Supplemental Nutrition Assistance Program: Trafficking Controls and Fraud Investigations, 51649-51658 [2013-20245]
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51649
Rules and Regulations
Federal Register
Vol. 78, No. 162
Wednesday, August 21, 2013
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. Prices of
new books are listed in the first FEDERAL
REGISTER issue of each week.
DEPARTMENT OF AGRICULTURE
Food and Nutrition Service
7 CFR Parts 271 and 274
[FNS–2012–0028]
RIN 0584–AE26
Supplemental Nutrition Assistance
Program: Trafficking Controls and
Fraud Investigations
Food and Nutrition Service
(FNS), USDA.
ACTION: Final rule, Interim Final Rule.
AGENCY:
The Food and Nutrition
Service (FNS) is issuing a final rule to
amend Supplemental Nutrition
Assistance Program (SNAP or Program)
regulations to allow State agencies to
deny a request for a replacement card
until contact is made by the household
with the State agency, if the requests for
replacement cards are determined to be
excessive. State agencies which elect to
exercise this authority will be required
to protect vulnerable persons, such as
individuals with disabilities, homeless
individuals or the elderly, who may
repeatedly lose their Electronic Benefit
Transfer (EBT) cards but are not
committing fraud.
FNS is also changing the EBT card
replacement timeframes in the same
section to require State agencies to make
replacement cards available for pick up
or to place the card in the mail within
two business days following notice by
the household to the State agency that
the card has been lost or stolen. FNS is
further amending its regulations to
define the term ‘‘trafficking’’ to include
the attempt to buy or sell SNAP benefits
in cases where an individual makes the
offer to sell SNAP benefits and/or EBT
card online or in person.
Finally, FNS is issuing an interim
final rule (with a request for additional
comment) that requires State agencies to
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SUMMARY:
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monitor EBT card replacement requests
and send notices to those clients who
have requested four cards within a 12month period. The State agency shall be
exempt from sending this Excessive
Replacement Card Notice if it adopts the
card withholding option in accordance
with this final rule and sends the
requisite Withhold Replacement Card
Warning Notice on the 4th replacement
card request.
DATES: Effective dates: This final rule is
effective November 19, 2013. The
addition of § 274.6(b)(6) is being issued
as an interim final rule and is effective
December 19, 2013.
Comment date: FNS will consider
comments from the public on the
addition of § 274.6. Comments must be
received at one of the addresses
provided below on or before October 21,
2013.
ADDRESSES: The Food and Nutrition
Service, USDA, invites interested
persons to submit comments on the
interim rule provision § 274.6(b)(6).
Comments may be submitted by one of
the following methods:
• Federal e-Rulemaking Portal: Go to
https://www.regulations.gov. Preferred
method; follow the online instructions
for submitting comments on docket
2012–0028.
• Fax: Submit comments by facsimile
transmission to: Jane Duffield, Chief,
State Administration Branch, Fax
number 703–305–0928.
• Mail: Comments should be
addressed to Jane Duffield, State
Administration Branch, 3101 Park
Center Drive, Room 818, Alexandria, VA
22302.
• Hand Delivery or Courier: Deliver
comments to Jane Duffield, State
Administration Branch, 3101 Park
Center Drive, Alexandria, VA 22302,
Room 818, Monday–Friday, 8:30 a.m.–
5:00 p.m.
All comments submitted in response
to the interim rule provision 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
comments publicly available on the
Internet via https://www.regulations.gov.
FOR FURTHER INFORMATION CONTACT: Jane
Duffield, Chief, State Administration
Branch, Food and Nutrition Service,
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USDA, 3101 Park Center Drive,
Alexandria, Virginia, 22302. Ms.
Duffield may be reached by telephone at
703–605–4385.
SUPPLEMENTARY INFORMATION:
Background
In this final rule, FNS is amending the
SNAP regulations at 7 CFR 274.6, to
give State agencies an option for
handling requests for multiple
replacement cards. Current regulations
do not allow State agencies to require
clients requesting multiple replacement
cards to contact the agency and provide
an explanation before a new card is
issued, even though such requests may
indicate fraudulent activity. Under this
rule, State agencies may choose to
withhold the benefit card when the
client has requested an excessive
number of replacements, until the client
makes contact with the State agency to
provide an explanation for the request.
State agencies taking this option would
be expected to establish a threshold
beyond which the individual must make
contact. That threshold may not be
fewer than four cards in a 12-month
period prior to the request, except in
limited circumstances.
Although the intent of the rule is not
to systematically affect clients
requesting fewer than four cards in a 12month period, FNS recognizes that State
agencies may obtain additional evidence
indicating that a household is suspected
of potential fraud that may warrant
initiating the process sooner. For
example, if a State agency receives a
complaint that an individual sold their
EBT card to another party, the State
agency shall initiate an investigation
and may promptly provide a notice to
the client, requiring the individual or
household to contact the State agency to
provide an explanation prior to
receiving a subsequent replacement
card.
FNS established the minimum
threshold of four cards within a 12month period on the basis of an analysis
of SNAP EBT electronic transaction
records. FNS found that shopping
behavior appeared consistent when
compared to the average until a
household requested its fourth
replacement card. Transaction activity
indicates that, after the fourth
replacement card, a household’s
shopping behavior is three times more
likely to be flagged as potential
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trafficking by FNS’ fraud detection
system. Trafficking is the exchange of
benefits for cash or other consideration,
as defined at 7 CFR 271.2, and is the
most egregious Program violation.
Furthermore, FNS found during the
period of January 2012 through
December 2012, approximately 98
percent of participating households had
three or fewer EBT cards, with most (79
percent) utilizing only one card
throughout the year. This further
reinforces that most requests for
replacement cards are legitimate and
when they occur, it is most likely to
replace a lost or damaged card. Since so
few households request four or more
replacement cards and those that do
have such markedly different
transaction activity as to indicate a
higher likelihood of potential
trafficking, FNS chose to define a
minimum threshold, and to consider
requests beyond four cards within a 12month period to be considered
excessive and a potential indicator of
trafficking.
Under this option, the State agency
must notify the household when the
threshold for excessive card
replacements is reached, as determined
by the State agency, and indicate that if
a member of the household requests
another card replacement, the State
agency will withhold the card until
contact is made. The State agency
would be expected to contact the fraud
investigation unit regarding clients who
contact the agency but do not provide
an appropriate explanation. The State
agency must issue a replacement card
during an ongoing investigation. In all
cases, States would be required to
protect vulnerable persons who lose
EBT cards but are not committing fraud.
FNS is further amending 7 CFR 274.6,
to change the EBT card replacement
timeframes, requiring State agencies to
make replacement cards available for
pick up or to place the card in the mail
within two business days following
notice by the client that the card has
been lost, stolen, or damaged. Currently,
State agencies must ensure clients
receive replacement EBT cards within
two business days (or five business days
if using a centralized mail issuance
system) after the client notifies the State
agency that the card has been lost or
stolen. This change places the
requirement on the State agency
issuance end instead of the on receiving
end of the replacement card process,
and alleviates State agencies’
responsibility for mail delays beyond
their control, while allowing FNS to
hold State agencies more accountable
for delays within their control.
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Additionally, this final rule amends
the definition of trafficking to include
actions that clearly express the attempt
to sell or buy SNAP benefits or EBT
cards in person or online through Web
sites and social media.
Finally, FNS is issuing an interim
final rule provision at 7 CFR 274.6(b)(6),
that requires State agencies to monitor
card replacement requests and issue
Excessive Replacement Card Notices to
clients who have requested four card
replacements in a 12-month period. The
State agency shall be exempt from
sending this notice if it chooses to
exercise the card withholding option, in
accordance with 7 CFR 274.6(b)(5), and
sends the Withhold Replacement Card
Warning Notice upon the household’s
fourth card replacement request,
indicating that the State agency will
withhold a fifth replacement card until
the household contacts the State agency.
FNS’ decision to issue the interim
final rule is based on a comment
received in response to the proposed
rule. The commenter suggested that the
Department propose a method for
handling multiple card requests similar
to that initiated by North Carolina and
recently implemented by the majority of
States. The commenter added that the
process has proven to be efficient and
cost effective for State agencies. FNS
agrees with this comment and is,
therefore, amending the regulations in
the same section, requiring States to
monitor and send warning notices to
clients who request four card
replacements in a 12-month period.
Based on current data, the number of
clients requesting five or more cards has
decreased nationally since many States
adopted this practice. Since the majority
of States currently monitor EBT card
replacement requests and subsequently
issue warning notices for four or more
requests, FNS does not believe this
provision will create a substantial
burden for States overall.
The proposed rule was published on
May 30, 2012, at 77 FR 31738, and
public comments were invited through
July 30, 2012. All comments have been
considered and adjustments have been
made to the final and interim final rule.
States administering SNAP are required
to administer the Program in accordance
with the provisions of the Act and
regulations issued pursuant to the Act,
including 7 CFR parts 271 and 274.
Failure to comply with the final rule
and the interim final rule when they
become effective would be subject to
appropriate FNS action.
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Summary of Comments and
Explanation of Revisions
Thirty-six comments to the proposed
regulations were received from various
stakeholders and are available for public
inspection online at
www.regulations.gov. In general, most
commenters supported the regulations
but not as currently written. FNS
received eight comments in full support
of the rule in its entirety. FNS received
one comment which did not offer any
comments on the contents of this rule
but focused on other areas, such as
retailer issues, which is being addressed
in other FNS rulemaking. FNS also
received comments with suggestions for
additional ways to reduce trafficking or
ways of handling EBT cards. Examples
of these suggestions include making
benefit cards larger, using neon colors,
having a photo on the card, and
charging for the cards, as much as
$50.00 from one commenter. These
comments were reviewed and
considered but will not be included in
this final rulemaking as they were not
directly related to the proposal for a
State option to withhold the card upon
excessive card replacement requests
until the household makes contact. FNS
received three comments which stated
that allowing four replacements is too
many and that FNS is being too lenient.
This comment was considered but is not
included in the final rulemaking as FNS
utilized a statistical basis for
establishing the minimum threshold,
one that differentiates between typical
behavior and activity that is more likely
to indicate fraud, while allowing States
to initiate the process sooner if the State
is in possession of additional evidence
of trafficking.
Allow States To Withhold Replacement
Cards Until Contact Is Made With the
State Agency
Several commenters suggested that
the threshold for card replacements
should be applied to individuals, not
households, as some households
contain more than one person with a
card. These commenters further
suggested that EBT cards that are never
used should not count against the total
for replacements. They pointed out that
some clients may not use an EBT card
because they request a card be mailed
but then go to the office and pick up
another card before receiving the card in
the mail. Another commenter suggested
that many first-time users do not
understand how to use the card and a
grace period in the beginning would
benefit those clients. Multiple
commenters felt that individuals must
be provided notice before reaching the
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threshold, as well as receiving a notice
once they have exceeded the threshold.
Two commenters stated the notice
should clarify a reasonable timeframe
for the individual to respond. Multiple
commenters stated that the notice to the
individual must contain contact
information for individuals who would
like to get more information or need
help with their card. Some commenters
further noted that the notice should
contain information about what it
means to be referred to the fraud unit
and to meet with a fraud investigator.
One commenter stated the rule is not
clear that the contact can be made by
phone or in person, and that it should
be made clear that this is the client’s
choice. FNS received two comments
regarding limited English proficiency,
which suggested that notices must be
sent in the individual’s chosen
language.
The terms ‘‘individual’’ and
‘‘household’’ are both used in this rule
and serve different purposes. FNS does
not intend for this rule to require all
members of the household make contact
with the State agency before a
replacement card can be issued.
However, the household must receive
the proper notification when the card
will be withheld. The household must
be aware of why the card is being
withheld and understand what they are
required to do in order to receive their
card replacement. The term
‘‘individual’’ is used regarding the
required contact by an individual
member of the household. Further, only
an individual who has been found
guilty through an administrative or
court hearing may be disqualified from
SNAP, not the entire household, per
regulations at 7 CFR 273.16(b)(11). FNS
will retain in the final rule that all card
replacement requests will count towards
the threshold, regardless of the reason
for the request.
Some clients may not understand the
State’s process for how to request
replacement cards or how long to expect
the card replacement to take. For
example, they may not understand that
a replacement card is not needed every
time the benefits are spent down or that
once a card is requested, it may take a
few days to receive the replacement.
This may create situations where clients
request additional cards while they are
waiting for a replacement card to arrive.
In such cases, the State would be able
to determine that there is no suspicious
activity and thus no reason to refer the
case for a fraud investigation. In these
situations, States have an opportunity to
follow up with these cases and educate
the clients about the appropriate
replacement card process or otherwise
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intercede, such as appointing an
authorized representative to help the
household manage the EBT card.
FNS believes that it is sufficient to
notify the client once when they have
reached the excessive card replacement
threshold, prior to the State agency
withholding the EBT card, and then
once they exceed the threshold, at the
times the State agency withholds the
EBT card. The final rule requires that
States implementing the card
withholding option must send notices to
the most recent address on file for all
households who have reached or
exceeded the excessive card
replacement threshold. The State agency
may only request an explanation,
provide a 5th replacement card, and if
deemed appropriate, refer the case for
investigation, after the State agency has
sent the written notice to the household
that the State agency is withholding the
household’s EBT card. If the State
agency has an over-the counter issuance
system in place, and the client comes in
to request a 5th replacement card, the
State agency must document that the
client has first received the written
warning notice to withhold the 5th
replacement card prior to requesting an
explanation from the client, replacing
the card, and if deemed appropriate,
referring the case for investigation.
States are not required to include a
timeframe in the notice because the
State can continue to hold the card until
the client contacts the State agency. It is
up to the client to make the contact in
order to receive their replacement card.
If the client never makes contact with
the agency, the card may be held
indefinitely, likely until the client is up
for recertification or benefits are
expunged according to FNS regulations
at 7 CFR 274.2(h).
FNS has also clarified that the notices
include information about how the
client is to contact the State agency,
including a telephone number. It is up
to the State agency to determine how
the contact should be made, such as in
person or by phone, and the State
agency must take into consideration
those with special circumstances and
make accommodations for compliance.
FNS feels that notice requirements are
adequate for their intended purpose and
the notice does not require a statement
about what it means to be referred for
a fraud investigation. Not all households
receiving these notices will be referred
for an investigation; some are likely
candidates for receiving educational
information regarding the proper use of
their card. State agencies should
provide information on proper EBT card
use on the notices. FNS will retain in
the final rule the requirement that the
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State ensures that notices meet language
requirements described at 7 CFR
272.4(b).
FNS received several comments
suggesting that any explanation
provided by the individual that is not
evidence of fraud is a satisfactory
explanation. Commenters stated that
FNS should make clear that the State
may only initiate an investigation for
fraud when the explanation provides
evidence of fraud. One commenter
stated that the language is too vague and
permissive, and allows eligibility
workers to interpret many legitimate
explanations as suspicious. Another
commenter points to 7 CFR 273.16(a),
which states that the disqualification or
prosecution process cannot be initiated
unless the State agency has sufficient
documentary evidence to substantiate
fraud.
The final regulation does not specify
which client explanations for needing
card replacements are suspicious and
which are satisfactory. FNS requires
States to refer individuals for fraud
investigations and conduct
investigations on all cases that the State
agency has determined suspicious. The
State is not required to have evidence in
order to conduct an investigation. The
purpose of the investigative process is
for the State agency to determine if
fraudulent behavior occurred, and to
gather evidence in order to pursue a
disqualification and/or criminal charges
where appropriate. If the State cannot
gather enough evidence, then the case
would not be taken through the
administrative disqualification hearing
(ADH) process or prosecuted, and no
disqualification penalty will be
assigned. If the State has gathered
enough evidence of an Intentional
Program Violation (IPV), the case will be
heard by the appropriate authority, who
will make a determination as to whether
the individual committed an IPV. 7 CFR
273.16(a) does not preclude a State
agency from conducting an investigation
to collect evidence, rather it specifies
that the case may not be taken to an
ADH or prosecuted without sufficient
documentary evidence—which is
gathered during the investigation.
One commenter stated that, if the
State provides a replacement card to a
household that has made contact but
has not provided an explanation for the
need to replace the card, the State has
rewarded the household for noncooperation. Another commenter stated
that clients will not cooperate or show
up because there is no reason to do so,
and FNS should revise the rule to allow
the State agency to close the case if the
recipient fails to keep the interview
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appointment or refuses to cooperate
during investigations.
FNS does not view the release of the
EBT replacement card upon contact
with the State agency as rewarding the
household for failing to cooperate. This
process provides the State agency an
opportunity to address the issue with
the client to determine if the behavior
may be indicative of fraud. In cases
where the client does not provide a
reasonable explanation for the requests,
the State agency must refer the case to
the State’s fraud investigation unit. This
final rule is intended to provide a tool
for States to use as a means of assessing
these cases of multiple card
replacements. It is not intended as a
means for a State agency to terminate or
close a case.
State agencies may not terminate or
close a case where the client has not
been found guilty of an IPV through an
ADH or a court hearing. Clients have the
right to remain silent and have their
cases heard by the appropriate
authority. Until the client has been
found to have committed an IPV, the
case may not be closed. This final rule
allows the State agency to hold the card
until the household makes contact in
order to help the State agency determine
why they are requesting so many cards.
If the client refuses to cooperate by not
providing an explanation, this should be
taken into consideration and the case
must be turned over for an investigation.
However, withholding the card until
contact is made, regardless of client
cooperation, does not affect the client’s
eligibility for the Program.
One commenter stated that the rule
should ensure that States replace cards
without any undue delays, such as
lengthy waits in State agency offices,
lack of access to in-person appointments
or inability to reach someone at the
State agency by phone. FNS agrees that
the State agency must ensure they have
a process in place to handle these cases
and there is not a delay in issuing the
card when the client complies with the
requirement to contact the State agency
after reaching the excessive card
threshold for replacement cards. The
regulation has been modified to require
State agencies to mail or make the
replacement card available for pick up
within two business days after the client
contacts the State agency to provide an
explanation.
FNS received 11 comments requesting
guidance be provided for States that use
EBT cards for both SNAP and cash
assistance. One commenter expressed
concerns as some States use EBT cards
for SNAP, cash benefits and Medicaid.
The commenter stated that if the card is
also used to deliver cash aid, such as
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Temporary Assistance for Needy
Families (TANF), it cannot be withheld
or delayed unless the cash assistance
program provides for this. FNS
recognizes the challenge where EBT
cards are used for multiple programs
and reiterates that the process for
withholding the card in these cases is a
State agency’s option and not a
requirement. FNS has conferred with
the United States Department of Health
and Human Services (HHS), which has
responsibility for the TANF Program,
and determined there are no TANF rules
preventing States from invoking this
option. FNS urges State agencies to
work with other assistance programs
delivered on the State’s EBT card, such
as Medicaid, to determine solutions that
may address this issue. FNS is willing
to assist States in this process.
FNS received four comments
regarding the increased workload issues,
costliness and requirement of massive
system changes to implement this rule.
These comments expressed that this
option will create a lot of work for State
agencies, and the agencies will not get
much in return for the extra effort. State
agencies may choose not to implement
this process because they decide it is
not a good use of limited State
resources.
One commenter is concerned with
implementing this rule timely, and the
ability or willingness of EBT contractors
to make the necessary changes for
reports on card replacements. This
section of the final rule, allowing State
agencies to withhold the EBT card until
contact is made, is an agency option
designed to provide States with a tool to
assist in identifying and disqualifying
those who are committing IPVs against
SNAP, as well as to educate those who
do not understand how to properly use
their EBT card. FNS is not requiring
State agencies to implement this option
and therefore has no requirement for
agencies to comply in a timely manner.
FNS encourages State agencies that
want to exercise this option to meet
with their EBT processors to discuss
which reports will be useful and
identify their needs so that the EBT
processors can determine the best way
to support this process. Identifying and
disqualifying anyone who commits an
IPV by requesting multiple card
replacements and trafficking SNAP
benefits sends a strong message that
abuse of the Program will not be
tolerated.
FNS received one comment stating
that the rule should direct State
agencies to inquire whether an
individual who repeatedly requests card
replacements needs some
accommodation and to investigate the
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feasibility of allowing restrictions on
recipients with disabilities to only use
their EBT cards in certain stores. FNS
received five comments that the rule
should provide much more detail about
what the State agency should do to
protect victims of crime, the homeless
and persons with disabilities. One
commenter was concerned that a State
agency may require only in-person
meetings to get information about
excessive card replacements, thus
placing severe hardship on the elderly
and disabled. Another commenter was
concerned about the noticing
requirements to the homeless
population, making this difficult and
impractical to apply equitably to them.
Another commenter stated that the
homeless should not be excluded from
providing an explanation for excessive
requests for card replacements. These
comments suggested that FNS should
provide guidance on specific steps to
protect vulnerable populations and the
definition of vulnerable population
should be expanded to include other
groups, such as illiterate populations
and victims of domestic violence.
FNS expects that State agencies will
work to ensure no undue hardships are
placed on the elderly or disabled and
the accommodations State agencies
typically make available to comply with
federal regulations will also be made
available for them if a State agency
invokes this option. The Agency thinks
the rule is sufficiently clear in this
regard. FNS does not have the legal
authority to restrict or limit card usage
to certain authorized retailers. This
option to withhold the card is a tool for
State agencies to monitor the integrity of
the Program and FNS expects State
agencies will follow all existing
requirements and regulations if they
choose to exercise this option.
The State agency should make every
effort to reach those clients who are
known to be homeless and to take that
circumstance into consideration when
these clients reach their card threshold.
For example, if a State agency suspects
that the client is in a vulnerable status
group such as the elderly, disabled, or
homeless and needs additional
accommodation, the State agency may
choose to contact the client for purposes
of collecting information for the card
replacement option; however, the State
agency must still send a warning notice
to the most recent address on file prior
to requesting an explanation and
providing the 5th EBT card
replacement. Some State agencies also
allow clients who do not list an address
to pick up their notices in the local
office. State agencies may opt to give
written notice to homeless clients and
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discuss excessive card replacements
when homeless clients come into the
State agency office to request a card that
exceeds the threshold. Those clients
which are part of the vulnerable
populations are not excluded from
providing an explanation but may need
accommodations to assist them in
providing the explanation.
State agencies should take the
household’s circumstances into account
when considering their explanation for
needing multiple replacements. The
regulation, as written, encompasses
other vulnerable populations, such as
those who are illiterate, those with
language barriers and victims of
domestic violence, which allows for
State agencies to make a determination
as they become aware of a client’s
circumstance. FNS has removed
references that suggest that contact must
be made by phone or in-person. While
phone and in-person contact is
acceptable, this will provide State
agencies the flexibility to offer other
contact options to those with special
circumstances.
Several comments asked for FNS to
clarify what sufficient additional
evidence they would need to provide to
warrant withholding a card sooner than
the threshold. A commenter also stated
that the evidence be specific to the
individual, rather than a characteristic
that they may share with others, such as
residency or the food store where they
shop. There are many circumstances a
State may become aware of that would
make them want to take action sooner.
State agencies may in fact receive
evidence that direct them to a particular
household based on activity by one
household member or transactions
conducted at a store under suspicion of
trafficking. A State agency may receive
a complaint indicating that a client is
selling their card for cash and then
requesting a replacement card. Or a
State agency may flag a client based on
suspicious transaction activity that is
indicative of trafficking. Some clients
may already be under investigation and
the State agency may already have
additional evidence in their case when
the client makes another card request.
These are examples of cases where the
State agency has additional evidence
that may warrant noticing the client
sooner than the determined threshold.
By determining four cards within a 12month period as excessive, FNS is
providing State agencies with its
expectation of how to respond
systematically. The minimum threshold
is not intended to preclude a State
agency from initiating the process
sooner for individual households if they
have additional evidence that warrants
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doing so, to ensure that potential
trafficking situations are identified and
acted upon quickly.
FNS received four comments that
interrupting the household’s access to
benefits by delaying or denying a
replacement card would deny the
household its right to a
predetermination hearing under 7 CFR
273.15, section 11(e)(10) of the Act, and
due process clauses as interpreted by
Goldberg v. Kelly, 397 US 254 (1970).
Another commenter stated that, since
these are adverse actions, if the client
does not contact the State agency, the
regulation must provide that the notice
include information about fair hearing
rights.
FNS does not agree that the rule fails
to provide due process. FNS currently
allows State agencies the choice to make
cards available to clients either by
coming to the office to pick them up or
by mail. While most State agencies use
a central mail process to issue cards,
there are agencies which only use the
over-the-counter method for issuing
cards to clients. Other State agencies use
the over-the-counter method but will
mail cards in special circumstances.
This has always been a State agency’s
option and FNS does not consider the
over-the-counter method as interrupting
a household’s access to benefits or
violating due process requirements. The
cards and benefits are available for the
client once the card is made available
pursuant to current regulations at 7 CFR
274.6(b). Similarly, when the State
agency chooses to withhold the card
until the client makes contact, those
agencies must make the card available,
pursuant to 7 CFR 274.6(b) in this final
rule, to the client once the client makes
the required contact. Furthermore, as
stated earlier, eligibility remains
unaffected by this process. The benefits
the household has been determined
eligible to receive are made available on
the EBT card as long as the household
remains eligible and the client has
access to the card by making the
required contact with the State agency.
Therefore, because the withholding of a
replacement card in accordance with
this final rule is not an adverse action,
Section 11(e)(10) of the Act and 7 CFR
273.15 do not apply.
Commenters also stated that there is
the possibility of coercion because the
threat of delay of benefits forces
someone to incriminate themselves.
FNS does not believe that this would be
coercion because the client is not
required to provide an explanation in
order to receive their card. The card will
be given to the client regardless of their
willingness to answer questions or
otherwise cooperate beyond making
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51653
contact. State agencies are expected to
clearly explain in their notice to clients
that clients must contact the State
agency but that they are not required to
provide an explanation in order to
receive a replacement card. Notices to
clients should explain that the process
is being used to yield useful, accurate
information and will not be used in a
way that might harass or coerce clients
into making false statements.
FNS received one comment stating
that the commenter was unclear how
withholding the card improves
trafficking prevention if FNS has the
ability to track EBT data. By
withholding the card, FNS believes it
provides the State agency with the
necessary tools to obtain sufficient
information from a household in order
to determine the nature of the excessive
card replacement requests. This
information allows the State agency to
better determine whether the request is
legitimate and indicates a need to
educate the household on how to better
manage their EBT card, or that an
explanation is suspicious and warrants
a referral for investigation.
Another commenter asked that further
clarification should be provided
concerning the analysis used to
determine the four card threshold. FNS
determined the minimum threshold of
four cards within a 12-month period
based on the fact that 98 percent of
households use three or fewer cards
within a year, with most (79 percent)
using only one card.
Also, for those that exceed the fourth
replacement card, their transaction
activity is three times more likely to be
flagged as trafficking by FNS’ fraud
detection system.
FNS received one comment that the
rule is restrictive since State agencies
are unable to make contact for
subsequent replacement requests
beyond the threshold level unless the
pattern has changed. The commenter
suggests that each person is limited to
one call or visit to explain the
circumstances for the request and this
does not do much to deter fraud. If the
State agency has spoken with the client
or conducted an investigation and found
no evidence of fraud, the agency may
not continue to withhold that card.
However, the State agency should
continue to monitor additional card
requests, and if the household continues
to request additional cards and the
pattern of card activity changes to
indicate possible trafficking behavior,
the State agency may notify the
household that the State agency is
withholding the EBT card and that the
household must contact the State
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agency to provide an explanation before
receiving another card.
FNS received multiple comments
referencing the rule is too lenient and
allowing four cards is too many. As
noted above, the minimum threshold is
based on an analysis by FNS of
electronic transaction data, which
demonstrates a statistically significant
difference when a household requests a
fourth replacement card indicating that
transaction activity is three times more
likely to be flagged as potential
trafficking, compared to clients with
three or fewer replacement cards. As the
intent of the rule is to further strengthen
program integrity, FNS believes that the
threshold of four cards within a 12month period is appropriate. However,
FNS acknowledges that State agencies
may want to initiate the process sooner
if they have additional evidence that a
household is suspected of trafficking,
thus the final rule maintains this
provision.
Required Excessive Replacement Card
Notice
In new paragraph 7 CFR 274.6(b)(6),
FNS has included a requirement in this
interim rule that State agencies monitor
requests for EBT card replacements and
send a Excessive Replacement Card
Notice to clients who request four cards
in a 12-month period. If a client requests
a fifth replacement card, the State
agency shall refer the case to the State’s
fraud investigation unit, if they suspect
the client is trafficking. If the State
agency suspects the client’s lack of
understanding of how to manage an EBT
card is the reason for requesting
excessive replacement cards, no referral
for investigation is warranted and,
therefore, should not be made.
If the State agency chooses to exercise
the option to withhold the replacement
card until it is contacted by the client,
and as long as the threshold used for the
initial Withhold Replacement Card
Warning Notice is on the fourth card
replacement request, the State agency
shall be exempt from sending the
Excessive Replacement Card Notice, in
accordance with 7 CFR 274.6(b)(6)(i). If
the State agency chooses the option to
withhold the replacement card and uses
a threshold higher than the fourth card
replacement request for the initial
notice, the State agency must send the
Excessive Replacement Card Notice
upon the fourth card request in
accordance with 7 CFR 274.6(b)(6). This
interim rule provides a minimum
requirement for the contents of the
required Excessive Replacement Card
Notice. States may contact FNS for
specific examples. Paragraph 274.6(b)(6)
is being published as an interim final
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rule in order to provide the opportunity
for comment.
The decision to include paragraph
274.6(b)(6) as an interim rule is based
on a comment received on the proposed
regulation. The comment notes that FNS
has touted the North Carolina agency’s
approach to handling multiple card
replacements the State agency sends a
letter to any household requesting four
or more cards in a 12-month period and
if another request is made, refers the
case to the State’s fraud investigation
unit. The commenter added that the
model to use a letter to deter excessive
card replacements has proven to be very
effective and less burdensome for State
agencies and should have been reflected
in the proposed regulation. FNS agrees
with the commenter that the North
Carolina agency’s model is a reasonable
and simple process and is aware that the
majority of State agencies are currently
issuing notices based on this model.
FNS believes that all State agencies
should be monitoring card replacement
activity and that the requirement to
issue an Excessive Replacement Card
Notice, as set forth in this interim final
rule, along with the option to withhold
a replacement card until the client
contacts the State agency, as set forth in
the final rule, provide important tools
for State agencies to use in monitoring
and preventing trafficking of EBT cards.
Since the majority of States currently
send warning notices to households
with four or more replacement card
requests, FNS does not believe the
noticing requirement will substantially
increase the burden for State agencies
overall.
Card Replacement Timeframes
Thirteen commenters addressed the
provision prescribing a one business
day timeframe when State agencies
must make a replacement card available
for pick up or place a replacement EBT
card in the mail instead of when the
client must actually receive the EBT
card.
Some commenters believed the
proposed change is unwarranted and
would result in delaying benefits to
needy households. Other commenters
wanted FNS to require that State
agencies replace EBT cards within 7
days when mailing cards instead of
requiring that State agencies place the
card in the mail within one business
day.
Because State agencies do not have
control over the length of time it takes
the United States Postal Service (USPS)
to get replacement EBT cards into the
hands of SNAP households, FNS
believes that prescribing when States
must act on a card replacement request
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Frm 00006
Fmt 4700
Sfmt 4700
is a better approach to minimize
possible delays that are beyond the
States’ control. In the end, FNS expects
that the new provision will better
ensure that SNAP households receive
their replacement cards within a
reasonable amount of time, while also
giving FNS greater ability to hold State
agencies accountable for delays within
their control.
Another commenter felt the proposed
requirement for placing the card in the
mail within one day is too restrictive
because State agencies need more days
to investigate and verify instances of
identity theft or other possible abuses.
Another commenter felt State agencies
should be able to determine their own
timeframes for mailing or making
replacement cards available, depending
on the number of replacement cards
requested, the reason for the request,
and other factors. The commenter added
that if the replacement is questionable,
but does not prove fraud, the State
agency would then be able to extend the
timeframe to a longer period so the
household is penalized. The proposed
rule specifically provides State agencies
the opportunity for further
investigation, if there have been
multiple card replacement requests
before having to provide another card.
As a result, State agencies now have the
ability to delay a card replacement until
contact is made for an individual
household that meets the threshold for
excessive card replacements or whose
request is questionable based on
available evidence. At the same time,
FNS continues to believe clients who
have legitimately lost their card or had
it stolen must receive a replacement
card within a reasonable amount of time
to ensure they have access to benefits
necessary to meet their dietary needs.
Therefore, in an effort to take the
different perspectives into
consideration, FNS has decided to
extend the timeframe by when State
agencies must act on card replacement
requests that do not meet the criteria for
further investigation to two business
days instead of one.
Several commenters also requested
FNS specifically prohibit the use of bulk
mail, indicating that many State
agencies use bulk mail postage to reduce
costs, which results in delayed mailings
as a State agency waits to amass enough
items to reach the bulk rate minimum.
As a result, bulk mail may not be
delivered for several weeks, in contrast
to the typical delivery time of 5 days for
regular mail. Under the new provision,
State agencies must meet the required
two-day timeframe for acting on card
replacement requests. Therefore, they
cannot wait to amass enough
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replacement cards to reach the
minimum requirement for bulk rate
mailings. Furthermore, the use of first
class mail for issuing cards is already
required under 7 CFR 274.2(b).
However, FNS is convinced of the
importance of specifically requiring first
class mail when mailing replacement
cards in order to prevent excessive
delays in getting clients the access they
need to their benefits. Therefore, under
§ 274.6, we are specifically requiring
that State agencies issue replacement
cards in accordance with the
requirement under § 274.2 to use firstclass mail and sturdy non-forwarding
envelopes when mailing EBT cards.
One commenter requested that FNS
specifically prohibit mailing Personal
Identification Numbers (PINs) with EBT
cards, while another commenter asked
that both the card and PIN be mailed
within one business day. The proposed
provision required that State agencies
mail EBT cards and PINs in accordance
with industry standards. In general,
States agencies no longer mail assigned
PINs and all provide clients with the
ability to select their own PIN through
an automated response unit. However,
FNS understands that PINs must be
mailed separately from EBT cards to
prevent theft and fraudulent use of the
card and that clients cannot access their
benefits without the PIN. Therefore, for
those State agencies that mail assigned
PINs or provide that option, we are
specifically requiring that PINs and
cards be mailed separately and PINs be
mailed one business day after the card
is mailed. This requirement applies to
both initial issuance and card
replacements.
Several other commenters felt State
agencies should be required to explain
to the household their options for
mailing or picking up a replacement
card and the timeframe associated with
both. FNS wishes to clarify that State
agencies are not required to provide
both mailing and pick-up options, nor
did FNS propose all State agencies
should now offer both options. In
general, State agencies rely mostly on
one method or the other, providing the
alternative option in only special
circumstances. Because there are both
advantages and disadvantages
associated with each option, FNS
continues to believe that State agencies
are in the best position to decide which
option better meets the needs of their
SNAP population. Furthermore, training
requirements in 7 CFR 274.2(e) already
require State agencies to inform all
households of the card replacement
policies. Therefore, FNS will continue
to rely on the existing provision for
informing clients of the card
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16:02 Aug 20, 2013
Jkt 229001
replacement timeframes and possible
options.
Finally, in response to a comment
regarding the timeframes for cards other
than those that are lost or stolen, FNS
is including damaged cards in the card
replacement provision in order to be
consistent with related language in
other provisions.
Clarify the Definition of Trafficking
In the proposed rule, FNS clarified
the definition of trafficking to include
the intent to sell SNAP benefits. FNS
received numerous comments that the
definition of trafficking should use the
word ‘‘attempt’’ instead of ‘‘intent.’’
Commenters state that the word
‘‘intent’’ permits State agencies to take
action based on what people are
thinking and not what they are doing.
‘‘Attempt’’ consists of the intent to do
an act, an overt action beyond mere
preparation, and the failure to complete
the act. FNS also received numerous
comments that the definition of
‘‘trafficking’’ should include the word
‘‘buy’’ as well as the word ‘‘sell’’. FNS
agrees with both of these comments and
has made this change in the final
regulation language.
FNS received one comment that the
rule should make clear that the party
found to have committed an IPV is the
individual who violates, or attempts to
violate, the Program. Other members of
the household, including the head of
household, should not be found to have
committed an IPV if they are not
involved in the activity. FNS agrees
with this comment. FNS regulations
under 7 CFR 273.16(b)(11) are clear that
IPVs are assigned to individuals who are
found guilty and not the entire
household. FNS expects State agencies
to comply with FNS regulations and
only the household member who
committed the IPV is disqualified from
the Program. As this perspective is
already clear in regulation, no
additional modifications are being
made.
FNS received one comment that
adding to a definition that already
prohibits this behavior is an expansion,
not a clarification. The comment further
states that USDA already clarified in a
policy memo that the regulations
already prohibit this behavior. FNS
agrees that it is amending the definition
of ‘‘trafficking’’ to include the attempt to
buy and sell benefits, thus giving State
agencies expanded means to target both
retailers and recipients who attempt to
buy or sell SNAP benefits online or in
person.
FNS received five comments
regarding eliminating the reference to
‘‘coupons.’’ FNS also received one
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Frm 00007
Fmt 4700
Sfmt 4700
51655
comment that the definition should
include both recipients and retailers. A
final rule titled, Supplemental Nutrition
Assistance Program (SNAP): Updated
Trafficking Definition and
Supplemental Nutrition Assistance
Program—Food Distribution Program on
Indian Reservations Dual Participation,
78 FR 11967 (Feb. 21, 2013) eliminates
coupon terminology from the trafficking
definition and applies the trafficking
definition to both clients and retailers.
Procedural Matters
Executive Order 12866
This rule has been determined to be
not significant and was reviewed by the
Office of Management and Budget
(OMB) in conformance with Executive
Order 12866.
Regulatory Flexibility Act
This rule has been reviewed with
regard to the requirements of the
Regulatory Flexibility Act (RFA) of
1980, 5 U.S.C. 601–612. Pursuant to that
review, it has been certified this rule
would not have a significant impact on
a substantial number of small entities.
State agencies that distribute
Supplemental Nutrition Assistance
Program benefits are the entities affected
by this change.
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 $100 million or
more 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.
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 $100 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 Supplemental Nutrition
Assistance Program is listed in the
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Catalog of Federal Domestic Assistance
Programs under 10.551. For the reasons
set forth in the final rule in 7 CFR part
3015, subpart V, and related Notice (48
FR 29115, June 24, 1983), this program
is included in the scope of Executive
Order 12372, which requires
intergovernmental consultation with
State and local officials.
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.
FNS has considered this rule’s impact
on State and local agencies and has
determined that because the majority of
States currently send warning notices to
households with four or more
replacement card requests, this rule
does not have federalism implications
under Executive Order 13132. This rule
does not impose substantial or direct
compliance costs on State and local
governments. Therefore, under Section
(6)(b) of the Executive Order, a
federalism summary impact statement is
not required.
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Executive Order 12988
This final rule has been reviewed
under Executive Order 12988, Civil
Justice Reform. This final 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 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 this final rule in
accordance with the Department
Regulation 4300–4, ‘‘Civil Rights Impact
Analysis,’’ to identify and address any
major civil rights impacts the rule might
have on minorities, women and persons
with disabilities. After a careful review
of the rule’s intent and provisions, FNS
has determined that this rule will not in
any way limit or reduce the ability of
protected classes of individuals to
receive SNAP benefits on the basis of
their race, color, national origin, sex,
age, disability, religion or political belief
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16:02 Aug 20, 2013
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nor will it have a differential impact on
minority owned or operated business
establishments, and women owned or
operated business establishments that
participate in SNAP.
Executive Order 13175
Executive Order 13175, requires
Federal agencies to consult and
coordinate with tribes on a governmentto-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.
In November of 2011 and May of 2013,
USDA engaged in a series of
consultative sessions to obtain input by
Tribal officials or their designees
concerning the impact of this rule on
the tribe or Indian Tribal governments,
or whether this rule may preempt Tribal
law. Reports from these sessions for
consultation will be made part of the
USDA annual reporting on Tribal
Consultation and Collaboration.
Paperwork Reduction Act
The Paperwork Reduction Act of 1995
(44 U.S.C. Chap. 35; see 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 and interim final
rule contains information collections
that are subject to review and approval
by OMB. Therefore, FNS has submitted
an information collection under 0584–
NEW, which contains the burden
information in the rule for OMB’s
review and approval. The new
provisions in this rule, which increase
current burden hours by 8,336 hours,
will be merged into Supplemental
Nutrition Assistance Program (SNAP)
Forms: Applications, Periodic
Reporting, Notices, OMB Control
Number #0584–0064, expiration date 4/
30/2016. These changes are contingent
upon OMB approval under the
Paperwork Reduction Act of 1995.
When the information collection
requirements have been approved, the
Department will publish a separate
action in the Federal Register
announcing OMB’s approval.
Comments on the information
collection in this final and interim final
rule must be received by October 21,
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2013. Send comments to the Office of
Information and Regulatory Affairs,
OMB, Attention: Desk Officer for FNS,
Washington, DC 20503. Please also send
a copy of your comments to Jane
Duffield, State Administration Branch,
3101 Park Center Drive, Alexandria, VA
22302. For further information, or for
copies of the information collection
requirements, please contact Jane
Duffield at the address indicated above.
Comments are invited on: (1) Whether
the proposed collection of information
is necessary for the proper performance
of the Agency’s functions, including
whether the information will have
practical utility; (2) the accuracy of the
Agency’s estimate of the proposed
information collection burden,
including the validity of the
methodology and assumptions used; (3)
ways to enhance the quality, utility and
clarity of the information to be
collected; and (4) 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 request for
comments will be summarized and
included in the request for OMB
approval. All comments will also
become a matter of public record.
Title: Supplemental Nutrition
Assistance Program: Trafficking
Controls and Fraud Investigations.
OMB Number: 0584–NEW.
Expiration Date: Not Yet Determined.
Type of Request: New Collection.
Abstract:
This rule codifies provisions for State
Agencies to issue warning notices to
withhold replacement cards or a notice
for excessive replacement cards.
Withhold Replacement Card Warning
Notice: State agencies may require an
individual member of a household to
contact the State agency to provide an
explanation in cases where the number
of requests for card replacements is
determined excessive. The State agency
must notify the household in writing
when it has reached the threshold,
indicating that the next request for card
replacement will require the client to
contact the State agency to provide an
explanation for the requests, before the
replacement card will be issued. The
State agency must also notify the
household in writing once the threshold
has been exceeded and the State agency
is withholding the card until contact is
made.
Excessive Replacement Card Notice:
State agencies must monitor all client
requests for EBT card replacements and
send a notice, upon the fourth request
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in a 12-month period, alerting the
household their account is being
monitored for potential, suspicious
activity. The State agency is exempt
from sending this notice if they have
chosen to exercise the option to
withhold the replacement card until
contact is made with the State agency.
The average burden per response and
the annual burden hours are explained
below and summarized in the charts
which follow.
Respondents for This Rule: State and
Local Agencies; Households
Estimated Number of Respondents for
This Rule: 23,864
51657
Estimated Number of Responses per
Respondent for This Rule: 2.49
Estimated Total Annual Responses:
59,528
Estimated Total Annual Burden on
Respondents for This Rule: 8,336
ESTIMATED ANNUAL BURDEN FOR 0584–NEW SUPPLEMENTAL NUTRITION ASSISTANCE PROGRAM: TRAFFICKING
CONTROLS AND FRAUD, 7 CFR 274
CFR
Number of
respondents
Title
Annual
reports
Total annual
responses
Burden hours
per response
Total burden
hours
Affected Public: State and Local Agencies
274.6(b)(5) ........
26.5
449.26
11,905.5
0.0334
397.64
274.6(b)(5) ........
274.6(b)(6) ........
Withhold Replacement Card Warning
Notice.
Replacement Card Withheld Notice .....
Excessive Replacement Card Notice ...
26.5
26.5
449.26
449.26
11,905.5
11,905.5
0.0334
0.0334
397.64
397.64
Subtotal .....
...............................................................
53
673.896
35,716.5
0.0334
1,193
Affected Public: Households
274.6(b)(5) ........
11,905.5
1
11,905.5
0.3
3,571.65
274.6(b)(5) ........
Withhold Replacement Card Warning
Notice.
Replacement Card Withheld Notice .....
11,905.5
1
11,905.5
0.3
3,571.65
Subtotal .....
...............................................................
23,811
1
23,811
0.3
7,143.30
Grand Total
...............................................................
23,864
2.494
59,527.5
0.1400
8,336
The 8,336 burden hours will be merged with OMB #0584–0064.
List of Subjects in 7 CFR Parts 271 and
274
Food stamps, Grant programs-social
programs, Reporting and recordkeeping
requirements.
complicity or collusion with others, or
acting alone.
*
*
*
*
*
PART 274—ISSUANCE AND USE OF
PROGRAM BENEFITS
For the reasons set forth in the
preamble, 7 CFR parts 271 and 274 are
amended as follows:
■
1. The authority citation for 7 CFR
parts 271 and 274 continue to read as
follows:
§ 274.2
3. In § 274.2, amend paragraph (b) by
removing the last sentence and by
revising paragraph (f) to read as follows:
■
*
Authority: 7 U.S.C. 2011–2036.
PART 271—GENERAL INFORMATION
AND DEFINITIONS
2. In § 271.2, add paragraph (6) to the
definition of ‘‘trafficking’’ to read as
follows:
■
§ 271.2
Definitions.
mstockstill on DSK4VPTVN1PROD with RULES
*
*
*
*
*
Trafficking means: * * *
(6) Attempting to buy, sell, steal, or
otherwise affect an exchange of SNAP
benefits issued and accessed via
Electronic Benefit Transfer (EBT) cards,
card numbers and personal
identification numbers (PINs), or by
manual voucher and signatures, for cash
or consideration other than eligible
food, either directly, indirectly, in
VerDate Mar<15>2010
16:02 Aug 20, 2013
Jkt 229001
Providing benefits to participants.
*
*
*
*
(f) EBT cards and Personal
Identification Numbers (PINs). (1) State
agencies which issue EBT cards by mail
shall, at a minimum, use first class mail
and sturdy nonforwarding envelopes or
packages to send EBT cards to
households.
(2) The State agency shall permit
SNAP households to select their PIN.
(i) PIN assignment procedures shall be
permitted in accordance with industry
standards as long as PIN selection is
available to clients if they so desire and
clients are informed of this option.
(ii) If assigning a PIN by mail in
conjunction with card issuance, State
agencies shall mail the PIN separate
from the card one business day after the
card is mailed.
*
*
*
*
*
■ 4. In § 274.6:
PO 00000
Frm 00009
Fmt 4700
Sfmt 4700
a. Revise paragraph (b) introductory
text and add paragraphs (b)(4) and (5);
and
■ b. Effective December 19, 2013, add
paragraph (b)(6).
The revision and additions read as
follows:
■
§ 274.6 Replacement issuances and cards
to households.
*
*
*
*
*
(b) Providing replacement EBT cards
or PINs. The State agency shall make
replacement EBT cards available for
pick up or place the card in the mail
within two business days following
notice by the household to the State
agency that the card has been lost,
stolen or damaged unless the State
agency implements a replacement
procedure pursuant to paragraph (b)(5)
of this section.
*
*
*
*
*
(4) Replacement card. The State
agency shall issue replacement cards
and PINs in accordance with § 274.2(f)
of this chapter.
(5) State option to withhold
replacement card. The State agency may
require an individual member of a
household to contact the State agency to
provide an explanation in cases where
the number of requests for card
replacements is determined excessive. If
they so require, the State agency must
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mstockstill on DSK4VPTVN1PROD with RULES
51658
Federal Register / Vol. 78, No. 162 / Wednesday, August 21, 2013 / Rules and Regulations
establish a threshold for the number of
card replacements during a specified
period of time to be considered
excessive. That threshold shall not be
less than four cards requested within 12
months prior to the request, unless the
State agency has additional evidence
indicating a suspected trafficking
violation, as defined at § 271.2 of this
chapter. If a trafficking violation is
suspected prior to the fourth card
request, the State agency shall refer the
client for investigation and, if deemed
appropriate, may provide a notice to the
client, requiring the individual or
household to contact the State agency to
provide an explanation prior to
receiving a subsequent replacement
card.
(i) The State agency shall notify the
household in writing when it has
reached the threshold, indicating that
the next request for card replacement
will require contact with the State
agency to provide an explanation for the
requests, before the replacement card
will be issued. The State agency shall
also notify the household in writing
once the threshold has been exceeded
that the State agency is withholding the
card until contact is made. These
notices must:
(A) Be written in clear and simple
language;
(B) Meet the language requirements
described at § 272.4(b) of this chapter;
(C) Specify the number of cards
requested and over what period of time;
(D) Explain that the next request, or
the current request if the threshold has
been exceeded, requires contact with
the State agency before another card is
issued;
(E) Provide all applicable information
on how contact is to be made in order
for the client to comply, such as whom
to contact, a telephone number and
address;
(F) Include a statement that explains
what is considered a misuse or
fraudulent use of benefits and the
possibility of referral to the fraud
investigation unit for suspicious
activity.
(ii) Following notification, should
another card be requested, the State
agency shall require that the household
contact the State agency to provide an
explanation for the requests. If the client
makes contact, the State agency shall
make the replacement EBT card
available for pick up or place the card
in the mail in accordance with § 274.2(f)
of this chapter within two business days
following household contact with the
State agency, regardless of whether or
not an explanation was provided.
(A) If a household does not contact
the State agency in response to the State
VerDate Mar<15>2010
17:20 Aug 20, 2013
Jkt 229001
agency’s notice, the State agency shall
not issue a replacement card to the
household and the case must be referred
for investigation.
(B) The State agency shall educate the
client on the proper use of the card if
the explanation is deemed appropriate
and the State agency shall not require
contact upon subsequent requests,
unless the pattern of card activity has
changed since the initial contact and
indicates possible trafficking activity.
(C) The State agency shall refer the
individual for investigation in cases
where the individual contacts the State
agency but refuses to explain the card
losses or the explanation provided
appears to be indicative of trafficking in
accordance with § 271.2 of this chapter.
The State agency shall issue a
replacement card to any household that
makes the required contact so that the
household has access to benefits in its
EBT account while the investigation is
underway and while awaiting a hearing,
in accordance with § 273.16(e)(5).
(iii) In all cases, a State agency shall
act to protect households containing
homeless persons, elderly or disabled
members, victims of crimes and other
vulnerable persons who may lose EBT
cards but are not committing fraud.
(6) Excessive Replacement Card
Notice. The State agency shall monitor
all client requests for EBT card
replacements and send a notice, upon
the fourth request in a 12-month period,
alerting the household that their
account is being monitored for
potential, suspicious activity. If another
replacement card is subsequently
requested and trafficking is suspected,
the State agency shall refer that case to
the State’s fraud investigation unit.
(i) The State agency shall be exempt
from sending the Excessive
Replacement Card Notice if they have
chosen to exercise the option to
withhold the replacement card until
contact is made with the State agency,
in accordance with paragraph (b)(5) of
this section, as long as the State agency
has chosen to use the minimum
threshold, which requires sending the
first warning notice on the fourth card
replacement request within 12 months.
If the State agency chooses to use a
threshold higher than the fourth card
replacement request, the State agency
must send the Excessive Replacement
Card Notice on the fourth card request
in accordance with this section.
(ii) The State agency shall notify the
household in writing upon their fourth
card request that their case is being
monitored. This notice shall, at a
minimum:
(A) Be written in clear and simple
language;
PO 00000
Frm 00010
Fmt 4700
Sfmt 4700
(B) Meet the language requirements
described at § 272.4(b) of this chapter;
(C) Specify the number of cards
requested and over what period of time;
(D) Explain that the transactions of
the cardholder’s account are being
monitored for potential trafficking
activity;
(E) Include a statement that explains
what is considered a misuse or
fraudulent use of benefits and the
possibility of referral to the State’s fraud
investigation unit for suspicious
activity.
(F) Provide contact information,
including a telephone number, should
the household have questions or
concerns regarding the notice.
Dated: August 7, 2013.
Audrey Rowe,
Administrator, Food and Nutrition Service.
[FR Doc. 2013–20245 Filed 8–20–13; 8:45 am]
BILLING CODE 3410–30–P
DEPARTMENT OF AGRICULTURE
Grain Inspection, Packers and
Stockyards Administration
9 CFR Part 201
RIN 0580–AA99
Weighing, Feed, and Swine
Contractors
Grain Inspection, Packers and
Stockyards Administration, USDA.
ACTION: Final rule.
AGENCY:
The Department of
Agriculture’s (USDA) Grain Inspection,
Packers and Stockyards Administration
(GIPSA) is amending the regulations
issued under the Packers and
Stockyards Act, 1921, as amended and
supplemented (P&S Act), to ensure that
payments by live poultry dealers and
swine contractors to poultry and swine
production contract growers are based
on accurate weighing of both inputs and
outputs. Specifically, we are amending
a regulation about scale tickets to reduce
redundant wording and to clarify
weighing procedures. In addition, we
are amending a regulation about
reweighing to add swine contractors to
the list of firms that must comply, and
adding feed to the list of items for which
reweighing may be requested. We are
also amending two other regulations
about weighing livestock and poultry to
add weighing processes for feed, to add
a specific time limit for weighing
poultry, and to add swine contractors to
the list of firms that must comply with
care and promptness requirements.
SUMMARY:
E:\FR\FM\21AUR1.SGM
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Agencies
[Federal Register Volume 78, Number 162 (Wednesday, August 21, 2013)]
[Rules and Regulations]
[Pages 51649-51658]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-20245]
========================================================================
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.
Prices of new books are listed in the first FEDERAL REGISTER issue of each
week.
========================================================================
Federal Register / Vol. 78, No. 162 / Wednesday, August 21, 2013 /
Rules and Regulations
[[Page 51649]]
DEPARTMENT OF AGRICULTURE
Food and Nutrition Service
7 CFR Parts 271 and 274
[FNS-2012-0028]
RIN 0584-AE26
Supplemental Nutrition Assistance Program: Trafficking Controls
and Fraud Investigations
AGENCY: Food and Nutrition Service (FNS), USDA.
ACTION: Final rule, Interim Final Rule.
-----------------------------------------------------------------------
SUMMARY: The Food and Nutrition Service (FNS) is issuing a final rule
to amend Supplemental Nutrition Assistance Program (SNAP or Program)
regulations to allow State agencies to deny a request for a replacement
card until contact is made by the household with the State agency, if
the requests for replacement cards are determined to be excessive.
State agencies which elect to exercise this authority will be required
to protect vulnerable persons, such as individuals with disabilities,
homeless individuals or the elderly, who may repeatedly lose their
Electronic Benefit Transfer (EBT) cards but are not committing fraud.
FNS is also changing the EBT card replacement timeframes in the
same section to require State agencies to make replacement cards
available for pick up or to place the card in the mail within two
business days following notice by the household to the State agency
that the card has been lost or stolen. FNS is further amending its
regulations to define the term ``trafficking'' to include the attempt
to buy or sell SNAP benefits in cases where an individual makes the
offer to sell SNAP benefits and/or EBT card online or in person.
Finally, FNS is issuing an interim final rule (with a request for
additional comment) that requires State agencies to monitor EBT card
replacement requests and send notices to those clients who have
requested four cards within a 12-month period. The State agency shall
be exempt from sending this Excessive Replacement Card Notice if it
adopts the card withholding option in accordance with this final rule
and sends the requisite Withhold Replacement Card Warning Notice on the
4th replacement card request.
DATES: Effective dates: This final rule is effective November 19, 2013.
The addition of Sec. 274.6(b)(6) is being issued as an interim final
rule and is effective December 19, 2013.
Comment date: FNS will consider comments from the public on the
addition of Sec. 274.6. Comments must be received at one of the
addresses provided below on or before October 21, 2013.
ADDRESSES: The Food and Nutrition Service, USDA, invites interested
persons to submit comments on the interim rule provision Sec.
274.6(b)(6). Comments may be submitted by one of the following methods:
Federal e-Rulemaking Portal: Go to https://www.regulations.gov. Preferred method; follow the online instructions
for submitting comments on docket 2012-0028.
Fax: Submit comments by facsimile transmission to: Jane
Duffield, Chief, State Administration Branch, Fax number 703-305-0928.
Mail: Comments should be addressed to Jane Duffield, State
Administration Branch, 3101 Park Center Drive, Room 818, Alexandria, VA
22302.
Hand Delivery or Courier: Deliver comments to Jane
Duffield, State Administration Branch, 3101 Park Center Drive,
Alexandria, VA 22302, Room 818, Monday-Friday, 8:30 a.m.-5:00 p.m.
All comments submitted in response to the interim rule provision
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 comments publicly
available on the Internet via https://www.regulations.gov.
FOR FURTHER INFORMATION CONTACT: Jane Duffield, Chief, State
Administration Branch, Food and Nutrition Service, USDA, 3101 Park
Center Drive, Alexandria, Virginia, 22302. Ms. Duffield may be reached
by telephone at 703-605-4385.
SUPPLEMENTARY INFORMATION:
Background
In this final rule, FNS is amending the SNAP regulations at 7 CFR
274.6, to give State agencies an option for handling requests for
multiple replacement cards. Current regulations do not allow State
agencies to require clients requesting multiple replacement cards to
contact the agency and provide an explanation before a new card is
issued, even though such requests may indicate fraudulent activity.
Under this rule, State agencies may choose to withhold the benefit card
when the client has requested an excessive number of replacements,
until the client makes contact with the State agency to provide an
explanation for the request. State agencies taking this option would be
expected to establish a threshold beyond which the individual must make
contact. That threshold may not be fewer than four cards in a 12-month
period prior to the request, except in limited circumstances.
Although the intent of the rule is not to systematically affect
clients requesting fewer than four cards in a 12-month period, FNS
recognizes that State agencies may obtain additional evidence
indicating that a household is suspected of potential fraud that may
warrant initiating the process sooner. For example, if a State agency
receives a complaint that an individual sold their EBT card to another
party, the State agency shall initiate an investigation and may
promptly provide a notice to the client, requiring the individual or
household to contact the State agency to provide an explanation prior
to receiving a subsequent replacement card.
FNS established the minimum threshold of four cards within a 12-
month period on the basis of an analysis of SNAP EBT electronic
transaction records. FNS found that shopping behavior appeared
consistent when compared to the average until a household requested its
fourth replacement card. Transaction activity indicates that, after the
fourth replacement card, a household's shopping behavior is three times
more likely to be flagged as potential
[[Page 51650]]
trafficking by FNS' fraud detection system. Trafficking is the exchange
of benefits for cash or other consideration, as defined at 7 CFR 271.2,
and is the most egregious Program violation. Furthermore, FNS found
during the period of January 2012 through December 2012, approximately
98 percent of participating households had three or fewer EBT cards,
with most (79 percent) utilizing only one card throughout the year.
This further reinforces that most requests for replacement cards are
legitimate and when they occur, it is most likely to replace a lost or
damaged card. Since so few households request four or more replacement
cards and those that do have such markedly different transaction
activity as to indicate a higher likelihood of potential trafficking,
FNS chose to define a minimum threshold, and to consider requests
beyond four cards within a 12-month period to be considered excessive
and a potential indicator of trafficking.
Under this option, the State agency must notify the household when
the threshold for excessive card replacements is reached, as determined
by the State agency, and indicate that if a member of the household
requests another card replacement, the State agency will withhold the
card until contact is made. The State agency would be expected to
contact the fraud investigation unit regarding clients who contact the
agency but do not provide an appropriate explanation. The State agency
must issue a replacement card during an ongoing investigation. In all
cases, States would be required to protect vulnerable persons who lose
EBT cards but are not committing fraud.
FNS is further amending 7 CFR 274.6, to change the EBT card
replacement timeframes, requiring State agencies to make replacement
cards available for pick up or to place the card in the mail within two
business days following notice by the client that the card has been
lost, stolen, or damaged. Currently, State agencies must ensure clients
receive replacement EBT cards within two business days (or five
business days if using a centralized mail issuance system) after the
client notifies the State agency that the card has been lost or stolen.
This change places the requirement on the State agency issuance end
instead of the on receiving end of the replacement card process, and
alleviates State agencies' responsibility for mail delays beyond their
control, while allowing FNS to hold State agencies more accountable for
delays within their control.
Additionally, this final rule amends the definition of trafficking
to include actions that clearly express the attempt to sell or buy SNAP
benefits or EBT cards in person or online through Web sites and social
media.
Finally, FNS is issuing an interim final rule provision at 7 CFR
274.6(b)(6), that requires State agencies to monitor card replacement
requests and issue Excessive Replacement Card Notices to clients who
have requested four card replacements in a 12-month period. The State
agency shall be exempt from sending this notice if it chooses to
exercise the card withholding option, in accordance with 7 CFR
274.6(b)(5), and sends the Withhold Replacement Card Warning Notice
upon the household's fourth card replacement request, indicating that
the State agency will withhold a fifth replacement card until the
household contacts the State agency.
FNS' decision to issue the interim final rule is based on a comment
received in response to the proposed rule. The commenter suggested that
the Department propose a method for handling multiple card requests
similar to that initiated by North Carolina and recently implemented by
the majority of States. The commenter added that the process has proven
to be efficient and cost effective for State agencies. FNS agrees with
this comment and is, therefore, amending the regulations in the same
section, requiring States to monitor and send warning notices to
clients who request four card replacements in a 12-month period. Based
on current data, the number of clients requesting five or more cards
has decreased nationally since many States adopted this practice. Since
the majority of States currently monitor EBT card replacement requests
and subsequently issue warning notices for four or more requests, FNS
does not believe this provision will create a substantial burden for
States overall.
The proposed rule was published on May 30, 2012, at 77 FR 31738,
and public comments were invited through July 30, 2012. All comments
have been considered and adjustments have been made to the final and
interim final rule. States administering SNAP are required to
administer the Program in accordance with the provisions of the Act and
regulations issued pursuant to the Act, including 7 CFR parts 271 and
274.
Failure to comply with the final rule and the interim final rule
when they become effective would be subject to appropriate FNS action.
Summary of Comments and Explanation of Revisions
Thirty-six comments to the proposed regulations were received from
various stakeholders and are available for public inspection online at
www.regulations.gov. In general, most commenters supported the
regulations but not as currently written. FNS received eight comments
in full support of the rule in its entirety. FNS received one comment
which did not offer any comments on the contents of this rule but
focused on other areas, such as retailer issues, which is being
addressed in other FNS rulemaking. FNS also received comments with
suggestions for additional ways to reduce trafficking or ways of
handling EBT cards. Examples of these suggestions include making
benefit cards larger, using neon colors, having a photo on the card,
and charging for the cards, as much as $50.00 from one commenter. These
comments were reviewed and considered but will not be included in this
final rulemaking as they were not directly related to the proposal for
a State option to withhold the card upon excessive card replacement
requests until the household makes contact. FNS received three comments
which stated that allowing four replacements is too many and that FNS
is being too lenient. This comment was considered but is not included
in the final rulemaking as FNS utilized a statistical basis for
establishing the minimum threshold, one that differentiates between
typical behavior and activity that is more likely to indicate fraud,
while allowing States to initiate the process sooner if the State is in
possession of additional evidence of trafficking.
Allow States To Withhold Replacement Cards Until Contact Is Made With
the State Agency
Several commenters suggested that the threshold for card
replacements should be applied to individuals, not households, as some
households contain more than one person with a card. These commenters
further suggested that EBT cards that are never used should not count
against the total for replacements. They pointed out that some clients
may not use an EBT card because they request a card be mailed but then
go to the office and pick up another card before receiving the card in
the mail. Another commenter suggested that many first-time users do not
understand how to use the card and a grace period in the beginning
would benefit those clients. Multiple commenters felt that individuals
must be provided notice before reaching the
[[Page 51651]]
threshold, as well as receiving a notice once they have exceeded the
threshold. Two commenters stated the notice should clarify a reasonable
timeframe for the individual to respond. Multiple commenters stated
that the notice to the individual must contain contact information for
individuals who would like to get more information or need help with
their card. Some commenters further noted that the notice should
contain information about what it means to be referred to the fraud
unit and to meet with a fraud investigator. One commenter stated the
rule is not clear that the contact can be made by phone or in person,
and that it should be made clear that this is the client's choice. FNS
received two comments regarding limited English proficiency, which
suggested that notices must be sent in the individual's chosen
language.
The terms ``individual'' and ``household'' are both used in this
rule and serve different purposes. FNS does not intend for this rule to
require all members of the household make contact with the State agency
before a replacement card can be issued. However, the household must
receive the proper notification when the card will be withheld. The
household must be aware of why the card is being withheld and
understand what they are required to do in order to receive their card
replacement. The term ``individual'' is used regarding the required
contact by an individual member of the household. Further, only an
individual who has been found guilty through an administrative or court
hearing may be disqualified from SNAP, not the entire household, per
regulations at 7 CFR 273.16(b)(11). FNS will retain in the final rule
that all card replacement requests will count towards the threshold,
regardless of the reason for the request.
Some clients may not understand the State's process for how to
request replacement cards or how long to expect the card replacement to
take. For example, they may not understand that a replacement card is
not needed every time the benefits are spent down or that once a card
is requested, it may take a few days to receive the replacement. This
may create situations where clients request additional cards while they
are waiting for a replacement card to arrive. In such cases, the State
would be able to determine that there is no suspicious activity and
thus no reason to refer the case for a fraud investigation. In these
situations, States have an opportunity to follow up with these cases
and educate the clients about the appropriate replacement card process
or otherwise intercede, such as appointing an authorized representative
to help the household manage the EBT card.
FNS believes that it is sufficient to notify the client once when
they have reached the excessive card replacement threshold, prior to
the State agency withholding the EBT card, and then once they exceed
the threshold, at the times the State agency withholds the EBT card.
The final rule requires that States implementing the card withholding
option must send notices to the most recent address on file for all
households who have reached or exceeded the excessive card replacement
threshold. The State agency may only request an explanation, provide a
5th replacement card, and if deemed appropriate, refer the case for
investigation, after the State agency has sent the written notice to
the household that the State agency is withholding the household's EBT
card. If the State agency has an over-the counter issuance system in
place, and the client comes in to request a 5th replacement card, the
State agency must document that the client has first received the
written warning notice to withhold the 5th replacement card prior to
requesting an explanation from the client, replacing the card, and if
deemed appropriate, referring the case for investigation.
States are not required to include a timeframe in the notice
because the State can continue to hold the card until the client
contacts the State agency. It is up to the client to make the contact
in order to receive their replacement card. If the client never makes
contact with the agency, the card may be held indefinitely, likely
until the client is up for recertification or benefits are expunged
according to FNS regulations at 7 CFR 274.2(h).
FNS has also clarified that the notices include information about
how the client is to contact the State agency, including a telephone
number. It is up to the State agency to determine how the contact
should be made, such as in person or by phone, and the State agency
must take into consideration those with special circumstances and make
accommodations for compliance. FNS feels that notice requirements are
adequate for their intended purpose and the notice does not require a
statement about what it means to be referred for a fraud investigation.
Not all households receiving these notices will be referred for an
investigation; some are likely candidates for receiving educational
information regarding the proper use of their card. State agencies
should provide information on proper EBT card use on the notices. FNS
will retain in the final rule the requirement that the State ensures
that notices meet language requirements described at 7 CFR 272.4(b).
FNS received several comments suggesting that any explanation
provided by the individual that is not evidence of fraud is a
satisfactory explanation. Commenters stated that FNS should make clear
that the State may only initiate an investigation for fraud when the
explanation provides evidence of fraud. One commenter stated that the
language is too vague and permissive, and allows eligibility workers to
interpret many legitimate explanations as suspicious. Another commenter
points to 7 CFR 273.16(a), which states that the disqualification or
prosecution process cannot be initiated unless the State agency has
sufficient documentary evidence to substantiate fraud.
The final regulation does not specify which client explanations for
needing card replacements are suspicious and which are satisfactory.
FNS requires States to refer individuals for fraud investigations and
conduct investigations on all cases that the State agency has
determined suspicious. The State is not required to have evidence in
order to conduct an investigation. The purpose of the investigative
process is for the State agency to determine if fraudulent behavior
occurred, and to gather evidence in order to pursue a disqualification
and/or criminal charges where appropriate. If the State cannot gather
enough evidence, then the case would not be taken through the
administrative disqualification hearing (ADH) process or prosecuted,
and no disqualification penalty will be assigned. If the State has
gathered enough evidence of an Intentional Program Violation (IPV), the
case will be heard by the appropriate authority, who will make a
determination as to whether the individual committed an IPV. 7 CFR
273.16(a) does not preclude a State agency from conducting an
investigation to collect evidence, rather it specifies that the case
may not be taken to an ADH or prosecuted without sufficient documentary
evidence--which is gathered during the investigation.
One commenter stated that, if the State provides a replacement card
to a household that has made contact but has not provided an
explanation for the need to replace the card, the State has rewarded
the household for non-cooperation. Another commenter stated that
clients will not cooperate or show up because there is no reason to do
so, and FNS should revise the rule to allow the State agency to close
the case if the recipient fails to keep the interview
[[Page 51652]]
appointment or refuses to cooperate during investigations.
FNS does not view the release of the EBT replacement card upon
contact with the State agency as rewarding the household for failing to
cooperate. This process provides the State agency an opportunity to
address the issue with the client to determine if the behavior may be
indicative of fraud. In cases where the client does not provide a
reasonable explanation for the requests, the State agency must refer
the case to the State's fraud investigation unit. This final rule is
intended to provide a tool for States to use as a means of assessing
these cases of multiple card replacements. It is not intended as a
means for a State agency to terminate or close a case.
State agencies may not terminate or close a case where the client
has not been found guilty of an IPV through an ADH or a court hearing.
Clients have the right to remain silent and have their cases heard by
the appropriate authority. Until the client has been found to have
committed an IPV, the case may not be closed. This final rule allows
the State agency to hold the card until the household makes contact in
order to help the State agency determine why they are requesting so
many cards. If the client refuses to cooperate by not providing an
explanation, this should be taken into consideration and the case must
be turned over for an investigation. However, withholding the card
until contact is made, regardless of client cooperation, does not
affect the client's eligibility for the Program.
One commenter stated that the rule should ensure that States
replace cards without any undue delays, such as lengthy waits in State
agency offices, lack of access to in-person appointments or inability
to reach someone at the State agency by phone. FNS agrees that the
State agency must ensure they have a process in place to handle these
cases and there is not a delay in issuing the card when the client
complies with the requirement to contact the State agency after
reaching the excessive card threshold for replacement cards. The
regulation has been modified to require State agencies to mail or make
the replacement card available for pick up within two business days
after the client contacts the State agency to provide an explanation.
FNS received 11 comments requesting guidance be provided for States
that use EBT cards for both SNAP and cash assistance. One commenter
expressed concerns as some States use EBT cards for SNAP, cash benefits
and Medicaid. The commenter stated that if the card is also used to
deliver cash aid, such as Temporary Assistance for Needy Families
(TANF), it cannot be withheld or delayed unless the cash assistance
program provides for this. FNS recognizes the challenge where EBT cards
are used for multiple programs and reiterates that the process for
withholding the card in these cases is a State agency's option and not
a requirement. FNS has conferred with the United States Department of
Health and Human Services (HHS), which has responsibility for the TANF
Program, and determined there are no TANF rules preventing States from
invoking this option. FNS urges State agencies to work with other
assistance programs delivered on the State's EBT card, such as
Medicaid, to determine solutions that may address this issue. FNS is
willing to assist States in this process.
FNS received four comments regarding the increased workload issues,
costliness and requirement of massive system changes to implement this
rule. These comments expressed that this option will create a lot of
work for State agencies, and the agencies will not get much in return
for the extra effort. State agencies may choose not to implement this
process because they decide it is not a good use of limited State
resources.
One commenter is concerned with implementing this rule timely, and
the ability or willingness of EBT contractors to make the necessary
changes for reports on card replacements. This section of the final
rule, allowing State agencies to withhold the EBT card until contact is
made, is an agency option designed to provide States with a tool to
assist in identifying and disqualifying those who are committing IPVs
against SNAP, as well as to educate those who do not understand how to
properly use their EBT card. FNS is not requiring State agencies to
implement this option and therefore has no requirement for agencies to
comply in a timely manner. FNS encourages State agencies that want to
exercise this option to meet with their EBT processors to discuss which
reports will be useful and identify their needs so that the EBT
processors can determine the best way to support this process.
Identifying and disqualifying anyone who commits an IPV by requesting
multiple card replacements and trafficking SNAP benefits sends a strong
message that abuse of the Program will not be tolerated.
FNS received one comment stating that the rule should direct State
agencies to inquire whether an individual who repeatedly requests card
replacements needs some accommodation and to investigate the
feasibility of allowing restrictions on recipients with disabilities to
only use their EBT cards in certain stores. FNS received five comments
that the rule should provide much more detail about what the State
agency should do to protect victims of crime, the homeless and persons
with disabilities. One commenter was concerned that a State agency may
require only in-person meetings to get information about excessive card
replacements, thus placing severe hardship on the elderly and disabled.
Another commenter was concerned about the noticing requirements to the
homeless population, making this difficult and impractical to apply
equitably to them. Another commenter stated that the homeless should
not be excluded from providing an explanation for excessive requests
for card replacements. These comments suggested that FNS should provide
guidance on specific steps to protect vulnerable populations and the
definition of vulnerable population should be expanded to include other
groups, such as illiterate populations and victims of domestic
violence.
FNS expects that State agencies will work to ensure no undue
hardships are placed on the elderly or disabled and the accommodations
State agencies typically make available to comply with federal
regulations will also be made available for them if a State agency
invokes this option. The Agency thinks the rule is sufficiently clear
in this regard. FNS does not have the legal authority to restrict or
limit card usage to certain authorized retailers. This option to
withhold the card is a tool for State agencies to monitor the integrity
of the Program and FNS expects State agencies will follow all existing
requirements and regulations if they choose to exercise this option.
The State agency should make every effort to reach those clients
who are known to be homeless and to take that circumstance into
consideration when these clients reach their card threshold. For
example, if a State agency suspects that the client is in a vulnerable
status group such as the elderly, disabled, or homeless and needs
additional accommodation, the State agency may choose to contact the
client for purposes of collecting information for the card replacement
option; however, the State agency must still send a warning notice to
the most recent address on file prior to requesting an explanation and
providing the 5th EBT card replacement. Some State agencies also allow
clients who do not list an address to pick up their notices in the
local office. State agencies may opt to give written notice to homeless
clients and
[[Page 51653]]
discuss excessive card replacements when homeless clients come into the
State agency office to request a card that exceeds the threshold. Those
clients which are part of the vulnerable populations are not excluded
from providing an explanation but may need accommodations to assist
them in providing the explanation.
State agencies should take the household's circumstances into
account when considering their explanation for needing multiple
replacements. The regulation, as written, encompasses other vulnerable
populations, such as those who are illiterate, those with language
barriers and victims of domestic violence, which allows for State
agencies to make a determination as they become aware of a client's
circumstance. FNS has removed references that suggest that contact must
be made by phone or in-person. While phone and in-person contact is
acceptable, this will provide State agencies the flexibility to offer
other contact options to those with special circumstances.
Several comments asked for FNS to clarify what sufficient
additional evidence they would need to provide to warrant withholding a
card sooner than the threshold. A commenter also stated that the
evidence be specific to the individual, rather than a characteristic
that they may share with others, such as residency or the food store
where they shop. There are many circumstances a State may become aware
of that would make them want to take action sooner. State agencies may
in fact receive evidence that direct them to a particular household
based on activity by one household member or transactions conducted at
a store under suspicion of trafficking. A State agency may receive a
complaint indicating that a client is selling their card for cash and
then requesting a replacement card. Or a State agency may flag a client
based on suspicious transaction activity that is indicative of
trafficking. Some clients may already be under investigation and the
State agency may already have additional evidence in their case when
the client makes another card request. These are examples of cases
where the State agency has additional evidence that may warrant
noticing the client sooner than the determined threshold. By
determining four cards within a 12-month period as excessive, FNS is
providing State agencies with its expectation of how to respond
systematically. The minimum threshold is not intended to preclude a
State agency from initiating the process sooner for individual
households if they have additional evidence that warrants doing so, to
ensure that potential trafficking situations are identified and acted
upon quickly.
FNS received four comments that interrupting the household's access
to benefits by delaying or denying a replacement card would deny the
household its right to a predetermination hearing under 7 CFR 273.15,
section 11(e)(10) of the Act, and due process clauses as interpreted by
Goldberg v. Kelly, 397 US 254 (1970). Another commenter stated that,
since these are adverse actions, if the client does not contact the
State agency, the regulation must provide that the notice include
information about fair hearing rights.
FNS does not agree that the rule fails to provide due process. FNS
currently allows State agencies the choice to make cards available to
clients either by coming to the office to pick them up or by mail.
While most State agencies use a central mail process to issue cards,
there are agencies which only use the over-the-counter method for
issuing cards to clients. Other State agencies use the over-the-counter
method but will mail cards in special circumstances. This has always
been a State agency's option and FNS does not consider the over-the-
counter method as interrupting a household's access to benefits or
violating due process requirements. The cards and benefits are
available for the client once the card is made available pursuant to
current regulations at 7 CFR 274.6(b). Similarly, when the State agency
chooses to withhold the card until the client makes contact, those
agencies must make the card available, pursuant to 7 CFR 274.6(b) in
this final rule, to the client once the client makes the required
contact. Furthermore, as stated earlier, eligibility remains unaffected
by this process. The benefits the household has been determined
eligible to receive are made available on the EBT card as long as the
household remains eligible and the client has access to the card by
making the required contact with the State agency. Therefore, because
the withholding of a replacement card in accordance with this final
rule is not an adverse action, Section 11(e)(10) of the Act and 7 CFR
273.15 do not apply.
Commenters also stated that there is the possibility of coercion
because the threat of delay of benefits forces someone to incriminate
themselves. FNS does not believe that this would be coercion because
the client is not required to provide an explanation in order to
receive their card. The card will be given to the client regardless of
their willingness to answer questions or otherwise cooperate beyond
making contact. State agencies are expected to clearly explain in their
notice to clients that clients must contact the State agency but that
they are not required to provide an explanation in order to receive a
replacement card. Notices to clients should explain that the process is
being used to yield useful, accurate information and will not be used
in a way that might harass or coerce clients into making false
statements.
FNS received one comment stating that the commenter was unclear how
withholding the card improves trafficking prevention if FNS has the
ability to track EBT data. By withholding the card, FNS believes it
provides the State agency with the necessary tools to obtain sufficient
information from a household in order to determine the nature of the
excessive card replacement requests. This information allows the State
agency to better determine whether the request is legitimate and
indicates a need to educate the household on how to better manage their
EBT card, or that an explanation is suspicious and warrants a referral
for investigation.
Another commenter asked that further clarification should be
provided concerning the analysis used to determine the four card
threshold. FNS determined the minimum threshold of four cards within a
12-month period based on the fact that 98 percent of households use
three or fewer cards within a year, with most (79 percent) using only
one card.
Also, for those that exceed the fourth replacement card, their
transaction activity is three times more likely to be flagged as
trafficking by FNS' fraud detection system.
FNS received one comment that the rule is restrictive since State
agencies are unable to make contact for subsequent replacement requests
beyond the threshold level unless the pattern has changed. The
commenter suggests that each person is limited to one call or visit to
explain the circumstances for the request and this does not do much to
deter fraud. If the State agency has spoken with the client or
conducted an investigation and found no evidence of fraud, the agency
may not continue to withhold that card. However, the State agency
should continue to monitor additional card requests, and if the
household continues to request additional cards and the pattern of card
activity changes to indicate possible trafficking behavior, the State
agency may notify the household that the State agency is withholding
the EBT card and that the household must contact the State
[[Page 51654]]
agency to provide an explanation before receiving another card.
FNS received multiple comments referencing the rule is too lenient
and allowing four cards is too many. As noted above, the minimum
threshold is based on an analysis by FNS of electronic transaction
data, which demonstrates a statistically significant difference when a
household requests a fourth replacement card indicating that
transaction activity is three times more likely to be flagged as
potential trafficking, compared to clients with three or fewer
replacement cards. As the intent of the rule is to further strengthen
program integrity, FNS believes that the threshold of four cards within
a 12-month period is appropriate. However, FNS acknowledges that State
agencies may want to initiate the process sooner if they have
additional evidence that a household is suspected of trafficking, thus
the final rule maintains this provision.
Required Excessive Replacement Card Notice
In new paragraph 7 CFR 274.6(b)(6), FNS has included a requirement
in this interim rule that State agencies monitor requests for EBT card
replacements and send a Excessive Replacement Card Notice to clients
who request four cards in a 12-month period. If a client requests a
fifth replacement card, the State agency shall refer the case to the
State's fraud investigation unit, if they suspect the client is
trafficking. If the State agency suspects the client's lack of
understanding of how to manage an EBT card is the reason for requesting
excessive replacement cards, no referral for investigation is warranted
and, therefore, should not be made.
If the State agency chooses to exercise the option to withhold the
replacement card until it is contacted by the client, and as long as
the threshold used for the initial Withhold Replacement Card Warning
Notice is on the fourth card replacement request, the State agency
shall be exempt from sending the Excessive Replacement Card Notice, in
accordance with 7 CFR 274.6(b)(6)(i). If the State agency chooses the
option to withhold the replacement card and uses a threshold higher
than the fourth card replacement request for the initial notice, the
State agency must send the Excessive Replacement Card Notice upon the
fourth card request in accordance with 7 CFR 274.6(b)(6). This interim
rule provides a minimum requirement for the contents of the required
Excessive Replacement Card Notice. States may contact FNS for specific
examples. Paragraph 274.6(b)(6) is being published as an interim final
rule in order to provide the opportunity for comment.
The decision to include paragraph 274.6(b)(6) as an interim rule is
based on a comment received on the proposed regulation. The comment
notes that FNS has touted the North Carolina agency's approach to
handling multiple card replacements the State agency sends a letter to
any household requesting four or more cards in a 12-month period and if
another request is made, refers the case to the State's fraud
investigation unit. The commenter added that the model to use a letter
to deter excessive card replacements has proven to be very effective
and less burdensome for State agencies and should have been reflected
in the proposed regulation. FNS agrees with the commenter that the
North Carolina agency's model is a reasonable and simple process and is
aware that the majority of State agencies are currently issuing notices
based on this model.
FNS believes that all State agencies should be monitoring card
replacement activity and that the requirement to issue an Excessive
Replacement Card Notice, as set forth in this interim final rule, along
with the option to withhold a replacement card until the client
contacts the State agency, as set forth in the final rule, provide
important tools for State agencies to use in monitoring and preventing
trafficking of EBT cards. Since the majority of States currently send
warning notices to households with four or more replacement card
requests, FNS does not believe the noticing requirement will
substantially increase the burden for State agencies overall.
Card Replacement Timeframes
Thirteen commenters addressed the provision prescribing a one
business day timeframe when State agencies must make a replacement card
available for pick up or place a replacement EBT card in the mail
instead of when the client must actually receive the EBT card.
Some commenters believed the proposed change is unwarranted and
would result in delaying benefits to needy households. Other commenters
wanted FNS to require that State agencies replace EBT cards within 7
days when mailing cards instead of requiring that State agencies place
the card in the mail within one business day.
Because State agencies do not have control over the length of time
it takes the United States Postal Service (USPS) to get replacement EBT
cards into the hands of SNAP households, FNS believes that prescribing
when States must act on a card replacement request is a better approach
to minimize possible delays that are beyond the States' control. In the
end, FNS expects that the new provision will better ensure that SNAP
households receive their replacement cards within a reasonable amount
of time, while also giving FNS greater ability to hold State agencies
accountable for delays within their control.
Another commenter felt the proposed requirement for placing the
card in the mail within one day is too restrictive because State
agencies need more days to investigate and verify instances of identity
theft or other possible abuses. Another commenter felt State agencies
should be able to determine their own timeframes for mailing or making
replacement cards available, depending on the number of replacement
cards requested, the reason for the request, and other factors. The
commenter added that if the replacement is questionable, but does not
prove fraud, the State agency would then be able to extend the
timeframe to a longer period so the household is penalized. The
proposed rule specifically provides State agencies the opportunity for
further investigation, if there have been multiple card replacement
requests before having to provide another card. As a result, State
agencies now have the ability to delay a card replacement until contact
is made for an individual household that meets the threshold for
excessive card replacements or whose request is questionable based on
available evidence. At the same time, FNS continues to believe clients
who have legitimately lost their card or had it stolen must receive a
replacement card within a reasonable amount of time to ensure they have
access to benefits necessary to meet their dietary needs. Therefore, in
an effort to take the different perspectives into consideration, FNS
has decided to extend the timeframe by when State agencies must act on
card replacement requests that do not meet the criteria for further
investigation to two business days instead of one.
Several commenters also requested FNS specifically prohibit the use
of bulk mail, indicating that many State agencies use bulk mail postage
to reduce costs, which results in delayed mailings as a State agency
waits to amass enough items to reach the bulk rate minimum. As a
result, bulk mail may not be delivered for several weeks, in contrast
to the typical delivery time of 5 days for regular mail. Under the new
provision, State agencies must meet the required two-day timeframe for
acting on card replacement requests. Therefore, they cannot wait to
amass enough
[[Page 51655]]
replacement cards to reach the minimum requirement for bulk rate
mailings. Furthermore, the use of first class mail for issuing cards is
already required under 7 CFR 274.2(b). However, FNS is convinced of the
importance of specifically requiring first class mail when mailing
replacement cards in order to prevent excessive delays in getting
clients the access they need to their benefits. Therefore, under Sec.
274.6, we are specifically requiring that State agencies issue
replacement cards in accordance with the requirement under Sec. 274.2
to use first-class mail and sturdy non-forwarding envelopes when
mailing EBT cards.
One commenter requested that FNS specifically prohibit mailing
Personal Identification Numbers (PINs) with EBT cards, while another
commenter asked that both the card and PIN be mailed within one
business day. The proposed provision required that State agencies mail
EBT cards and PINs in accordance with industry standards. In general,
States agencies no longer mail assigned PINs and all provide clients
with the ability to select their own PIN through an automated response
unit. However, FNS understands that PINs must be mailed separately from
EBT cards to prevent theft and fraudulent use of the card and that
clients cannot access their benefits without the PIN. Therefore, for
those State agencies that mail assigned PINs or provide that option, we
are specifically requiring that PINs and cards be mailed separately and
PINs be mailed one business day after the card is mailed. This
requirement applies to both initial issuance and card replacements.
Several other commenters felt State agencies should be required to
explain to the household their options for mailing or picking up a
replacement card and the timeframe associated with both. FNS wishes to
clarify that State agencies are not required to provide both mailing
and pick-up options, nor did FNS propose all State agencies should now
offer both options. In general, State agencies rely mostly on one
method or the other, providing the alternative option in only special
circumstances. Because there are both advantages and disadvantages
associated with each option, FNS continues to believe that State
agencies are in the best position to decide which option better meets
the needs of their SNAP population. Furthermore, training requirements
in 7 CFR 274.2(e) already require State agencies to inform all
households of the card replacement policies. Therefore, FNS will
continue to rely on the existing provision for informing clients of the
card replacement timeframes and possible options.
Finally, in response to a comment regarding the timeframes for
cards other than those that are lost or stolen, FNS is including
damaged cards in the card replacement provision in order to be
consistent with related language in other provisions.
Clarify the Definition of Trafficking
In the proposed rule, FNS clarified the definition of trafficking
to include the intent to sell SNAP benefits. FNS received numerous
comments that the definition of trafficking should use the word
``attempt'' instead of ``intent.'' Commenters state that the word
``intent'' permits State agencies to take action based on what people
are thinking and not what they are doing. ``Attempt'' consists of the
intent to do an act, an overt action beyond mere preparation, and the
failure to complete the act. FNS also received numerous comments that
the definition of ``trafficking'' should include the word ``buy'' as
well as the word ``sell''. FNS agrees with both of these comments and
has made this change in the final regulation language.
FNS received one comment that the rule should make clear that the
party found to have committed an IPV is the individual who violates, or
attempts to violate, the Program. Other members of the household,
including the head of household, should not be found to have committed
an IPV if they are not involved in the activity. FNS agrees with this
comment. FNS regulations under 7 CFR 273.16(b)(11) are clear that IPVs
are assigned to individuals who are found guilty and not the entire
household. FNS expects State agencies to comply with FNS regulations
and only the household member who committed the IPV is disqualified
from the Program. As this perspective is already clear in regulation,
no additional modifications are being made.
FNS received one comment that adding to a definition that already
prohibits this behavior is an expansion, not a clarification. The
comment further states that USDA already clarified in a policy memo
that the regulations already prohibit this behavior. FNS agrees that it
is amending the definition of ``trafficking'' to include the attempt to
buy and sell benefits, thus giving State agencies expanded means to
target both retailers and recipients who attempt to buy or sell SNAP
benefits online or in person.
FNS received five comments regarding eliminating the reference to
``coupons.'' FNS also received one comment that the definition should
include both recipients and retailers. A final rule titled,
Supplemental Nutrition Assistance Program (SNAP): Updated Trafficking
Definition and Supplemental Nutrition Assistance Program--Food
Distribution Program on Indian Reservations Dual Participation, 78 FR
11967 (Feb. 21, 2013) eliminates coupon terminology from the
trafficking definition and applies the trafficking definition to both
clients and retailers.
Procedural Matters
Executive Order 12866
This rule has been determined to be not significant and was
reviewed by the Office of Management and Budget (OMB) in conformance
with Executive Order 12866.
Regulatory Flexibility Act
This rule has been reviewed with regard to the requirements of the
Regulatory Flexibility Act (RFA) of 1980, 5 U.S.C. 601-612. Pursuant to
that review, it has been certified this rule would not have a
significant impact on a substantial number of small entities. State
agencies that distribute Supplemental Nutrition Assistance Program
benefits are the entities affected by this change.
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 $100 million
or more 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.
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 $100 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 Supplemental Nutrition Assistance Program is listed in the
[[Page 51656]]
Catalog of Federal Domestic Assistance Programs under 10.551. For the
reasons set forth in the final rule in 7 CFR part 3015, subpart V, and
related Notice (48 FR 29115, June 24, 1983), this program is included
in the scope of Executive Order 12372, which requires intergovernmental
consultation with State and local officials.
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. FNS has
considered this rule's impact on State and local agencies and has
determined that because the majority of States currently send warning
notices to households with four or more replacement card requests, this
rule does not have federalism implications under Executive Order 13132.
This rule does not impose substantial or direct compliance costs on
State and local governments. Therefore, under Section (6)(b) of the
Executive Order, a federalism summary impact statement is not required.
Executive Order 12988
This final rule has been reviewed under Executive Order 12988,
Civil Justice Reform. This final 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 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 this final rule in accordance with the Department
Regulation 4300-4, ``Civil Rights Impact Analysis,'' to identify and
address any major civil rights impacts the rule might have on
minorities, women and persons with disabilities. After a careful review
of the rule's intent and provisions, FNS has determined that this rule
will not in any way limit or reduce the ability of protected classes of
individuals to receive SNAP benefits on the basis of their race, color,
national origin, sex, age, disability, religion or political belief nor
will it have a differential impact on minority owned or operated
business establishments, and women owned or operated business
establishments that participate in SNAP.
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. In November of 2011 and May
of 2013, USDA engaged in a series of consultative sessions to obtain
input by Tribal officials or their designees concerning the impact of
this rule on the tribe or Indian Tribal governments, or whether this
rule may preempt Tribal law. Reports from these sessions for
consultation will be made part of the USDA annual reporting on Tribal
Consultation and Collaboration.
Paperwork Reduction Act
The Paperwork Reduction Act of 1995 (44 U.S.C. Chap. 35; see 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 and interim final rule contains information collections that
are subject to review and approval by OMB. Therefore, FNS has submitted
an information collection under 0584-NEW, which contains the burden
information in the rule for OMB's review and approval. The new
provisions in this rule, which increase current burden hours by 8,336
hours, will be merged into Supplemental Nutrition Assistance Program
(SNAP) Forms: Applications, Periodic Reporting, Notices, OMB Control
Number 0584-0064, expiration date 4/30/2016. These changes are
contingent upon OMB approval under the Paperwork Reduction Act of 1995.
When the information collection requirements have been approved, the
Department will publish a separate action in the Federal Register
announcing OMB's approval.
Comments on the information collection in this final and interim
final rule must be received by October 21, 2013. Send comments to the
Office of Information and Regulatory Affairs, OMB, Attention: Desk
Officer for FNS, Washington, DC 20503. Please also send a copy of your
comments to Jane Duffield, State Administration Branch, 3101 Park
Center Drive, Alexandria, VA 22302. For further information, or for
copies of the information collection requirements, please contact Jane
Duffield at the address indicated above. Comments are invited on: (1)
Whether the proposed collection of information is necessary for the
proper performance of the Agency's functions, including whether the
information will have practical utility; (2) the accuracy of the
Agency's estimate of the proposed information collection burden,
including the validity of the methodology and assumptions used; (3)
ways to enhance the quality, utility and clarity of the information to
be collected; and (4) 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 request for comments will be summarized and
included in the request for OMB approval. All comments will also become
a matter of public record.
Title: Supplemental Nutrition Assistance Program: Trafficking
Controls and Fraud Investigations.
OMB Number: 0584-NEW.
Expiration Date: Not Yet Determined.
Type of Request: New Collection.
Abstract:
This rule codifies provisions for State Agencies to issue warning
notices to withhold replacement cards or a notice for excessive
replacement cards.
Withhold Replacement Card Warning Notice: State agencies may
require an individual member of a household to contact the State agency
to provide an explanation in cases where the number of requests for
card replacements is determined excessive. The State agency must notify
the household in writing when it has reached the threshold, indicating
that the next request for card replacement will require the client to
contact the State agency to provide an explanation for the requests,
before the replacement card will be issued. The State agency must also
notify the household in writing once the threshold has been exceeded
and the State agency is withholding the card until contact is made.
Excessive Replacement Card Notice: State agencies must monitor all
client requests for EBT card replacements and send a notice, upon the
fourth request
[[Page 51657]]
in a 12-month period, alerting the household their account is being
monitored for potential, suspicious activity. The State agency is
exempt from sending this notice if they have chosen to exercise the
option to withhold the replacement card until contact is made with the
State agency.
The average burden per response and the annual burden hours are
explained below and summarized in the charts which follow.
Respondents for This Rule: State and Local Agencies; Households
Estimated Number of Respondents for This Rule: 23,864
Estimated Number of Responses per Respondent for This Rule: 2.49
Estimated Total Annual Responses: 59,528
Estimated Total Annual Burden on Respondents for This Rule: 8,336
Estimated Annual Burden for 0584-New Supplemental Nutrition Assistance Program: Trafficking Controls and Fraud, 7 CFR 274
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Number of Annual Total annual Burden hours Total burden
CFR Title respondents reports responses per response hours
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Affected Public: State and Local Agencies
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274.6(b)(5)........................... Withhold Replacement Card 26.5 449.26 11,905.5 0.0334 397.64
Warning Notice.
274.6(b)(5)........................... Replacement Card Withheld Notice 26.5 449.26 11,905.5 0.0334 397.64
274.6(b)(6)........................... Excessive Replacement Card 26.5 449.26 11,905.5 0.0334 397.64
Notice.
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Subtotal.......................... ................................ 53 673.896 35,716.5 0.0334 1,193
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Affected Public: Households
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274.6(b)(5)........................... Withhold Replacement Card 11,905.5 1 11,905.5 0.3 3,571.65
Warning Notice.
274.6(b)(5)........................... Replacement Card Withheld Notice 11,905.5 1 11,905.5 0.3 3,571.65
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Subtotal.......................... ................................ 23,811 1 23,811 0.3 7,143.30
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Grand Total....................... ................................ 23,864 2.494 59,527.5 0.1400 8,336
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The 8,336 burden hours will be merged with OMB 0584-0064.
List of Subjects in 7 CFR Parts 271 and 274
Food stamps, Grant programs-social programs, Reporting and
recordkeeping requirements.
For the reasons set forth in the preamble, 7 CFR parts 271 and 274
are amended as follows:
0
1. The authority citation for 7 CFR parts 271 and 274 continue to read
as follows:
Authority: 7 U.S.C. 2011-2036.
PART 271--GENERAL INFORMATION AND DEFINITIONS
0
2. In Sec. 271.2, add paragraph (6) to the definition of
``trafficking'' to read as follows:
Sec. 271.2 Definitions.
* * * * *
Trafficking means: * * *
(6) Attempting to buy, sell, steal, or otherwise affect an exchange
of SNAP benefits issued and accessed via Electronic Benefit Transfer
(EBT) cards, card numbers and personal identification numbers (PINs),
or by manual voucher and signatures, for cash or consideration other
than eligible food, either directly, indirectly, in complicity or
collusion with others, or acting alone.
* * * * *
PART 274--ISSUANCE AND USE OF PROGRAM BENEFITS
0
3. In Sec. 274.2, amend paragraph (b) by removing the last sentence
and by revising paragraph (f) to read as follows:
Sec. 274.2 Providing benefits to participants.
* * * * *
(f) EBT cards and Personal Identification Numbers (PINs). (1) State
agencies which issue EBT cards by mail shall, at a minimum, use first
class mail and sturdy nonforwarding envelopes or packages to send EBT
cards to households.
(2) The State agency shall permit SNAP households to select their
PIN.
(i) PIN assignment procedures shall be permitted in accordance with
industry standards as long as PIN selection is available to clients if
they so desire and clients are informed of this option.
(ii) If assigning a PIN by mail in conjunction with card issuance,
State agencies shall mail the PIN separate from the card one business
day after the card is mailed.
* * * * *
0
4. In Sec. 274.6:
0
a. Revise paragraph (b) introductory text and add paragraphs (b)(4) and
(5); and
0
b. Effective December 19, 2013, add paragraph (b)(6).
The revision and additions read as follows:
Sec. 274.6 Replacement issuances and cards to households.
* * * * *
(b) Providing replacement EBT cards or PINs. The State agency shall
make replacement EBT cards available for pick up or place the card in
the mail within two business days following notice by the household to
the State agency that the card has been lost, stolen or damaged unless
the State agency implements a replacement procedure pursuant to
paragraph (b)(5) of this section.
* * * * *
(4) Replacement card. The State agency shall issue replacement
cards and PINs in accordance with Sec. 274.2(f) of this chapter.
(5) State option to withhold replacement card. The State agency may
require an individual member of a household to contact the State agency
to provide an explanation in cases where the number of requests for
card replacements is determined excessive. If they so require, the
State agency must
[[Page 51658]]
establish a threshold for the number of card replacements during a
specified period of time to be considered excessive. That threshold
shall not be less than four cards requested within 12 months prior to
the request, unless the State agency has additional evidence indicating
a suspected trafficking violation, as defined at Sec. 271.2 of this
chapter. If a trafficking violation is suspected prior to the fourth
card request, the State agency shall refer the client for investigation
and, if deemed appropriate, may provide a notice to the client,
requiring the individual or household to contact the State agency to
provide an explanation prior to receiving a subsequent replacement
card.
(i) The State agency shall notify the household in writing when it
has reached the threshold, indicating that the next request for card
replacement will require contact with the State agency to provide an
explanation for the requests, before the replacement card will be
issued. The State agency shall also notify the household in writing
once the threshold has been exceeded that the State agency is
withholding the card until contact is made. These notices must:
(A) Be written in clear and simple language;
(B) Meet the language requirements described at Sec. 272.4(b) of
this chapter;
(C) Specify the number of cards requested and over what period of
time;
(D) Explain that the next request, or the current request if the
threshold has been exceeded, requires contact with the State agency
before another card is issued;
(E) Provide all applicable information on how contact is to be made
in order for the client to comply, such as whom to contact, a telephone
number and address;
(F) Include a statement that explains what is considered a misuse
or fraudulent use of benefits and the possibility of referral to the
fraud investigation unit for suspicious activity.
(ii) Following notification, should another card be requested, the
State agency shall require that the household contact the State agency
to provide an explanation for the requests. If the client makes
contact, the State agency shall make the replacement EBT card available
for pick up or place the card in the mail in accordance with Sec.
274.2(f) of this chapter within two business days following household
contact with the State agency, regardless of whether or not an
explanation was provided.
(A) If a household does not contact the State agency in response to
the State agency's notice, the State agency shall not issue a
replacement card to the household and the case must be referred for
investigation.
(B) The State agency shall educate the client on the proper use of
the card if the explanation is deemed appropriate and the State agency
shall not require contact upon subsequent requests, unless the pattern
of card activity has changed since the initial contact and indicates
possible trafficking activity.
(C) The State agency shall refer the individual for investigation
in cases where the individual contacts the State agency but refuses to
explain the card losses or the explanation provided appears to be
indicative of trafficking in accordance with Sec. 271.2 of this
chapter. The State agency shall issue a replacement card to any
household that makes the required contact so that the household has
access to benefits in its EBT account while the investigation is
underway and while awaiting a hearing, in accordance with Sec.
273.16(e)(5).
(iii) In all cases, a State agency shall act to protect households
containing homeless persons, elderly or disabled members, victims of
crimes and other vulnerable persons who may lose EBT cards but are not
committing fraud.
(6) Excessive Replacement Card Notice. The State agency shall
monitor all client requests for EBT card replacements and send a
notice, upon the fourth request in a 12-month period, alerting the
household that their account is being monitored for potential,
suspicious activity. If another replacement card is subsequently
requested and trafficking is suspected, the State agency shall refer
that case to the State's fraud investigation unit.
(i) The State agency shall be exempt from sending the Excessive
Replacement Card Notice if they have chosen to exercise the option to
withhold the replacement card until contact is made with the State
agency, in accordance with paragraph (b)(5) of this section, as long as
the State agency has chosen to use the minimum threshold, which
requires sending the first warning notice on the fourth card
replacement request within 12 months. If the State agency chooses to
use a threshold higher than the fourth card replacement request, the
State agency must send the Excessive Replacement Card Notice on the
fourth card request in accordance with this section.
(ii) The State agency shall notify the household in writing upon
their fourth card request that their case is being monitored. This
notice shall, at a minimum:
(A) Be written in clear and simple language;
(B) Meet the language requirements described at Sec. 272.4(b) of
this chapter;
(C) Specify the number of cards requested and over what period of
time;
(D) Explain that the transactions of the cardholder's account are
being monitored for potential trafficking activity;
(E) Include a statement that explains what is considered a misuse
or fraudulent use of benefits and the possibility of referral to the
State's fraud investigation unit for suspicious activity.
(F) Provide contact information, including a telephone number,
should the household have questions or concerns regarding the notice.
Dated: August 7, 2013.
Audrey Rowe,
Administrator, Food and Nutrition Service.
[FR Doc. 2013-20245 Filed 8-20-13; 8:45 am]
BILLING CODE 3410-30-P