[Federal Register Volume 59, Number 224 (Tuesday, November 22, 1994)]
[Unknown Section]
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From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-28750]
Federal Register / Vol. 59, No. 224 / Tuesday, November 22, 1994 /
[[Page Unknown]]
[Federal Register: November 22, 1994]
VOL. 59, NO. 224
Tuesday, November 22, 1994
DEPARTMENT OF AGRICULTURE
Food and Consumer Service
[Amendment No. 331]
7 CFR Chapter II and Parts 271 and 278
Food Stamp Program: Revision of the Definition of Insured
Financial Institutions and Modification of Food Stamp Redemption
Procedures
AGENCY: Food and Consumer Service, USDA.
ACTION: Final rule.
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SUMMARY: This rule amends Food Stamp Program regulations relative to
food stamp redemption and changes the definition of ``insured financial
institution''. This change is necessary because of statutory revisions
to the Federal bank insurance system. Financial institutions formerly
insured by the Federal Savings and Loan Insurance Corporation (FSLIC)
are now insured by the Savings Association Insurance Fund (SAIF), which
is administered by the Federal Deposit Insurance Corporation (FDIC).
This rule also modifies the procedures for financial institutions which
deposit food stamps at Federal Reserve Banks in order to be consistent
with changes in Federal Reserve requirements.
In addition, this rule amends 7 CFR chapter II to reflect the
abolishment of the Food and Nutrition Service and the establishment of
the Food and Consumer Service in the recent Department of Agriculture
reorganization.
DATES: The amendments to parts 271 and 278 are effective December 22,
1994. The amendments to the heading of 7 CFR Chapter II and to the
references in the chapter are effective November 22, 1994.
FOR FURTHER INFORMATION CONTACT: Suzanne Fecteau, Chief, Coupon and
Retailer Branch, Benefit Redemption Division, by telephone at (703)
305-2418.
SUPPLEMENTARY INFORMATION:
Executive Order 12866
This rule has been determined to be not significant for purposes of
Executive Order 12866, and therefore, has not been reviewed by the
Office of Management and Budget.
Executive Order 12372
The Food Stamp Program is listed in the Catalog of Federal Domestic
Assistance under No. 10.551. For the reasons set forth in the final
rule and related Notice(s) to 7 CFR part 3015, subpart V (48 FR 29115,
June 24, 1983 or 48 FR 54317, December 1, 1983, as appropriate, and any
subsequent notices that may apply), this program is excluded from the
scope of Executive Order 12372 which requires intergovernmental
consultation with State and local officials.
Regulatory Flexibility Act
This action has been reviewed with regard to the requirements of
the Regulatory Flexibility Act of 1980 (Pub. L. 96-354). The
Administrator of the Food and Consumer Service has certified that this
action does not have a significant economic impact on a substantial
number of small entities. The rule makes only slight technical changes
to the Food Stamp Program coupon redemption procedures to improve
system accountability, while also revising the definition of ``insured
financial institution''.
Paperwork Reduction Act
The reporting requirements relating to the provisions on the
redemption of food stamps at 7 CFR 278.5 have been approved under OMB
number 0584-0085. The public reporting burden for this collection of
information is estimated to average .020 hours per response, including
the time for reviewing instructions, searching existing data sources,
gathering and maintaining the data needed, and completing and reviewing
the collection of information. Send comments regarding this burden
estimate or any burden, to the U.S. Department of Agriculture,
Clearance Officer, OIRM, Room 404-W, Washington, D.C., 20250; and to
the Office of Management and Budget, Paperwork Reduction Project (OMB
#0584-0085), Washington, D.C., 20503.
Executive Order 12778
This final rule has been reviewed under Executive Order 12778,
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
implementation. This rule is not intended to have retroactive effect
unless so specified in the ``Effective Date'' paragraph of this
preamble. Prior to any judicial challenge to the provisions of this
rule or the application of its provisions all applicable administrative
procedures must be exhausted. In the Food Stamp Program the
administrative procedures are as follows:
(1) For program benefit recipients--state administrative procedures
issued pursuant to 7 U.S.C. 2020 (e)(10) and 7 CFR 273.15;
(2) For State agencies--administrative procedures issued pursuant
to 7 U.S.C. 2023 set out at 7 CFR 276.7 (for rules related to non-
quality control (QC) liabilities) or part 284 (for rules related to QC
liabilities);
(3) For program retailers and wholesalers--administrative
procedures issued pursuant to 7 U.S.C. 2023 set out at 7 CFR 278.8.
Background
Current regulations at 7 CFR part 278 contain requirements that
firms authorized by the Food and Consumer Service to accept food stamps
may redeem them only at financial institutions which are insured by the
FDIC or the FSLIC; or at financial institutions which are insured under
the Federal Credit Union Act and which have retail food stores or
wholesale food concerns in their field of membership (7 CFR 278.5). On
August 9, 1989, the FSLIC, along with its parent organization, the
Federal Home Loan Bank Board, ceased to exist. These institutions have
been consolidated into the SAIF pursuant to sections 211(6) and 401 of
the Financial Institution Reform, Recovery and Enforcement Act of 1989
(FIRREA) (Pub. L. 101-73, 103 Stat. 183). The SAIF is administered by
the FDIC. This rule amends the Food Stamp Program regulations to delete
FSLIC wherever that reference appears.
The Department is also amending the regulations to be consistent
with the Federal Reserve requirements that financial institutions
submit only balanced deposits to the Federal Reserve and use Magnetic
Ink Character Recognition (MICR) to encode on the Food Stamp Redemption
Certificate the verified amount of coupons received from authorized
firms. The redemption certificate is the deposit document that
authorized firms use to deposit coupons with financial institutions for
credit.
Deposit Balancing Requirements
In an effort to improve the accountability in the food coupon
redemption process and reduce the likelihood of fraud, the Department
enlisted the cooperation of the Federal Reserve to modify its
depositing requirements for food coupons to facilitate reconciliation
of coupons deposited with deposit documents and redemption
certificates. Financial institutions are now required by the Federal
Reserve to submit balanced deposits, which means that the face value of
coupons deposited must match both the amount of coupons entered on the
financial institution's deposit document and the total amount of
coupons entered by authorized firms on the redemption certificates
accompanying the deposit.
MICR-Encoding Requirement
Requiring financial institutions, or retailers with MICR-encoding
capability, to MICR-encode the verified coupon amount on redemption
certificates allows redemption data to be electronically captured at
the Federal Reserve Banks and transmitted directly to the Department's
computer processing center. It also allows the Federal Reserve Banks
and the Department to achieve greater accuracy and accountability in
the coupon deposit reconciliation system while using standard banking
technology.
A proposed rule dealing with these requirements was published at 56
FR 13,601 on April 3, 1991 and provided the public with a 60-day period
to submit comments on the proposed provisions. The Department received
no public comments on the proposed rule and this rule is being
finalized without change.
Establishment of the Food and Consumer Service
Pursuant to Pub. L. 103-354, The Federal Crop Insurance Reform and
Department of Agriculture Reorganization Act of 1994, the Secretary of
Agriculture issued Secretary's Memorandum 1010-1, Reorganization of the
Department of Agriculture, on October 20, 1994. SM 1010-1 orders the
abolishment of the Food Nutrition Service (FNS), and the establishment
of the Food and Consumer Service, which assumes the functions
previously performed by FNS. This rule includes amendments to 7 CFR
chapter II which are necessary to bring Agency regulations into
alignment with the Departmental reorganization.
List of Subjects
7 CFR Part 271
Administrative practice and procedure, Food stamps, Grant
programs--social programs.
7 CFR Part 278
Administrative practice and procedure, Banks, Banking, Claims, Food
stamps, Groceries--retail, Groceries, general line--wholesaler,
Penalties.
Accordingly, 7 CFR chapter II and parts 271 and 278 are amended as
follows:
Chapter II--Food and Consumer Service, Department of Agriculture
1. The heading of 7 CFR chapter II is revised to read as set forth
above.
Chapter II [Amended]
2. In 7 CFR chapter II (consisting of parts 210-299) all references
to ``Food and Nutrition Service'' are revised to read ``Food and
Consumer Service'', and all references to ``FNS'' are revised to read
``FCS''.
3. The authority citation for parts 271 and 278 continues to read
as follows:
Authority: 7 U.S.C. 2011-2032.
PART 271--GENERAL INFORMATION AND DEFINITIONS
Sec. 271.2 [Amended]
4. In Sec. 271.2 the definition of Insured financial institution is
amended by removing the words ``or the Federal Savings and Loan
Insurance Corporation (FSLIC)''.
PART 278--PARTICIPATION OF RETAIL FOOD STORES, WHOLESALE FOOD
CONCERNS AND INSURED FINANCIAL INSTITUTIONS
5. In Sec. 278.5:
a. Paragraph (a)(1) is amended by removing the words ``or the
Federal Savings and Loan Insurance Corporation (FSLIC)'' in the first
sentence, and adding two new sentences to the end of the paragraph.
b. Paragraph (a)(2) is revised.
The revision and additions read as follows:
Sec. 278.5 Participation of insured financial institutions.
(a) Accepting coupons. (1) * * * All verified and encoded
redemption certificates accepted by insured financial institutions
shall be forwarded with the corresponding coupon deposits to the
Federal Reserve Bank along with the accompanying Food Coupon Deposit
Document (Form FNS-521). In accordance with Federal Reserve
requirements, the coupon deposit value entered on the Food Coupon
Deposit Document must be equal to the actual value of coupons being
deposited and to the total value of verified amounts encoded on the
corresponding redemption certificates.
(2) An insured financial institution shall verify the amount of the
coupons being redeemed and record the amount in the designated space on
the redemption certificate. In order to conform with Federal Reserve
requirements, the verified amount shall be recorded in the appropriate
field on the redemption certificate using Magnetic Ink Character
Recognition (MICR) encoding. Redemption certificates accepted by
insured financial institutions shall be forwarded with the
corresponding coupon deposits to the Federal Reserve Bank along with
the Food Coupon Deposit Document (Form FNS-521).
* * * * *
6. In Sec. 278.9, a new paragraph (k) is added to read as follows:
Sec. 278.9 Implementation of amendments relating to the participation
of retail food stores, wholesale food concerns and insured financial
institutions.
* * * * *
(k) Amendment No. 331. The program changes made to Secs. 271.2 and
278.5 by this amendment are effective December 22, 1994.
Dated: November 4, 1994.
William E. Ludwig,
Administrator, Food and Consumer Service.
[FR Doc. 94-28750 Filed 11-21-94; 8:45 am]
BILLING CODE 3410-30-U
