FNS Issues Final Rule Enhancing SNAP Retailer Standards
On December 8, 2016, the U.S. Food and Nutrition Service (FNS) issued its Final Rule entitled “Enhancing Retailer Standards in the Supplemental Nutrition Assistance Problem (SNAP).” The Final Rule amends FNS’s SNAP regulations in a number of important ways that will affect nearly all of the more than 250,000 SNAP-authorized retailers across the country.
The Final Rule is substantially different from the proposed rule published by FNS on February 17, 2016 (“Proposed Rule”), which would have resulted in dramatic reductions in the number of authorized SNAP retailers. FNS received more than 1,000 comments from retailers, anti-hunger groups, and over 150 members of Congress, mostly in strong opposition thereto. In response, FNS substantially modified many of the proposed revisions in its Final Rule.
Definition of Retail Food Store
FNS declined to adopt its arbitrary and capricious proposal to re-classify retail food stores as ineligible restaurants if more than 15% of the store’s food sales resulted from the sale of foods cooked or heated on-site, regardless of whether the cooking or heating took place pre- or post-sale. Instead, the Final Rule modified the definition of “retail food store” to exclude entities that have more than 50% of their total gross retail sales in food cooked or heated on-site by the retailer before or after purchase. While this is not likely to result in the loss of SNAP authorization for many convenience stores and other small retailers, that may not be true for stores that sell considerable amounts of coffee, tea, baked goods (including breads, cakes, cookies, donuts, and pastries), and/or deli counter items (including rotisserie chicken, roast turkey, potato salad, and sushi) that are cooked, baked, or heated at the retail location.
New Stocking Requirements: SNAP retailers will now be required to stock a minimum of 84 staple food items. This represents a substantial increase from the prior requirement of three varieties on each of the four staple food categories. Although this is a reduction from the proposed minimum stocking requirement of 168 staple food items, this will reduce the amount of shelf space available to smaller retailers for items that SNAP beneficiaries more frequently purchase.
Multiple Ingredient Food: FNS receded from its proposal to exclude multiple ingredient foods from staple foods. As a result, multi-ingredient foods will still be counted as staple foods based on the category of their main ingredient.
Accessory Food Items: The Final Rule excludes snacks (including potato chips), candy and desserts (including ice cream), spices, and most beverages (excluding milk) from categorization as “staple food” items. Not surprisingly, this provision was not widely opposed. It is important to note that these “accessory foods” remain “eligible foods” which can be purchased with SNAP benefits.
Public Disclosure of Firms Sanctioned for SNAP Violations: FNS also included a provision in the Final Rule that provides it may disclose the store name, store owner’s name, and information about the sanction for any retail food store that is disqualified or is otherwise sanctioned for a violation of SNAP regulations (including assessment of a civil monetary penalty). It is unclear why FNS included this provision given that it is already required by the Freedom of Information Act (FOIA) to disclose such information to the public. Although FNS is precluded by federal law and existing regulations from disclosing personally identifying information about beneficiaries and confidential business information from retailers, the agency is not prohibited by any law or regulation from releasing information about its fraud enforcement activities.
Whether this is FNS’s first step towards public disclosure of its Final Agency Decisions (FAD) in SNAP-related matters remains to be seen. FNS is the only USDA agency that does not publish its administrative decisions on its website. And while interested retailers can obtain redacted versions of those decisions, doing so is cost-prohibitive. For example, FNS has recently sent FOIA fee estimates in excess of $84,000 to several requesters who sought electronic copies of FADs issued since January 2015. FNS also requires retailers charged with program violations to send formal FOIA requests to obtain information about their own store and then redacts key information that the agency relies upon when deciding whether to disqualify the store from SNAP authorization. These policies are likely due process violations and wholly inconsistent with President Obama’s 2009 governmental transparency directive and former Attorney General Holder’s FOIA guidelines. Whether these policies continue under the incoming administration remains to be seen.
The effective date of the Final Rule is January 7, 2017. Although most of its provisions take effect within 120 days, the increased stocking requirements will not take effect until January 2018 for currently authorized firms.
OFW Principal Stewart D. Fried represents authorized SNAP and WIC retailers before FNS and state agencies.