96-32998. Food Stamp Program: Revisions in Use and Disclosure Rules Involving the Sharing of Information Provided by Retail and Wholesale Food Concerns with Other Federal and State Agencies  

  • [Federal Register Volume 61, Number 250 (Friday, December 27, 1996)]
    [Rules and Regulations]
    [Pages 68119-68122]
    From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
    [FR Doc No: 96-32998]
    
    
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    DEPARTMENT OF AGRICULTURE
    
    Food and Consumer Service
    
    7 CFR Part 278
    
    RIN 0584-AC00
    
    
    Food Stamp Program: Revisions in Use and Disclosure Rules 
    Involving the Sharing of Information Provided by Retail and Wholesale 
    Food Concerns with Other Federal and State Agencies
    
    AGENCY: Food and Consumer Service, USDA
    
    ACTION: Final rule.
    
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    SUMMARY: This rulemaking implements certain provisions in two different 
    laws which expand the authority of the United States Department of 
    Agriculture's Food and Consumer Service (FCS) to share information 
    provided by applicants and firms participating as authorized retail 
    food stores or wholesale food concerns in the Food Stamp Program (FSP) 
    with other Federal and State government agencies.
        The intent of this final rule is to enable better administration 
    and enforcement of the Food Stamp Act of 1977, as amended (the Act), or 
    any other Federal or State law and regulations issued under the Act or 
    any other Federal or State law. This rule provides new criteria to 
    govern the sharing of such information and new criminal penalties for 
    unauthorized use. It also implements the Secretary of Agriculture's new 
    authority to share employer identification numbers (EINs) and Social 
    Security numbers (SSNs) of applicants and firms participating in the 
    FSP with other Federal agencies.
        Finally, this rule makes technical changes to correct an error in 
    regulatory reference and also to reflect changes made by the Department 
    of the Treasury
    
    [[Page 68120]]
    
    in a parallel rule that does not change the substance of the affected 
    provisions.
    
    EFFECTIVE DATE: Provisions in this rule are effective and will be 
    implemented beginning February 25, 1997.
    
    FOR FURTHER INFORMATION CONTACT: Questions regarding this final rule 
    should be addressed to Suzanne Fecteau, Food and Consumer Service, 
    Chief, Redemption Management Branch, 3101 Park Center Drive, 
    Alexandria, Virginia 22302-1594, or by telephone at (703) 305-2418.
    
    SUPPLEMENTARY INFORMATION:
    
    Executive Order 12866
    
        This final 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 to 7 CFR part 3015 subpart V (48 FR 29115, June 
    24, 1983), this Program is excluded from the scope of Executive Order 
    12372, which requires inter-governmental consultation with State and 
    local officials.
    
    Regulatory Flexibility Act
    
        This final rule has been reviewed with regard to the requirements 
    of the Regulatory Flexibility Act of 1980 (5 U.S.C. Sec. 601-612). 
    William E. Ludwig, the Administrator of the Food and Consumer Service, 
    has certified that this rule will not have a significant economic 
    impact on a substantial number of small entities; however, it may have 
    a significant effect on a limited number of small entities that violate 
    State or Federal laws.
    
    Paperwork Reduction Act
    
        This final rule does not contain reporting or recordkeeping 
    requirements subject to approval by the Office of Management and Budget 
    under the Paperwork Reduction Act of 1980 (44 U.S.C. 3507).
    
    Executive Order 12778
    
        This final rule has been reviewed under Executive Order 12778, 
    Civil Justice Reform. This rule has 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 also has retroactive effect. 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 283 (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
    
        On May 12, 1995, the Department published a proposed rule at 60 FR 
    25625, to implement section 203 of the Food Stamp Program Improvements 
    Act of 1994, Public Law 103-225. Section 203 revises section 9(c) of 
    the Food Stamp Act of 1977, as amended, to expand FCS' authority to 
    share information provided by applicants and participating retail food 
    concerns--including information about food stamp redemptions, retail 
    food sales, and store ownership--with other Federal and State law 
    enforcement and investigative agencies. It covers certain information 
    provided on authorization applications, as well as additional 
    supporting information submitted to document store eligibility to 
    participate in the FSP. This information can be shared for the purpose 
    of administering and enforcing the Food Stamp Act, as well as the 
    enforcement of any other Federal or State laws, and the regulations 
    issued under this Act or such other laws.
        The sharing of EINs and SSNs is not covered by Public Law 103-225 
    or by Section 9(c) of the Food Stamp Act of 1977, as amended. The 
    sharing of EINs and SSNs is covered in section 316 of the Social 
    Security Independence and Program Improvements Act of 1994, Public Law 
    103-296, and is also implemented by this rule. Section 316 revises 
    section 6109(f) of the Internal Revenue Code of 1986, and section 
    205(c)(2)(C) of the Social Security Act, to expand FCS' authority to 
    verify and match SSNs and EINs with other Federal agencies or 
    instrumentalities of the United States to more effectively administer 
    and enforce the FSP, as well as other Federal laws and regulations.
        For currently authorized firms, the provisions of this rule are 
    effective February 25, 1997 and will be implemented beginning February 
    25, 1997. Because of the legal notice requirements related to the use 
    of EINs and SSNs, currently authorized firms will receive notices of 
    the expanded information sharing provisions of this rule, and will be 
    given the opportunity to withdraw from FSP participation if they do not 
    want to be subject to these new provisions. Firms that remain 
    authorized 60-days after the date of the notice, will be subject to the 
    information sharing provisions. However, firms that withdraw or were 
    disqualified from FSP participation prior to the implementation date on 
    the notice will not be subject to the expanded information sharing 
    provisions of this rule, unless such firms participate in the FSP at a 
    future date subsequent to implementation of this rule.
        Comments were solicited on the provisions of the proposed 
    rulemaking through June 12, 1995. This final action addresses the 
    commentors' concerns. Readers should refer to the proposed rule for a 
    more complete understanding of this final action.
        The Department received three comment letters on the proposed rule, 
    two representing Federal agencies and one representing a State agency. 
    All three commentors were supportive of the proposed provisions, and 
    two offered constructive suggestions to clarify certain provisions of 
    the proposed rule.
        A State agency commented that the proposed rule will assist law 
    enforcement and investigative agencies in their efforts to investigate 
    food stamp trafficking, as well as other crimes associated with 
    trafficking.
        A Federal agency commented on the need to clarify certain 
    requirements in the proposed rule regarding how information is 
    requested. The proposed rule required that requests be submitted in 
    writing and include the specific provisions of laws and regulations 
    being enforced. The recommendation was that written requests include 
    electronic communications. This commentor also recommended that the 
    final rule allow standing agreements between FCS and other agencies to 
    document that such information is being accessed for bona fide law 
    enforcement purposes, without citing specific provisions of law.
        It is the view of the Department that written requests include 
    electronic communications. The Department also believes that formal 
    agreements between government agencies may be a better way to document 
    the bona fide need for the information. In such situations, individual 
    written requests for access to FCS information may not be necessary. 
    The Department has made this clear in the final rule by adding the 
    appropriate language.
    
    [[Page 68121]]
    
        The Department of Agriculture's Office of Inspector General (OIG) 
    expressed concern that the proposed rule restricted its authority to 
    share information for enforcement of the Food Stamp Act, while other 
    government entities could access information to enforce all laws and 
    regulations under their respective jurisdictions. OIG also requested 
    that the final rule include language to give it special authority to 
    release information in certain circumstances.
        The Department agrees that OIG and other USDA agencies may be 
    allowed access to information needed to enforce Departmental laws and 
    regulations. Appropriate clarifying language is included in the final 
    rule. Authority for OIG or other agencies to release FCS information 
    will be addressed in written agreements with individual agencies.
        OIG was also concerned about the effective date of this rule. The 
    proposed rule provides that stores authorized to participate in the FSP 
    on August 15, 1994, and stores authorized after that date will be 
    subject to the rule. OIG was concerned that a possible interpretation 
    might be that stores initially authorized before August 15, 1994, that 
    continue participating after implementation, would not be subject to 
    this rule. This was not the Department's intent; thus, the final rule 
    states that all stores participating in the FSP after implementation 
    shall be subject to the provisions in this rule. This rule also affects 
    unauthorized entities and individuals accepting and redeeming food 
    stamps illegally, except that the sharing of EINs and SSNs for such 
    firms will be limited to those firms which were previously sanctioned 
    or convicted under section 12 or 15 of the Food Stamp Act of 1977, as 
    amended (7 U.S.C. 2021 or 2024).
        The Department has made minor revisions to clarify the meaning of a 
    few provisions in the proposed rule in order to avoid any confusion. A 
    reference to ``applicant'' under paragraph (q) that was inappropriate 
    has been replaced with the appropriate term, ``retail food store.'' The 
    Department also clarified a reference in the proposed rule involving 
    the Special Supplemental Food Program for Women, Infants and Children 
    (WIC). Current regulations afford WIC special information sharing 
    status. This rule's expanded information sharing negates the need to 
    treat WIC as a special situation; therefore, the sentence involving the 
    treatment of WIC in the proposed rule has been removed.
        The Department has also added clarifying language to clearly 
    distinguish between the two different laws implemented by this rule. 
    One law (amending the Food Stamp Act) addresses information, excluding 
    SSNs and EINs, provided by applicants and participating firms that can 
    be shared with both Federal and State law enforcement or investigative 
    agencies. The other law (amending the Social Security Act and the 
    Internal Revenue Code) addresses information involving SSNs and EINs 
    that can only be shared with certain Federal agencies and 
    instrumentalities of the United States. Clarifying language has also 
    been added to the final rule to define ``a law enforcement or 
    investigative agency'' and ``an FCS initiated match.'' Editorial 
    changes in the final rule were also made to provide a more orderly 
    presentation.
        Finally, because a regulation published on October 15, 1996 
    redesignated paragraph (q) to (r) in Sec. 278.1, this rule makes the 
    conforming changes.
    
    List of Subjects in 7 CFR Part 278
    
        Administrative practice and procedure, Banks, Banking, Claims, Food 
    stamps, Groceries--retail, Groceries, General line--wholesaler, 
    Penalties.
    
        Accordingly, 7 CFR part 278 is amended as follows:
    
    PART 278--[AMENDED]
    
        1. The authority citation for 7 CFR part 278 continues to read as 
    follows:
    
        Authority: 7 U.S.C. 2011-2032
    
    PART 278--PARTICIPATION OF RETAIL FOOD STORES, WHOLESALE FOOD 
    CONCERNS AND INSURED FINANCIAL INSTITUTIONS
    
        2. In Sec. 278.1:
        a. The heading and the introductory text of paragraph (r) is 
    revised;
        b. Paragraphs (r)(1) and (r)(2) are redesignated as paragraphs 
    (r)(2) and (r)(3), respectively, and a new paragraph (r)(1) is added;
        c. Newly redesignated paragraphs (r)(2)(i), (r)(2)(ii), (r)(3)(i), 
    and (r)(3)(ii) are revised;
        d. Newly redesignated paragraph (r)(2)(iii) is amended by adding 
    after the word ``Department'' in the first sentence the words ``or any 
    agency or instrumentality of the United States'' and by removing the 
    designation ``(c)(2)'' following the references to ``Sec. 301.6109-2'' 
    and ``(26 CFR 301.6109-2)'' and adding in its place the designation 
    (d)(2);
        e. Newly redesignated paragraph (r)(2)(iv) is amended by adding 
    after the word ``Department'' the words ``or maintained by any agency 
    or instrumentality of the United States'', by removing the references 
    to ``Sec. 278.1(s)(1)(ii)'' and ``Sec. 278.1 (r)(1)(iv)'' and adding in 
    their place references to ``paragraph (r)(2)(ii) of this section'' and 
    ``paragraph (r)(2)(iv) of this section'', and by removing the 
    designation ``(d)'' following the references to ``Sec. 301.6109-2'' and 
    ``(26 CFR 301.6109)'' and adding in its place the designation (e);
        f. Newly redesignated paragraph (r)(2)(v) is amended by removing 
    the designation ``(e)'' after the references to ``Sec. 301.6109-2'' and 
    ``(26 CFR 301.6109-2)'' and adding in its place the designation (f);
        g. Newly redesignated paragraph (r)(3)(iv) is amended by removing 
    the reference ``Sec. 278.1(q)(2)(iv)'' and adding in its place the 
    reference ``paragraph (r)(3)(iv) of this section''; and
        h. A new paragraph (r)(4) is added.
        The revisions and additions read as follows:
    
    
    Sec. 278.1  Approval of retail food stores and wholesale food concerns.
    
    * * * * *
        (r) Use and disclosure of information provided by firms. With the 
    exception of EINs and SSNs, the contents of an initial application, or 
    other information required to be submitted by retail food stores and 
    wholesale food concerns to determine continued eligibility, such as 
    ownership information and sales and redemption data, may be disclosed 
    to and used by Federal and State law enforcement and investigative 
    agencies for the purpose of administering or enforcing the Food Stamp 
    Act or any other Federal or State law, and the regulations issued under 
    the Food Stamp Act or such other law. Such disclosure and use shall 
    also include companies or individuals under contract for the operation 
    by, or on behalf of FCS to accomplish an FCS function. Such purposes 
    include the audit and examination of such information by the 
    Comptroller General of the United States authorized by any other 
    provision of law. Any person who publishes, divulges, discloses, or 
    makes known in any manner or to any extent not authorized by Federal 
    law or regulations any information obtained under this paragraph shall 
    be fined not more than $1,000 or imprisoned not more than 1 year, or 
    both. Safeguards with respect to employee identification numbers (EINs) 
    are contained in paragraph (r)(2) of this section. Safeguards with 
    respect to Social Security numbers (SSNs) are contained in paragraph 
    (r)(3) of this section.
        (1) Criteria for requesting information. FCS shall determine what 
    information can be disclosed and which government
    
    [[Page 68122]]
    
    agencies have access to that information based on the following 
    criteria:
        (i) Federal and State law enforcement or investigative agencies or 
    instrumentalities administering or enforcing specified Federal and 
    State laws, or regulations issued under those laws, have access to 
    certain information maintained by FCS. Such agencies or 
    instrumentalities must have among their responsibilities the 
    enforcement of law or the investigation of suspected violations of law. 
    However, only certain Federal entities have access to information 
    involving SSNs and EINs in accordance with paragraph (r)(1)(ii) of this 
    section;
        (ii) Except for SSNs and EINs, information provided to FCS by 
    applicants and authorized firms participating in the FSP may be 
    disclosed and used by qualifying Federal and State entities in 
    accordance with paragraph (r)(1)(i) of this section. The disclosure of 
    SSNs and EINs is limited only to qualifying Federal agencies or 
    instrumentalities which otherwise have access to SSNs and EINs based on 
    law and routine use. Release of information under this paragraph shall 
    be limited to information relevant to the administration or enforcement 
    of the specified laws and regulations, as determined by FCS;
        (iii) Requests for information must be submitted in writing, 
    including electronic communication, and must clearly indicate the 
    specific provision of law or regulations which would be administered or 
    enforced by access to requested information, and the relevance of the 
    information to those purposes. If a formal agreement exists between FCS 
    and another agency or instrumentality, individual written requests may 
    be unnecessary. FCS may request additional information if needed to 
    clarify a request;
        (iv) Disclosure by FCS is limited to: Information about applicant 
    stores and concerns with applications on file; information about 
    authorized stores participating in the FSP; and information about 
    unauthorized entities or individuals illegally accepting or redeeming 
    food stamps;
        (v) Requests for information disclosure by FCS may involve a 
    specific store or concern, or some or all stores and concerns covered 
    by paragraph (r)(1)(iv) of this section. In addition, FCS may sign 
    agreements allowing certain government entities direct access to 
    appropriate FCS data, with access to EINs and SSNs limited only to 
    other Federal agencies and instrumentalities that otherwise have access 
    to such numbers.
        (2) Employer identification numbers. (i) The Department may have 
    access to the EINs obtained pursuant to paragraph (b)(5) of this 
    section for the purpose of establishing and maintaining a list of the 
    names and EINs of the stores and concerns for use in determining those 
    applicants who previously have been sanctioned or convicted under 
    sections 12 and 15 of the Food Stamp Act of 1977, as amended, (7 U.S.C. 
    2021 or 2024). The Department also may share EINs with other Federal 
    agencies and instrumentalities that otherwise have access to EINs if 
    the Department determines that such sharing would assist in verifying 
    and matching such information against information maintained by such 
    other agency or instrumentality. Any such information shared pursuant 
    to this paragraph may be used by the Department or such other agency or 
    instrumentality for the purpose of effective administration and 
    enforcement of the Food Stamp Act of 1977, as amended, or for the 
    purpose of investigating violations of other Federal laws or enforcing 
    such laws. See Treas. Reg. Sec. 301.6109-2 (b) and (c) (26 CFR 
    301.6109-2 (b) and (c)).
        (ii) The only persons permitted access to EINs obtained pursuant to 
    paragraph (b) of this section are officers and employees of the United 
    States, who otherwise have access and whose duties or responsibilities 
    require access to the EINs for the administration or enforcement of the 
    Food Stamp Act of 1977, as amended, or for the purpose of investigating 
    violations of other Federal laws or enforcing such laws. See Treas. 
    Reg. Sec. 301.6109-2(d)(1) (26 CFR 301.6109-2(d)(1)).
    * * * * *
        (3) Social Security numbers. (i) The Department may have access to 
    SSNs obtained pursuant to paragraph (b)(5) of this section for the 
    purpose of establishing and maintaining a list of names and SSNs of 
    stores and concerns for use in determining those applicants who 
    previously have been sanctioned or convicted under section 12 or 15 of 
    the Food Stamp Act of 1977, as amended, (7 U.S.C. 2021 or 2024). The 
    Department may use this determination of sanctions and convictions in 
    administering sections 12 and 15 of the Food Stamp Act of 1977, as 
    amended, (7 U.S.C. 2018, 2021). The Department also may share SSNs with 
    other Federal agencies and instrumentalities if the Department 
    determines that such sharing would assist in verifying and matching 
    such information against information maintained by the Department or 
    such other agency or instrumentality. Any such information shared 
    pursuant to this paragraph shall be used for the purpose of effective 
    administration and enforcement of the Food Stamp Act of 1977, as 
    amended, or for the purpose of investigating violations of other 
    Federal laws or enforcing such laws.
        (ii) The only persons permitted access to SSNs obtained pursuant to 
    paragraph (b) of this section are officers and employees of the United 
    States, who otherwise have access, and whose duties or responsibilities 
    require access to the SSNs for the administration or enforcement of the 
    Food Stamp Act of 1977, as amended, or for the purpose of investigating 
    violations of other Federal laws or enforcing such laws. Such access 
    shall also include companies or individuals under contract for the 
    operation by, or on behalf of FCS to accomplish an FCS function.
    * * * * *
        (4) FCS initiated matches. Under the restrictions noted in 
    paragraph (r) of this section, FCS will periodically initiate cross 
    matches of retailer data with other Federal and State agencies' files 
    for the purpose of verifying information provided by applicant and 
    participating firms, and for the purposes of administering and 
    enforcing other Federal or State laws. Such matches could involve all 
    firms participating after implementation for the purpose of verifying 
    information such as, but not limited to, SSNs and retail sales data.
    * * * * *
        3. In Sec. 278.9, a new paragraph (l) 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.
    
    * * * * *
        (l) Amendment No. 335. Expanded authority to use and disclose 
    information about firms participating in the FSP under CFR 278.1(r) for 
    currently authorized firms is effective and will be implemented 
    beginning February 25, 1997 but not before 60-days after the date of 
    notices to such firms, notifying them of the changes. The only 
    exception to the above is that such disclosure of information shall not 
    apply to firms that are withdrawn or are disqualified from FSP 
    participation prior to implementation, unless such firms participate in 
    the FSP at a future date subsequent to the implementation date.
    
        Dated: December 18, 1996.
    William E. Ludwig,
    Administrator, Food and Consumer Service.
    [FR Doc. 96-32998 Filed 12-26-96; 8:45 am]
    BILLING CODE 3410-30-U
    
    
    

Document Information

Effective Date:
2/25/1997
Published:
12/27/1996
Department:
Food and Consumer Service
Entry Type:
Rule
Action:
Final rule.
Document Number:
96-32998
Dates:
Provisions in this rule are effective and will be implemented beginning February 25, 1997.
Pages:
68119-68122 (4 pages)
RINs:
0584-AC00
PDF File:
96-32998.pdf
CFR: (2)
7 CFR 278.1
7 CFR 278.9