[Federal Register Volume 62, Number 57 (Tuesday, March 25, 1997)]
[Notices]
[Pages 14110-14112]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-7453]
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DEPARTMENT OF AGRICULTURE
Food Stamp Program, Regulatory Review: Food Stamp Electronic
Benefit Transfer (EBT) Systems--Interoperability
AGENCY: Food and Consumer Service, USDA.
ACTION: Notice: Request for Information.
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SUMMARY: The Department is reviewing policy and seeking information
related to interoperable food stamp EBT systems. In particular, the
Department is asking for information on the costs and transaction fees
that are now or may in the future be associated with food stamp EBT
interoperability, as well as any
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additional information that should be considered within the scope of
this review.
DATES: Comments must be received on or before May 27, 1997 to be
assured of consideration.
ADDRESSES: Comments should be submitted to Jeffrey N. Cohen, Chief,
Electronic Benefit Transfer Branch, Benefit Redemption Division, Food
and Consumer Service, USDA, Room 718, 3101 Park Center Drive,
Alexandria, Virginia 22302. Comments may also be datafaxed to the
attention of Mr. Cohen at (703) 605-0232. All written comments will be
open for public inspection at the office of the Food and Consumer
Service during regular business hours (8:30 a.m. to 5 p.m., Monday
through Friday) at the above indicated address.
FOR FURTHER INFORMATION CONTACT: Questions regarding this solicitation
for comments should be addressed to Mr. Cohen at the above address or
by telephone at (703) 305-2517.
SUPPLEMENTARY INFORMATION:
Executive Order 12866
This Notice has been reviewed under Executive Order 12866 and has
been classified not major. This Notice will not have an annual effect
of $100 million or more, nor will it cause a major increase in costs or
prices for consumer, individual industries, Federal, State or local
government agencies, or geographic regions. This notice will not have
significant adverse effects on competition, employment, investment,
productivity, innovation, or on the ability of U.S.-based enterprise to
compete with foreign-based enterprises in domestic or export markets.
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 in 7 CFR 3015, Subpart V and related Notice (48 FR 29115), 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 is not a rule as defined by the Regulatory Flexibility
Act of 1980 (5 U.S.C. 601-612) and thus is exempt from the provisions
of the Act.
Paperwork Reduction Act
This Notice does not contain reporting or recordkeeping
requirements subject to approval by the Office of Management and Budget
(OMB) under the Paperwork Reduction Act of 1980 (44 U.S.C. 3507).
Executive Order 12988
This Notice has been reviewed under Executive Order 12988, Civil
Justice Reform and found to be exempt from its provisions.
Background
The Food and Consumer Service has actively supported the
implementation of Electronic Benefit Transfer (EBT) systems by State
agencies to issue and redeem food stamp benefits. To date, 18 State
agencies operate food stamp EBT systems (along with other cash
programs), eight of which are statewide operations. During the next two
years, it is estimated that more than half the States will be operating
food stamp EBT systems. Recently passed legislation mandates
implementation of EBT systems for the Food Stamp Program by the year
2002.
As defined in the Food Stamp EBT regulations at 7 CFR 274.12, State
agencies are required to provide the necessary point-of-sale (POS)
equipment, telecommunications and other support to each authorized food
stamp retailer at no cost. This State-provided POS equipment may be
used solely for the Food Stamp Program and other welfare programs. When
a retailer chooses to use its own commercial POS equipment, the State
agency (or their EBT contractor) must be prepared to interface with
that store's equipment. Any costs associated with the interface may be
negotiated between the State and the retailers.
The Food Stamp EBT regulations also require State agencies to
assess food stamp household access needs and equip those food retailers
across project borders that are necessary for household access to their
food stamp benefits. The State agencies have the flexibility to
determine the access criteria. For other non-State retailers who desire
access, the State agencies are encouraged to negotiate with these
retailers to allow them to participate in their system. The specific
terms for participation have differed across States and may involve
leasing any necessary POS equipment, equipment purchases, and/or
payment of transaction fees. All terms are negotiated with each
retailer. These current retailer interoperability policies are designed
to strike a balance between ensuring adequate retailer and recipient
access, on one hand, and maximizing state flexibility and minimizing
EBT costs on the other.
Extending access beyond the immediate borders of the States where
current systems operate is only beginning to be addressed by States.
The States of Texas and New Mexico, for example, have developed the
capability to exchange transactions with one another. As more State
agencies implement EBT systems, access to benefits beyond the immediate
borders of a State is becoming an important issue. Food retailers that
operate stores in several States have expressed a desire to have
interoperability much like the coupon system. They argue that such
interoperability would provide greater access to their goods.
In part to facilitate interoperability and address retailer
concerns regarding standardization of EBT systems, EBT Operating Rules
have been developed by State agencies, food retailers, financial
institutions, networks and others under the auspices of the National
Automated Clearing House Association (NACHA). NACHA established an EBT
Council to complete these national Operating Rules and have adopted
them under the QUEST service mark. The QUEST Operating Rules define the
responsibilities of retailers, financial institutions, networks and
commercial third party providers in an interoperable EBT environment.
By definition, these rules require retailers participating in the QUEST
system to provide access to all QUEST cards and require States to
arrange for their cards to be accessible at any POS or ATM terminal
that displays the QUEST service mark. Several State agencies have
elected to require use of the QUEST Operating Rules by their EBT
contractor.
Recent proposals by EBT contractors have offered to meet the State
agencies' requirements for QUEST interoperability through an EBT
gateway or switch. The gateway would have the capability of switching a
food stamp purchase or credit transaction to the correct EBT processor
for authorization. Third party processors servicing food retailers for
commercial debit or credit could connect to this single point, the
gateway, and thus provide interoperability to their retailer customers
for any food stamp card presented at the checkout lane. Any store,
regardless of its location or the State card being presented, would
thereby be able to accept any QUEST transaction. However, the providers
of this service argue that this capability comes at a cost and have
proposed to charge a gateway fee to retailers or their service
providers for this switching service. The precise fee amount or who
will pay this fee is still being discussed by the affected parties. The
appropriateness of these fees is still being questioned as well. The
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Department has been requested by both State agencies and retailers to
establish policy in this area.
Requested Information
In light of the discussions that continue to take place, the
Department is interested in obtaining information. Interoperability is
recognized as being good for recipients and good for retailers, but it
would appear to raise costs. We want to learn more about these costs:
the nature of these costs and to what degree they will appear. Towards
that end, the Department wishes to obtain input regarding the
anticipated frequency of interoperable food stamp transactions, the
relative costs to provide interoperability, and who might best bear the
costs. More formally stated:
(1) How many interstate transactions are expected to occur and how
often will they occur?
(2) Should interoperability between State EBT systems be required?
(3) What are the interstate costs and the factors that make up
those costs?
Comments are encouraged on these specific issues proposed for
consideration as well as any additional issues that should be
considered within the scope of this review. Comments will assist the
Department in determining whether policy changes are appropriate.
Dated: March 11, 1997.
William E. Ludwig,
Administrator, Food and Consumer Service.
[FR Doc. 97-7453 Filed 3-24-97; 8:45 am]
BILLING CODE 3410-30-U
