency policy has not
considered multiple formats of a product (e.g., raw chicken, canned
chicken, and frozen chicken) to constitute discrete staple food
varieties.
Variety has been traditionally defined by the Agency based on the
essential composition of the food product (i.e., main ingredient),
especially in the meat, poultry, or fish and vegetables or fruits
staple food categories. Products that share the same primary component
(e.g., sliced turkey and ground turkey--turkey) and very similar kinds
of products (e.g., McIntosh apples and Empire apples--apples;
mozzarella cheese and cheddar cheese--cheeses) have not generally been
considered to represent discrete varieties in their respective staple
food categories. Main ingredient and product kind have, therefore, been
recognized in Agency policy as the primary determinants of variety. The
confusion evidenced by retailers' and trade associations' comments
regarding the Agency's current definition of ``variety'' may be a
reflection of the fact that retail food stores may generally meet the
current Criterion A stocking requirements (i.e., three varieties in
each of the four staple food categories) without deliberately
considering the products needed for compliance. The increase in the
number of required varieties from three to seven, which was mandated by
the 2014 Farm Bill, has caused retailers to carefully consider what
stock would affect compliance and may have resulted in the
aforementioned comments and confusions.
Some advocacy and local or State government commenters suggested
including plant-based proteins in the meat, poultry, or fish staple
food category and plant-based dairy alternatives in the dairy products
staple food category. One county health department, representing a
county with a population over 750,000 and containing over 700 SNAP
authorized firms argued that, ``Additional staple food items that
should be considered include eggs and plant-based protein sources such
as canned or frozen legumes, unsalted nuts and seeds, and soy products
(i.e., tofu). These products could be included in the staple foods
category for meat, poultry and fish, re-framed as a protein category.''
As discussed earlier in the context of the breadth of stock provision,
there were also commenters who stated that they expected that retailers
would have difficulty in reaching seven different varieties in the
meat, poultry, or fish and the dairy staple food categories.
In common language usage a ``dairy product'' is understood to mean
an edible food product produced from the milk of a mammal, most
commonly cow's milk. Some traditional varieties of
[[Page 90690]]
dairy include milk, butter, yogurt, and cheese. There are a small
number of unique varieties of commonplace dairy products, most of which
share the same main ingredient (i.e., milk). Under existing Agency
policy, plant-based dairy alternatives are also considered acceptable
varieties in the dairy products staple food category. In fact, as
proposed, the rule had specified that ``plant-based milk'' was included
as a variety in the dairy products staple food category, which would
provide additional choices for retailers in meeting the new breadth of
stock requirements.
FNS acknowledges the difficulty in reaching seven varieties in this
staple food category. Given this reality, as well as the needs of
lactose-intolerant consumers, the final rule will consider plant-based
dairy products to be varieties in the dairy products staple food
category based on their main ingredient (e.g., cow's milk, goat's milk,
almond, and soy) and the traditional dairy product for which they are a
substitute (i.e., product kind). For example, almond-based milk, soy-
based milk, almond-based cheese, and soy-based cheese will each be
considered a discrete variety in the dairy products staple food
category under the final rule. Additionally, the final rule modifies
existing Agency policy to subdivide certain traditional, animal-based
dairy varieties into more than one variety. For example, under existing
Agency policy cheese is considered one variety while under the final
rule cow's milk-based soft cheese and cow's milk-based firm/hard cheese
each will be considered discrete varieties.
Additionally, FNS acknowledges the importance of plant-based
sources of protein and the potential difficulties in reaching seven
varieties in the meat, poultry, or fish staple food category. The final
rule, therefore, will modify existing Agency policy to include three
varieties of plant-based protein sources (i.e., nuts/seeds, beans, and
peas) in the meat, poultry, or fish staple food category. Under current
Agency policy such products (i.e., nuts/seeds, beans, and peas) are
counted as varieties in the vegetable or fruits staple food category.
Under this final rule beans and peas may only be counted once each as a
variety in the meat, poultry, or fish staple food category or once each
as a variety in the vegetables or fruits staple food category while
nuts/seeds may only be counted once as a variety in the meat, poultry,
or fish staple food category. This change is in keeping with the
nutritional guidance of USDA's MyPlate, which clarifies that, while
beans and peas belong to both the protein foods group and the vegetable
group, nuts/seeds are only considered to belong to the protein foods
group. This means that if a store stocked one jar of peanut butter, one
bag of almonds, and one bag of sunflower seeds, this would be
considered three stocking units of one variety (i.e., nuts/seeds) which
could be counted towards breadth of stock in the meat, poultry, or fish
staple food category. In this example, additional units of these or
other nut/seed products (e.g., three bags of walnuts) would not further
be counted as additional varieties in the meat, poultry, or fish staple
food category. This also means that if a firm stocked three bags of
dried kidney beans (i.e., beans) and three bags of dried black eyed
peas (i.e., peas), then these products would be counted as two
varieties towards the breadth of stock in the meat, poultry, or fish
staple food category or in the vegetables or fruits staple food
category. Beans and peas can each only be counted once as variety in
either the meat, poultry, or fish staple food category or in the
vegetables or fruits staple food category. This means that if a firm
stocked three bags of dried kidney beans, three bags of dried black
beans, and three bags of dried pinto beans, then these products could
only be counted as one variety (i.e., beans) in either the meat,
poultry, or fish staple food category or in the vegetables or fruits
staple food category. Likewise, three bags of dried black-eyed peas,
three bags of dried split peas, and three bags of dried lentils could
only be counted as one variety (i.e., peas) in either the meat,
poultry, or fish staple food category or in the vegetables or fruits
staple food category. These varieties may not individually be split
between staple food categories. This is a departure from the way in
which ``variety'' is traditionally defined (i.e., by main ingredient
and/or product kind). The reason for this unique exception is that
these plant-based proteins are being added to the meat, poultry, or
fish staple food category in order to supplement, not supplant, the
animal-based proteins for which the category is named. Under this
provision firms will not be able meet the breadth of stock requirement
for the meat, poultry, or fish staple food category by stocking seven
kinds of nuts/seeds, peas, and/or beans, each of these may only be
counted once.
Plant-based meat substitutes or analogues, marketed as vegetarian
or vegan alternatives to meat, will also be counted as varieties in the
meat, poultry, or fish staple food. Varieties of such meat analogues
may include, but are not limited to, mycoprotein-based meat analogues,
soy-based meat analogues (e.g., tofu or tempeh) and gluten-based meat
analogues (e.g., seitan). For such meat analogues variety is assigned
in the traditional way (i.e., by main ingredient and by product kind).
This means that if a firm stocked three packages of tofu this would be
considered one staple variety counting toward the breadth of stock in
the meal, poultry, or fish staple food category. In this example,
additional units of this or other soy-based meat analogues (e.g., three
bags of textured soy protein or three boxes of soy-based vegan hot
dogs) would not further be counted as additional varieties in the meat,
poultry, or fish staple food category. None of these or any other meat
analogues may be counted as a variety in any other staple food
category.
Even with the addition of these plant-based varieties into the
meat, poultry, or fish staple food category it will be necessary for
most firms to stock animal-based varieties to meet the breadth of stock
requirement for the meat, poultry, or fish staple food category. For
example, if a firm stocked five of the aforementioned plant-based
varieties (e.g., three jars of peanut butter [nuts/seeds], three bags
of dried black beans [beans], three bags of dried lentils [peas], three
packages of tofu [soy-based meat analogue], and three packages of
seitan [gluten-based meat analogue]), that firm would still be required
to stock at least two more varieties in the meat, poultry, or fish
staple food category (e.g., three dozen eggs, three packages of frozen
chicken cutlets, and three packages of ham).
These changes better align SNAP regulations with the nutritional
guidance of USDA's MyPlate, help to ease the burden of compliance on
retail food stores, and serve to increase the availability of healthy
food options for low-income Americans.
Some governmental, medical, and advocate commenters believed that
additional restrictions should be placed on these required varieties to
ensure that a certain number of healthy options were available. For
example, two city health departments, one noted earlier as representing
a city of 8.5 million, and another representing a city of over 1.5
million containing over 2,300 SNAP authorized firms, argued that,
within each staple food category, certain kinds of healthy varieties
should be mandated by FNS. Examples of such healthy varieties included
low-fat dairy, lean meat, fresh vegetables, and whole grain breads.
While FNS does agree with the commenters that argued that such changes
would likely increase healthful
[[Page 90691]]
options for SNAP participants, the Agency believes that incorporating
such additional enhancements to this provision could be overly
burdensome on retailers.
Other commenters suggested that variety shortfalls in one or more
staple food categories should be allowed to be covered with additional
varieties of fruits or vegetables (e.g., a store may stock only five
varieties of dairy but nine varieties of fruits and vegetables). While
the Agency supports changes that would encourage firms to stock more
nutritious products, including fresh fruit and vegetable products, such
a change would run counter to statutory requirements of the 2014 Farm
Bill that a retailer offer for sale ``a variety of at least 7 foods in
each of the 4 categories of staple foods'' and exceeds the Agency's
statutory authority.
Some commenters who supported the proposed provision pointed out
that a lax definition of ``variety'' would allow stores to skirt
variety requirements by stocking seven different formats of one or two
kinds of products with the same main ingredient. If a lax definition of
``variety'' were implemented, for example, the variety requirement for
the vegetables or fruits staple food category could be satisfied by
frozen French fries, powdered mashed potatoes, frozen hash browns,
potato chips, canned cream of potato soup, frozen tater tots, and
potatoes. FNS concurs with these concerns and will not be altering the
proposed definition of ``variety'' to allow for different formats of
products with the same main ingredient to count as different varieties.
Under both current Agency regulations and the final rule,
``variety'' is generally defined by product kind or main ingredient for
the meat, poultry, or fish and vegetables or fruits staple food
categories. This means that chicken, pork, and beef each represent
discrete varieties for the former category and that apple, banana, and
lettuce each represent discrete varieties for the latter category.
Products like Empire apples and McIntosh apples may have different
names and slightly different appearances, but they are generally
recognized as the same kind of product. For this reason both Empire
apples and McIntosh would be not each be considered a discrete variety,
but rather the discrete variety is the product kind itself--apples.
Likewise although apples, 100% apple juice, and applesauce are
different products, they would not each be considered a discrete
variety for the purposes of SNAP Criterion A because they share the
same main ingredient (i.e., apples). Similarly, although deli-sliced
chicken breast, frozen chicken drumsticks, and canned chicken are
different products, they would not each be considered a discrete
variety for the purposes of SNAP Criterion A because they share the
same main ingredient (i.e., chicken). For multiple ingredient food
products the first ingredient determines variety such that a frozen
microwaveable meal with beef listed as the first ingredient would
constitute a variety in the meat, poultry, or fish staple food category
(i.e., beef) and a can of ravioli with tomato sauce listed as the first
ingredient would constitute a variety in the vegetables or fruits
staple food category (i.e., tomato). Most bread or cereals food items
sold and consumed in America primarily derive from one or more of the
following four grains: Wheat, corn, rice, and/or oats. Based on the
limited types of grains and the new breadth of stock requirements, FNS
believes it is impractical to strictly define ``variety'' for the
purposes of this staple food category by the aforementioned method
(i.e., product kind and main ingredient), as is the standard for two of
the other staple food categories. As a result, in the bread or cereals
staple food category variety is defined by product kind (i.e., bread
and other baked or finished grain-based products) or main ingredient
(e.g., wheat and oats) as described in Part IV List of Examples below.
Numerous commenters requested additional Agency guidance on what
constituted a variety for each of the four staple food categories. In
response, a list of examples in Section IV is included in the preamble
of the final rule; this list provides 20 examples of varieties in each
of the four staple food categories and is intended to be illustrative,
not exhaustive. Additionally, the examples listed in the proposed rule
have been amended in the final rule to illustrate the intended
flexibility for retailers. The changes made to the examples of
varieties in the meat, poultry, or fish and the dairy products staple
food categories reflect the inclusion of plant-based alternatives.
``Plant-based'' milk has been, for example, removed as a listed example
and replaced with almond milk to reflect the inclusion of multiple
varieties of plant-based milks (e.g., almond milk, soy milk, and rice
milk) in the dairy products staple food category. Additionally, the
example ``melon'' was removed and replaced with grapes as melon is not
considered a product kind under the definition of ``variety'' but
instead includes several discrete varieties (e.g., honeydew and
cantaloupe). Likewise, ``breakfast cereal'' was removed and replaced
with ``rice'' because the former is not a product kind but instead
includes several discrete varieties (e.g., rice-based breakfast cereal
and oat-based breakfast cereal).
After review of all comments on this provision, this final rule has
largely retained the long-standing Agency definition of ``variety''
and, as described above, modifies the definition of ``variety'' to
allow retailers more flexibility in meeting the breadth of stock
provision in the dairy, bread and cereals, and meat, poultry, and fish
staple food categories. This provision will be implemented for all new
applicant firms and all firms eligible for reinstatement 120 days after
the effective date of this final rule and 365 days after the effective
date of this final rule for all currently authorized firms.
Public Disclosure of Firms Sanctioned for SNAP Violations
This discretionary provision proposed to reaffirm the Agency's
authority and intent to publicly disclose the store and owner name for
firms sanctioned for SNAP violations. This provision received few
comments most of which were supportive. Of the total 1,260 germane and
non-duplicative public comments received, 14 comments, or about 1% of
total public comments, specifically addressed this provision. About 71%
of comments that specifically addressed this provision were supportive
while approximately 14% opposed this provision and approximately 14%
were generally divided and/or expressed mixed opinions. No retailer
commenters specifically opposed this provision, industry trade groups
that commented specifically on this provision generally opposed this
provision and all other commenter types that commented on this
provision were generally supportive.
Three retailer associations (i.e., the international convenience
store trade association, the petroleum marketers' trade association,
and the national food retailer trade association) opposed the
disclosure of this information. One noted that it, ``. . . does not
believe that the name of a store owner should be disclosed if the owner
name identifies an individual in the store. [Our] members believe that
the owner name disclosure is unnecessary and could lead to mental and
emotional harm to the owner'' and went on to add, ``FNS should also
consider and take into consideration the seriousness of the sanctions
imposed and whether there have been multiple violations. Publicizing a
store owner's private information for a first time sanction that may
have resulted from an inadvertent
[[Page 90692]]
violation is unreasonable and clearly extreme.'' Another of these three
associations commented, ``There is no provision of the proposed rule,
however, that would allow for sanction information to be taken down
after the passage of a certain amount of time or in the event a store
was sold to another owner or placed under new management.'' A fourth
retailer association representing independent grocers seconded this
final point and stated the group, ``. . . is not opposed to public
disclosure of disqualified retailers who have engaged in fraudulent
activity after the appeals process has been exhausted; however [the
organization] encourages the Agency to remove or amend the public
notice when a store is sold so the new owners are not harmed by this
disclosure.''
One State welfare fraud investigator association commented, ``We
believe the proposed rule changes (increasing the minimum number of
categories in which perishable goods are required, amending the depth
of stock, redefining `Retail Food Store' to exclude restaurants, and,
particularly, disclosing information about retailers who have violated
SNAP rules) would serve to deter fraud.'' A city health department
representing the large city of 8.5 million and over 10,000 SNAP
authorized firms also stated that this provision will ``increase
integrity efforts against fraud, waste, and abuse in SNAP''.
FNS closely monitors retailers to ensure that they comply with
Program rules and regulations. FNS may warn or sanction retailers found
violating Program rules. Sanctions can include time-limited or
permanent Program disqualification as well as civil penalties. This
provision is an essential tool in Agency efforts to combat and deter
Program fraud and abuse. For example, the names of retail stores and
owners whom have been charged, indicted, or convicted for SNAP retailer
fraud by federal, state or local authorities are already disclosed
publicly through news releases and other means. This provision
reaffirms FNS' authority and intent to disclose the store and owner
name for firms sanctioned for SNAP violations. In response to the
suggestion that encourages the Agency to remove or amend the public
notice when a store is sold so the new owners are not harmed by this
disclosure, FNS believes that the public disclosure of both the retail
store name and the owner who had been sanctioned would mitigate the
potential harm to a new store owner.
FNS, however, acknowledges the concerns of these commenters. As a
result, FNS has clarified and narrowed this provision in the final
rule. Specifically, the final rule stipulates that information
regarding firms sanctioned for SNAP violations will be disclosed by FNS
only for the duration of the sanction. Firms sanctioned for lesser
offenses (e.g., sale of minor ineligibles) may face term
disqualifications as short as six months. FNS agrees that making the
owner and store name of such firms indefinitely available to the public
is neither necessary nor is it judicious. This provision has been
modified such that FNS may disclose the name and address of the store,
the owner names(s), and information about the sanction itself for the
duration of the sanction. The duration of the sanction lasts until the
period of disqualification ends or until the civil penalty has been
paid in full, whichever is longer. Additionally, this provision has
also been modified such that in the event that a sanctioned firm is
assigned a civil penalty in lieu of a period of disqualification, as
described in 7 CFR 278.6(a), FNS may continue to disclose this
information for as long as the duration of the period of
disqualification or until the civil penalty has been paid in full,
whichever is longer. The information regarding firms sanctioned with
permanent disqualification for offenses such as the trafficking SNAP
benefits should and will be made publicly available for the duration of
the disqualification (i.e., indefinitely). Program violations that
result in a permanent disqualification are serious offenses and the
Agency is dedicated to fighting Program fraud and abuse in all forms.
FNS agrees with the comments from governmental entities that the public
disclosure of the owner and store name of firms that violate Program
rules is a powerful deterrent to retailer SNAP fraud. This provision
will be implemented on the effective date of this final rule.
IV. List of Examples
Summary of List of Examples
The final rule codifies a statutory provision to increase the
required number of staple food varieties in each of the four staple
food categories from three to seven and to increase the required number
of staple food categories containing at least one perishable foods
variety from two to three, where ``perishable foods'' are defined as
items which are either frozen, fresh, unrefrigerated, or refrigerated
staple food items that will spoil or suffer significant deterioration
in quality within three weeks. The final rule also codifies a
discretionary provision which clarifies and modifies the definition of
acceptable ``variety'' in each of the four staple food categories.
Included below are lists of acceptable varieties in the four staple
food categories. Also included is an examination of what constitutes a
stocking unit for the purposes of the depth of stock provision.
Finally, included is a list of food items which are and are not
considered accessory food items. The lists of examples that follow are
intended to be illustrative and provide guidance on the final rule.
What follows is not to be construed as an exhaustive list of staple
food varieties, stocking units, or accessory food items.
The Meat, Poultry, or Fish Staple Food Category
In the meat, poultry, or fish staple food category ``variety'' is
generally defined by product kind or main ingredient. This means that
chicken, pork, and beef each represent discrete varieties. For multiple
ingredient food products the first ingredient determines variety such
that a frozen microwaveable meal with beef listed as the first
ingredient would constitute a variety in the meat, poultry, or fish
staple food category (i.e., beef).
This list of examples serves to provide guidance on acceptable
varieties in the meat, poultry, or fish staple food category. The meat,
poultry, or fish staple food category now includes varieties of meat
analogues (e.g., soy-based meat analogue and gluten-based meat
analogue). The meat, poultry, or fish staple food category also now
includes three types of plant-based protein staple foods (i.e., nuts/
seeds, beans, and peas). Each of these three aforementioned plant-based
protein types may only be counted once each as a variety in the meat,
poultry, or fish staple food category. Alternatively, beans and peas
may instead be counted once each as a variety in vegetables or fruits
staple food category. These two types (i.e., beans and peas) may only
be counted once each regardless of the staple food category they are
counted in. Nuts/seeds may only be counted once as a variety in the
meat, poultry, or fish staple food category, but not in the vegetable
or fruits staple food category.
What follows is an illustrative, but not exhaustive, list of 20
acceptable varieties in this staple food category. Included
parenthetically with each variety are two different examples of food
items which would usually fall within that variety. The examples of
multiple ingredient food items in this list would be acceptable only if
the listed main ingredient would be
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considered a variety in the meat, poultry, or fish staple category.
Perishable foods are indicated by the presence of an asterisk (*).
Plant-based Protein Types:
1. Nuts/Seeds (e.g., sunflower seeds or peanut butter)
2. Beans (e.g., dried black beans or dried red kidney beans)
3. Peas (e.g., dried lentils or canned split pea soup with a first
listed ingredient of split peas)
Meat, Poultry, and Fish:
4. Turkey (e.g., fresh deli sliced turkey* or fresh ground turkey*)
5. Goat (e.g., fresh goat chops* or frozen rack of goat ribs*)
6. Salmon (e.g., packaged smoked salmon or canned salmon)
7. Chicken (e.g., fresh chicken cutlets* or frozen chicken
nuggets*)
8. Beef (e.g., fresh ground beef* or beef jerky)
9. Tuna (e.g., fresh albacore tuna steak* or canned albacore tuna
fish)
10. Shrimp (e.g., frozen shrimp scampi meal* or fresh cocktail
shrimp*)
11. Tilapia (e.g., fresh tilapia filet* or panko breaded frozen
tilapia meal*)
12. Crab (e.g., fresh crab cakes* or canned crab meat)
13. Soy-based meat analogue (e.g., tofu* or soy-based vegan chicken
alternative*)
14. Chicken eggs (e.g., fresh eggs* or liquid egg whites*)
15. Catfish (e.g., frozen catfish filet* or smoked packaged
catfish)
16. Lamb/Mutton (e.g., fresh lamb chops* or fresh ground lamb*)
17. Cod (e.g., frozen cod* or fresh cod*)
18. Pork (e.g., pork loin* or fresh sliced ham*)
19. Duck (e.g., fresh duck* or canned duck)
20. Clams (e.g., frozen clams* or canned clam meat)
The Vegetables or Fruits Staple Food Category
In the vegetables or fruits staple food category ``variety'' is
generally defined by product kind or main ingredient. This means that
apples, bananas, and lettuce each represent discrete varieties. For
multiple ingredient food products the first ingredient determines
variety such that a can of ravioli with tomato sauce listed as the
first ingredient would constitute a variety in the vegetables or fruits
staple food category (i.e., tomato).
What follows is an illustrative, but not exhaustive, list of 20
acceptable varieties in this staple food category. Included
parenthetically with each variety are two different examples of food
items which would usually fall within that variety. The multiple
ingredient food item examples in this list would be acceptable only if
the main ingredient is in the vegetables or fruits staple category.
Perishable foods are indicated by the presence of an asterisk (*).
1. Potatoes (potatoes* or frozen tater tots*)
2. Oranges (100% orange juice* or fresh oranges*)
3. Tomatoes (canned tomato soup or sun dried tomatoes)
4. Apples (dried apples or pre-cut apple go-packs*)
5. Pumpkin (canned pumpkin or fresh whole pumpkin)
6. Bananas (fresh bananas* or frozen bananas*)
7. Onions (canned onions or fresh onions*)
8. Grapes (fresh grapes* or 100% grape juice)
9. Lettuce (fresh head of iceberg lettuce* or pre-cut and bagged
romaine lettuce*)
10. Pineapples (canned pineapple rings or fresh whole pineapple*)
11. Cucumbers (fresh cucumbers* or jarred pickles)
12. Strawberries (fresh strawberries* or frozen strawberries*)
13. Peaches (canned peaches or fresh peaches*)
14. Carrots (fresh whole carrots* or pre-cut carrot stick go-packs*)
15. Grapefruit (fresh whole grapefruit* or grapefruit fruit cup*)
16. Cabbage (e.g., fresh head of cabbage* or jarred kimchi)
17. Artichoke (e.g., fresh artichoke* or canned artichoke hearts)
18. Broccoli (e.g., fresh broccoli* or frozen broccoli florets*)
19. Avocados (e.g., ready-made guacamole* or fresh avocado*)
20. Celery (e.g., pre-cut celery stick go-packs* or fresh whole
celery*)
The Dairy Staple Food Category
In common language usage a ``dairy product'' is understood to mean
an edible food product produced from the milk of a mammal, most
commonly cow's milk. Some traditional varieties of dairy include milk,
butter, yogurt, and cheese. There are a small number of unique
varieties of commonplace dairy products, most of which share the same
main ingredient (i.e., milk). Based on the limited types of commonplace
dairy products and the new breadth of stock requirements, it is
impractical to define ``variety'' for the purposes of this staple food
category based on the main ingredient and it is useful to include
plant-based alternatives. Plant-based dairy products will be considered
a variety in the dairy products staple food category based on their
main ingredient and the traditional dairy product for which they are a
substitute. So, for example, almond-based milk, soy-based milk, almond-
based cheese, and soy-based cheese will each be considered a discrete
variety in the dairy products staple food category under the final
rule. Though these items are plant-based, they are recognized as dairy
equivalents and therefore, do not count as varieties in the remaining
staple food categories. Additionally, some of the traditional types of
dairy products have been divided into varieties based on distinct and
generally accepted differences. For example, the dairy type cheese has
been divided into two discrete varieties: Cow's milk-based soft cheese
and cow's milk-based hard/firm cheese based on generally accepted
industry norms. What follows is an illustrative, but not exhaustive,
list of 20 acceptable varieties in this staple food category. Included
parenthetically with each variety are two different examples of food
items which would usually fall within that variety. The multiple
ingredient food item examples in this list would be acceptable only if
the main ingredient is in the dairy products staple category.
Perishable foods are indicated by the presence of an asterisk (*).
1. Yogurt (e.g., fresh whole milk French vanilla yogurt* or fresh
nonfat peach yogurt*)
2. Soy yogurt (e.g., strawberry soy yogurt* or lite vanilla soy
yogurt*)
3. Almond yogurt (e.g., mixed berry almond yogurt* or low-fat plain
almond yogurt*)
4. Perishable cow milk (e.g., fresh skim cow milk* or fresh whole cow
milk*)
5. Perishable cow kefir (e.g., nonfat fresh blueberry kefir* or fresh
banana kefir*)
6. Shelf-stable liquid cow milk (e.g., condensed cow milk or evaporated
cow milk)
7. Shelf-stable powdered cow milk (e.g., powdered cow milk or casein/
whey powder)
8. Cow milk-based infant formula (e.g., organic, milk-based formula or
milk-based, iron-fortified formula)
9. Soy-based infant formula (e.g., iron-fortified, soy-based formula or
hypoallergenic, soy-based formula)
10. Butter (e.g., frozen sweet cream butter* or fresh salted butter*)
11. Butter substitute (e.g., margarine or non-dairy spread)
12. Sour cream (e.g., fresh, lite sour cream* or fresh, organic sour
cream*)
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13. Almond-based milk (e.g., refrigerated almond milk* or shelf-stable
almond milk)
14. Soy-based milk (e.g., shelf-stable soy milk or refrigerated soy
milk*)
15. Rice-based milk (e.g., shelf-stable rice milk or refrigerated rice
milk*)
16. Firm/hard cheese (e.g., fresh deli sliced cheddar cheese* or
packaged grated parmesan cheese)
17. Soft cheese (e.g., fresh curd cheese* or pre-wrapped American
cheese product slices*)
18. Goat cheese (e.g., fresh honey goat cheese* or fresh plain goat
cheese*)
19. Soy-based cheese alternative (e.g., mozzarella-style soy cheese* or
American-style soy cheese slices*)
20. Perishable goat milk (e.g., fresh whole goat milk* or fresh low-fat
goat milk*)
The Bread or Cereals Staple Food Category
Most bread or cereals food items sold and consumed in America
primarily derive from one of the following four grains: Wheat, corn,
rice, and/or oats. Based on the limited types of common grains and the
new breadth of stock requirements, therefore, it is impractical to
define ``variety'' for the purposes of this staple food category based
exclusively on the product kind or exclusively on the main ingredient,
as is the standard for two of the other staple food categories.
What follows is an illustrative, but not exhaustive, list of 20
acceptable varieties in this staple food category. Included
parenthetically with each variety are two different examples of food
items which would usually fall within that variety. The multi-
ingredient food examples in this list would be acceptable only if the
main ingredient is in the bread or cereal staple category. Perishable
foods are indicated by the presence of an asterisk (*).
1. Wheat (e.g., whole wheat flour or wheat germ)
2. Corn/maize (e.g., cornmeal or cornbread)
3. Rice (e.g., brown rice or basmati rice)
4. Oats (e.g., oatmeal or honey oat bread*)
5. Barley (e.g., pearled barley or barley meal)
6. Rye (e.g., raw rye or rye bread*)
7. Millet (e.g., millet flour or raw millet)
8. Quinoa (e.g., raw quinoa or quinoa pasta)
9. Teff (e.g., raw teff or injera*)
10. Bread (e.g., a loaf of rye bread* or a loaf of multigrain bread*)
11. Pasta (e.g., gluten-free spaghetti or whole wheat rotini)
12. Baking mixes (e.g., pancake mix or cornbread mix)
13. Tortillas (e.g., corn tortillas* or flour tortillas*)
14. Bagels (e.g., poppy seed bagels* or plain bagels*)
15. Pitas (e.g., low-carb pita* or whole wheat pita*)
16. Cold breakfast cereal (e.g., rice-based cereal or oat-based cereal)
17. English muffins (e.g., whole wheat English muffins* or honey oat
English muffins*)
18. Hot breakfast cereal (e.g., cream of wheat or farina)
19. Buns/rolls (e.g., frozen dinner rolls* or hot dog buns*)
20. Infant cereal (e.g., wheat-based infant cereal or oat-based infant
cereal)
As an example, a firm could meet the requirements for the bread or
cereals staple food category by stocking three loaves of bread, three
bags of rice, three boxes of spaghetti, three bags of pitas, three bags
of tortillas, three bags of flour and three packages of cornmeal.
Stocking Units
The proposed rule put forward a discretionary provision requiring
six stocking units per qualifying staple food variety. The final rule
halves that proposed requirement and codifies a discretionary provision
that requires three stocking units per qualifying staple food variety.
This list of examples serves to define ``stocking unit'' for the
purposes of this provision. If a food item would not usually be sold
individually, then it does not individually constitute a stocking unit.
Such food items are usually sold in bunches, boxes, bags, or packages
with a number of other identical items (e.g., a loaf of bread, a bunch
of grapes, a carton of eggs, a bag of rice, or a package of sliced
turkey). The individual sale of such food items would be impractical
given their small individual size. For such products it is the bunch,
box, bag, or package that represents one stocking unit. What follows is
an illustrative, but not exhaustive, list of such products and their
standard stocking unit size.
Small fruit and berries: A package of blueberries or a package
of strawberries
Leaf vegetables: A head of lettuce or a bunch of collard green
leaves
Stalk/root vegetables: A bunch of carrots or a bunch of celery
sticks
Deli sliced items: A package of turkey slices or a package of
cheddar cheese slices
Grains: A bag or sack of rice or a box of oatmeal
If a food item is usually or often sold singly, then that single
unit may constitute one stocking unit. What follows is an illustrative,
but not exhaustive, list of such products and their standard stocking
unit sizes:
Hand fruit: A banana or an apple
Large fruits or vegetables: A watermelon or a pumpkin
Small portion or single-serving packages: A yogurt cup or a
fruit cup
If a food item (e.g., grains, dried fruits, nuts, deli cold cuts,
etc.) is stored singly in a common container or unit, but sold to
customers by weight, then the standard stocking unit is considered to
be one pound. A bulk container containing three pounds of dried
cranberries, available to and sold to the customer by weight,
therefore, would constitute three stocking units of one variety in the
fruit or vegetable staple food category.
If FNS determines that a bunch, box, bag, or package usually sold
as a unit has been subdivided into unreasonably small units in order to
meet this depth of stock provision, FNS will not consider such food
items to constitute a stocking unit for the purposes of this depth of
stock provision.
V. List of Accessory Food Items and Examples of Staple Food Items
Accessory Food Items
The final rule codifies a discretionary provision which clarifies
the definition of ``staple food''. This provision realigns the
definition of ``accessory food items'' with statutory intent, defining
``accessory food items'' to include snacks, desserts, and foods that
complement or supplement meals.
While any food or food product intended for home consumption is
generally considered to be eligible for purchase with SNAP benefits,
only staple food products are counted toward a retail food store's
eligibility to participate in SNAP. Staple foods are generally
considered to be basic items of food that make up a significant portion
of an individual's diet and are usually prepared at home and consumed
as a major component of a meal. Some examples include tomatoes, ground
beef, milk, or rice. Accessory food items, on the other hand, are
generally considered to be food items consumed as snacks or desserts as
well as food items that complement or supplement meals, such as most
beverages and spices.
A product is often considered an accessory food item if it is
usually consumed on its own, usually as a snack or dessert, without
being cooked or prepared (e.g., potato chips or an ice-cream sandwich).
Products that are explicitly identified as staple foods, such as hand
fruit, are not considered
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accessory foods even if they are sometimes consumed on their own
without being cooked or prepared. A product is also often considered an
accessory food item if it is usually used to flavor other foods (e.g.,
salt or sugar) or if it is a beverage (e.g., soda pop or water). If a
product would normally be considered a staple food, but is sold in a
small package size (e.g., a small bag of dried apricots or a yogurt
cup), that product is still generally considered a staple food.
Commercially processed foods and prepared mixtures with multiple
ingredients are usually assigned to the staple food category of their
main ingredient on their ``Nutrition Facts'' label per current
regulations and policy. For example, a frozen pizza with enriched white
wheat flour listed as its main ingredient would be considered a staple
food variety in the bread or cereals staple food category. If the main
ingredient of a multiple ingredient food item is an accessory food item
(e.g., salt), then that multiple ingredient food item is considered an
accessory food item. The one exception to this policy is the accessory
food item water. If the main ingredient of a multiple ingredient food
item is water, then that item is assigned to the staple food category
of its second listed ingredient. If that second ingredient is also an
accessory food item (e.g., sugar) then that item is considered an
accessory food item.
All food products identified as accessory food items in Agency
guidance materials shall not be considered staple foods for the
purposes of determining the eligibility of any firm. Any food products
with main ingredients identified as accessory food items in Agency
guidance shall also be considered accessory food items and shall not be
considered staple foods for the purposes of determining the eligibility
of any firm. Any other food product that is not identified as an
accessory food item in Agency guidance materials shall be considered a
staple food in the category of its main ingredient. Agency guidance
that explicitly identifies types of accessory food items will be
updated as necessary per 7 CFR 278.1(t). If a retail food store owner
is unsure as to whether a food item is or is not an accessory food
item, they may look online for guidance through the USDA FNS's Ask the
Expert system at: http://www.fns.usda.gov/ask-the-expert (-->
``Nutrition'' --> ``Supplemental Nutrition Asst Prgm''). Additional
training for retail food store owners will be made available to further
clarify this matter as deemed necessary.
What follows is a list of accessory food items; any product not
listed below or in future Agency guidance will be considered a staple
food, as explained above, provided that its main ingredient is
considered a variety in the staple food category.
Snack and Dessert Food Items:
Potato, corn, wheat, tortilla, pita, and vegetable chips,
crisps, sticks, and straws; onion ring snacks; corn nuts; snack mixes;
crackers; pork rinds; pretzels; pre-popped or un-popped popcorn; and
cheese puffs or curls
Doughnuts, cupcakes, cookies, snack cakes, muffins,
pastries, sweet rolls, pies, cakes, pudding, churros, scones, gelatin
desserts, and any packaged mixes intended to create any of the
aforementioned products
Mints, chocolate, marshmallow, gum, toffee, brittle,
fudge, marzipan, nougat, candy bars, and candy of all kinds
Ice cream, ice milk, frozen yogurt, custard, whipped
cream, sherbet, sorbet, gelato, granita, Italian ices, frozen
carbonated beverages, snow cones, and ice pops
Any food product with a main ingredient that appears on
this list or in Agency guidance as an accessory food item
Food Items That Complement or Supplement Meals:
Powdered, dried, or extracted spices or seasonings
Baking soda and baking powder
Sugar, honey, maple syrup, aspartame, molasses, high
fructose corn syrup, and any other natural or artificial sweeteners
Soda pop, sports or energy drinks, iced tea, fruit punch,
mixers for alcoholic beverages, water, and all other carbonated or
uncarbonated beverages (except milk, plant-based milk alternatives, and
100% fruit or vegetable juice)
Monosodium glutamate, sodium nitrate, olestra, and any
other food additives or any food product that is edible but non-caloric
and non-digestible
Vegetable oil, olive oil, shortening, lard, safflower oil,
and any other solid or liquid oils or fats (except butter)
Ketchup, mayonnaise, salad dressing, hot sauce, mustard,
vinegar, relish, horseradish, chutney, duck sauce, marmite, and all
other condiments
Vanilla extract or other flavor extracts and cooking wine
Gravy and bouillon
Any food product with a main ingredient that appears on
this list or in Agency guidance as an accessory food item
Some mixed packaged food products may consist of more than one
discrete element, such as salted crackers and soft cream cheese
packaged together. In this example, the salted crackers are considered
an accessory food while the soft cream cheese is considered a staple
food. If the accessory food item is the main component of the mixed
packaged food product, per the ingredients list on the Nutrition Facts
label, then such a product is considered an accessory food item. If the
staple food item is the main component of the mixed packaged food
product, per the ingredients list on the Nutrition Facts label, then
such a product is considered a staple food item.
The definition of ``accessory food items'', however, is not based
on packaging size or style, nor does it include food items identified
in any of the four staple food categories. What follows is an
illustrative, but not exhaustive, list of staple food items NOT
considered accessory food items; any product not listed below will be
considered a staple food in the staple food category of its main
ingredient as explained previously.
Examples of Staple Foods:
Commercially processed foods and prepared mixtures with
multiple ingredients with a staple food main ingredient
Pre-cut, to-go packages or cups of fresh apple, carrot,
grapefruit, celery, or other fruits or vegetables
Single-serving yogurt cups containing or not containing
fruit, with a staple food main ingredient
Milk, flavored milk (e.g., chocolate milk), and plant-
based milk alternatives (e.g., soy milk), with a staple food main
ingredient
Yogurt and flavored yogurt (e.g., strawberry yogurt) with
a staple food main ingredient
Dehydrated, smoked, fermented, cured, or dried meats such
as jerky or salami with a staple food main ingredient (e.g., beef or
chicken)
Peanut butter, strawberry jam, and other plant-based
spreads with a staple food main ingredient
Fresh vegetables often used as herbs including, but not
limited to, fresh basil, fresh thyme, and fresh mint
100% fruit and/or vegetable juice
Salsa, hummus, guacamole, and other plant-based dips with
a staple food main ingredient
Pickled fruits, vegetables, eggs, or meats with a staple
food main ingredient
Single-serving packets of dried fruit
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including, but not limited to, raisins, prunes, dried apples, and dried
papaya spears, as well as dried vegetables
To-go packages of nuts or seeds
VI. Procedural Matters
Executive Order 12866, Executive Order 13563, and Executive Order 13272
Executive Orders 12866 and 13563 direct agencies to assess all
costs 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. Finally, Executive Order 13272 and the Small
Business Jobs Act of 2010 require agencies engaged in rulemaking
actions to respond directly to written comments submitted by the Small
Business Administration (SBA) Office of Advocacy.
The SBA Office of Advocacy submitted a comment in response to the
proposed rule. This comment identified shortcomings in FNS's Regulatory
Impact Analysis (RIA) and Regulatory Flexibility Analysis (RFA) and
also conveyed the concerns of small business stakeholders regarding the
RIA, RFA, and certain provisions of the rule as proposed. The SBA
commented that the RIA and RFA lacked analytical rigor and
transparency, and further maintained that the costs, benefits, and
other impacts of the proposed rule were not sufficiently quantified in
the RIA and RFA. Specifically, the SBA stated that the Agency's
``conclusion that the rule's impact on small authorized SNAP retailers
will amount to $140 is underestimated.'' Furthermore, the SBA indicated
that FNS failed to consider alternatives adequately when drafting the
proposed rule, especially with respect to a narrower rulemaking action
that codified only the statutory breadth of stock provision. In
response to these and other concerns FNS has carefully reexamined the
proposed RIA and RFA. The final versions of these documents reflect
substantial modifications made in order to incorporate the feedback of
the SBA as well as industry trade associations. These changes address
concerns regarding the consideration of alternatives and the
calculation of the cost impact, among others.
Additionally, in its comment the SBA suggested that ``FNS should
commit to publishing small business compliance guides as this rule
becomes finalized as it will help small businesses adapt to the new
requirements.'' As stated previously in this final rule's section
titled ``Retailer Guidance for Implementation of Final Rule,'' many
Program stakeholders specifically requested that FNS provide retailers
with detailed guidance and training materials on the rule to ensure
that all retailers fully understand all of the provisions of the final
rule. In addition to the clarifications and lists of examples provided
in the preamble of the final rule, FNS will answer retailer inquiries
and provide retailers with additional notice, guidance, and training
materials during the aforementioned implementation period per 7 CFR
278.1(t). This will include extensive outreach to ensure that the
retailer community is provided with sufficient technical assistance to
ensure that all firms are adequately informed regarding these changes
to SNAP rules. The SBA also suggested that FNS should consider
``granting increased compliance time for a percentage of small
retailers.'' As stated previously in this final rule's section titled
DATES, the stocking provisions of this final rule will be implemented
365 days after the effective date of this final rule for all currently
authorized firms. This phased implementation will give small format
retailers the time they need to come into compliance with the
provisions of this final rule.
This final rule has been determined to be significant and was
reviewed by the Office of Management and Budget (OMB). The Regulatory
Impact Analysis (RIA) for this rulemaking was published as part of the
docket in Supporting Documents on www.regulations.gov. A summary of the
RIA follows.
Regulatory Impact Analysis Summary
Need for Action: The final rule is needed to clarify and enhance
current regulations governing the eligibility of retail food stores
participating in SNAP and to codify mandatory provisions of the 2014
Farm Bill.
Benefits: This final rulemaking will codify mandatory provisions of
the 2014 Farm Bill and strengthen provisions in current regulations to
conform to the intent of statutory requirements. The final rule will
increase the variety of nutrient-dense staple food products offered for
sale at SNAP-authorized firms, while also increasing the required depth
of stock. Together, these provisions will help to ensure that SNAP
households have access to healthier foods on a continuous basis. The
final rule reflects the Agency's commitment to provide vital nutrition
assistance to our most vulnerable citizens, protect taxpayer monies,
and safeguard Program integrity. The final rule allows FNS to ensure
that retailers authorized to participate in SNAP as retail food stores
are consistent with the purposes of the Program. The final rule
reinforces the intent of SNAP that participants use their benefits to
purchase more nutritious foods intended for home preparation and
consumption.
Costs: There will be costs to the Federal government as a result of
the final rule due to a short-term increase in store visits to ensure
compliance with the new stocking requirements. The Agency has estimated
the total cost to the Federal government as approximately $3.7 million
in Fiscal Year (FY) 2018 and $15 million over five years. 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 statutory intent
of the Act to make nutritious foods available to SNAP participants for
home preparation and consumption. Some retailers may incur small costs
due to the need to modify their stock. Estimates of the final rule's
impacts on retailers are based on an analysis of a nationally
representative sample of 1,392 SNAP authorized small-format firms using
data gathered by FNS during store inspections, or store visits. Based
on this analysis FNS estimates that the average small-format SNAP
authorized firm already stocks over 70% of the stock needed to meet the
requirements of this final rule and the average small-format SNAP
authorized firm will only need to stock an additional 24 items.
Moreover, this analysis indicated that over 98% of small-format SNAP
authorized firms currently stock at least nine perishable staple food
items and, therefore, that the overwhelming majority of small-format
SNAP authorized firms will not need to stock any additional perishable
items to meet the requirements in this final rule. The average cost to
a small SNAP authorized retail food store is estimated at about $245 in
the first year and about $620 over five years.
Firms that do not stock sufficient staple food items to meet the
new stocking requirements will have the opportunity to modify their
staple food stock in order to be eligible to continue participating 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.
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It should be noted that most of the provisions in this final rule
have been modified significantly from their proposed language. This
final rule, for example, requires less stock than the proposed rule
(i.e., 168 item stock requirement proposed and 84 item stock required
in the final rule). Nevertheless, the final average retailer cost
estimate (about $245 in the first year and about $620 over five years
per firm) represents an increase over the cost estimate presented in
the proposed RIA and RFA (about $140 in the first year per firm).
Several commenters pointed out types of costs, including ongoing costs,
not originally accounted for in the Agency's cost estimate (e.g.,
``opportunity costs''). FNS appreciates this public feedback and has
incorporated these types of costs in its calculations of estimated cost
for the final rule's RIA and RFA.
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. 601-612). Pursuant
to that review, FNS believes that the rulemaking does not present a
substantial economic impact to a considerable number of small
businesses; although the number of stores impacted is large, we
estimate that the cost to those small businesses for stocking
additional stock would be nominal, on average about $245 in the first
year and $620 over five years. FNS has prepared a final Regulatory
Flexibility Analysis (RFA) to respond to public comments received in
reference to the proposed RFA and to reflect revisions to the rule. The
complete RFA for this final rule was published as part of the docket in
Supporting Documents on www.regulations.gov. A summary of the RFA
follows.
Regulatory Flexibility Analysis Statement
This final rule will impact nearly 200,000 small grocery stores and
convenience stores by requiring that these stores make changes to their
stock in order to comply with the new minimum stocking requirement
mandated in this rule. FNS estimates that for the vast majority of
stores the changes needed will be minimal and represent a negligible
share of a store's total gross sales. The average small store will need
to add an estimated 24 items to their existing stock to meet the new
minimum requirement in this rule. Costs would be greatest in the first
year, as stores make one-time changes to their stock. In future years,
costs will be primarily opportunity costs associated with stocking
items with lower profit margins and administrative costs associated
with reading guidance to ensure compliance with the requirements. The
average cost to a SNAP-authorized retailer is estimated at about $245
in the first year and $620 over five years.
Public Law 104-4, the Unfunded Mandate Reform Act
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
Agency 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 $146 million
or more (when adjusted for 2015 inflation; GDP deflator source: Table
1.1.9 at http://www.bea.gov/iTable) in any one year. When such a
statement is needed for a rule, Section 205 of the UMRA generally
requires the Agency 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) for State, local and
Tribal governments or the private sector of $146 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
Executive Order 12372 requires Federal agencies to engage in
intergovernmental consultation with State and local officials when
involved in Federal financial assistance programs and direct Federal
development. SNAP is listed in the Catalog of Federal Domestic
Assistance under No. 10.551. For the reasons set forth in the Final
Rule codified in 7 CFR part 3015, Subpart V and related Notice (48 FR
29115, June 24, 1983), this Program is excluded from the scope of
Executive Order 12372.
Executive Order 13132, 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 agencies' 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 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, Civil Justice Reform
This rule has been reviewed under Executive Order 12988, Civil
Justice Reform. This 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 rule is not intended to have retroactive effects
unless so specified in the Dates 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, Tribal Impact Statement
This rule has been reviewed in accordance with the requirements of
Executive Order 13175, ``Consultation and Coordination with Indian
Tribal Governments.'' 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 information
sessions as a venue for collaborative conversations with Tribal
officials or their designees. Reports from these information sessions
are part of the USDA annual reporting on Tribal consultation and
collaboration.
During the open comment period FNS received a letter from an Indian
Tribal Organization (ITO). On September 28, 2016, the Food and
Nutrition Service met with the Tribal Organization and 8 Tribes
represented by this Organization to further discuss comments contained
in this letter. FNS identified one (1) actionable comment, e.g. SNAP
[[Page 90698]]
eligibility should be considered circumstantially in areas with limited
food access.
The 2014 Farm Bill authorized additional consideration where an
applicant retailer is located in an area with significantly limited
access to food when determining the qualifications of that applicant.
This flexibility of the rule was clarified during the meeting on
September 28, to provide a deeper understanding of the agency's
underlying rationale in implementing this program in this manner.
If a Tribe requests consultation, the Food and Nutrition Service
will work with the Office of Tribal Relations to ensure meaningful
consultation is provided where changes, additions, and modifications
identified herein are not expressly mandated by Congress.
USDA Regulation 4300-4, Civil Rights Impact Analysis
FNS has reviewed this final rule in accordance with Departmental
Regulations 4300-4, ``Civil Rights Impact Analysis'' (CRIA) and 1512-1,
``Regulatory Decision Making Requirements'' to identify and address any
major civil rights impacts the final rule might have on minorities,
women, and persons with disabilities. This final rule enhances current
regulations and codifies statutory requirements and, after a careful
review of the final rule's intent and provisions, FNS has determined
that this final rule will not have an adverse impact on any retail food
store owners or SNAP recipients belonging to protected classes. The
complete CRIA for this final rule was published as part of the docket
in Supporting Documents on www.regulations.gov.
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 final 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. FNS intends to provide Program
stakeholders with guidance and technical assistance materials related
to this final rule utilizing online media. The Agency also intends to
use online media to publicly disclose information regarding firms
sanctioned for Program violations.
List of Subjects
7 CFR Part 271
Food stamps, Grant programs--Social programs, Reporting and
recordkeeping requirements.
7 CFR Part 278
Claims, Disqualification, Financial institutions, Fines and
penalties, Food stamps, Retail food stores, Wholesale food concerns.
Accordingly, for reasons set forth in the preamble, 7 CFR parts 271
and 278 are amended as follows:
0
1. The authority citation for 7 CFR parts 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. [thinsp]271.2:
0
a. Add a definition for Firm in alphabetical order.
0
b. Revise paragraph (1) of the definition of Retail food store.
0
c. Revise the definition of Staple food.
The addition and revisions read as follows:
Sec. [thinsp]271.2 Definitions.
* * * * *
Firm. (1) Firm 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 in this subchapter and SNAP
policies, the terms firm, entity, retailer, and store are used
interchangeably.
* * * * *
Retail food store means:
(1) An establishment or house-to-house trade route that sells food
for home preparation and consumption normally displayed in a public
area, and either offers for sale qualifying staple food items on a
continuous basis, evidenced by having no fewer than seven different
varieties of food items in each of the four staple food categories with
a minimum depth of stock of three stocking units for each qualifying
staple variety, including at least one variety of perishable foods in
at least three such categories, (Criterion A) as set forth in Sec.
278.1(b)(1) of this chapter, or has more than 50 percent of its total
gross retail sales in staple foods (Criterion B) as set forth in Sec.
278.1(b)(1) of this chapter as determined by visual inspection,
marketing structure, business licenses, accessibility of food items
offered for sale, purchase and sales records, counting of stockkeeping
units, or other accounting recordkeeping methods that are customary or
reasonable in the retail food industry as set forth in Sec.
278.1(b)(1) of this chapter. Entities that have more than 50 percent of
their total gross retail sales in: Food cooked or heated on-site by the
retailer before or after purchase; and hot and/or cold prepared foods
not intended for home preparation and consumption, including prepared
foods that are consumed on the premises or sold for carry-out are not
eligible for SNAP participation as retail food stores under Sec.
278.1(b)(1) of this chapter. Establishments that include separate
businesses that operate under one roof and share the following
commonalities: Ownership, sale of similar foods, and shared inventory,
are considered to be a single firm 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. The meat, poultry, or fish staple food category also includes
up to three types of plant-based protein sources (i.e., nuts/seeds,
beans, and peas) as well as varieties of plant-based meat analogues
(e.g., tofu). The dairy products staple food category also includes
varieties of plant-based dairy alternative staple food items such as,
but not limited to, almond milk and soy yogurt. 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.
[thinsp]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 only be counted in one staple food
category. For example, foods such as cold pizza, macaroni and cheese,
multi-ingredient soup, or frozen dinners, shall only be counted as one
staple food item and will be included in the staple food category of
the main ingredient as determined by FNS. Accessory food items include
foods that are generally considered snack foods or desserts such as,
but not
[[Page 90699]]
limited to, chips, ice cream, crackers, cupcakes, cookies, popcorn,
pastries, and candy, and other 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. Items shall
not be classified as accessory food exclusively based on packaging size
but rather based on the aforementioned definition and as determined by
FNS. A food product containing an accessory food item as its main
ingredient shall be considered an accessory food item. Accessory food
items 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. [thinsp]278.1:
0
a. Amend the last sentence in paragraph (b)(1)(i)(A) by removing the
word ``two'' and adding in its place the word ``three''.
0
b. Revise paragraph (b)(1)(ii)(A);
0
c. Amend the first sentence in paragraph (b)(1)(ii)(B) by removing the
word ``two'' and adding in its place the word ``three''.
0
d. Revise paragraph (b)(1)(ii)(C);
0
e. Revise the fourth sentence in paragraph (b)(1)(iv);
0
f. Redesignate paragraph (b)(6) as paragraph (b)(7);
0
g. Add new paragraph (b)(6).
0
h. Add paragraph (q)(5).
The additions and revisions read as follows:
Sec. [thinsp]278.1 Approval of retail food stores and wholesale food
concerns.
* * * * *
(b) * * *
(1) * * *
(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 four staple food categories with
a minimum depth of stock of three stocking units for each qualifying
staple variety and at least one variety of perishable foods in at least
three staple food categories. Documentation to determine if a firm
stocks a sufficient amount of required staple foods to offer them for
sale on a continuous basis may be required in cases where it is not
clear that the firm has made reasonable stocking efforts to meet the
stocking requirement. Such documentation can be achieved through
verifying information, when requested by FNS, such as invoices and
receipts in order to prove that the firm had ordered and/or received a
sufficient amount of required staple foods up to 21 calendar days prior
to the date of the store visit. Failure to provide verifying
information related to stock when requested may result in denial or
withdrawal of authorization. Failure to cooperate with store visits
shall result in the denial or withdrawal of authorization.
* * * * *
(C) Offer a variety of staple foods which means different types of
foods within each staple food category. For example: Apples, cabbage,
tomatoes, bananas, pumpkins, broccoli, and grapes in the vegetables or
fruits category; or cow milk, almond milk, soy yogurt, soft cheese,
butter, sour cream, and cow milk yogurt in the dairy products category;
or rice, bagels, pitas, bread, pasta, oatmeal, and whole wheat flour in
the bread or cereals category; or chicken, beans, nuts, beef, pork,
eggs, and tuna in the meat, poultry, or fish category. Variety of foods
is not to be interpreted as different brands, nutrient values (e.g.,
low sodium and lite), flavorings (e.g., vanilla and chocolate),
packaging types or styles (e.g., canned and frozen) or package sizes of
the same or similar foods. Similar food items such as, but not limited
to, tomatoes and tomato juice, different types of rice, whole milk and
skim milk, ground beef and beefsteak, 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
category. Accessory foods shall not be counted as staple foods for
purposes of determining eligibility to participate in SNAP as a retail
food store.
* * * * *
(iv) * * * In addition, firms that are considered to be
restaurants, that is, firms that have more than 50 percent of their
total gross sales in foods cooked or heated on-site by the retailer
before or after purchase; and hot and/or cold prepared foods not
intended for home preparation or consumption, including prepared foods
that are consumed on the premises or sold for carryout, shall not
qualify for participation as retail food stores under Criterion A or B.
* * *
* * * * *
(6) Need for access. FNS will consider whether the applicant firm
is located in an area with significantly limited access to food when
the applicant firm fails to meet Criterion A per paragraph (b)(1)(ii)
or Criterion B per paragraph (b)(1)(iii) of this section so long as the
applicant firm meets all other SNAP authorization requirements. In
determining whether an applicant is located in such an area, FNS may
consider access factors such as, but not limited to, the distance from
the applicant firm to the nearest currently SNAP authorized firm and
transportation options. In determining whether to authorize an
applicant despite its failure to meet Criterion A and Criterion B, FNS
will also consider factors such as, but not limited to, the extent of
the applicant firm's stocking deficiencies in meeting Criterion A and
Criterion B and whether the store furthers the purposes of the Program.
Such considerations will be conducted during the application process as
described in paragraph (a) of this section.
* * * * *
(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(s') name(s) and information about the sanction itself. FNS may
continue to disclose this information for as long as the duration of
the sanction. In the event that a sanctioned firm is assigned a civil
penalty in lieu of a period of disqualification, as described in Sec.
278.6(a), FNS may continue to disclose this information for as long as
the duration of the period of disqualification or until the civil
penalty has been paid in full, whichever is longer.
* * * * *
Dated: December 7, 2016.
Audrey Rowe,
Acting Under Secretary, Food, Nutrition and Consumer Services.
[FR Doc. 2016-29837 Filed 12-14-16; 8:45 am]
BILLING CODE 3410-30-P