[Federal Register Volume 88, Number 239 (Thursday, December 14, 2023)]
[Rules and Regulations]
[Pages 86545-86563]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-26641]
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Rules and Regulations
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains regulatory documents
having general applicability and legal effect, most of which are keyed
to and codified in the Code of Federal Regulations, which is published
under 50 titles pursuant to 44 U.S.C. 1510.
The Code of Federal Regulations is sold by the Superintendent of Documents.
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Federal Register / Vol. 88, No. 239 / Thursday, December 14, 2023 /
Rules and Regulations
[[Page 86545]]
DEPARTMENT OF AGRICULTURE
Food and Nutrition Service
7 CFR Part 246
[FNS-2023-0027]
RIN 0584-AE94
Special Supplemental Nutrition Program for Women, Infants, and
Children (WIC): Implementation of the Access to Baby Formula Act of
2022 and Related Provisions
AGENCY: Food and Nutrition Service (FNS), U.S Department of Agriculture
(USDA).
ACTION: Final rule with request for comment.
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SUMMARY: This rulemaking serves to amend the Special Supplemental
Nutrition Program for Women, Infants, and Children (WIC) Program
regulations by incorporating provisions of the Access to Baby Formula
Act of 2022 and making related amendments. ABFA establishes waiver
authority for the Secretary of Agriculture to address certain
emergencies, disasters, and supply chain disruptions impacting WIC, and
adds requirements to State agency infant formula cost containment
contracts to protect against disruptions to the Program in the event of
a recall. The provisions focus on improving State agencies' ability to
ensure continuity of Program operations during emergency periods (i.e.,
emergencies, disasters, and public health emergencies) and supply chain
disruptions, while ensuring access to Program benefits among low-income
pregnant and postpartum participants, infants, and children up to 5
years of age who are at nutritional risk.
DATES: This rule is effective February 12, 2024. Written comments must
be received on or before February 12, 2024 to be assured of
consideration. Online comments submitted through the Federal
eRulemaking Portal on this rule must be received on or before February
12, 2024.
ADDRESSES: The Food and Nutrition Service, USDA, invites interested
persons to submit written comments on this final rule. USDA seeks
comment on all aspects of this rule. Comments may be submitted in
writing by one of the following methods:
Federal eRulemaking Portal: Go to http://www.regulations.gov. Follow the online instructions for submitting
comments.
Regular U.S. Mail: WIC Administration, Benefits, and
Certification Branch, Policy Division, Food and Nutrition Service, P.O.
Box 2885, Fairfax, Virginia 22031-0885.
Overnight, Courier, or Hand Delivery: Allison Post, WIC
Administration, Benefits, and Certification Branch, Policy Division,
Food and Nutrition Service, 1320 Braddock Place, 3rd Floor, Alexandria,
Virginia 22314.
All written comments submitted in response to this final
rule will be included in the record and will be made available to the
public. Please be advised that the substance of the comments and the
identity of the individuals or entities submitting the comments will be
subject to public disclosure. FNS will make the written comments
publicly available on the internet via http://www.regulations.gov.
FOR FURTHER INFORMATION CONTACT: Allison Post, Chief, WIC
Administration, Benefits, and Certification Branch, Policy Division,
Supplemental Nutrition and Safety Programs, Food and Nutrition Service,
USDA, 1320 Braddock Place, Alexandria, Virginia, (703) 457-7708 or
[email protected].
SUPPLEMENTARY INFORMATION:
I. Overview
On May 21, 2022, the President signed the Access to Baby Formula
Act of 2022 (ABFA, Pub. L. 117-129) into law. ABFA amends Section 17 of
the Child Nutrition Act of 1966 (CNA, 42 U.S.C. 1786) to (1) establish
permanent waiver authority to the Secretary of Agriculture to address
certain emergencies, disasters, and supply chain disruptions impacting
WIC; and (2) require WIC State agency infant formula cost containment
contracts to include specific remedies to protect against disruptions
to the Program in the event of an infant formula recall. This rule
amends 7 CFR part 246 to codify the provisions of ABFA and implement
related changes which will strengthen WIC's ability to address
emergency periods and supply chain disruptions, particularly those
impacting infant formula. For the purpose of this rule:
emergency periods are defined as a public health emergency
declared by the Secretary of Health and Human Services and any renewal
of such a public health emergency; a presidentially declared major
disaster; or a presidentially declared emergency, in alignment with the
definition set forth in ABFA.1 2
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\1\ Public Health Service Act, 42 U.S.C. 247d Sec. 319 (2003).
https://www.govinfo.gov/content/pkg/USCODE-2019-title42/pdf/USCODE-2019-title42-chap6A-subchapII-partB-sec247d.pdf.
\2\ Robert T. Stafford Disaster Relief and Emergency Assistance
Act, 42 U.S.C. 5121 et seq. Sec. 102 (1988). https://www.fema.gov/sites/default/files/documents/fema_stafford_act_2021_vol1.pdf.
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supply chain disruption is defined as a shortage of WIC
supplemental foods, including infant formula, that limits WIC
participants' ability to reasonably purchase WIC supplemental foods
benefits within a State agency's jurisdiction, as determined, and
declared by the Secretary, in alignment with the definition set forth
in ABFA.\3\
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\3\ FEMA, ``Disaster Declaration Process,'' May 2011. Available
online at: https://www.fema.gov/pdf/media/factsheets/dad_disaster_declaration.pdf.
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Specifically, this rulemaking will:
(1) Codify permanent, expanded waiver authority of the Secretary to
help ensure continuity of WIC services during emergency periods and
supply chain disruptions impacting WIC.
(2) Codify requirements for WIC State agencies to include language
in their WIC infant formula cost containment contracts that describes
remedies in the event of an infant formula recall, including how an
infant formula manufacturer would protect against disruption to
supplemental food access by WIC participants.
(3) Add a new provision that WIC State agencies must include as a
part of the State Plan a ``plan of alternate operating procedures'' in
the event of an emergency period, supplemental food recall, or other
supply chain disruption.
In the development of this rule, the Department prioritized equity,
access, and nutrition security for WIC
[[Page 86546]]
applicants and participants.\4\ The Department also recognizes that the
rule may impact WIC State agencies, including Indian Tribal
Organizations (ITOs), local agencies, clinics, and WIC-authorized
vendors. Additionally, the Department recognizes that the rule may
impact infant formula manufacturers. While WIC is not designed to be a
disaster assistance program, this rule aims to improve the continuity
of services and Program benefits and access to supplemental foods for
participants during these unforeseen circumstances. Relatedly, customer
service, participation, and retention, as well as program integrity,
have also been considered in this rulemaking. To support WIC State
agencies in equitable implementation of this rulemaking, FNS plans to
provide WIC State agencies with technical assistance, which may include
guidance documents, memoranda, webinars, and/or presentations at
conferences. In addition, FNS will explore ways to support WIC State
agencies in providing alternative languages and formats and effective
communication of program changes, including with auxiliary aids and
services to participants and vendors.
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\4\ U.S. Department of Agriculture, Food and Nutrition Service,
``Food and Nutrition Security.'' Available online at: https://
www.usda.gov/nutrition-
security#:~:text=Nutrition%20security%20means%20consistent%20access,T
ribal%20communities%20and%20Insular%20areas.
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Given the need for swift implementation of ABFA following recent
disruptions to the supply chain and wide-ranging effects of the infant
formula recall, this is a final rule with request for comments pursuant
to the Administrative Procedure Act's exemption on matters relating to
agency management or personnel or to public property, loans, grants,
benefits, or contracts.\5\ It is imperative the provisions are
implemented as soon as is feasible so that FNS and WIC State agencies
have mechanisms in place to ensure continuity of operations and access
to Program benefits for WIC participants. The Department has requested
comments on specific topics in this rule that can inform future
rulemaking, policy, and/or guidance related to infant formula and will
consider comments on all aspects of the rule when developing guidance
and policy. Given the prescriptive nature of ABFA and the need for
swift implementation ultimately in the interest of WIC participants,
the Department believes this approach best serves the public interest.
The Department has collected, and will consider, input from
stakeholders to ensure the implementation of this rule supports the WIC
population and achieves the intended results. For example, FNS Regional
Operations and Support has collected feedback on FNS' response to the
infant formula recall and the Coronavirus Disease 2019 (COVID-19)
public health emergency from FNS Regional Offices and WIC State
agencies. FNS has considered this feedback in development of this rule
and will continue to do so when developing guidance and policy to
support the successful implementation of the rule. The Department
recognizes the value of stakeholder feedback and will continue to seek
and collect feedback to inform future technical assistance.
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\5\ Administrative Procedure Act, 5 U.S.C. 553 (1966). https://uscode.house.gov/view.xhtml?req=granuleid:U.S.C.-prelim-title5-section553&num=0&edition=prelim.
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II. Background
A. Overview of WIC
WIC is currently administered by 89 WIC State agencies, including
the 50 geographic states, the District of Columbia, 33 Indian Tribal
Organizations (ITOs), and five U.S. Territories (the Commonwealth of
the Northern Mariana Islands, American Samoa, Guam, Puerto Rico, and
the U.S. Virgin Islands). By providing supplemental foods, nutrition
education, including breastfeeding promotion and support, and referrals
to health and other social services, WIC addresses the nutritional
needs and safeguards the health of low-income pregnant and postpartum
participants, infants, and children up to 5 years of age who are at
nutritional risk.
According to their participant category and nutritional needs, WIC
participants receive supplemental foods on a monthly basis from one of
seven evidence-based food packages. The amounts and categories of foods
provided are intended to supplement participants' diets and provide
specific nutrients known to be lacking in the diets of WIC's target
population.
WIC participants typically access supplemental foods, including
infant formula, through a retail food delivery system. In such systems,
a WIC shopper goes to a WIC-authorized vendor (i.e., a retail store
authorized by the State agency), selects foods available in their
benefit balance, and uses a food instrument, typically an Electronic
Benefits Transfer (EBT) card, to purchase the items. Outside of a
retail food delivery system, some WIC participants access their
supplemental foods through a home food delivery or direct distribution
system operated by the WIC State agency. Additionally, WIC participants
with certain medical conditions who require exempt formulas or WIC-
eligible nutritionals may receive these as part of, or in addition to,
their WIC food package with appropriate documentation. These exempt
formulas and WIC-eligible nutritionals are procured outside of the
traditional WIC State agency cost-containment contracting process for
standard milk and soy-based infant formula and may be purchased at the
store like their other WIC items, or through other systems set up by
the WIC State agency, depending on availability and need for the
product(s).
B. WIC Program Waiver Authority
Historically, WIC has had limited authority to waive Program
requirements. However, since the onset of the COVID-19 public health
emergency, WIC has experienced a series of disruptions to Program
operations necessitating the ability for USDA's Food and Nutrition
Service (FNS) to have permanent waiver authority.
On February 17, 2022, a major infant formula manufacturer
voluntarily recalled certain powder infant formula, including exempt
infant formula. While recalls may be conducted because a mandatory
order has been issued by the U.S. Food and Drug Administration (FDA)
under statutory authority, they can also be conducted voluntarily by a
manufacturer, as in this case. This recall exacerbated existing supply
chain issues resulting from the ongoing COVID-19 public health
emergency. During its early response to the shortage, FNS used waiver
authority granted under Section 301 of the Robert T. Stafford Disaster
Relief and Emergency Assistance Act, (``Stafford Act,'' 42 U.S.C.
5121), to approve several waiver types for WIC State agencies to help
WIC participants obtain infant formula. This was possible because of
existing COVID-19 major disaster declarations covering the geographic
areas of all WIC State agencies, including States, ITOs, and
Territories.6 7
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\6\ FEMA, ``COVID-19 Disaster Declarations,'' August 20, 2021.
Available online at: https://www.fema.gov/covid-19.
\7\ FEMA, ``FEMA Assistance for Tribal Governments,'' March 17,
2021. Available online at: https://www.fema.gov/fact-sheet/fema-
assistance-tribal-
governments#:~:text=Tribes%20that%20are%20Recipients%20will%20have%20
a%20direct,in%20the%20Tribal%20Declarations%20Pilot%20Guidance.%20Mor
e%20items.
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Section 301 of the Stafford Act provides any Federal agency charged
with the administration of a federal
[[Page 86547]]
assistance program with the authority to modify or waive administrative
conditions for assistance that would otherwise prevent the giving of
assistance if the inability to meet such conditions is a result of the
major disaster. Activation of Section 301 of the Stafford Act requires
a State Governor's request and the President's approval. When approved,
these are referred to as Major Disaster Declarations. Section 301 of
the Stafford Act cannot be activated by emergency declarations, public
health emergencies, or supply chain disruptions. Prior to March 2020,
Section 301 of the Stafford Act was the only waiver authority available
to grant administrative flexibilities in WIC.
On March 13, 2020, the ongoing COVID-19 crisis was declared a
public health emergency of sufficient severity and magnitude to warrant
declaration of a nationwide public health emergency through the
Secretary of Health and Human Services. Over the next several weeks, in
response to the COVID-19 public health emergency, major disaster
declarations were put into place covering all WIC State agencies,
including States, Indian Tribal Organizations, and U.S. Territories,
pursuant to Section 501(b) of the Stafford Act. While the major
disaster declarations would eventually enable WIC State agencies to
request regulatory waivers under the Stafford Act's authority,
immediate and additional flexibilities were necessary to support WIC
State agencies.
Therefore, on March 18, 2020, the Families First Coronavirus
Response Act (FFCRA, Pub. L. 116-127) was signed into law to assist
with the COVID-19 public health emergency. USDA received temporary
authority to provide WIC State agencies with flexibilities necessary to
continue operations and safely provide Program benefits to
participants. Specifically, Section 2203 of FFCRA provided USDA with
the statutory waiver authority necessary to waive the physical presence
requirement for all applicants and participants seeking certification
or recertification in WIC; and defer anthropometric (i.e., height/
length and weight) and bloodwork requirements which are used to
determine nutritional risk. As a result, FNS waived the statutory
requirement for in-person WIC clinic visits, thereby encouraging social
distancing, during the COVID-19 public health emergency. Under Section
2204 of FFCRA, WIC State agencies could also request USDA to waive or
modify WIC regulations. Such requests could only be granted if the WIC
State agency (1) could not meet regular Program requirements due to
COVID-19, and (2) such waiver or modification was necessary to provide
assistance to WIC participants. As prescribed in FFCRA, the Department
had the authority to provide waivers through September 30, 2020, which
was then extended through September 30, 2021, through the Continuing
Appropriations Act, 2021 and Other Extensions Act (Pub. L. 116-159).
Certain WIC waivers granted prior to September 30, 2021, were then
extended through FNS' policy guidance until 90 days after the end of
the nationally declared public health emergency under Section 319 of
the Public Health Service Act,\8\ which ended on May 11, 2023, per
announcement from the U.S. Department of Health and Human Services
(HHS). FFCRA provided USDA with the necessary authority to provide WIC
State agencies with the flexibility to pivot operations and continue
serving Program participants during a public health emergency. However,
USDA's authority was temporary and designed to specifically address
COVID-19.
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\8\ U.S. Department of Agriculture, Food and Nutrition Service,
``WIC Policy Memorandum #2021-10: Updated Expiration Schedule for
Existing FNS-Approved WIC COVID-19 Waivers,'' September 20, 2021.
Available online at: https://www.fns.usda.gov/wic/policy-memorandum-2021-10.
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While the existing COVID-19 major disaster declarations and
resulting Stafford Act authority provided a vehicle through which FNS
could grant WIC State agencies waivers, under normal circumstances,
such waiver authority would not typically be available for the
Department to respond to an infant formula recall, nor could the
Department issue nationwide waivers. As a result, in direct response to
the infant formula recall, Congress recognized the need to provide USDA
with permanent authority to waive or modify certain statutory and
regulatory requirements when certain conditions are present.
ABFA amended Section 17 of the CNA (42 U.S.C. 1786) to (1)
establish waiver authority for the Secretary of Agriculture to address
certain emergencies, disasters, and supply chain disruptions impacting
WIC; and (2) require WIC State agency infant formula cost containment
contracts to include specific remedies to protect against disruptions
to the Program in the event of a recall. Unlike the Stafford Act, ABFA
provides USDA with the authority to issue waivers for one or more State
agencies, including nationwide, and does not require that each State
agency individually request specific waivers. As a result of ABFA, FNS
issued an implementing policy memorandum describing the infant formula
cost containment contract requirements and waiver authority.\9\ In
order to provide WIC State agencies with additional notice in
anticipation of the expiration of the major disaster declarations in
affected areas which formally ended May 11, 2023, FNS transferred
waivers originally approved under the Stafford Act and the existing
COVID-19 major disaster declaration for the affected area to approval
under the waiver authority granted by ABFA and the existing COVID-19
major disaster declaration for the affected area. Accordingly, to aid
WIC participants in purchasing infant formula using WIC benefits, FNS
extended waivers set to expire under the ABFA authority and established
a new expiration date for most waivers granted in response to the
infant formula recall through the earlier of either January 31, 2023,
or 60 days after the expiration of the COVID-19 major disaster
declaration in the affected area.\10\ This revised expiration schedule
applied to most waiver types, including those related to medical
documentation, maximum monthly allowances of infant formula, imported
formula authorization and issuance, and vendor substitutions.\11\ This
expiration date was again extended on December 19, 2022, in a letter
sent to WIC State agencies and formally implemented through FNS Policy
Memorandum #2023-3: Unwinding Formula Flexibilities in WIC on February
2, 2023. FNS communicated that revised expiration dates for the formula
waivers included rolling extensions for various waivers through June
30, 2023, based on the continued need for flexibility by the WIC State
agencies.\12\
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\9\ U.S. Department of Agriculture, Food and Nutrition Service,
``WIC Policy Memorandum #2022-6: Implementation of the Access to
Baby Formula Act of 2022 Public Law 117-129,'' June 6, 2022.
Available online at: https://www.fns.usda.gov/wic/implementation-access-baby-formula-act-2022.
\10\ U.S. Department of Agriculture, Food and Nutrition Service,
``WIC Policy Memorandum #2023-1: Abbott Infant Formula Recall Waiver
Expiration Schedules,'' November 8, 2022. Available online at:
https://www.fns.usda.gov/resource/abbott-infant-formula-recall-waiver-expiration-memo#.
\11\ U.S. Department of Agriculture, Food and Nutrition Service,
``WIC Policy Memorandum #2022-6: Implementation of the Access to
Baby Formula Act of 2022 Public Law 117-129,'' June 6, 2022.
Available online at: https://www.fns.usda.gov/wic/implementation-access-baby-formula-act-2022.
\12\ U.S. Department of Agriculture, Food and Nutrition Service,
``WIC Policy Memorandum #2023-3: Unwinding Infant Formula
Flexibilities in WIC,'' February 1, 2023. Available online at:
https://www.fns.usda.gov/wic/policy-memorandum-2023-3-unwinding-infant-formula-flexibilities.
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[[Page 86548]]
C. WIC Disaster Planning
WIC State agencies are required to submit an annual plan for
Program operations. Program regulations at 7 CFR 246.4 define State
Plan requirements, but plans to address potential emergencies,
disasters, or significant disruptions in operations are not currently
one of the required elements. Nearly all State agencies already
voluntarily maintain a disaster plan; however, these plans are
typically part of a broader health department or other State agency
disaster plan and do not address WIC-specific Program operations during
emergencies nor do they typically address other operational disruptions
beyond natural disasters.
FNS provides information to help WIC State agencies plan for
meeting the needs of WIC participants and applicants prior to and
during a disaster response; plan for continued WIC benefits during
public health emergencies; and plan for other situations that disrupt
regular WIC operations through the guidance document, Guide to
Coordinating Special Supplemental Nutrition Program for Women, Infants,
and Children (WIC) Services When Regular Operations Are Disrupted.\13\
This guidance highlights operational flexibilities in WIC regulations
that WIC State agencies may implement quickly. The COVID-19 public
health emergency and the infant formula recall highlighted the need for
all State agencies to have formal contingency plans in place to ensure
the continuity of WIC operations during emergency periods (i.e.,
emergencies, disasters, and public health emergencies) and supply chain
disruptions, while ensuring access to Program benefits among low-income
pregnant and postpartum participants.
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\13\ U.S. Department of Agriculture, Food and Nutrition Service,
``Guide to Coordinating Special Supplemental Nutrition Program for
Women, Infants, and Children (WIC) Services When Regular Operations
Are Disrupted,'' January 18, 2022. Available online at: https://www.fns.usda.gov/wic/guide-coordinating-wic-service-during-disasters.
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D. Infant Formula Cost Containment Historical Background
In the 1980s WIC State agencies became increasingly interested in
cost containment initiatives due to rising food costs and their
potential to limit Program participation due to insufficient funding.
Infant formula represented a significant portion of WIC food costs so
there was specific interest in infant formula cost containment
contracts. Early initiatives by some State agencies were so successful
that in 1989, the Agriculture Appropriations Act of 1989 (Pub. L. 100-
460) directed all WIC State agencies to explore the feasibility of
cost-containment measures and implement such a measure if found to be
viable. Although the provisions of the Agriculture Appropriations Act
of 1989 expired on September 30, 1989, the Child Nutrition and WIC
Reauthorization Act of 1989 (Pub. L. 101-147) extended these provisions
and required the Secretary to prescribe regulations to carry out these
provisions. The Child Nutrition and WIC Reauthorization Act of 1989
also outlined exceptions to these provisions, notably for ITOs that
operate their own WIC Program and serve less than 1,000 participants.
The WIC Infant Formula Procurement Act of 1992 (Pub. L. 102-512)
amended the CNA to enhance competition among infant formula
manufacturers and reduce the per unit costs of infant formula purchased
by WIC. In 1996, FNS issued WIC Policy Memorandum #96-6: WIC Infant
Formula Rebate Reviews, which provides guidance to avoid rebate billing
discrepancies and can serve as a WIC State agency reference during the
procurement and contracting process.\14\ Congress also amended the CNA
through the Child Nutrition and WIC Reauthorization Act of 2004 (Pub.
L. 108-265) to include additional technical definitions that further
clarified how cost containment systems must be structured. FNS
established regulations to implement each of these laws and released
WIC Policy Memorandum #2004-4: Implementation of the Infant Formula
Cost Containment Provisions of P.L. 108-265 to address Public Law 108-
265.\15\
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\14\ U.S. Department of Agriculture, Food and Nutrition Service,
``WIC Policy Memorandum #96-6: WIC Infant Formula Rebate Reviews,''
March 12, 1996. Available online at: https://www.fns.usda.gov/wic/infant-formula-rebate-reviews.
\15\ U.S. Department of Agriculture, Food and Nutrition Service,
``WIC Policy Memorandum #2004-4: Implementation of the Infant
Formula Cost Containment Provisions of P.L.aw 108-265,'' July 30,
2004. Available online at: https://www.fns.usda.gov/wic/
implementation-infant-formula-cost-containment-provisions-pl-108-
265#:~:text=This%20memorandum%20provides%20guidance%20on%20the%20impl
ementation%20of,2004%2C%20%28Reauthorization%20Act%29%20enacted%20on%
20June%2030%2C%202004.
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During the onset of the nationwide infant formula shortage and
prior to the passage of ABFA, there were no federal requirements for
infant formula rebate contracts to include remedies in the event of a
recall. FNS used its limited waiver authority under the Stafford Act to
issue waivers to allow WIC State agencies to exceed the maximum monthly
allowance for infant formula and exempt infant formula and issue non-
contract brand formula without medical documentation (except in Food
Package III). Each WIC State agency had to come to an agreement with
the manufacturer holding their rebate contract on Program flexibilities
allowed under these waivers to protect against disruption to Program
participants. Additionally, the infant formula manufacturer whose
product was the subject of the voluntary recall voluntarily paid
rebates on competitive, non-contract brand infant formula in WIC State
agencies where they held the contract.
E. Infant Formula Cost Containment Contracts
The Child Nutrition Act of 1966, (CNA, 42 U.S.C.
1786(h)(8)(A)(i)(I)) and WIC Program regulations at 7 CFR 246.16a
require most WIC State agencies to continuously operate a cost
containment system for infant formula. WIC State agencies have
historically met this requirement through a competitive bidding process
that requires sealed bids, for single-supplier rebate contracts. WIC
State agencies solicit sealed bids and award a contract to the
manufacturer offering the lowest price. Contracted manufacturers
provide a rebate on each can of their infant formula purchased by
Program participants through authorized WIC vendors. The WIC State
agency invoices the manufacturer for payment directly to the WIC State
agency, which does not impact the payments to retail stores who accept
WIC transactions. The resulting rebate payments from manufacturers are
used to offset WIC food costs, allowing WIC State agencies to serve
more WIC participants. Each WIC State agency or alliance of State
agencies that solicits for a rebate contract manages their own
procurement and contracting process through execution and
implementation. WIC State agencies may implement an alternative cost
containment system; however, the system must provide a savings equal to
or greater than a single-supplier competitive system through the
process described in WIC regulations at 7 CFR 246.16a(d). To date, WIC
State agencies have not implemented any alternative cost containment
systems.
Once a contract is executed and implemented, the contract brand
milk and soy-based formulas are added to the WIC State agency's
Approved Product List (APL) and are made available for issuance and
redemption throughout the State agency's WIC Program. A competent
professional authority (CPA) in the WIC clinic setting is responsible
for completing a nutrition assessment for WIC participants, and then
[[Page 86549]]
prescribing and individually tailoring an appropriate food package. The
primary contract brand milk- or soy-based infant formula is considered
``first choice'' and will be issued as the default in the food packages
for infants who receive formula from WIC. Based on information from the
participant, including cultural or dietary preferences, and/or
nutrition assessment findings, an alternate formula, such as a soy-
based option or another milk-based option, within the rebate contract
(i.e., contract brand infant formula) may be deemed appropriate for
issuance. Medical documentation is generally not required for milk- and
soy-based contract brand infant formulas offered under the rebate
contract.
Infant formula rebate funds offset a significant amount of food
costs. In fiscal year 2022, infant formula rebate amounts totaled
approximately $1.5 billion, the cost of providing benefits to an
average of 1.32 million participants each month, or 21 percent of WIC
participants monthly, as indicated by the WIC Financial Management and
Participation Report (FNS-798).
III. Discussion of Regulatory Amendments
A. Add Waiver Authority Granted by the Access to Baby Formula Act
1. Add New Definitions (Sec. 246.2)
This rule adds definitions of Emergency period, Qualified
administrative requirement, Recall, and Supply chain disruption
consistent with ABFA statutory language.
a. This rule defines an Emergency period as a period during which
there exists: (1) a presidentially declared major disaster as defined
under Section 102 of the Robert T. Stafford Disaster Relief and
Emergency Assistance Act (42 U.S.C. 5121 et seq.), (2) a presidentially
declared emergency as defined under Section 102 of the Robert T.
Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5121
et seq.), (3) a public health emergency declared by the Secretary of
Health and Human Services under Section 319 of the Public Health
Service Act (42 U.S.C. 247d), or (4) a renewal of such a public health
emergency pursuant to Section 319. This aligns with the definition
provided by AFBA and does not include State-declared emergencies,
disasters, or public health emergencies.
b. This rule defines Qualified administrative requirement as (1) a
statutory requirement under Section 17 of the CNA (42 U.S.C. 1786), or
(2) a regulatory requirement issued pursuant to this section. This
aligns with the definition provided by ABFA and encompasses the scope
of Program requirements that may be waived or modified by the
Secretary.
c. This rule defines Recall as it is defined in the U.S. Food and
Drug Administration (FDA) regulations in 21 CFR 7.3(g) or any successor
regulation. FDA defines recall as a firm's removal or correction of a
marketed product that the FDA considers to be in violation of the laws
it administers and against which the agency would initiate legal action
(e.g., seizure). Recall does not include a market withdrawal, which is
defined at 21 CFR 7.3(j) as a firm's removal or correction of a
distributed product which involves a minor violation that would not be
subject to legal action by the FDA or which involves no violation
(e.g., normal stock rotation practices, routine equipment adjustments
and repairs, etc.) or a stock recovery, which is defined at 21 CFR
7.3(k) as a firm's removal or correction of a product that has not been
marketed or that has not left the direct control of the firm (i.e., the
product is located on premises owned by, or under the control of, the
firm and no portion of the lot has been released for sale or use). The
Department is committed to continued alignment with FDA's definition of
recall. Recalls may be conducted voluntarily by a manufacturer or may
be required by FDA.
d. This rule defines Supply chain disruption as a shortage of WIC
supplemental foods that limits WIC participants' ability to reasonably
purchase supplemental foods using WIC benefits within a State agency's
jurisdiction, as determined, and declared by the Secretary for the
purposes of WIC. This definition reflects ABFA statutory language and
clarifies that supply chain disruption declarations as defined in this
rulemaking are specifically for the purposes of WIC and do not impact
or extend authority to other programs or entities. Supply chain
disruptions can occur within any portion of a State agency's
jurisdiction, throughout the State agency's jurisdiction, or within
several State agencies' jurisdictions, including nationwide. In
accordance with ABFA, supply chain disruptions include those caused by
recalls of WIC supplemental foods. Other causes of supply chain
disruptions under ABFA may include but are not limited to, labor
shortages, temporary business disruptions, delays in the availability
of products across a wide range of industries, production issues, a
mismatch between supply and demand or other shortages impacting WIC
supplemental foods. The Department recognizes that unforeseen
circumstances beyond those described may also cause a shortage of WIC
supplemental foods that limits participants' ability to purchase such
foods using WIC benefits. However, not every potential cause described
here, or potential unforeseen circumstance may impede the transaction
and redemption of WIC benefits for supplemental foods. Therefore, the
definition of supply chain disruption is not limited to any specific
causes so that the Department maintains the flexibility to determine if
a supply chain disruption has occurred and is able to respond to any
future disruptions.
2. Specify Criteria for Establishing Waivers and Timeframes for Use
(Sec. 246.29)
This rule creates a new provision at Sec. 246.29 that specifies
the criteria under which a waiver or modification may be established,
information WIC State agencies must provide to FNS when requesting a
waiver, and the timeframes during which waivers will remain available
for use by WIC State agencies.
a. Requirements for Establishing a Waiver
This rule provides a non-exhaustive list of conditions that must be
met for the Secretary to waive a qualified administrative requirement
for one or multiple WIC State agencies during an emergency period or
supply chain disruption. In accordance with ABFA statutory provisions,
a waiver may be established when the following criteria are met (1) the
qualified administrative requirement cannot be implemented during any
part of the emergency period or supply chain disruption, (2) the waiver
is necessary to serve participants, and (3) the waiver does not
substantially weaken the nutritional quality of supplemental foods. If
the criteria are met, the Secretary may issue either nationwide waivers
available for WIC State agencies to opt into, or State agency-specific
waivers.
The Department is including additional specifications in this
rulemaking that the waiver or modification must:
(1) Not materially impair any statutory or regulatory right of
participants or potential participants as set forth at 7 CFR 246.8 and
7 CFR parts 15, 15a and 15b which includes all protected classes for
federally assisted programs in USDA;
(2) Not present an unreasonable barrier to participation;
(3) Not create new or additional eligibility requirements for
participation;
[[Page 86550]]
(4) Comply with 7 CFR 246.13(b) to ensure State agencies maintain
effective control over and accountability for all Program grants and
funds;
(5) Offer substitution options with similar nutritional quality,
that most closely provide the maximum monthly allowance of supplemental
foods, and that do not create new supplemental food categories as set
forth in 7 CFR 246.10(e)(12) Table 4; and
(6) Meet additional requirements for the request and approval as
determined necessary by FNS.
Including these requirements is intended to provide WIC State
agencies seeking waivers with basic parameters and to protect
participants and applicants. While this rule will allow for more
flexibilities in Program operations, the Department is committed to
continued equity, access, and nutrition security for WIC applicants and
participants and preventing unforeseen barriers to participation.
Further, the Department is committed to clear and timely communication
with State and local agency staff, WIC participants, and the public
when an emergency period or supply chain disruption has been declared.
b. Information Required From WIC State Agencies Requesting a Waiver
ABFA laid out certain requirements that must be met for a waiver to
be granted by FNS to a WIC State agency. A WIC State agency may request
that a qualified administrative requirement be waived or modified
through submission of a waiver request if the Secretary has not already
issued an applicable nationwide waiver available for a WIC State agency
to opt into. This rule establishes the minimum information a WIC State
agency must provide to FNS when requesting a waiver to ensure that
these criteria are met. Specifically, when submitting a request to FNS,
WIC State agencies must provide:
(i) The qualified administrative requirement the State agency is
requesting to waive or modify (including the statutory or regulatory
citation) and an explanation for why it cannot be met;
(ii) Justification for why the waiver is necessary to continue WIC
services;
(iii) An explanation that the waiver meets the conditions set forth
in new section 7 CFR 246.29(a);
(iv) The emergency period or supply chain disruption under which
the request is being made; and
(v) The period for which the flexibility is being requested.
The Department has deemed this the minimum information necessary to
confirm the WIC State agency's request meets the conditions required to
waive or modify a qualified administrative requirement during an
emergency period or supply chain disruption. However, contingent on the
specific situation, FNS maintains the right to require additional
information from a WIC State agency to support its waiver request. For
example, a WIC State agency seeking a waiver or waiver extension may be
required to provide justification, including, but not limited to, data
to support the request, how the waiver will be implemented, estimated
impact on WIC food funds for the time period being requested, or an
explanation of how the WIC State agency will track or monitor the
continued necessity for the waiver. The Department recognizes that each
emergency period and supply chain disruption is unique and therefore
State agencies may be asked to provide different types of information
relevant to the specific scenario. Additional information regarding the
waiver submission and review process will be provided through
subsequent policy guidance.
c. Duration of Waiver Availability
This rule codifies the timeframes during which waivers can be
available for use by WIC State agencies, as provided by ABFA. Waivers
may be established at any time during an emergency period or supply
chain disruption.
A waiver established during an emergency period may be available
for the duration of the emergency period and up to 60 days after the
end of the emergency period. A waiver established during a declared
supply chain disruption may be available for:
(i) a period of up to 45 days from a date determined by the
Secretary and renewed with at least 15 days' notice provided by the
Secretary, and
(ii) no more than 60 days after the supply chain disruption
declaration ceases to exist.
In accordance with ABFA, if the Secretary determines that a supply
chain disruption exists and issues a waiver, the Secretary will notify
each State agency affected by the disruption. Likewise, the Secretary
will notify each State agency affected by the disruption and granted a
waiver as a result of the disruption at least 15 days prior to the end
of the 45-day period if the supply chain disruption declaration has
been renewed. FNS will communicate any supply chain disruption renewals
as they occur and provide technical assistance on the process as
needed.
B. Update Requirements for State Agency Infant Formula Cost Containment
Contracts
1. Establish Minimum Required Remedies for Infant Formula Cost
Containment Contracts (Sec. 246.16a)
This rule establishes that a State agency must include remedies in
the event of a recall in their infant formula cost containment contract
to protect against disruption in infant formula supply to participants.
In accordance with applicable Program requirements and the infant
formula cost containment contract, the State agency will determine when
remedies take effect and remain in effect. At minimum, the State
agency's infant formula cost containment contract must:
(1) Allow infant formula to be issued in all unit sizes that may
exceed the maximum monthly allowance. The State agency and contracted
infant formula manufacturer must prioritize unit sizes that most
closely provide the maximum monthly allowance;
(2) Allow the issuance of non-contract brand formula without
medical documentation (except in Food Package III);
(3) When any contract brand infant formula of the contracted
manufacturer is the subject of a recall, require the contracted
manufacturer to:
(i) Provide the State agency with an action plan, within a
timeframe established within the contract, which includes supply data,
to meet infant formula demand and limit disruption to Program
participants in the affected jurisdiction(s) and
(ii) Pay rebates on competitive, non-contract brand infant formula
that meets the definition of infant formula at 7 CFR 246.2.
WIC State agencies may work with their legal counsel and
procurement offices to include additional remedies beyond these
regulatory minimum remedies in their infant formula contracts. WIC
State agencies may also negotiate flexibilities that are within
regulatory requirements and do not require Program waivers with their
contracted infant formula manufacturers.
As previously described, in response to the sustained nationwide
infant formula shortage--resulting from the February 17, 2022,
voluntary recall of a major source of powder infant formula, including
exempt infant formula--which exacerbated existing COVID-19 shortages,
FNS used its limited waiver authority under the Stafford Act to issue
waivers. This was possible because of existing COVID-19 major disaster
declarations covering the geographic
[[Page 86551]]
areas of all WIC State agencies, including States, ITOs, and
Territories. These waivers allowed WIC State agencies to benefit from
three specific remedies to: (1) exceed the maximum monthly allowance
for infant formula to allow for the purchase of larger unit sizes; (2)
issue non-contract brand formula without medical documentation (except
in Food Package III); and (3) receive rebates for non-contract brand
infant formula, when their contracted manufacturer's product was the
subject of the recall. As a result, State agencies were able to allow
for the purchase of available formula when the contract brand or size
was unavailable during shortages. Because these three specific remedies
assisted State agencies with meeting participants' needs during the
sustained nationwide infant formula shortage, such remedies were
included as suggestions in WIC Policy Memorandum #2022-6:
Implementation of the Access to Baby Formula Act of 2022-PL 117-129 and
are now being codified in this rulemaking.\16\ Exceeding the maximum
monthly allowance for infant formula to allow for the purchase of
larger unit sizes and issuing non-contract brand formula without
medical documentation (except in Food Package III) will continue to
require an approved waiver before a State agency can operationalize
these remedies, and must be operationalized within the active waivers'
timeframe in order to remain in compliance with Program requirements.
---------------------------------------------------------------------------
\16\ U.S. Department of Agriculture, Food and Nutrition Service,
``WIC Policy Memorandum #2022-6: Implementation of the Access to
Baby Formula Act of 2022 Pub. L. 117-129,'' June 6, 2022. Available
online at: https://www.fns.usda.gov/wic/implementation-access-baby-formula-act-2022.
---------------------------------------------------------------------------
During the sustained nationwide infant formula shortage, State
agencies worked with their infant formula contracted manufacturer to
collect supply data in order to respond to participant needs. This data
proved valuable to State agencies' ability to respond to the shortages.
Thus, the provision of an action plan, which includes supply data, to
meet infant formula demand and limit disruption to Program participants
in the affected jurisdiction(s) when any contract brand infant formula
of the contracted manufacturer is the subject of a recall has been
included as a minimum remedy in this rule. The State agency and
contracted manufacturer must establish a timeframe by which the
manufacturer must provide the State agency with an action plan
following the recall of any contract brand infant formula of the
contracted manufacturer. The Department recommends that these action
plans be provided to State agencies within 48 hours following the
recall of any contract brand infant formula of the contracted
manufacturer.
In establishing the remedies, the Department considered requiring
manufacturers to maintain a stockpile of infant formula for use in the
event of a recall. The Department considered potential logistics
involved, such as: types and quantity of formula to stockpile,
potential locations, the level of stockpile maintenance necessary to
rotate stock, and development of a distribution plan related to
stockpiling. Ultimately, the Department determined that the cost and
administrative burden necessary to require manufacturers to maintain a
stockpile in excess of manufacturers' usual inventory would likely be
too extensive for practical implementation and would counteract any
potential benefits for the Program.
Currently, the Program provides infant formula in all three
physical forms available in the retail marketplace, which are powder,
liquid concentrate, and ready-to-feed.\17\ While 7 CFR 246.10(e)(1)(iv)
offers State agencies the flexibility to issue powder or concentrated
liquid, 7 CFR 246.16a(c)(4) requires infant formula manufacturers to
bid on all three physical forms. Currently powder is the predominant
form in the marketplace and some manufacturers do not produce liquid
concentrate. Requiring liquid concentrate in WIC could impact some
manufacturers' ability to competitively bid and meet contractual
requirements. Therefore, the Department is seeking public comment on
the operational and financial impacts to the Program of modifying the
requirement for infant formula manufacturers to bid on liquid
concentrate. Through this rulemaking, the Department is not making any
changes to the current bidding requirements at 7 CFR 246.16a(c)(4) or
the physical forms of infant formula that may be issued in accordance
with 7 CFR 246.10(e)(1)(iv).
---------------------------------------------------------------------------
\17\ Ready-to-feed formulas may be authorized only under certain
circumstances, as specified at 7 CFR 246.10(e)(1)(iv).
---------------------------------------------------------------------------
2. Clarify Terminology in Infant Formula Cost Containment Contracts
(Sec. 246.16a(c)(5))
This rule clarifies terminology at 7 CFR 246.16a(c)(5).
Specifically, the current terms ``responsive and responsible'' used in
the regulations to describe bidders are consolidated under this
rulemaking to ``responsive.'' Responsive is further defined for
clarification, consistent with the intent stated in a previous
rulemaking preamble, Requirements for and Evaluation of WIC Program Bid
Solicitations for Infant Formula Rebate Contracts (65 FR 51213-51229),
and WIC Policy Memorandum #99-3: Evaluation Criteria for Infant Formula
Rebate Contracts.18 19
---------------------------------------------------------------------------
\18\ U.S. Department of Agriculture, Food and Nutrition Service,
``Special Supplemental Nutrition Program for Women, Infants and
Children (WIC): Requirements for and Evaluation of WIC Program Bid
Solicitations for Infant Formula Rebate Contracts,'' 65 FR 51213-
51229. (August 23, 2000). Available online at: https://
www.federalregister.gov/documents/2000/08/23/00-21423/special-
supplemental-nutrition-program-for-women-infants-and-children-wic-
requirements-for-
and#:~:text=A%20key%20component%20to%20the%20success%20of%20infant,th
an%20savings%20generated%20by%20a%20competitive%20bidding%20system.
\19\ U.S. Department of Agriculture, Food and Nutrition Service,
``WIC Policy Memorandum #99-3: Evaluation Criteria for Infant
Formula Rebate Contracts,'' October 14, 1998. Available online at:
https://www.fns.usda.gov/wic/evaluation-criteria-infant-formula-rebate-contracts.
---------------------------------------------------------------------------
The inclusion of the terms responsive and responsible were
initially intended to help ensure WIC State agencies select formula
manufacturers that fully respond to the invitation to bid and meet
eligibility requirements in statute and regulation. However, since
these terms were not defined, they resulted in ambiguity in their
application. This rule removes the responsibility requirement and
defines the responsiveness requirement. Under the modified provision, a
bidder must submit a bid that conforms to the solicitation and meets
requirements at Sec. 246.16a to be considered responsive. The rule
adds language to clarify this meaning, which will provide consistent
application of the term and ensure that all responsive bids will
receive consideration.
C. Add Requirement for State Agency Plans of Alternate Operating
Procedures (Sec. 246.4(a))
This rule adds a new provision requiring WIC State agencies to
include a plan of alternate operating procedures, commonly referred to
as a disaster plan, as part of their State Plan. This provision will
ensure WIC State agencies have plans in place to support continuity of
operations in the event of a disruption of WIC services, including but
not limited to emergency periods, supplemental food recalls, and other
supply chain disruptions.
State Plans are submitted annually by WIC State agencies as a
prerequisite to receiving funds. State Plans must be updated as needed
to reflect substantive changes to the State agencies' Program design
and operation. Therefore, as a part of the State Plan, alternate
operating procedures must also be updated as needed to reflect any
[[Page 86552]]
substantive changes resulting from lessons learned as WIC State
agencies respond to emergency periods and supply chain disruptions.
Such updates will allow WIC State agencies to prepare and respond to
these events more effectively in the future. Additionally, FNS
encourages WIC State agencies to review their State Plans and ensure
they continue to meet the needs of Program stakeholders. State Plans
are a vehicle through which WIC State agencies can outline short- and
long-term goals necessary to improve Program design and operation. For
example, State agencies may include descriptions of goals and action
plans to facilitate continued improvement in the delivery of Program
benefits and service during Program disruptions as a part of their
alternate operating procedures.
Both the COVID-19 public health emergency and the 2022 infant
formula recall and sustained infant formula shortage required nearly
all WIC State agencies to quickly develop and implement alternative
plans for running their programs. While some WIC State agencies, such
as those with experience in dealing with natural disasters, may have
established alternative operations plans, these plans are typically
part of a broader health department or other State agency disaster plan
and do not address WIC-specific Program operations during disruptions
nor do they typically address other operational disruptions beyond
natural disasters. This resulted in ex post facto development of
policies and procedures and ultimately varying levels of Program
disruption during the COVID-19 public health emergency and the 2022
infant formula recall and sustained infant formula shortage. These two
events highlight the need for all WIC State agencies to be prepared to
continue operations when faced with a number of potential disruptions.
The FNS-required alternate operating procedures set baseline minimum
elements that must be included by all WIC State agencies, and in turn
provide greater transparency to FNS on actions each State agency will
take in the event of a disruption. The Department believes that
proactive State agency development of robust alternate operating
procedures will minimize the negative impact of such disruptions to WIC
operations and services, position State agencies to be better prepared
to adjust to unexpected situations, and ensure the availability of
authorized supplemental foods, including infant formula.
The Department recognizes that a variety of situations, including a
supplemental food recall, may prompt the Secretary to declare a supply
chain disruption. However, WIC State agencies must be prepared to
respond to supplemental food recalls whether or not an official supply
chain disruption declaration has been made. As such, WIC State
agencies' alternate operating procedures must specifically and directly
address supplemental food recalls, with an emphasis on infant formula
recalls, including specialty products, as part of the section
addressing supply chain disruptions as a whole. The Department is
committed to supporting WIC State agencies in prioritizing resources
and developing a separate plan for the distribution of specialty
formula.
The Department understands the same event may impact WIC State
agencies differently dependent upon their geographic location,
participant populations, and other factors. As such, the Department
encourages each WIC State agency to consider potential events unique to
their location and identify how the State agency will meet the needs of
their participant populations when developing alternate operating
procedures. To assist with anticipation of potential events, the
Department expects WIC State agencies to establish relationships with
relief agencies responsible for disaster and public health emergency
planning applicable to the State agency's jurisdiction and participants
and leverage these relationships as needed. Ultimately, the intent of
such relationships is for the WIC State agency to make data-informed
decisions in order to better meet the needs of their jurisdiction's
populations. Nevertheless, WIC State agencies must also consider the
unique and sudden nature of events that disrupt regular WIC operations
when developing alternate operating procedures.
Alternate operating procedures must describe the process by which
the WIC State agency will minimize the negative impact to WIC
operations and services and ensure the availability of authorized
supplemental foods, especially infant formula, to the extent feasible.
At a minimum, alternate operating procedures must include:
(i) A plan to address operation of specific Program areas
including:
a. Access to Program records;
b. Alternate certification and benefit issuance;
c. Verification of Certification (VOC) issuance;
d. Food package adjustments;
e. Vendor requirements;
f. Benefit redemption; and
g. Food delivery systems.
(ii) A plan to ensure continuity of WIC services and address the
needs of participants with documented qualifying conditions receiving
Food Package III, rural areas, tribal populations, and other priority
populations in the affected area, as applicable;
(iii) A designated emergency contact within the State agency for
emergency periods, supply chain disruptions, and supplemental food
recalls;
(iv) A designated emergency contact within the State agency to
address the needs of participants with documented qualifying conditions
receiving Food Package III;
(v) A plan to establish a relationship with relief agencies
responsible for disaster and public health emergency planning
applicable to the State agency's jurisdiction and participants to
support data-informed approaches when responding to emergency periods,
supplemental food recalls, and other supply chain disruptions;
(vi) A plan to limit the disruption of infant formula benefits in
the event of an emergency period, supplemental food recall, and other
supply chain disruption;
(vii) A communications plan to keep FNS, State and local agency
staff, authorized WIC vendors, WIC participants, and the public
informed during an emergency period, supplemental food recall, or other
supply chain disruption.
(viii) A plan to report to FNS on alternate operating procedures
implemented during an emergency period, supplemental food recall, and
other supply chain disruptions, which includes Program data and
information on the impact of benefit use and delivery.
(ix) A plan to adjust State agency specific minimum requirements
for the variety and quantity of supplemental foods that a vendor
applicant must stock to be authorized.
Minimum requirements outlined in this provision reflect current
guidance found in the Guide to Coordinating WIC Service During
Disasters.\20\ In developing and implementing the alternate procedures,
State agencies must take into account existing requirements for
technology projects in accordance with FNS Handbook 901.\21\ For
example, if a State agency decides
[[Page 86553]]
to take steps to integrate changes to their management information
system (MIS) to facilitate better service to participants during
Program disruptions, State agencies should consult FNS Handbook 901 to
secure approval and the requested funding, if applicable. Subsequent to
this rulemaking, FNS will issue updated guidance to WIC State agencies
outlining required components of the plan and continue to ensure the
existing guidance found in the Guide to Coordinating WIC Service During
Disasters is up to date and available for reference.\22\ This Guide
will also provide additional detail regarding provisions for WIC State
agency consideration in development of their disaster plans. For
example, additional alternate operating procedures may include:
---------------------------------------------------------------------------
\20\ U.S. Department of Agriculture, Food and Nutrition Service,
``Guide to Coordinating WIC Service During Disasters,'' January 18,
2022. Available online at: https://www.fns.usda.gov/wic/guide-coordinating-wic-service-during-disasters.
\21\ U.S. Department of Agriculture, Food and Nutrition Service,
``FNS Handbook 901,'' January 8, 2020. Available online at: https://www.fns.usda.gov/sso/fns-handbook-901-v2-advance-planning-documents.
\22\ U.S. Department of Agriculture, Food and Nutrition Service,
``Guide to Coordinating WIC Service During Disasters,'' January 18,
2022. Available online at: https://www.fns.usda.gov/wic/guide-coordinating-wic-service-during-disasters.
---------------------------------------------------------------------------
designating alternate means and locations for
certification and benefit issuance for circumstances in which the
conventional means and locations are not possible or optimal;
establishing a plan to support individuals seeking WIC
services receiving a full nutrition assessment and appropriate
referrals;
establishing a plan with health care centers or other
providers of exempt infant formula and WIC-eligible nutritionals for
the distribution of these products to participants with documented
qualifying conditions receiving Food Package III
developing a WIC formula (infant formula, exempt infant
formula, or WIC-eligible nutritional) distribution plan; and,
if a WIC State agency already has a direct distribution or
home delivery system in place, updating policy to specifically include
provisions reasonable to institute during recalls and/or supplemental
food shortages.
Ultimately, this provision is intended to minimize adverse impacts
to WIC operations and the continuation of WIC benefits during an
emergency period, supplemental food recall, and other supply chain
disruptions impacting WIC's normal operations. Further, participants
living in rural areas, on Tribal lands, following cultural or religious
food practices, and/or having qualifying conditions and receiving Food
Package III are potentially most impacted during an emergency period,
supplemental food recall, and other supply chain disruptions. The
Department expects this rule to ensure more consistent and safe access
to the foods these most vulnerable participants need by anticipating
and preparing how to meet those needs before any potential Program
disruptions. This rule will allow for more flexibilities in Program
operations and will require WIC State agencies to develop plans to
address the needs of unique and vulnerable populations overall.
Finally, the Department recognizes WIC is not designed to be a
disaster assistance program and is not considered a first response
option for disaster survivors. As such, the Department continues to
encourage WIC State agencies to work with State and local emergency
services offices, as well as the Federal Emergency Management Agency
(FEMA), to the maximum extent practicable, to provide participants with
a coordinated disaster response during an emergency period.
IV. Implementation
Because the majority of the revisions described in this rulemaking
are introducing opportunities for increased flexibility for WIC State
agencies, this final rule will take effect 60 days after publication,
except for Sec. 246.4(a), which is the provision requiring WIC State
agencies to include, as a part of the State Plan, a plan of alternate
operating procedures, commonly referred to as a disaster plan, in
accordance with FNS guidance.
For Sec. 246.4(a), these changes are required to be implemented
with State agency FY 2025 State Plan submissions, due to FNS no later
than August 15, 2024. This timeline recognizes WIC State agencies will
need the time to develop and refine their alternate operating
procedures to meet the requirements of this provision.
Per WIC Policy Memorandum #2022-6: Implementation of the Access to
Baby Formula Act of 2022--PL 117-129, all contracts entered into or
renewed on or after May 21, 2022, the date of enactment of ABFA, are
expressly required by law to include language in their WIC infant
formula rebate contracts that describes remedies in the event of an
infant formula recall, including how an infant formula manufacturer
would protect against disruption to Program participants in the State
(i.e., ensure that WIC participants can purchase formula using WIC
benefits). Section 246.16a as amended codifies these requirements and
the provisions as described herein must be strictly applied to all
infant formula contracts entered into or renewed once the final rule
takes effect. FNS considers a new contract to be entered into upon
award after a competitively bid process.
The Department seeks comments from WIC State agencies on the type
and scope of administrative burden that may be associated with
implementing the provisions in this rule in this manner.
Procedural Matters
Executive Order 12866, 13563 and 14094
We have examined the impacts of this rule as required by Executive
Order 12866 on Regulatory Planning and Review (September 30, 1993),
Executive Order 13563 on Improving Regulation and Regulatory Review
(January 18, 2011), Executive Order 14094 entitled ``Modernizing
Regulatory Review'' (April 6, 2023), the Regulatory Flexibility Act
(RFA) (September 19, 1980, Pub. L. 96-354), section 1102(b) of the
Social Security Act, section 202 of the Unfunded Mandates Reform Act of
1995 (March 22, 1995; Pub. L. 104-4), Executive Order 13132 on
Federalism (August 4, 1999), and the Congressional Review Act (5 U.S.C.
804(2)).
Executive Orders 12866, 13563 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). The
Executive Order 14094 entitled ``Modernizing Regulatory Review''
(hereinafter, the Modernizing E.O.) amends section 3(f)(1) of Executive
Order 12866 (Regulatory Planning and Review). The amended section 3(f)
of Executive Order 12866 defines a ``significant regulatory action'' as
an action that is likely to result in a rule: (1) having an annual
effect on the economy of $200 million or more in any 1 year (adjusted
every 3 years by the Administrator of OIRA for changes in gross
domestic product), or adversely affect in a material way the economy, a
sector of the economy, productivity, competition, jobs, the
environment, public health or safety, or State, local, territorial, or
tribal governments or communities; (2) creating a serious inconsistency
or otherwise interfering with an action taken or planned by another
agency; (3) materially altering the budgetary impacts of entitlement
grants, user fees, or loan programs or the rights and obligations of
recipients thereof; or (4) raise legal or policy issues for which
centralized review would meaningfully further the President's
priorities or the principles set forth in the Executive Order, as
specifically authorized in a timely manner by the Administrator of OIRA
in each case.
[[Page 86554]]
A regulatory impact analysis (RIA) must be prepared for major rules
with significant regulatory action/s and/or with significant effects as
per section 3(f)(1) ($200 million or more in any 1 year). Based on our
estimates, OMB's Office of Information and Regulatory Affairs has
determined that this rulemaking is ``significant'' and not ``major''
under Subtitle E of the Small Business Regulatory Enforcement Fairness
Act of 1996 (also known as the Congressional Review Act).'' Therefore,
OMB has reviewed this final regulation, and the Department has provided
the following assessment of their impact.
Regulatory Impact Analysis
As required for all rules designated as Significant by the Office
of Management and Budget, an economic summary was developed for this
final rule. The following summarizes the conclusions of the regulatory
impact analysis:
Need for Action: As described in the preamble, this rulemaking
serves to amend the Special Supplemental Nutrition Program for Women,
Infants, and Children (WIC) Program regulations by incorporating
provisions of the Access to Baby Formula Act of 2022 (ABFA) and making
related amendments. ABFA establishes waiver authority for the Secretary
of Agriculture to address certain emergencies, disasters, and supply
chain disruptions impacting the WIC Program, and adds requirements to
State agency infant formula cost containment contracts to protect
against disruptions to the Program in the event of a recall. The
amendments made via this rule are expected to improve State agencies'
ability to ensure continuity of Program operations during emergencies,
disasters, and supply chain disruptions, while ensuring access to
Program benefits among low-income infants, children, and pregnant,
postpartum, and breastfeeding individuals.
Affected Parties: WIC participants and those involved in the
provision of infant formula to WIC participants, including the USDA
Food and Nutrition Service (FNS), State and local agencies, including
Indian Tribal Organizations (ITOs), clinics, infant formula
manufacturers, and retail vendors.
I. Statement of Need
On May 21, 2022, the Access to Baby Formula Act of 2022 (Pub. L.
117-129) was signed into law. ABFA amends Section 17 of the Child
Nutrition Act of 1966 (CNA, 42 U.S.C. 1786) to (1) establish waiver
authority to the Secretary of Agriculture to address certain
emergencies, disasters, and supply chain disruptions impacting the WIC
Program; and (2) require State agency infant formula cost containment
contracts to include specific remedies to protect against disruptions
to the Program in the event of a recall. This rule amends 7 CFR part
246 to codify the provisions of ABFA, which strengthens WIC's ability
to address emergencies, disasters, and supply chain disruptions,
particularly those impacting infant formula.
II. Background
Established in 1974, the mission of the Special Supplemental
Nutrition Program for Women, Infants, and Children (WIC) is to
safeguard the health of low-income pregnant, postpartum, and
breastfeeding individuals, infants, and children ages 1 through 4 years
who are at nutritional risk by providing nutritious foods to supplement
diets, nutrition education (to include breastfeeding promotion and
support), and referrals to health and other social services.
Participation in WIC is associated with improved pregnancy outcomes and
lower infant mortality. WIC participation is also associated with
improved diet quality.\23\ In Federal fiscal year (FY) 2022, WIC served
an average of 6.24 million infants, children, and pregnant,
breastfeeding, and postpartum individuals per month.\24\
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\23\ Caulfield, L., Bennett, W., Gross, S., Hurley, K.,
Ogunwole, S., Venkataramani, M., Lerman, J., Zhang, A., Sharma, R.,
Bass, E. (2022). Maternal and Child Outcomes Associated with the
Special Supplemental Nutrition Program for Women, Infants, and
Children (WIC). Comparative Effectiveness Review No. 253. Prepared
by the Johns Hopkins University Evidence-based Practice Center under
Contract No. 75Q80120D00003.) AHRQ Publication No. 22-EHC019.
Rockville, MD: Agency for Healthcare Research and Quality. DOI:
https://doi.org/10.23970/AHRQEPCCER253.
\24\ U.S. Department of Agriculture Food and Nutrition Service.
WIC Data Tables, 2021. Available online at: https://www.fns.usda.gov/pd/wic-program.
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On March 13, 2020, the President declared the ongoing COVID-19 a
public health emergency of sufficient severity and magnitude to warrant
declaration of a nationwide emergency. The President later approved
major disaster declarations for State agencies, including Indian Tribal
Organizations and U.S. Territories pursuant to section 501(b) of the
Stafford Act.
On March 18, 2020, the Families First Coronavirus Response Act
(FFCRA, Pub. L. 116-127) was signed into law to assist with the COVID-
19 public health emergency, which provided additional funding for WIC
and offered additional flexibilities by providing USDA with authority
to grant certain programmatic waivers to State agencies to enable WIC
to continue serving WIC participants in the midst of a public health
crisis (e.g., the physical presence requirement was waived to encourage
social distancing and reduce in-person visits to WIC clinics).
On February 17, 2022, a major infant formula manufacturer
voluntarily recalled certain powder infant formula, including exempt
infant formula. This recall exacerbated existing supply chain issues
resulting from the ongoing COVID-19 public health emergency. In
response to this recall, USDA used its limited waiver authority granted
under Section 301 of the Robert T. Stafford Disaster Relief and
Emergency Assistance Act, ``Stafford Act'' (42 U.S.C. 5121) to help WIC
participants obtain infant formula. This was possible because of
existing COVID-19 major disaster declarations in all WIC State
agencies, including States, Indian Tribal Organizations, and U.S.
Territories.
While the existing COVID-19 major disaster declaration and
resulting Stafford Act authority provided a vehicle through which USDA
could grant WIC State agencies waivers, under normal circumstances such
waiver authority would not typically be available for the Department to
respond to an infant formula recall, nor could the Department issue
nationwide waivers. As a result, Congress recognized the need to
provide long-term waiver flexibilities, and the President signed ABFA
into law on May 21, 2022, in direct response to the infant formula
recall. ABFA amended Section 17 of the Child Nutrition Act of 1966 (42
U.S.C. 1786) to (1) establish waiver authority to the Secretary of
Agriculture to address certain emergencies, disasters, and supply chain
disruptions impacting the WIC Program; and (2) require WIC State agency
infant formula cost containment contracts to include specific remedies
to protect against disruptions to the Program in the event of a recall.
This rule amends 7 CFR part 246 to codify the provisions of ABFA.
III. List of Rule Provisions and Impacts
Most of the provisions in this rule are required by ABFA; the
provisions added by the Secretary that go beyond ABFA's requirements
are noted below and include consolidating language in the regulations
to describe bidders to ``responsive'' and requiring State agencies to
create plans of alternate operating procedures. A list of the rule's
provisions and a discussion of their likely impacts to the WIC Program,
on Program cost, and on affected parties follows.
[[Page 86555]]
A. Add Waiver Authority Granted by the Access to Baby Formula Act
1. Add New Definitions
i. Program Impact: This rule adds definitions of Emergency period,
Qualified administrative requirement, Recall, and Supply chain
disruption in order to incorporate ABFA statutory language.
ii. Cost Impact: USDA estimates no change in cost associated with
this provision. This change merely adds definitions required for
operational clarity under ABFA.
iii. Impact on Affected Parties: USDA estimates no impact on
affected parties. Impacts on affected parties that arise due to other
provisions of this rule are discussed below.
2. Specify Criteria for Establishing Waivers or Modification and
Timeframes for Use
i. Program Impact: This rule creates a new provision at Sec.
246.29 that specifies (1) criteria under which a waiver or modification
may be established, (2) information State agencies must provide to FNS
when requesting a waiver, and (3) the timeframes during which waivers
will remain available for use by State agencies. One recent example of
a category of waivers is physical presence waivers.\25\ The Families
First Coronavirus Response Act gave USDA authority to grant waivers to
State agencies of the requirement that all individuals seeking to
enroll or re-enroll in WIC do so in person (i.e., physical presence).
This waiver also allowed State agencies to defer certain anthropometric
(i.e., height/length and weight) and bloodwork requirements used to
determine nutritional risk. The physical presence waiver allowed USDA
to encourage social distancing and decrease the spread of COVID-19
while ensuring continuity of operations for State and local WIC
agencies and for WIC participants.
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\25\ Almost all State agencies (88 of 89 State agencies) used a
physical presence waiver sometime during the COVID-19 pandemic. For
more information on physical presence waivers by State agency, see
https://www.fns.usda.gov/disaster/pandemic/covid-19/wic-physical-presence-waiver.
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A second recent example of a category of waivers are the food
package substitution waivers.\26\ These waivers allowed State agencies
to permit approved substitutes for the types and amounts of certain
WIC-prescribed foods if their availability is limited. For example, as
appropriate based on local food marketplace circumstances, State
agencies were approved, upon request, to allow participants to
substitute milk of any available fat content if prescribed varieties
are not available; substitute authorized whole grains in package sizes
up to 24 oz. when 16 oz. packages are not available; and/or substitute
18-count cartons of eggs when 12-count cartons are unavailable. These
waivers enabled WIC participants to continue to receive appropriate
supplemental foods during shortages of the specific products and/or
package sizes that were previously authorized by the State agencies.
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\26\ A large majority of State agencies (70 of 89) issued food
package substitution waivers for one or more food types. For more
information on food package substation waivers by State agency, see
https://www.fns.usda.gov/wic/food-package-substitution-waiver.
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ii. Cost Impact: USDA was unable to reliably estimate the change in
cost associated with this provision, beyond the very slight change in
burden hours (38 hours across all State agencies annually) associated
with this provision. Although USDA estimates a negligible increase in
burden hours due to this provision, USDA also notes that formalizing
the criteria for establishing waivers and timeframes for waiver use
makes the waiver process more predictable for both State agencies and
the Federal government and greatly decreases the likelihood of repeated
waiver revisions and submissions in order to meet waiver requirements.
USDA is unable to reliably quantify the costs of future waivers since
the types and scope/scale of future waivers will be in response to
unknown events. USDA notes that some waivers have the possibility to
increase or decrease the cost of the Program, though USDA generally
expects these possible cost impacts to be small. For example, it is
possible that the physical presence waiver either increased or
decreased administrative costs for some local WIC clinics, depending on
whether the local clinics increased or decreased staffing or office
space in response to moving to phone or online certification/
recertification of participants. Ninety-nine percent of State agencies
reported that the physical presence waivers were ``very'' or
``extremely important'' to ensuring quality services during the COVID-
19 pandemic, and some State agencies reported that the physical
presence waivers allowed them to serve more participants with fewer
staff or in less time, which points to potential cost savings generated
by the physical presence waivers.\27\ Similarly, food package
substitution waivers may increase or decrease food costs slightly,
depending on whether the food package substitutions are for items
slightly more or less expensive than those typically included in the
food package. Approximately 90 percent of State agencies reported that
the food substitution waivers were ``very important'' or ``extremely
important'' to ensuring quality services during the COVID-19 pandemic,
pointing to the waivers' contribution to ensuring continued operations
during the pandemic.\28\ Neither the physical presence waiver nor the
food package substitution waivers issued during the COVID-19 pandemic
were found to result in significant increases or decreases in WIC
spending at the Federal level.\29\ In FY2019, FY2020, and FY2021,
Federal spending on WIC was $5.3, $5.0, and $5.0 billion, respectively,
while participation during the same Fiscal Years was 6.4, 6.2, and 6.2
million individuals. Therefore, the effect of waivers in the aggregate
during the COVID-19 emergency does not appear to have had a significant
effect on Federal WIC costs, though it is possible that individual
waivers may have increased or decreased Federal WIC costs.
---------------------------------------------------------------------------
\27\ Unpublished data collected by USDA as a part of State
agency reporting on FFCRA waiver use. These data will be released in
an upcoming USDA report.
\28\ Ibid.
\29\ WIC program data for the periods before and during the
COVID-19 pandemic (available online at https://www.fns.usda.gov/pd/wic-program) do not show any substantial increase or decrease in WIC
spending, in spite of the hundreds of waivers in place during the
COVID-19 pandemic.
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The use of waivers in the past has generally focused on ensuring
continued operation of the WIC Program as normally as possible under
temporary and extraordinary circumstances. Waiver authority as
authorized by ABFA must continue to be used primarily for this purpose;
therefore, USDA does not predict that the future use of waivers will
lead to either substantial costs or savings.
iii. Impact on Affected Parties: USDA estimates an increase in
burden on State agencies as a result of this provision, but this
provision will also clarify and standardize the steps that a State
agency must undertake in order to submit a waiver request, which could
save some State agencies effort in the long run by preventing State
agencies from having to resubmit waiver requests multiple times because
their initial requests do not meet the waiver requirements or do not
provide enough information for FNS to understand why the waiver is
necessary in order to continue Program operations. USDA also notes that
waiver authority has generally been granted to FNS programs when it was
needed in the past, and this provision does not make
[[Page 86556]]
the process for requesting a waiver more burdensome than it already was
when FNS implemented waivers during the COVID-19 public health
emergency. More generally, waiver authority allows USDA and State and
local WIC agencies to continue to operate the WIC Program as intended
during extraordinary times, without compromising the quality of WIC
services or supplemental nutrition and without increasing the burden on
WIC participants. Clear requirements and a simplified waiver process
will allow State agencies and USDA to put waivers in place more
quickly, enabling State agencies and USDA to rapidly respond to
emergency situations and meet waiver applicant and participant needs.
B. Update Requirements for State Agency Infant Formula Cost Containment
Contracts
1. Establish Minimum Required Remedies for Infant Formula Cost
Containment Contracts
i. Program Impact: While ABFA generally requires that infant
formula cost containment contracts include remedies to protect against
disruption to Program participants in the event of an infant formula
recall, this rulemaking codifies into regulations specific minimum
remedies that assisted State agencies with meeting participants' needs
during a major infant formula recall. The minimum remedies must include
(1) that infant formula issuance may exceed the maximum monthly
allowance to allow for the purchase of all unit sizes; (2) non-contract
brand formula can be issued without medical documentation (except in
Food Package III); and (3) when the contracted brand infant formula is
the subject of the recall, require the contracted infant formula
manufacturer to provide the State agency with an action plan, which
includes supply data, to meet infant formula demand and limit
disruption to Program participants in the affected jurisdiction(s)
within 10 calendar days of the recall, and pay rebates on competitive,
non-contract brand infant formula that meets the definition of infant
formula at 7 CFR 246.2. WIC State agencies may work with their legal
counsel and procurement offices to include additional remedies beyond
these regulatory minimum remedies in their infant formula contracts.
WIC State agencies may also negotiate flexibilities that are within
regulatory requirements and do not require Program waivers with their
contracted infant formula manufacturers.
ii. Cost Impact: USDA was unable to reliably estimate the change in
costs associated with this provision, beyond the small change in burden
hours (148 hours across all State agencies annually) associated with
this provision. Although USDA acknowledges that there will be cost
impacts associated with this provision in the event of future recalls,
at this time, USDA is unable to reliably quantify the costs of future
remedies, since the types and scope/scale of future remedies will be in
response to unknown events, and therefore, USDA does not include a
formal estimate of the 5-year cost of this provision. Instead, the
following section provides a historic look at the frequency, scale, and
cost of previous infant formula recalls for illustrative purposes as
well as an estimate of the cost impact that could result from even
modest changes to infant formula contract rebate rates.
The first two parts of the provision grant administrative
flexibilities to ensure continued formula supply to WIC participants
(1) by enabling State agencies to issue all unit sizes and, in some
cases, exceed the maximum monthly allowance for formula during issuance
if some package sizes are not available in the local marketplace (2) by
enabling State agencies to issue non-contract brand formula without
medical documentation (except in Food Package III) in the event that
the contract brand formula is unavailable.
The third part of the provision--that the contracted infant formula
manufacturer will pay rebates on competitive non-contract brand infant
formula when the contracted infant formula manufacturer's product is
the subject of the recall--has the potential to impose costs on infant
formula manufacturers. As described above, during the most recent major
infant formula recall, the infant formula manufacturer whose product
was the subject of the voluntary recall temporarily continued paying
rebates on competitive non-contract brand infant formula in the WIC
State agencies where they held the contract. Adding this remedy to
future infant formula cost containment contracts requires all infant
formula manufacturers to pay these rebates in the future when their
product is the subject of a recall, which in turn could pose an added
cost to the manufacturer subject to the recall while their product is
off the market.
In the event that a supply chain disruption necessitates issuing a
waiver to a State agency allowing the issuance of non-contract infant
formula without medical documentation, but where the contracted infant
formula manufacturer in that State agency is not the subject of a
recall and thus not obligated to pay rebates on non-contract products
as described above, then USDA expects to see a decrease in rebate
income relative to the amount of non-contract brand formula issued in
that State agency. Any decrease in rebate income relative to the amount
of non-contract brand formula issued would increase WIC food
expenditures on infant formula for USDA, as was the case in State
agencies without contracts with a specific major infant formula
manufacturer during the 2022 major infant formula recall. While the
Department is not able to estimate the scale of future recalls, a look
back at typical infant formula rebate amounts, prior to the 2022
voluntary recall by a major infant formula manufacturer of certain
powder infant formula, including exempt infant formula, provides a
helpful estimate of possible costs. USDA received approximately $1.6
billion in WIC infant formula rebates in FY 2021, while the monthly
average number of fully formula-fed infant participants was
approximately 962,000, and the monthly average number of partially
breastfed infant participants was approximately 329,000, resulting in
an average monthly rebate of $103.38 per infant receiving a WIC food
package with infant formula. As an example of scale, it would therefore
cost USDA around $10.3 million to cover the lost rebate amounts for
100,000 average infants receiving formula per month, based on FY 2021
costs.\30\
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\30\ Analysis of FNS administrative data, available at https://www.fns.usda.gov/pd/wic-program.
---------------------------------------------------------------------------
Our analysis suggests that most infant formula recall events in the
past 20 years have been recalls of small amounts of products--usually
single batches or lot numbers, and almost all covering fewer than
around 100,000 cans of infant formula per recall--and would not require
the kind of large-scale intervention that the major infant formula
recall in 2022 required. One available list of infant formula recalls
from 1982-2005 showed no large nationwide recalls (except for one in
2001 that was a result of mislabeling, not product contamination).\31\
Similarly, a search of FDA's Enforcement Database
---------------------------------------------------------------------------
\31\ See http://flca.info/HTMLobj-154/Recalls.pdf. Accessed
December 7, 2022.
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[[Page 86557]]
showed only small recalls of infant formula (fewer than 100,000 cans
per recall that likely did not disrupt the supply chain) from June 2012
through 2022, until the large major infant formula recall.\32\
---------------------------------------------------------------------------
\32\ Search available at https://www.fda.gov/safety/recalls-market-withdrawals-safety-alerts/enforcement-reports. Accessed
December 7, 2022.
---------------------------------------------------------------------------
Finally, USDA notes that these provisions may impact rebate amounts
offered on infant formula contracts moving forward. If this rule
changes the incentive for infant formula manufacturers to increase or
decrease rebate bids on infant formula contracts through the
competitive bidding process, it could increase or decrease the rebate
amounts offered by infant formula manufacturers to State Agencies. This
would consequently decrease or increase Federal WIC food costs.
However, when examining the limited number of infant formula contracts
awarded either (1) since the start of the major infant formula recall,
or (2) since the passage of ABFA, which included contracts that require
the three remedies outlined in this rule, USDA was not able to discern
a pattern of either increased or decreased formula rebate bids; some
offered rebate amounts increased slightly and others decreased
slightly, similar to how formula contracts have changed over time in
the past. Therefore, USDA is not able to estimate that these provisions
will have an impact on the rebates offered in future infant formula
contracts. However, to provide a sense of scale, USDA notes that WIC
received $1.6 billion in rebates from infant formula and food
manufacturers in FY2021; a nationwide 5 percent increase or decrease in
average infant formula rebate amounts offered to State agencies would
decrease or increase Federal WIC food spending by $80 million per year.
iii. Impact on Affected Parties: The extent to which other impacts
of these provisions will be realized largely depends on how often and
at what scale they are needed in responding to future recalls. In the
event that an infant formula manufacturer is never subject to a recall,
then the impact of these remedies on infant formula manufacturers will
be minimal.In the event of a recall, these provisions grant substantial
benefits to WIC State and local agencies, WIC vendors, and WIC
participants. The minimum remedies described above benefit WIC State
agencies by providing a substantially streamlined administrative
process to approve and issue new infant formula benefits in the event
of a recall. WIC vendors benefit from the certainty that WIC
participants will continue to be issued and be able to purchase infant
formula. Finally, these remedies are intended to protect WIC
participants from disruptions in access to infant formula during
product recalls. For infant formula manufacturers, if their product is
subject to a recall these provisions will require them to pay rebates
on non-contract infant formula in their contracted State agencies.
However, these provisions also provide certainty as to how all
stakeholders in the WIC infant formula supply chain--the Federal
Government, State and local WIC agencies, WIC vendors, WIC clinics, and
infant formula manufacturers--will respond and what responsibilities
they bear in the event of a formula recall.
2. Clarify Terminology in Infant Formula Cost Containment Contracts
i. Program Impact: This rule will clarify terminology at 7 CFR
246.16a(c)(5). Specifically, the current terms ``responsive and
responsible'' used in the regulations to describe bidders are
consolidated to ``responsive.'' Responsive is further defined for
clarification; to be responsive, a bidder must submit a bid that
conforms to the solicitation and must meet requirements at 246.16a. The
rule adds language to clarify this meaning, which will enhance
consistent application of the term and ensure that all responsive bids
will receive consideration. This provision is not required by ABFA.
ii. Cost Impact: USDA is not able to estimate a change in cost
associated with this provision. Improved clarity may slightly lower
administrative costs to State agencies or infant formula manufacturers.
iii. Impact on Affected Parties: This change improves the clarity
of the bidding process for infant formula contracts between State
agencies and infant formula manufacturers.
C. Add Requirement for State Agency Plans of Alternate Operating
Procedures
i. Program Impact: This rule will add a new provision that State
agencies must include as a part of the State Plan a plan of alternate
operating procedures, commonly referred to as disaster plans, in the
event of a disruption of WIC services. Requiring States to have these
plans in place prior to a disaster will help mitigate potential impacts
as States would have uniform baseline measures in place to address
potential barriers to Program operations and allow State agencies to
respond more quickly during these unforeseen events. This provision is
not required by ABFA.
ii. Cost Impact: USDA was unable to estimate the change in cost
associated with this provision, beyond the change in burden hours
(1,869 hours across all State agencies annually) associated with this
provision. Some State agencies may already include components of a plan
of alternate operating procedures in their State Plan; for these State
agencies, this provision poses a minimal additional burden to update
their procedures in accordance with regulations. Although there may be
a small increase in burden as State agencies write alternative
operating procedures to include in future State Plans, USDA anticipates
that having these plans in place may decrease burden on State agencies
and improve State agencies' responsiveness during a disaster, although
USDA is not able to quantify these potential benefits.
iii. Impact on Affected Parties: USDA anticipates a small increase
in burden on some State agencies. However, USDA expects that having
these plans in place will leave State agencies more prepared in the
event of a disaster and will help mitigate the disruptions WIC
participants might face in the event of a disaster.
IV. Summary of Impacts
A. Cost Impact
The costs of the rule that were able to be estimated are the result
of an increase in reporting and recordkeeping burden associated with
the provisions of the rule (an increase of 2,055 reporting and
recordkeeping hours annually across all State agencies), most of which
are due to the provision requiring alternative operating procedures in
State Plans. USDA estimates these costs to be $0.6 million to the State
agencies over the five years from FY 2024 to FY 2028.\33\
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\33\ Costs associated with State agency burden hours are
calculated using the hourly total compensation for all State and
Local workers from the Bureau of Labor and Statistics (BLS) for FY
2021 and inflated according to the CPI-W increase in OMB's economic
assumptions for the FY2023 President's Budget for years FY2024-
FY2028 (https://data.bls.gov/timeseries/CMU3010000000000D).
[[Page 86558]]
Table 1--Estimated State Agency Costs Due to Change in Administrative \34\ Burden, FY 2024-2028
----------------------------------------------------------------------------------------------------------------
Fiscal year (millions)
-----------------------------------------------------------------------------
2024 2025 2026 2027 2028 Total
----------------------------------------------------------------------------------------------------------------
Increase in State Agency Reporting $ 0.1 $ 0.1 $ 0.1 $ 0.1 $ 0.1 $ 0.6
and Recordkeeping Burden.........
----------------------------------------------------------------------------------------------------------------
B. Benefit Impact
As discussed in detail above, the provisions of this rule
strengthen USDA and WIC State agencies' ability to address emergencies,
disasters and supply chain disruptions, particularly those impacting
infant formula by (1) codifying permanent, expanded waiver authority of
the Secretary to help ensure continuity of WIC services during certain
emergencies, disasters, and supply chain disruptions impacting the WIC
Program; (2) codifying requirements for State agencies to include
language in their WIC infant formula cost containment contracts that
describes remedies in the event of an infant formula recall, including
how an infant formula manufacturer would protect against disruption to
benefit access by WIC participants, and (3) requiring that State
agencies include as a part of their State Plans a ``plan of alternate
operating procedures'' in the event of an emergency period, supply
chain disruption, or supplemental food recall.
---------------------------------------------------------------------------
\34\ Amounts may not sum to the total shown due to rounding.
---------------------------------------------------------------------------
Although USDA is not able to quantify the benefits generated by
this rule, USDA expects for the provisions of this rule to improve the
Federal Government's and State agencies' readiness to respond to
emergencies, disasters, or supply chain disruptions. Improved readiness
should decrease uncertainty to State and local WIC agencies, WIC
clinics, infant formula manufacturers, WIC-authorized vendors, and WIC
participants and should improve the continued provision of WIC services
and benefits to WIC participants in the event of a emergencies,
disasters, or supply chain disruption.
C. Participation and Distributional Impacts
As noted in the above analysis, the Department does not project a
participation impact attributable to this rule; the changes made by
this rule are largely administrative in nature and strive to ensure
continued, smooth operation of WIC during extraordinary events. The
changes are unlikely to be visible to WIC-eligible individuals and WIC
participants in a way that affects their decision to participate or
continue to participate in the WIC Program.
Previous analyses have studied the effects that WIC has on
individuals who do not participate in WIC.\35\ The Department is unable
to reliably estimate an effect of this rule on non-WIC participants, as
the provisions of this rule that are non-administrative and not costed
(i.e., the non-administrative consequences of the waiver provisions and
the infant formula contract provisions) do not come into force except
in response to future, unpredictable events. Furthermore, the limited
datapoints the Department does have do not indicate that this rule is
likely to affect infant formula rebates in a meaningful way and,
therefore, is unlikely to affect the wider infant formula market. To
the extent that the provisions of this rule helps ensure continued
infant formula supply in the event of a supply chain disruption, this
rule could have positive spillover effects on non-WIC participants, as
the infant formula available for purchase to WIC participants will also
be available for purchase by non-WIC participants.
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\35\ See, for example, Oliveira, V. and Fraz[atilde]o, E.
(2015), ``Painting a More Complete Picture of WIC: How WIC Impacts
Nonparticipants,'' available online at https://www.ers.usda.gov/amber-waves/2015/april/painting-a-more-complete-picture-of-wic-how-wic-impacts-nonparticipants/.
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Regulatory Flexibility Act
The Regulatory Flexibility Act (5 U.S.C. 601-612) requires agencies
to analyze the impact of rulemaking on small entities and consider
alternatives that would minimize any significant impacts on a
substantial number of small entities. Pursuant to that review, it has
been certified this rule would not have a significant impact on a
substantial number of small entities.
This final rule would not have a significant economic impact on a
substantial number of small entities. This final rule would not have an
adverse impact of small entities in the WIC; the impact is not
significant as it allows for greater options and flexibilities to
support the continuation of WIC services during emergency periods and
supply chain disruptions. State agencies are already required to
continuously operate a cost containment system for infant formula, with
some exceptions. Notably, ITOs with 1,000 or fewer participants are
exempt from this provision. Further, the Department has encouraged WIC
State agencies to develop disaster plans in the event of disruptions to
Program operations. Of the 89 WIC State agencies, 82 State agencies
have disaster plans in place.
Factual Basis
The provisions of this final rule apply to small local agencies
operating the Special Supplemental Nutrition Program for Women, Infants
and Children, and to State agency staff who must monitor local agencies
in remote locations. These entities meet the definitions of ``small
governmental jurisdiction'' and ``small entity'' in the Regulatory
Flexibility Act. These entities will not be negatively impacted by the
changes and options in this rule.
Congressional Review Act
Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq.),
the Office of Information and Regulatory Affairs designated this rule
as not a 'major rule' as defined by 5 U.S.C. 804(2).
Unfunded Mandates Reform Act
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public
Law 104-4, establishes requirements for Federal agencies to assess the
effects of their regulatory actions on State, local and tribal
governments, and the private sector. Under section 202 of the UMRA, the
Department generally must prepare a written statement, including a cost
benefit analysis, for proposed and final rules with ``Federal
mandates'' that may result in expenditures by State, local or tribal
governments, in the aggregate, or the private sector, of $177 million
or more in 2023 (when adjusted for 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 Department to identify and consider a reasonable number of
regulatory alternatives and adopt the most cost effective or least
burdensome alternative that achieves the objectives of the rule.
[[Page 86559]]
This final rule does not contain Federal mandates (under the
regulatory provisions of Title II of the UMRA) for State, local and
tribal governments, or the private sector of $146146177146146 million
or more in any one year. Thus, the rule is not subject to the
requirements of Sections 202 and 205 of the UMRA.
Executive Order 12372
The Special Supplemental Nutrition Program for Women, Infants, and
children (WIC) is listed in the Catalog of Federal Domestic Assistance
under Number 10.557 and is subject to Executive Order 12372, which
requires intergovernmental consultation with State and local officials.
(See 2 CFR chapter IV.)
Federalism Summary Impact Statement
Executive Order 13132 requires Federal agencies to consider the
impact of their regulatory actions on State and local governments.
Where such actions have federalism implications, agencies are directed
to provide a statement for inclusion in the preamble to the regulations
describing the agency's considerations in terms of the three categories
called for under Section (6)(b)(2)(B) of Executive Order 13132.
The Department has considered the impact of this rule on State and
local governments and has determined that this rule does not have
federalism implications. Therefore, under Section 6(b) of the Executive
Order, a federalism summary is not required.
Executive Order 12988, Civil Justice Reform
This final rule has been reviewed under Executive Order 12988,
Civil Justice Reform. This rule is intended to have preemptive effect
with respect to any State or local laws, regulations, or policies which
conflict with its provisions or which would otherwise impede its full
and timely implementation. This rule is not intended to have
retroactive effect unless so specified in the Effective Dates section
of the final rule. Prior to any judicial challenge to the provisions of
the final rule, all applicable administrative procedures must be
exhausted.
Civil Rights Impact Analysis
FNS has reviewed the final rule, in accordance with the Department
Regulation 4300-004 ``Civil Rights Impact Analysis,'' to identify and
address any major civil rights impacts the proposed rule might have on
participants on the basis of race, sex, national origin, disability,
and age. The requirements outlined in the final rule aim to remove
barriers to WIC food access. The changes would impact WIC State
agencies, including ITOs, WIC local agencies and clinics, participants
and WIC vendors in ways that are expected to increase equity and access
for WIC participants during times of disaster.
To mitigate potential impacts on Program access for LEP populations
and persons with disabilities, FNS will provide WIC State agencies with
technical assistance aimed at ensuring that communications about
program changes are available in appropriate languages and in
alternative formats for persons with disabilities. After reviewing the
potential impacts, FNS does not believe the rule would result in civil
rights impacts on protected groups of WIC participants and applicants.
However, the FNS CRD will propose further outreach and mitigation
strategies to alleviate any unforeseen impacts, if deemed necessary.
Executive Order 13175
Executive Order 13175 requires Federal agencies to consult and
coordinate with Tribes on a government-to-government basis on policies
that have Tribal implications, including regulations, legislative
comments or proposed legislation, and other policy statements or
actions that have substantial direct effects on one or more Indian
Tribes, on the relationship between the Federal Government and Indian
Tribes, or on the distribution of power and responsibilities between
the Federal Government and Indian Tribes. Tribal consultation regarding
this rule was conducted on November 8, 2022. FNS provided an
opportunity for consultation on the rule and Tribal leaders were
generally supportive. If a Tribe requests consultation on this
rulemaking in the future, FNS will work with USDA's Office of Tribal
Relations to ensure meaningful consultation is provided.
Paperwork Reduction Act
The Paperwork Reduction Act of 1995 (44 U.S.C. Chap. 35; 5 CFR part
1320) requires the Office of Management and Budget (OMB) approve all
collections of information by a Federal agency 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.
This final rule impacts existing information collection
requirements that are contained in OMB Control Number 0584-0043 Special
Supplemental Nutrition Program for Women, Infants, and Children (WIC)
Program Regulations--Reporting and Recordkeeping (expiration date
December 31, 2023) which are subject to review and approval by OMB in
accordance with the Paperwork Reduction Act of 1995. Additionally, the
waiver elements of this rule are already in effect but codified in this
rule and have been previously approved by OMB under OMB #0584-0687. Any
further public comment on the waiver information collection solicited
in response to this rule will be used to inform the next revision of
the information collection. Therefore, FNS is submitting for public
comment in this rule the changes in the information collection burdens
in OMB Control Numbers 0584-0043 that would result from adoption of
this rule. The information collection and recordkeeping requirements
included in this final rule have been submitted by the Agency to OMB
for approval which is currently pending. FNS will not collect any
information associated with this rule until the information collections
are approved by OMB.
Comments on the information collection for this final rule must be
received by February 12, 2024.
Comments may be sent to: Allison Post, Food and Nutrition Service,
U.S. Department of Agriculture, 1320 Braddock Place, 3rd Floor,
Alexandria, VA 22314. Comments will also be accepted through the
Federal eRulemaking Portal. Go to http://www.regulations.gov and follow
the online instructions for submitting comments electronically.
Comments are invited on: (a) whether the collection of information
is necessary for the proper performance of the functions of the
Department, including whether the information shall have practical
utility; (b) the accuracy of the Department's estimate of the burden of
the proposed collection of information, including the validity of the
methodology and assumptions used; (c) ways to enhance the quality,
utility, and clarity of the information to be collected; and (d) ways
to minimize the burden of the collection of information on those who
are to respond, including use of appropriate automated, electronic,
mechanical, or other technological collection techniques or other forms
of information technology.
All responses to this notice will be summarized and included in the
request for OMB approval. All comments will also become a matter of
public record.
[[Page 86560]]
a. Revisions to OMB Control Number 0584-0043
Title: Special Supplemental Nutrition Program for Women, Infants,
and Children (WIC) Program Regulations--Reporting and Recordkeeping
Burden.
OMB Number: 0584-0043.
Expiration Date: 12/31/2023.
Type of Request: Revision of a currently approved collection.
Abstract: This is a revision of existing information collection
requirements in the information collection under OMB Control Number
0584-0043 that are affected by this rulemaking. Under this rule, the
Department amends 7 CFR part 246 to codify the provisions of ABFA and
implement related changes which will strengthen WIC's ability to
address emergency periods and supply chain disruptions, particularly
those impacting infant formula. This final rule impacts the burden
associated with reporting and recordkeeping requirements for State
agencies. This final rule may also result in additional financial costs
to State agencies.
(i) Burden Revisions Related to State Plan Requirements
This rule requires WIC State agencies to include, as a part of the
State Plan, a plan of alternate operating procedures, commonly referred
to as a disaster plan in accordance with FNS guidance. Although current
WIC regulations do not require WIC State agencies to develop and
implement disaster plans, the Department has always encouraged WIC
State agencies to develop them. While many WIC State agencies have a
disaster plan, they are typically part of a broader health department
or other State agency disaster plan and do not address WIC-specific
Program operations during emergency periods and supply chain
disruptions.
FNS estimates that 82 WIC State agencies have a disaster plan, and
that it will take these State agencies an additional 16 hours to update
their existing disaster plans to conform with the added specific
requirements for these plans included in this rulemaking. Of the
remaining 7 WIC State agencies who do not have existing disaster plans,
FNS estimates that it will take these State agencies 80 hours to
develop disaster plans in accordance with this rulemaking. Therefore,
FNS estimates that this rule would result in an increase of 21 burden
hours to each State agency's reporting burden ((82 State agencies x 16
hours) + (7 State agencies x 80 hours)/89 State agencies = 21 burden
hours). This would increase the burden hours to submit an annual State
Plan from 134.62 to 155.62 which would increase the associated
reporting burden by 1,869 burden hours.
(ii) Burden Revision Related to Infant Formula Cost Containment
Contracts Remedies
This rule requires State agencies to include minimum required
remedies in infant formula cost containment contracts to ensure that,
in the event of an infant formula recall, any State agency for whom the
Secretary has issued a waiver(s) under the conditions described in
Sec. 246.29 will be able to enact remedies to protect against
disruption to Program participants. All State agencies must
continuously operate a cost containment system for infant formula, with
some exceptions. Notably, ITOs with 1,000 or fewer participants are
exempt from this provision. As such, 79 State agencies out of 89 WIC
State agencies have infant formula cost containment contracts.
Contracts that State agencies entered into after ABFA was enacted on
May 21, 2022 may already include some of the requirements specified in
this rule, as WIC Policy Memorandum #2022-6 suggested remedies that are
being codified in this rule. However, regardless of whether State
agencies have included some of the remedies into their contracts, this
rule includes greater specificity on the requirements outlined in WIC
Policy Memorandum #2022-6 and an additional requirement. Therefore,
incorporating the rule's minimum required remedies in infant formula
cost containment contracts would require an estimated one-time two-hour
burden per State agency. Therefore, FNS estimates that this rule would
result in a one-time increase in 148 burden hours to State agencies'
reporting burden (79 State agencies x 2 burden hours = 148 burden
hours).
Additionally, this rule requires infant formula manufacturers to
provide State agencies with an action plan to meet formula demand and
limit disruption to Program participants in the affected
jurisdiction(s) in the event of an infant formula recall. This plan
must include current supply data to assist the State agency in their
recall response. Based on the rarity of large-scale infant formula
recalls, FNS estimates that one State agency and one infant formula
manufacturer will be impacted by an infant formula recall each year,
and that it will take the infant formula manufacturer 4 hours to
provide the State agency with an action plan with current supply data.
Therefore, FNS estimates that this rule would result in an additional 4
burden hours to businesses' reporting burden (1 infant formula
manufacturer x 4 burden hours = 4 burden hours).
(iii) Burden Revisions Related to Emergency Period and Supply Chain
Disruption Recordkeeping
This rule requires State agencies establish a plan to report to FNS
on alternate operating procedures implemented during an emergency
period, supplemental food recall, and other supply chain disruptions,
which includes Program data and information on the impact of benefit
use and delivery. Additionally, this rule requires infant formula
manufacturers to provide State agencies with an action plan to meet
formula demand and limit disruption to program participants in the
affected jurisdiction(s) in the event of an infant formula recall. This
plan must include current supply data to assist the State agency in
their recall response. FNS estimates that 15 State agencies will
implement alternate operating procedures in the event of an emergency
period or supply chain disruption, including an infant formula recall,
each year. FNS estimates that it will take State agencies 2 hours to
record data related to alternate operating procedures implemented
during an emergency period or supply chain disruption, and supply data
from infant formula manufacturers in the event of an infant formula
recall. Therefore, FNS estimates that this rule would result in an
additional 30 burden hours to State agencies' recordkeeping burden (15
State agencies x 2 burden hours = 30 burden hours).
Respondents: State agencies, including Indian Tribal Organizations
and U.S. Territories (note that burden estimates for local agencies are
not affected by this rule).
Estimated Number of Respondents: 90.
Estimated Number of Responses per Respondent: 1.99.
Estimated Total Annual Burden on Respondents: 14,032.
[[Page 86561]]
Appendix I--WIC Burden Table
--------------------------------------------------------------------------------------------------------------------------------------------------------
Annual Number of Estimated Previous Difference
Estimated responses Total burden total submission due to
Regulatory section Information collected number of per annual hours per burden total hours program
respondents respondent responses request hours per person changes
--------------------------------------------------------------------------------------------------------------------------------------------------------
REPORTING BURDEN ESTIMATES
--------------------------------------------------------------------------------------------------------------------------------------------------------
Affected Public: State and Local
Agencies (including Indian Tribal
Organizations and U.S. Territories)
--------------------------------------------------------------------------------------------------------------------------------------------------------
246.4................................ State Plan.............. 89 1 89 155.62 13,850.18 11,981.18 1,869.00
246.16a(j)........................... Infant formula cost 74 1 74 2 148 0 * 148
containment contracts
remedies.
----------------------------------------------------------------------------------------
Subtotal Reporting: State and ........................ 89 2 163 85.88 13,998 11,981 2,017.00
Local Agencies.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Affected Public: Business: Retail Vendors (WIC-Authorized Food Stores)
--------------------------------------------------------------------------------------------------------------------------------------------------------
246.16a(j)........................... Infant formula 1 1 1 4 4 0 4
contractor action plan.
----------------------------------------------------------------------------------------
Subtotal Reporting: Retail 1....................... 1.00 1 4.00 4 0 4
Vendors *.
----------------------------------------------------------------------------------------
Grand Subtotal: Reporting.... 90...................... 1.82 164 85.38 14,002 11,981 2,021
--------------------------------------------------------------------------------------------------------------------------------------------------------
RECORDKEEPING BURDEN ESTIMATES
--------------------------------------------------------------------------------------------------------------------------------------------------------
Affected Public: State and Local Agencies (including Indian Tribal Organizations and U.S. Territories)
--------------------------------------------------------------------------------------------------------------------------------------------------------
246.4(a)(30); 246.16a(j)............. Emergency Period and 15 1 15 2 30 0 30
Supply Chain Disruption
Recordkeeping.
----------------------------------------------------------------------------------------
Subtotal: Recordkeeping.......... ........................ 15 1.00 15 2.00 30 0 30
----------------------------------------------------------------------------------------
Grand Total: Reporting and ........................ 90 1.99 179 78.39 14,032 11,981 2,051
Recordkeeping.
--------------------------------------------------------------------------------------------------------------------------------------------------------
* There is a one-time information collection burden associated with this provision.
Summary of Requested Burden Revisions:
Table 4--Summary of Requested Burden Revisions to #0584-0043
----------------------------------------------------------------------------------------------------------------
Responses Respondents Time burden
----------------------------------------------------------------------------------------------------------------
Current Inventory: * Total Burden............................... 48,798,800 6,913,189 4,547,099
Current Inventory: * Reporting.............................. 21,254,756 6,913,189 4,017,132
Current Inventory: * Recordkeeping.......................... 27,544,044 11,897 529,967
Total Burden Revision Requested................................. 48,798,890 6,913,190 4,549,150
Burden Revision Requested: Reporting........................ 21,254,831 6,913,190 4,019,153
Burden Revision Requested: Recordkeeping.................... 11,897 27,544,059 529,997
-----------------------------------------------
Difference in Total Burden from Rulemaking.............. 90 1 2,051
----------------------------------------------------------------------------------------------------------------
E-Government Act Compliance
The Department 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.
List of Subjects in 7 CFR Part 246
Administrative practice and procedure, Civil rights, Food
assistance programs, Grant programs--health, Grant programs--social
programs, Indians, Infants and children, Maternal and child health,
Nutrition, Penalties, Reporting and recordkeeping requirements, Women.
Accordingly, the Department amends 7 CFR part 246 as follows:
PART 246--SPECIAL SUPPLEMENTAL NUTRITION PROGRAM FOR WOMEN, INFANTS
AND CHILDREN
0
1. The authority citation for part 246 continues to read as follows:
Authority: 42 U.S.C. 1786.
0
2. Amend Sec. 246.2 by adding the definitions for ``Emergency
period,'' ``Qualified administration requirement,'' ``Recall'' and,
``Supply Chain
[[Page 86562]]
Disruption'' in alphabetical order to read as follows:
Sec. 246.2 Definitions.
* * * * *
Emergency period means a period during which there exists:
(1) A presidentially declared major disaster as defined under
section 102 of the Robert T. Stafford Disaster Relief and Emergency
Assistance Act (42 U.S.C. 5121 et seq.).
(2) A presidentially declared emergency as defined under section
102 of the Robert T. Stafford Disaster Relief and Emergency Assistance
Act (42 U.S.C. 5121 et seq.).
(3) A public health emergency declared by the Secretary of HHS
under section 319 of the Public Health Service Act (42 U.S.C. 247d).
(4) A renewal of such a public health emergency pursuant to section
319.
* * * * *
Qualified administrative requirement means a statutory requirement
under Section 17 of the Child Nutrition Act of 1966 (CNA; 42 U.S.C.
1786) or a regulatory requirement issued pursuant to this section.
* * * * *
Recall means recall as defined in 21 CFR 7.3(g) or any successor
regulation. Recalls may be conducted voluntarily by a manufacturer or
may be required by FDA.
* * * * *
Supply chain disruption means a shortage of WIC supplemental foods
that limits WIC participants' ability reasonably to purchase
supplemental foods using WIC benefits within a State agency's
jurisdiction, as determined, and declared by the Secretary for the
purposes of WIC.
* * * * *
0
3. Amend Sec. 246.4 by adding paragraph (a)(30) to read as follows:
Sec. 246.4 State plan.
(a) * * *
(30) Plans of alternate operating procedures, commonly referred to
as disaster plans, to support the continuation of WIC services during
an emergency period as defined at Sec. 246.2, supply chain disruption
as defined at Sec. 246.2, and supplemental food recall. State agencies
must consider the unique and sudden nature of an emergency period,
supplemental food recall, and other supply chain disruptions when
developing alternate operating procedures. Alternate procedures must
describe the process by which the State agency will minimize the
negative impact to WIC operations and services and ensure the
availability of authorized supplemental foods, especially infant
formula, to the extent feasible. At a minimum, alternate operating
procedures must include-
(i) A plan to address operation of specific Program areas
including-
(A) Access to Program records;
(B) Alternate certification and benefit issuance
(C) Verification of Certification (VOC) issuance
(D) Food package adjustments;
(E) Vendor requirements;
(F) Benefit redemption; and
(G) Food delivery systems.
(ii) A plan to ensure continuity of WIC services and address the
needs of participants with documented qualifying conditions receiving
Food Package III, rural areas, Indian tribal organizations, and other
priority populations in the affected area as applicable;
(iii) A designated emergency contact within the State agency for
emergency periods, supplemental food recalls, and other supply chain
disruptions;
(iv) A designated emergency contact within the State agency to
address the needs of participants with documented qualifying conditions
receiving Food Package III;
(v) A plan to establish relationships with relief agencies
responsible for disaster and public health emergency planning
applicable to the State agency's jurisdiction and participants to
support data-informed approaches when responding to emergency periods,
supplemental food recalls, and other supply chain disruptions;
(vi) A plan to limit the disruption of infant formula benefits in
the event of an emergency period, supplemental food recall, and other
supply chain disruptions;
(vii) A communications plan to keep FNS, State and local agency
staff, authorized WIC vendors, WIC participants, and the public
informed during an emergency period supplemental food recall, and other
supply chain disruptions;
(viii) A plan to report to FNS on alternate operating procedures
implemented during an emergency period, supplemental food recall, and
other supply chain disruptions which includes Program data and
information on the impact of benefit use and delivery; and
(ix) A plan to adjust State agency specific minimum requirements
for the variety and quantity of supplemental foods that a vendor
applicant must stock to be authorized.
* * * * *
0
4. In Sec. 246.16a:
0
a. Revise paragraph (c)(5); and
0
b. Add a new paragraph (n).
The revision and addition read as follows:
Sec. 246.16a Infant formula and authorized foods cost containment.
* * * * *
(c) * * *
(5) A State agency must award the contract(s) to the responsive
bidder(s) offering the lowest total monthly net price for infant
formula or the highest monthly rebate (subject to paragraph(c)(4)(ii)
of this section) for a standardized number of units of infant formula.
To be responsive, a bidder must submit a bid by the deadline set by the
State agency that conforms to the solicitation and must meet
requirements at 246.16a and set forth in the bid solicitation. The
State agency must calculate the lowest net price using the lowest
national wholesale cost per unit for a full truckload of the infant
formula on the date of the bid opening.
* * * * *
(n) What minimum recall-related provisions must be included in
infant formula cost containment contracts? A State agency must include
remedies in the event of a recall in their infant formula cost
containment contract to protect against disruption in infant formula
supply to participants. The State agency will determine when remedies
take effect and remain in effect, in accordance with applicable Program
requirements and the infant formula cost containment contract. At
minimum, recall remedies in the State agency's infant formula cost
containment contract must:
(1) Allow infant formula to be issued in all unit sizes that may
exceed the maximum monthly allowance. The State agency and contracted
infant formula manufacturer must prioritize unit sizes that most
closely provide the maximum monthly allowance;
(2) Allow the issuance of non-contract brand infant formulas
without medical documentation, with the exception of participants
receiving Food Package III as defined in section 246.10(e)(3) of this
Part; and
(3) When any contract brand infant formula of the contracted
manufacturer is the subject of a recall, require the contracted infant
formula manufacturer to:
(i) Provide the State agency with an action plan, within a timeline
established within the contract, which includes supply data, to meet
infant formula demand and limit disruption to Program participants in
the affected jurisdiction(s); and
[[Page 86563]]
(ii) Pay rebates on competitive, non-contract brand infant formula
that meets the definition of infant formula at 7 CFR 246.2.
0
5. Add Sec. 246.29 to read as follows:
Sec. 246.29 Waivers of program requirements.
(a) Required conditions. The Secretary may waive or modify any
qualified administrative requirement for one or more State agencies
during an emergency period or supply chain disruption. Waivers or
modifications may be issued following a State agency request or at the
discretion of the Secretary. To be considered, a waiver or modification
issued under this Section must meet the following requirements:
(1) The qualified administrative requirement cannot be implemented
during any part of the emergency period or supply chain disruption.
(2) The waiver or modification is necessary to serve participants
and does not substantially weaken the nutritional quality of
supplemental foods.
(3) The waiver or modification would not result in material
impairment of any statutory or regulatory rights of participants or
potential participants as set forth at 7 CFR 246.8 or 7 CFR parts 15,
15a and 15b.
(4) The waiver or modification would not create a barrier to
participation.
(5) The waiver or modification would not create additional
eligibility requirements for participation.
(6) The waiver or modification would comply with 7 CFR 246.13(b).
(7) The waiver or modification must offer substitution options with
similar nutritional quality, that most closely provide the maximum
monthly allowance of supplemental foods, and that do not create new
supplemental food categories as set forth in 7 CFR 246.10(e)(12) Table
4.
(8) A State agency that requests a waiver or modification meets
additional requirements for the request and approval as determined
necessary by FNS.
(b) Timeframes for waiver request and use. (1) Waiver starts. A
waiver or modification may be granted any time during an emergency
period or supply chain disruption.
(2) Waiver duration.
(i) A waiver or modification established during an emergency period
may be available for the emergency period and up to 60 days after the
end of the emergency period.
(ii) A waiver or modification established during a supply chain
disruption may be available for:
(A) a period of up to 45 days from the date of waiver issuance and
renewed with at least 15 days' notice provided by the Secretary; and
(B) no more than 60 days after the supply chain disruption
declaration ceases to exist.
(c) State agency waiver requests. State agencies shall submit
requests for a modification or waiver for USDA approval. Requests shall
include but not necessarily be limited to:
(1) The qualified administrative requirement the State agency is
requesting to modify or waive (including the statutory or regulatory
citation) and an explanation for why it cannot be met;
(2) Justification for why the waiver is necessary to continue WIC
services;
(3) An explanation that the waiver meets the conditions set forth
in 7 CFR 246.29(a);
(4) The emergency period or supply chain disruption under which the
request is being made;
(5) The period for which the flexibility is being requested.
Cynthia Long,
Administrator, Food and Nutrition Service.
[FR Doc. 2023-26641 Filed 12-13-23; 8:45 am]
BILLING CODE 3410-30-P