Supplemental Nutrition Assistance Program: Pandemic Electronic Benefits Transfer (P-EBT) Integrity, 70043-70050 [2020-24303]
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70043
Rules and Regulations
Federal Register
Vol. 85, No. 214
Wednesday, November 4, 2020
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.
DEPARTMENT OF AGRICULTURE
Food and Nutrition Service
7 CFR Part 284
[FNS–2020–0028]
RIN 0584–AE80
Executive Summary
Supplemental Nutrition Assistance
Program: Pandemic Electronic
Benefits Transfer (P–EBT) Integrity
Background Information
Food and Nutrition Service
(FNS), Agriculture Department (USDA).
ACTION: Final rule.
AGENCY:
The Food and Nutrition
Service (FNS or the Agency), an agency
of the U.S Department of Agriculture
(USDA or the Department), is issuing a
final rule to add regulations that will
ensure the integrity of the supplemental
allotments created by Section 1101 of
the Families First Coronavirus Response
Act (FFCRA), as amended by the
Continuing Appropriations Act, 2021
and Other Extensions Act (CR) for
households with children who would
have otherwise received free or reduced
price school meals under the Richard B.
Russell National School Lunch Act, but
for school closures or reduction in the
number of days or hours that students
attend school in response to the ongoing
and national Coronavirus Disease 2019
(COVID–19) Public Health Emergency.
Such allotments are referred to as
Pandemic Electronic Benefits Transfer
(P–EBT) benefits. The CR extended the
authority for P–EBT through Fiscal Year
(FY) 2021, and also authorized P–EBT
for households with at least one child
enrolled in a covered child care facility
(as defined by Section 1101(i)(1) of the
FFCRA, as amended) and the
supplemental nutrition assistance
program (SNAP) when the covered child
care facility is closed or has reduced
attendance or hours or one or more
schools in the area of the covered child
care facility are closed or have reduced
attendance or hours. This final rule
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SUMMARY:
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would also safeguard the integrity of
SNAP, as P–EBT operates within the
SNAP infrastructure. USDA FNS is
responsible for administering P–EBT
and SNAP at the Federal level.
DATES: Effective Date: This final rule is
effective on November 4, 2020.
Notice Date: Within 10 calendar days
of November 4, 2020, SNAP authorized
firms shall be notified of the contents of
this final rule.
FOR FURTHER INFORMATION CONTACT:
Andrea Gold, the SNAP Retailer Policy
and Management Division, USDA FNS
at SM.FN.RPMDHQ-WEB@usda.gov;
703.305.2434.
SUPPLEMENTARY INFORMATION:
Establishment of P–EBT
On January 31, 2020, Secretary Azar
of the U.S. Department Health and
Human Services (HHS) declared a
public health emergency under section
319 of the Public Health Service Act (42
U.S.C. 247d), in response to the
Coronavirus Disease 2019 (COVID–19).
On March 13, 2020, President Trump
declared the ongoing COVID–19
outbreak in the U.S. to be a national
emergency. Due to COVID–19, many
schools nationwide began closing in
March 2020. In order to provide some
financial relief to families, on March 18,
2020, President Trump signed into law
the Families First Coronavirus Response
Act (FFCRA; Pub. L. 116–127). Section
1101 of the FFCRA, as originally
enacted, authorized USDA to approve
State plans to provide federally funded
food assistance to each household
containing at least one child who would
have received free or reduced price
school meals, but for school closures
lasting at least five consecutive days
during a public health emergency
declaration. The U.S. Department of
Agriculture (USDA or the Department)
refers to these benefits created by
Section 1101 of the FFCRA as Pandemic
Electronic Benefits Transfer (P–EBT)
benefits. The Continuing
Appropriations Act, 2021 and Other
Extensions Act (CR; Pub. L. 116–159)
amended Section 1101 of the FFCRA to
extend the authority for P–EBT through
FY 2021 (which would cover portions of
School Years 2020/2021 and 2021/2022)
and expanded P–EBT to include: (1)
Households with children whose
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schools reduce the number of days or
hours that students attend school for at
least five consecutive days during a
public health emergency, (2) households
with at least one child enrolled in a
covered childcare facility and SNAP
when the covered child care facility is
closed or has reduced attendance or
hours for at least five consecutive days
during a public health emergency, and
(3) households with at least one child
enrolled in a covered childcare facility
and SNAP when one or more schools in
the area of the covered child care
facility are closed or have reduced
attendance or hours for at least five
consecutive days during a public health
emergency.
The USDA’s Food and Nutrition
Service (FNS or the Agency) works to
end hunger and obesity through the
Federal administration of 15 Federal
nutrition assistance programs including
the National School Lunch Program
(NSLP), which provides free and
reduced price lunches to eligible
children, and the Supplemental
Nutrition Assistance Program (SNAP),
which provides nutrition benefits to
supplement the food budgets of needy
families so they can purchase healthy
food and move towards self-sufficiency.
FNS was, therefore, charged by Congress
with the implementation of P–EBT at
the Federal level. As of November 4,
2020, 52 States 1 have been approved by
USDA to administer P–EBT.
Collectively, these States have been
approved to provide over 30.1 million
eligible children with about $10.1
billion in food assistance benefits.
Section 1101(d) of the FFCRA
provided States the option to deliver P–
EBT benefits via the Electronic Benefit
Transfer (EBT) system established for
SNAP benefits by Section 7 of the Food
and Nutrition Act of 2008 (FNA; 7
U.S.C. 2016). All States, as defined by
1 All 50 states, the District of Columbia, the U.S.
Virgin Islands, and Guam are referred to as ‘‘States’’
for this rule, and all 53 States (as defined in section
3(r) of the Food and Nutrition Act) were eligible to
administer P–EBT under section 1101 of FFCRA as
originally enacted. Of those 53, only 52 have
requested P–EBT. While the CR extended the option
to receive P–EBT benefits to other State Agencies
not covered by the original FFCRA—Puerto Rico,
American Samoa, and the Northern Mariana
Islands—these territories manage retailer
participation as a part of their block grants.
Retailers in these territories are not currently
subject to 7 CFR part 278 and would not be subject
to 7 CFR part 284. As such, for purposes of this
rule, they are not included in any reference to
States or State Agencies.
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this rule, that have implemented P–EBT
have opted to use the EBT system for
such delivery.
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Routine Operation of SNAP Benefit
Issuance and Redemption
SNAP benefits are issued and
redeemed using the EBT system. Each
SNAP household has an account into
which SNAP benefits are issued on a
monthly basis. The SNAP benefits are
accessed by a household using an EBT
card and a personal identification
number (PIN), and may only be used to
purchase SNAP eligible food as defined
in 7 CFR 271.2.
In addition, SNAP benefits may only
be redeemed at firms 2 authorized by
USDA to accept SNAP benefits. Per
Section 9 of the FNA (7 U.S.C. 2018)
and 7 CFR 278.1(a), firms must apply to
and be authorized by the Department to
accept SNAP benefits as a form of
payment. The Department is responsible
for policy and oversight related to firm
eligibility, authorization, and
compliance. USDA oversight includes
integrity efforts such as findings of
violations on the basis of evidence
obtained through on-site investigations,
inconsistent SNAP redemption data,
and evidence obtained through a
transaction report under the EBT
system. Per 7 CFR 278.1, 278.6, and
278.7, firms that violate SNAP rules
may face the following:
Adverse Administrative Actions
• Denial (a firm applying for SNAP
authorization is found ineligible
and may not reapply for a specific
period)
• Withdrawal (an authorized firm is
found ineligible, removed from the
program, and may not reapply for a
specific period)
• Penalties (imposed after an
investigation revealed violations):
➢ Warning Letter (the violations
found at the firm do not rise to the
level of a sanction, so the firm is
only warned)
➢ Sanctions (the violations found at
the firm are serious, so the firm is
subject to a sanction):
Æ Claim (the firm must repay illicitly
obtained benefits)
Æ Disqualification (the firm may not
participate in the program for a
specific period)
Æ Civil Money Penalty (CMP; the firm
must pay a fine)
D Hardship CMP (a firm facing a term
disqualification in a low food
access area may pay a fine and
continue to participate in the
program)
2 As
defined at 7 CFR 271.2.
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D Transfer of Ownership CMP (a firm
is sold while serving a period of
disqualification and must pay a
fine)
D Trafficking CMP (a firm meeting
certain criteria may pay a fine in
lieu of permanent disqualification
for trafficking)
One of the most serious violations of
SNAP rules for firms is trafficking.
SNAP regulations at 7 CFR 271.2
currently define the violation of
trafficking. Trafficking usually means
the exchange of SNAP benefits for cash
or other consideration and carries more
serious sanctions for firms. The
Department monitors and takes
appropriate administrative action,
including sanctions, against firms that
engage in trafficking and other
violations. USDA cannot fulfill its
primary purpose of helping individuals
and families in need afford a basic diet
without maintaining strong program
integrity. USDA takes its role as a
steward of public funds seriously and
emphasizes program integrity
throughout all program operations,
including the use of a fraud detection
system to analyze data on EBT
transactions conducted at firms.
Implementation of P–EBT and
Interaction With SNAP
Per Section 1101(d) of the FFCRA, P–
EBT benefits may be issued through the
same EBT system established by Section
7 of the FNA (7 U.S.C. 2016) which is
used to issue SNAP benefits. To
accelerate the implementation of P–
EBT, ease administrative burden for
States, and more rapidly provide
emergency financial relief to families,
States generally issued P–EBT benefits
onto a household’s existing EBT card if
the household was already receiving
SNAP benefits (and therefore already
possessed an EBT card).
Initially, the Department planned to
implement P–EBT using a model similar
to that used for certain Child Nutrition
Summer EBT demonstration projects
(Summer EBT for Children or SEBTC) as
authorized by the Agriculture, Rural
Development, Food and Drug
Administration, and Related Agencies
Appropriations Act, 2010 (Pub. L. 111–
80). In this SEBTC model, benefits are
issued to a participant’s existing EBT
card into an account distinct from
SNAP, and the SEBTC benefits remain
separate from SNAP benefits throughout
the issuance and redemption process.
However, because this SEBTC model
was only ever implemented as a
demonstration project in 7 States, most
States were not already equipped with
the infrastructure needed to implement
P–EBT in the same manner.
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Due to the experience administering
these SEBTC demonstration projects,
USDA determined that it would take
several months to modify SNAP State
Agency eligibility and issuance systems
to accommodate this type of model for
P–EBT. In addition, due to the ongoing
and national COVID–19 Public Health
Emergency, SNAP State Agencies found
themselves extremely short-staffed and
unable implement this type of major
system modification.
After consultation with SNAP State
Agencies, and in light of the urgency of
the ongoing and national COVID–19
Public Health Emergency, USDA
permitted States to issue SNAP and P–
EBT benefits using essentially the same
existing SNAP EBT mechanism every
State already had in place. As a result
of this, however, P–EBT and SNAP
benefits are generally indistinguishable
throughout the issuance and redemption
process.
Under the process implemented by
States, P–EBT benefits were generally
issued onto a household’s existing EBT
card if the household was already
receiving SNAP benefits (and therefore
already possessed an EBT card). Such
SNAP households would have received
P–EBT benefit issuances into their
existing SNAP accounts. Once P–EBT
benefits were issued into households’
existing SNAP accounts, P–EBT benefits
and SNAP benefits became comingled,
and neither SNAP households receiving
P–EBT benefits nor firms accepting P–
EBT benefits were able to tell the
difference between these two types of
benefits. In at least one State, new cards
were sent to all P–EBT recipient
households, regardless as to their
participation in SNAP.
Non-SNAP households that were
eligible for P–EBT benefits generally
received EBT cards in the mail that were
loaded with only P–EBT benefits. These
cards issued to non-SNAP households
functioned identically to the EBT cards
provided to SNAP households.
Despite using the same delivery and
funding mechanism, P–EBT benefits are
not SNAP benefits. SNAP was
authorized and is governed by the FNA,
while P–EBT was separately created and
is governed by the FFCRA with separate
appropriations for a different purpose—
to provide supplemental allotments to
households with children who would
have otherwise received free or reduced
school meals, but for school closures
related to the ongoing and national
COVID–19 Public Health Emergency.
See Section 1101 of the FFCRA.
Nevertheless, the aforementioned
implementation mechanisms rendered
P–EBT and SNAP benefits essentially
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indistinguishable for benefit issuance
and redemption purposes.
Purpose of the Final Rule
Because P–EBT and SNAP benefits
are essentially indistinguishable for
benefit issuance and redemption
purposes when the benefits are loaded
onto the same EBT card, neither SNAP
households receiving P–EBT benefits
nor firms accepting P–EBT benefits are
able to tell the difference between these
two types of benefits. At the same time,
the Department’s SNAP fraud detection
system also cannot distinguish between
these two types of benefits.
In addition, as discussed earlier, 7
CFR parts 271 and 278 provide for
adverse administrative actions against
firms for SNAP violations, such as
trafficking, but those regulations govern
violations involving SNAP benefits, not
P–EBT benefits. Since P–EBT benefits
are not SNAP benefits, existing
regulations regarding the appropriate
use of SNAP benefits and the
consequences for misusing those
benefits do not apply to P–EBT benefits,
and there are currently no such
provisions for the misuse of P–EBT
benefits. However, USDA finds it
appropriate and necessary to impose
certain restrictions on the use of P–EBT
benefits for several reasons described
below.
Congress initially authorized P–EBT
as food assistance for households with
children who lost free or reduced price
school meals and since then, as
mentioned previously, has greatly
expanded P–EBT’s scope. P–EBT
benefits are not cash assistance, nor are
they intended for misuse such as
trafficking. As a type of replacement for
the value of meals at schools or covered
child care facilities,3 P–EBT is not
intended for certain incongruous uses,
including the purchase of nonfood items
such as alcohol and tobacco. To
safeguard the integrity of P–EBT (as well
as SNAP), this final rule will ensure that
the Department can hold firms
accountable by aligning P–EBT with
certain existing SNAP integrity
regulations. The Department believes
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3 As
authorized by the originally enacted Section
1101(b) of FFCRA and explained in Pandemic EBT
(P–EBT) Questions and Answers (April 15, 2020)
(available at: https://fns-prod.azureedge.net/sites/
default/files/resource-files/SNAP-COVIDPEBTQA.pdf), the guidelines for P–EBT benefit
amounts were based on the value of the rates for
free school meals. All States that issued P–EBT
benefits after the original enactment of the FFCRA
did so in amounts corresponding to the value of the
rates for free school meals. The CR subsequently
amended Section 1101(i) of the FFCRA to define
‘‘free rate’’ separately for breakfast and lunch, based
on the rates of those free meals under Section 4 of
the Child Nutrition Act of 1966 and the Richard B.
Russell National School Lunch Act, respectively.
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that providing an integrity scheme for
P–EBT helps ensure that P–EBT benefits
are used for their intended purpose,
upholding the Congressional intent of
both the FFCRA and the CR.
The inability to impose penalties on
all firms for misuse of P–EBT benefits
undermines USDA’s oversight and
integrity efforts, and would also
adversely affect SNAP oversight and
integrity. For example, in FY 2019,
USDA identified and sanctioned more
than one thousand firms engaged in the
trafficking of SNAP benefits.4 The
overwhelming majority of these cases
were built, at least in part, using the
Department’s SNAP fraud detection
system’s transaction data. Since the
Department’s SNAP fraud detection
system cannot distinguish between
SNAP and P–EBT benefits in transaction
data, USDA would be unable to use this
vital data in program integrity work
without considerable time-consuming
modifications and resources, or the
promulgation of this final rule.
Without this final rule, USDA’s ability
to hold violators accountable would be
adversely impacted. To illustrate the
impact on USDA’s oversight efforts, a
2017 report regarding trafficking
activities from 2012 through 2014
revealed that approximately 12 percent,
or about 36,000 firms, engaged in
trafficking, totaling approximately $1.1
billion a year or about 1.5% of all
benefits redeemed. If USDA were unable
to use EBT transaction data as is
typically done for detecting trafficking
and sanctioning trafficking firms, then
as many as a thousand fewer firms
engaging in trafficking would be
identified and sanctioned in a year.5
This would mean that such firms would
be able to continue to commit trafficking
violations without consequence,
resulting in as much as $31 million in
fraud a year that would remain
unchecked.6
4 Data drawn from USDA’s ‘‘Fiscal Year 2019
Year End Summary’’ (https://fnsprod.azureedge.net/sites/default/files/resourcefiles/2019-SNAP-Retailer-Management-Year-EndSummary.pdf).
5 Data drawn from USDA’s ‘‘Fiscal Year 2019
Year End Summary’’ (https://fnsprod.azureedge.net/sites/default/files/resourcefiles/2019-SNAP-Retailer-Management-Year-EndSummary.pdf).
6 The 2012–2014 retailer trafficking study
estimated that about 36,000 retailers engage in
trafficking totaling about $1.1 billion a year
(reflecting about 1.5% of benefits redeemed). Using
an arithmetic mean, the average trafficking retailer
traffics about $31,000 in a year. USDA identified
and sanctioned about 1,000 firms for trafficking in
FY 2019 using EBT transaction data analysis as an
investigative tool. If this USDA work were
hampered, then these firms could continue
trafficking activities at the same or a greater rate,
resulting in as much as $31 million in trafficking
being unchecked.
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70045
The purpose of P–EBT was to provide
financial relief to families in the midst
of the ongoing national COVID–19
Public Health Emergency. USDA
prioritized expediting the
implementation of P–EBT in States that
applied. However, while making
expeditious implementation possible,
the co-mingling of SNAP and P–EBT
benefits inadvertently introduced this
anomaly into FNS integrity efforts.
If USDA did not promulgate this final
rule, then USDA would not be able to
efficiently and effectively address
misuse by firms of P–EBT benefits or
SNAP benefits, and both P–EBT and
SNAP program integrity would be
adversely impacted. Assuming that P–
EBT benefits are trafficked at a rate
similar to SNAP benefits, USDA
estimates that $151 million in P–EBT
benefits could be trafficked.7 Currently,
USDA estimates that about 3 percent of
actual EBT fraud is detected through
investigations that utilize EBT
transaction data. The limited ability to
use this data would potentially cause
this fraud to go unchecked, which
would constitute a serious integrity
issue. Furthermore, because P–EBT
benefits may remain in a household’s
account for months or even years before
being expunged, USDA must address
these integrity problems; otherwise,
they could persist for months or even
years after the issuance of P–EBT
benefits.8 This final rule is crucial in
allowing USDA to address trafficking in
a timely manner and ensuring P–EBT
benefits, as well as SNAP benefits, are
used in a manner consistent with
Congressional intent.
This final rule allows USDA to
immediately address the integrity
issues, instead of prolonging them and
allowing for bad actors to discover the
anomaly and take advantage of it. If
USDA were to notify the public of these
integrity issues without implementing a
comprehensive solution, then such a
notice would subvert program integrity.
By promulgating this final rule, USDA
is ensuring that traditional mechanisms
of ongoing and robust firm oversight
7 Total P–EBT benefit issuance is about $10.1
billion and the estimated 2012–2014 SNAP retailer
trafficking rate is 1.5% of benefits redeemed.
8 For administrative ease, most States chose to
issue P–EBT benefits such that these benefits would
only be expunged from beneficiaries’ SNAP
accounts after a continuous 365-day period of
inactivity per SNAP standards at 7 CFR 274.2(h)(2)
as they were when P–EBT State Plans were
submitted. Every time a beneficiary accesses their
benefits, this 365-day expungement clock is reset.
Some beneficiaries may choose to conserve their P–
EBT benefits, using them sparingly over a
protracted period. Therefore, although P–EBT is
currently authorized through September 30, 2020,
P–EBT benefits could remain on EBT cards years
after that date.
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and enforcement are maintained to
protect the integrity of both P–EBT and
SNAP and that the current lack of P–
EBT integrity regulations is addressed
without further unnecessary and
harmful delay. This will allow USDA to
continue detecting and pursuing
administrative remedies to ensure there
is no increase in trafficking and other
violations.
Importantly, given the urgency of the
issue, it is most efficient for P–EBT
regulations to adopt the structure and
meaning of SNAP regulations instead of
crafting an entirely new regulatory
scheme and implementing massive
system changes that would accompany
such a new regulatory scheme. Such
separate undertakings solely for P–EBT
are impractical and potentially
ineffective because of the time, cost, and
effort involved.
For the reasons discussed, this final
rule establishes integrity regulations (as
enumerated in this final rule) for P–EBT
benefits as detailed further below in the
‘‘Summary of P–EBT Regulations’’
section.
Summary of P–EBT Regulations
This final rule establishes that P–EBT
benefits issued pursuant to Section 1101
benefits (e.g., trafficking only P–EBT
benefits or trafficking a combination of
P–EBT and SNAP benefits), then that
firm shall be subject to the appropriate
sanction (e.g., permanent
disqualification or a civil money penalty
in lieu of permanent disqualification).
Firms shall not be subject to multiple
sanctions for a single investigation that
involves both P–EBT and SNAP benefits
(i.e., firms shall not be subject to one
sanction for misuse of P–EBT benefits
and a separate sanction for misuse of
SNAP benefits based on a single
investigation).
While this final rule promulgates
provisions for P–EBT benefits that
generally track the corresponding SNAP
benefit provisions, one exception is the
P–EBT benefits provision concerning
judicial review. As P–EBT benefits arise
from FFCRA, as amended regulations at
§ 284.1(g) will provide for judicial
appeal rights pursuant the
Administrative Procedure Act (5 U.S.C.
702 through 706) as opposed to section
14 of the FNA. Currently, judicial
review requests for civil cases filed
pursuant to the Administrative
Procedure Act have a six-year statute of
limitations. See 28 U.S.C. 2401(a).
Citation in this final rule
Purpose of final rule provision
7 CFR 284.1(a) ................
7 CFR 284.1(b)(1) ............
background on P–EBT and the function of this section .................................
definition of trafficking applies to activities described in such definition involving P–EBT benefits.
definition of firm’s practice applies to activities described in such definition
involving P–EBT benefits.
definition of involving P–EBT benefits or involve P–EBT benefits means activities involving P–EBT benefits as well as SNAP benefits, or only P–
EBT benefits.
requirements and restrictions on the participation of retail food stores and
wholesale food concerns and the redemption of coupons apply to activities involving P–EBT benefits, including the restriction that P–EBT benefits may only be accepted by an authorized firm and only in exchange for
eligible food.
a firm may be subject to denial or withdrawal for any violations involving P–
EBT benefits as specified in the subparagraphs.
firms with certain sanctions for violations involving P–EBT benefits must
submit a collateral bond or irrevocable letter or credit as a condition of
authorization; the calculation of the value of such collateral bonds or irrevocable letters or credit shall also include the amount of P–EBT redemptions.
authorization will be denied or withdrawn for activities indicating a lack of
necessary business integrity and reputation, including activities involving
P–EBT benefits.
authorization will be denied or withdrawn for failure to pay fines, penalties,
and claims imposed for violations involving P–EBT benefits.
a firm may be subject to disqualification, monetary penalties, and/or fines
for any violations that include activities involving P–EBT benefits as specified in the subparagraphs.
permanent disqualification or civil monetary penalty in lieu of permanent
disqualification for trafficking applies to trafficking that involves P–EBT
benefits.
permanent disqualification for violations involving P–EBT benefits, such as
the sale of ineligible items, when the firm had already been sanctioned at
least twice.
sanctions for unauthorized acceptance apply to transactions involving P–
EBT benefits.
7 CFR 284.1(b)(2) ............
7 CFR 284.1(b)(3) ............
7 CFR 284.1(c) .................
7 CFR 284.1(d) ................
7 CFR 284.1(d)(1) ............
7 CFR 284.1(d)(2) ............
7 CFR 284.1(d)(3) ............
7 CFR 284.1(e) ................
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of the FFCRA, as amended by the
Continuing Appropriations Act, 2021
and Other Extensions Act (CR; Pub. L.
116–159) or any subsequent legislation,
are subject to integrity regulations, as
enumerated below. This change will
ensure that P–EBT (as well as SNAP) is
administered in a manner that
safeguards against fraud and abuse. This
final rule renames the previously
reserved part 284 as ‘‘Miscellaneous’’
and creates § 284.1, titled ‘‘Pandemic
Electronic Benefits Transfer (P–EBT),’’
therein.
The following crosswalk summarizes
the provisions of this new § 284.1. The
left column lists the citation for each
final rule provision, the center column
summarizes the effect of the provision,
and the right column indicates the
preexisting SNAP integrity regulation to
which the final rule provision refers. In
using phrases such as ‘‘involving P–EBT
benefits’’, the Department means that
the activity at issue involves P–EBT
benefits as well as SNAP benefits, or
only P–EBT benefits. Under 7 CFR
278.6, a firm that commits serious
violations may be subject to a period of
disqualification or a civil money
penalty. Under this final rule, if a firm
commits violations involving P–EBT
7 CFR 284.1(e)(1) ............
7 CFR 284.1(e)(2) ............
7 CFR 284.1(e)(3) ............
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Reference to preexisting regulation
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n/a.
7 CFR 271.2.
7 CFR 271.2.
n/a.
7 CFR 278.2, 278.3, and 278.4.
7 CFR 278.1.
7 CFR 278.1(b)(4).
7 CFR 278.1(b)(3), (k)(3) and (6), and
(l)(1)(iv).
7 CFR 278.1(k)(7) and (l)(1)(v) and
(vi).
7 CFR 278.6.
7 CFR 278.6(e)(1)(i) and (i).
7 CFR 278.6(e)(1)(ii).
7 CFR 278.6(e)(2)(v), (e)(3)(iv), and
(m).
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Citation in this final rule
Purpose of final rule provision
7 CFR 284.1(e)(4) ............
5-year disqualification for certain firms when collective redemptions exceed
food sales in a certain time period; the amount of redemptions shall also
include the amount of P–EBT redemptions.
3-year disqualification for any of the violations described in § 278.6(e)(2)
when FNS had not previously advised the firm of the possibility that violations were occurring and of the possible consequences of violating the
regulations, when those violations involve P–EBT benefits.
1-year disqualification for transactions involving P–EBT benefits where retailer accepted benefits in payment for items sold on credit.
disqualifications for sale of ineligible foods applies to transactions involving
P–EBT benefits.
periods of disqualification imposed against firms will be doubled when such
firms have been sanctioned for committing violations involving P–EBT
benefits.
warning letters shall be issued to firms when such firms commit violations
involving P–EBT benefits, which are too limited to warrant a period of disqualification.
calculation of hardship and transfer of ownership civil money penalties includes consideration of the firm’s average monthly redemption of P–EBT
benefits.
calculation of trafficking civil money penalties includes consideration of the
firm’s average monthly redemption of P–EBT benefits.
standards regarding the determination and disposition of claims apply to
claims based on P–EBT benefits.
firms aggrieved by administrative action under § 284.1(d), (e), and (f) may
request administrative review in accordance with part 279, subpart A.
Firms aggrieved by the determination of such an administrative review
may seek judicial review under 5 U.S.C. 702 through 706.
7 CFR 284.1(e)(5) ............
7 CFR 284.1(e)(6) ............
7 CFR 284.1(e)(7) ............
7 CFR 284.1(e)(8) ............
7 CFR 284.1(e)(9) ............
7 CFR 284.1(e)(10) ..........
7 CFR 284.1(e)(11) ..........
7 CFR 284.1(f) .................
7 CFR 284.1(g) ................
Procedural Matters
Administrative Procedure Act (APA)
Statement
The Administrative Procedure Act of
1946, as amended (APA; 5 U.S.C. 553),
generally requires that agencies go
through notice-and-comment
rulemaking before finalizing regulations
and have a 30-day delayed effective date
for final rules. The APA, however,
allows for exemptions to these
requirements. This final rule is being
promulgated under one of these
exemptions, as described below.
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APA Exemption for Rules Pertaining to
Benefits
The APA provides that the noticeand-comment and 30-day delay in the
effective date provisions do not apply
when a rule concerns ‘‘a matter relating
to agency management or personnel or
to public property, loans, grants,
benefits, or contracts.’’ 5 U.S.C.
553(a)(2). P–EBT is a food assistance
benefit created by the FFCRA and,
therefore, USDA has the authority under
FFCRA to issue a final rule pertaining
to P–EBT without notice-and-comment
or a delayed effective date.9
9 Previously, USDA utilized APA notice-andcomment rulemaking procedures regardless of the
APA exemption for benefits, pursuant to the
‘‘Public Participation in Rule Marking: Statement of
Policy’’ (Statement of Policy), published on July 24,
1971 (36 FR 13804). However, this Statement of
Policy was rescinded in 2013. 78 FR 64194 (Oct. 28,
2013). Additionally, while Section 4(c) of the FNA
(7 U.S.C. 2013(c)) generally requires USDA FNS to
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Reference to preexisting regulation
Executive Order 12866 and Executive
Order 13563
Executive Orders 12866 and 13563
direct agencies to assess all costs and
benefits of available regulatory
alternatives and, if regulation is
necessary, to select regulatory
approaches that maximize net benefits
(including potential economic,
environmental, public health, and safety
effects, distributive impacts, and
equity). Executive Order 13563
emphasizes the importance of
quantifying both cost and benefits, of
reducing cost, of harmonizing rules, and
of promoting flexibility.
The Office of Management and Budget
(OMB) has reviewed this final rule and
determined that it is not significant
under Executive Order 12866 (E.O.
12866). E.O. 12866 defines a
‘‘significant regulatory action’’ as one
comply with the APA requirements when
promulgating SNAP regulations under the FNA,
this final rule is promulgated under the FFCRA, not
the FNA. Therefore, this final rule regarding P–EBT
benefits is exempt from the APA notice-andcomment and 30-day delay in the effective date
provisions under 5 U.S.C. 553(a)(2). Furthermore,
while notice-and-comment rulemaking remains an
option for matters involving benefits, USDA is
choosing to promulgate a final rule for P–EBT
benefits under the authority in 5 U.S.C. 553(a)(2)
because the additional time to undergo notice-andcomment would further undermine integrity. Firms
are already subject to certain requirements
regarding the redemption of SNAP benefits on EBT
cards; therefore, carrying over those requirements to
P–EBT benefits that are often comingled with SNAP
benefits on the same EBT cards does not warrant
departure from 5 U.S.C. 553(a)(2).
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70047
7 CFR 278.6(e)(2)(ii), (iii), and (iv).
7 CFR 278.6(e)(3)(ii).
7 CFR 278.6(e)(4)(ii) and 278.2(f).
7
CFR
278.6(e)(2)(i),
(e)(4)(i), and (e)(5).
7 CFR 278.6(e)(6).
(e)(3)(i),
7 CFR 278.6(e)(7).
7 CFR 278.6(g).
7 CFR 278.6(j).
7 CFR 278.7.
7 CFR part 279.
that is likely to: (1) Have an annual
effect on the economy of $100 million
or more or adversely affect, in a material
way, the economy, a sector of the
economy, productivity, competition,
jobs, the environment, public health or
safety, or State, local, or Tribal
governments or communities; (2) create
a serious inconsistency or otherwise
interfere with an action taken or
planned by another agency; (3)
materially alter the budgetary impact of
entitlements, grants, user fees, or loan
programs or the rights and obligations of
recipients thereof; or (4) raise novel
legal or policy issues arising out of legal
mandates, the President’s priorities, or
the principles set forth in E.O. 12866.
This final rule does not meet any of
these criteria.
The Department does not anticipate
that this final rule will impose any
additional costs on firms, beneficiary
households, SNAP State Agencies, or
any other stakeholders. USDA estimates
that failure to promulgate and
implement this final rule would
significantly hamper the agency’s ability
to enforce regulation and law in
maintaining SNAP integrity. USDA
considered the regulatory alternatives of
taking no action or promulgating this
final rule instead as a notice of proposed
rulemaking, but these approaches were
rejected for the reasons provided in the
preamble. As this rule was designated
not significant, no additional regulatory
impact analysis has been performed for
this rule.
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Regulatory Flexibility Act Certification
The Regulatory Flexibility Act (RFA)
generally requires that agencies must
prepare a regulatory flexibility analysis
that meets the requirements of the RFA
and publish such an analysis in the
Federal Register. Specifically, the RFA
normally requires agencies to describe
the impact of a rulemaking on small
entities by providing a regulatory
impact analysis. Such an analysis must
address the consideration of regulatory
options that would lessen the economic
effect of the rule on small entities. The
RFA defines a ‘‘small entity’’ as (1) a
proprietary firm meeting the size
standards of the Small Business
Administration (SBA); (2) a nonprofit
organization that is not dominant in its
field; or (3) a small government
jurisdiction with a population of less
than 50,000. Except for such small
government jurisdictions, neither State
nor local governments are ‘‘small
entities.’’ Similarly, for purposes of the
RFA, individual persons are not small
entities. The requirement to conduct a
regulatory impact analysis does not
apply if the agency ‘‘certifies that the
rule will not, if promulgated, have a
significant economic impact on a
substantial number of small entities.’’
The Department hereby certifies that
this final rule will not have a significant
economic impact on a substantial
number of small entities.
Congressional Review Act
Pursuant to the Congressional Review
Act (CRA; Pub. L. 104–121), OMB has
designated this action as not a major
rule, as defined by 5 U.S.C. 804(2). The
CRA defines a ‘‘major rule’’ as any rule
that has resulted in or is likely to result
in: an annual effect on the economy of
$100,000,000 or more; a major increase
in costs or prices for consumers,
individual industries, Federal, State, or
local government agencies, or
geographic regions; or, significant
adverse effects on competition,
employment, investment, productivity,
innovation, or on the ability of U.S.based enterprises to compete with
foreign-based enterprises in domestic
and export markets.
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Executive Order 13771
Executive Order 13771 directs
agencies to reduce regulation and
control regulatory costs and provides
that the cost of planned regulations be
prudently managed and controlled
through a budgeting process. This rule
is not an E.O. 13771 regulatory action
because it is not significant under E.O.
12866.
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Executive Order 12988, Civil Justice
Reform
This final rule has been reviewed
under Executive Order 12988 (E.O.
12988), Civil Justice Reform. This rule is
intended to have preemptive effect with
respect to any State or local laws,
regulations, or policies which conflict
with its provisions or which would
otherwise impede its full and timely
implementation. This final rule is not
intended to have retroactive effect. Prior
to any judicial challenge to the
provisions of the final rule, all
applicable administrative procedures
must be exhausted.
Executive Order 12372,
Intergovernmental Review
Executive Order 12372 (E.O. 12372)
requires intergovernmental consultation
with State and local governments that
would provide non-Federal funds for, or
that would be directly affected by,
proposed Federal financial assistance or
direct Federal development. This is a
final rule regarding benefits fully
funded by the Federal Government and
is therefore excluded from the scope of
E.O. 12372.
Executive Order 13132, Federalism
Executive Order 13132 (E.O. 13132)
requires Federal agencies to consider
the impact of their regulatory actions on
State and local governments. Where
such actions have federalism
implications, imposes substantial direct
compliance costs on State and local
government, and are not required by
statute, 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 E.O. 13132.
The Department has considered the
impact of this final rule on State and
local governments and has determined
that this rule does not have federalism
implications. Therefore, a federalism
impact summary is not required.
Executive Order 13175, Consultation
and Coordination With Indian Tribal
Governments
Executive Order 13175 (E.O. 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
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Federal Government and Indian Tribes.
The Department has considered the
impact of this final rule on Indian
Tribes and has determined that this rule
does not have Tribal implications.
Although Tribal consultation and
coordination is not required under E.O.
13175, USDA commits to review of this
rule at the Department’s next scheduled
Tribal listening session in case
unexpected Tribal government issues or
concerns emerge during
implementation.
Paperwork Reduction Act
The Paperwork Reduction Act of 1995
(44 U.S.C. Chap. 35; 5 CFR part 1320)
requires the Office of Management and
Budget (OMB) approve collections of
information by a Federal agency before
they can be implemented.
In accordance with 44 U.S.C.
3518(c)(1)(B)(ii), any information
requests or requirements in this rule are
not subject to the requirements of the
Paperwork Reduction Act because such
collections of information are pursuant
to an administrative action or
investigation by an agency of the United
States against specific individuals or
entities. The Secretary hereby certifies
that this rule does not impose reporting
or recordkeeping requirements subject
to the approval by the Office of
Management and Budget under the
requirements of the Paperwork
Reduction Act.
E-Government Act Compliance
USDA is committed to the EGovernment Act, which requires
Government agencies in general to
provide the public the option of
submitting information or transacting
business electronically to the maximum
extent possible. An electronic copy of
this final rule will be made available
through the agency’s website.
Unfunded Mandates Reform Act
This final rule contains no Federal
mandates (under the regulatory
provision of title II of the Unfunded
Mandates Reform Act of 1995) for State,
local, and Tribal governments or the
private sector. Therefore, this final rule
is not subject to the requirements of
section 202 and 205 of the Unfunded
Mandates Reform Act.
Civil Rights Impact Analysis
USDA FNS has reviewed this final
rule in accordance with USDA
Regulation 4300–4, ‘‘Civil Rights Impact
Analysis,’’ to identify any major civil
rights impacts this final rule might have
on SNAP or P–EBT participants on the
basis of age, race, color, national origin,
sex or disability. After review and
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analysis of the final rule and available
data, it has been determined that this
final rule will neither adversely nor
disproportionately impact any protected
group. As this final rule has not been
designated a ‘‘significant regulatory
action,’’ a separate Civil Rights Impact
Analysis (CRIA) is not required per
Section 7(a) of USDA Regulation 4300–
4, ‘‘Civil Rights Impact Analysis.’’
USDA Non-Discrimination Policy
In accordance with Federal civil
rights law and USDA civil rights
regulations and policies, the USDA, its
Agencies, offices, and employees, and
institutions participating in or
administering USDA programs are
prohibited from discriminating based on
race, color, national origin, religion, sex,
gender identity (including gender
expression), sexual orientation,
disability, age, marital status, family/
parental status, income derived from a
public assistance program, political
beliefs, or reprisal or retaliation for prior
civil rights activity, in any program or
activity conducted or funded by USDA
(not all bases apply to all programs).
Remedies and complaint filing
deadlines vary by program or incident.
Persons with disabilities who require
alternative means of communication for
program information (e.g., Braille, large
print, audiotape, American Sign
Language) should contact the
responsible Agency or USDA’s TARGET
Center at (202) 720–2600 (voice and
TTY) or contact USDA through the
Federal Relay Service at (800) 877–8339.
Additionally, program information may
be made available in languages other
than English.
To file a program discrimination
complaint, complete the USDA Program
Discrimination Complaint Form, AD–
3027, found online at https://
www.ascr.usda.gov/complaint_filing_
cust.html and at any USDA office or
write a letter addressed to USDA and
provide in the letter all of the
information requested in the form. To
request a copy of the complaint form,
call (866) 632–9992. Submit your
completed form or letter to USDA by: (1)
Mail: U.S. Department of Agriculture,
Office of the Assistant Secretary for
Civil Rights, 1400 Independence
Avenue SW, Washington, DC 20250–
9410; (2) fax: (202) 690–7442; or (3)
email: program.intake@usda.gov.
USDA is an equal opportunity
provider, employer, and lender.
List of Subjects in 7 CFR Part 284
Administrative practice and
procedure, Food stamps, Grant
programs-social programs, Pandemic,
Penalties.
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For the reasons set out in the
preamble, 7 CFR part 284 is added to
read as follows:
■
PART 284—MISCELLANEOUS
Sec.
284.1 Pandemic Electronic Benefits
Transfer (P–EBT).
284.2 [Reserved]
Authority: Pub. L. 116–127, 134 Stat. 178.
§ 284.1 Pandemic Electronic Benefits
Transfer (P–EBT).
(a) Overview. Section 1101 of the
Families First Coronavirus Response
Act (FFCRA; Pub. L. 116–127), as
amended, authorized supplemental
allotments to certain households. These
benefits shall be referred to as Pandemic
Electronic Benefits Transfer (P–EBT)
benefits throughout this section. This
section establishes the retailer integrity
regulations for P–EBT for retailers in
any State as defined in Section 3(r) of
the Food and Nutrition Act.
(b) Definitions. For this section:
(1) Trafficking means the activities
described in the definition of trafficking
at § 271.2 of this chapter when such
activities involve P–EBT benefits.
(2) Firm’s practice means the
activities described in the definition of
firm’s practice at § 271.2 of this chapter
when such activities involve P–EBT
benefits.
(3) Involving P–EBT benefits or
involve P–EBT benefits means activities
involving P–EBT benefits as well as
supplemental nutrition assistance
program (SNAP) benefits, or only P–EBT
benefits.
(c) Participation of retail food stores
and wholesale food concerns, and
redemption of P–EBT benefits.
Requirements and restrictions on the
participation of retail food stores and
wholesale food concerns and the
redemption of coupons described at
§§ 278.2, 278.3 and 278.4 of this
chapter, including the acceptance of
coupons for eligible food at authorized
firms, also apply to activities involving
P–EBT benefits.
(d) Firm eligibility standards. A firm
may be subject to the following actions
described at § 278.1 of this chapter for
noncompliance or violations involving
P–EBT benefits:
(1) The requirements described at
§ 278.1(b)(4) of this chapter regarding a
collateral bond or irrevocable letter of
credit for applicant firms with certain
sanctions apply to applicant firms with
sanctions imposed for violations
involving P–EBT benefits. The amount
of the collateral bond or irrevocable
letter of credit shall be calculated in
accordance with § 278.1(b)(4)(i)(D) and
shall also include the amount of P–EBT
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70049
benefit redemptions when calculating
the average monthly benefit redemption
volume.
(2) Authorization shall be denied or
withdrawn based on a determination by
the Food and Nutrition Service (FNS)
that a firm lacks or fails to maintain
necessary business integrity and
reputation, in accordance with the
standards and time periods described at
§ 278.1(b)(3), (k)(3), and (l)(1)(iv) of this
chapter. When making such
determinations, FNS shall consider the
criteria referred to in § 278.1(b)(3),
(k)(3), and (l)(1)(iv) where the
underlying activities involve P–EBT
benefits.
(3) Firm authorization shall be denied
or withdrawn for failure to pay any
claims, fines, or civil money penalties in
the manner described at § 278.1(k)(7)
and (l)(1)(v) and (vi) of this chapter
where such sanctions were imposed for
violations involving P–EBT benefits.
(e) Penalties. For firms that commit
certain violations described at §§ 278.6
and 278.2 of this chapter where such
violations involve P–EBT benefits, FNS
shall take the corresponding action
prescribed at § 278.6 or § 278.2 for that
violation. For the purposes of assigning
a period of disqualification, a warning
letter shall not be considered to be a
sanction. Specifically, FNS shall:
(1) Disqualify a firm permanently, as
described at § 278.6(e)(1)(i) of this
chapter, for trafficking, as defined at
§ 284.1(b)(1) of this chapter, or impose
a civil money penalty in lieu of
permanent disqualification, as described
at § 278.6(i) of this chapter, where such
compliance policy and program is
designed to prevent violations of
regulations of this section;
(2) Disqualify a firm permanently, as
described at § 278.6(e)(1)(ii) of this
chapter, for any violation involving P–
EBT benefits committed by a firm that
had already been sanctioned at least
twice before under this section or part
278 of this chapter;
(3) Disqualify the firm for 5 years, as
described at § 278.6(e)(2)(v) of this
chapter, or for 3 years, as described at
§ 278.6(e)(3)(iv) of this chapter, for
unauthorized acceptance violations
involving P–EBT benefits, and impose
fines, as described at § 278.6(m) of this
chapter, for unauthorized acceptance
violations involving P–EBT benefits;
(4) Disqualify the firm for 5 years in
circumstances described at § 278.6(e)(2)
of this chapter when the amount of
redemptions, which shall also include
the amount of P–EBT redemptions,
exceed food sales for the same period of
time, as described at § 278.6(e)(2)(ii),
(iii), and (iv);
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(5) Disqualify the firm for 3 years as
described at § 278.6(e)(3)(ii) of this
chapter for situations described at
§ 278.6(e)(2) of this chapter involving P–
EBT benefits;
(6) Disqualify the firm for 1 year for
credit account violations as described at
§§ 278.6(e)(4)(ii) and 278.2(f) of this
chapter, where such violations involve
P–EBT benefits;
(7) Disqualify the firm for ineligibles
violations for such circumstances and
corresponding time periods as described
at § 278.6(e)(2)(i), (e)(3)(i), (e)(4)(i), and
(e)(5) of this chapter, where such
violations involve P–EBT benefits;
(8) Double the appropriate period of
disqualification for a violation, as
described at § 278.6(e)(6) of this chapter,
where such violation involves P–EBT
benefits, when the firm has once before
been assigned a sanction under this
section or part 278 of this chapter;
(9) Issue a warning letter to the
violative firm when violations are too
limited to warrant a period of
disqualification, as described at
§ 278.6(e)(7) of this chapter, where such
violations involve P–EBT benefits;
(10) Impose a civil money penalty for
hardship or transfer of ownership, as
described at § 278.6(g) of this chapter, in
amounts calculated using the described
formula at § 278.6(g), which shall also
include the relevant amount of P–EBT
redemptions when calculating the
average monthly benefit redemptions;
and
(11) Impose a civil money penalty in
lieu of permanent disqualification for
trafficking as described at § 278.6(j) of
this chapter in an amount calculated
using the described formula at § 278.6(j),
which shall also include the relevant
amount of P–EBT redemptions when
calculating the average monthly benefit
redemptions.
(f) Claims. The standards for
determination and disposition of claims
described at § 278.7 of this chapter
apply to P–EBT benefits.
(g) Administrative and Judicial
review. Firms aggrieved by
administrative action under paragraphs
(d), (e), and (f) of this section may
request administrative review of the
administrative action with FNS in
accordance with part 279, subpart A, of
this chapter. Firms aggrieved by the
determination of such an administrative
review may seek judicial review of the
determination under 5 U.S.C. 702
through 706.
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§ 284.2
[Reserved]
II. Section-by-Section Analysis
Pamilyn Miller,
Administrator, Food and Nutrition Service.
[FR Doc. 2020–24303 Filed 11–3–20; 8:45 am]
BILLING CODE 3410–30–P
SMALL BUSINESS ADMINISTRATION
13 CFR Part 125
RIN 3245–AH14
Regulatory Reform Initiative:
Government Contracting Programs
U.S. Small Business
Administration.
AGENCY:
ACTION:
Final rule.
With this deregulatory action,
the U.S. Small Business Administration
(SBA) is removing from the Code of
Federal Regulations (CFR) four
regulations in the Service-Disabled
Veteran-Owned (SDVO) Small Business
Concern (SBC) Program that are no
longer necessary because they are
unnecessary or redundant. The removal
of these regulations assists the public by
simplifying SBA’s regulations in the
CFR.
SUMMARY:
DATES:
This rule is effective December 4,
2020.
FOR FURTHER INFORMATION CONTACT:
Khem Sharma, Chief, Office of Size
Standards, (202) 205–7189 or
khem.sharma@sba.gov.
SUPPLEMENTARY INFORMATION:
I. Background Information
On February 4, 2020, SBA published
a proposed rule with request for
comments in the Federal Register to
remove four regulations from the SDVO
SBC program. 85 FR 6106. This program
allows agencies to set aside contracts for
SDVO SBCs. Under this program,
Federal Agencies may also award sole
source contracts to SDVO SBCs so long
as the award can be made at a fair and
reasonable price and the anticipated
total value of the contract, including any
options, is below $4 million ($6.5
million for manufacturing contracts).
For purposes of this program, veterans
and service-related disabilities are
defined as they are under the statutes
governing veterans’ affairs, 38 U.S.C.
101.
SBA received no comments to the
proposed rule. As such, SBA is
finalizing the rule by removing four
regulations that are unnecessary or
covered elsewhere in the CFR.
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§ 125.15 May an SDVO SBC have
affiliates?
Section 125.15 provides that an SDVO
SBC may have affiliates. This rule is
redundant because whether an SDVO
SBC can have an affiliate is addressed
in 13 CFR 121.103, the general rules of
affiliation.
§ 125.16 May 8(a) program
participants, HUBZone SBCs, small and
disadvantaged businesses, or womenowned small businesses qualify as
SDVO SBCs?
Section 125.16 states that an SDVO
SBC may qualify for other SBA
contracting programs. This regulation is
unnecessary because the requirements
for an SDVO SBC to qualify for other
programs are addressed in the rules on
eligibility for those specific programs.
§ 125.19 Does SDVO SBC status
guarantee receipt of a contract?
Section 125.19 states that an SDVO
SBC is not guaranteed receipt of a
contract. This provision is unnecessary
because nothing in SBA’s regulations
indicates that qualifying as an SDVO
SBC entitles a firm to a contract.
§ 125.20 Who decides if a contract
opportunity for SDVO competition
exists?
Section 125.20 is redundant because
13 CFR 125.22 and 125.23 already
provide that contracting officers make
SDVO SBC competition decisions.
III. Compliance With Executive Orders
12866, 13771, 12988, and 13132, the
Paperwork Reduction Act (44 U.S.C.,
Ch. 35), and the Regulatory Flexibility
Act (5 U.S.C. 601–612)
A. Executive Order 12866
The Office of Management and Budget
(OMB) has determined that this rule
does not constitute a significant
regulatory action for purposes of
Executive Order 12866 and is not a
major rule under the Congressional
Review Act, 5 U.S.C. 801, et seq.
B. Executive Order 13771
This rule is expected to be an
Executive Order 13771 deregulatory
action with an annualized net savings of
$33,669 and a net present value of
$480,986, both in 2016 dollars.
The four regulations in the SDVO
program are either unnecessary or
redundant. Their removal will assist the
public by simplifying the SBA’s
regulations in the CFR and reduce the
time spent reviewing them. The cost
saving calculation assumes 2 percent of
the 21,750 SDVO small businesses per
E:\FR\FM\04NOR1.SGM
04NOR1
]]>Agencies
[Federal Register Volume 85, Number 214 (Wednesday, November 4, 2020)]
[Rules and Regulations]
[Pages 70043-70050]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-24303]
========================================================================
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.
========================================================================
Federal Register / Vol. 85, No. 214 / Wednesday, November 4, 2020 /
Rules and Regulations
[[Page 70043]]
DEPARTMENT OF AGRICULTURE
Food and Nutrition Service
7 CFR Part 284
[FNS-2020-0028]
RIN 0584-AE80
Supplemental Nutrition Assistance Program: Pandemic Electronic
Benefits Transfer (P-EBT) Integrity
AGENCY: Food and Nutrition Service (FNS), Agriculture Department
(USDA).
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The Food and Nutrition Service (FNS or the Agency), an agency
of the U.S Department of Agriculture (USDA or the Department), is
issuing a final rule to add regulations that will ensure the integrity
of the supplemental allotments created by Section 1101 of the Families
First Coronavirus Response Act (FFCRA), as amended by the Continuing
Appropriations Act, 2021 and Other Extensions Act (CR) for households
with children who would have otherwise received free or reduced price
school meals under the Richard B. Russell National School Lunch Act,
but for school closures or reduction in the number of days or hours
that students attend school in response to the ongoing and national
Coronavirus Disease 2019 (COVID-19) Public Health Emergency. Such
allotments are referred to as Pandemic Electronic Benefits Transfer (P-
EBT) benefits. The CR extended the authority for P-EBT through Fiscal
Year (FY) 2021, and also authorized P-EBT for households with at least
one child enrolled in a covered child care facility (as defined by
Section 1101(i)(1) of the FFCRA, as amended) and the supplemental
nutrition assistance program (SNAP) when the covered child care
facility is closed or has reduced attendance or hours or one or more
schools in the area of the covered child care facility are closed or
have reduced attendance or hours. This final rule would also safeguard
the integrity of SNAP, as P-EBT operates within the SNAP
infrastructure. USDA FNS is responsible for administering P-EBT and
SNAP at the Federal level.
DATES: Effective Date: This final rule is effective on November 4,
2020.
Notice Date: Within 10 calendar days of November 4, 2020, SNAP
authorized firms shall be notified of the contents of this final rule.
FOR FURTHER INFORMATION CONTACT: Andrea Gold, the SNAP Retailer Policy
and Management Division, USDA FNS at [email protected];
703.305.2434.
SUPPLEMENTARY INFORMATION:
Executive Summary
Background Information
Establishment of P-EBT
On January 31, 2020, Secretary Azar of the U.S. Department Health
and Human Services (HHS) declared a public health emergency under
section 319 of the Public Health Service Act (42 U.S.C. 247d), in
response to the Coronavirus Disease 2019 (COVID-19). On March 13, 2020,
President Trump declared the ongoing COVID-19 outbreak in the U.S. to
be a national emergency. Due to COVID-19, many schools nationwide began
closing in March 2020. In order to provide some financial relief to
families, on March 18, 2020, President Trump signed into law the
Families First Coronavirus Response Act (FFCRA; Pub. L. 116-127).
Section 1101 of the FFCRA, as originally enacted, authorized USDA to
approve State plans to provide federally funded food assistance to each
household containing at least one child who would have received free or
reduced price school meals, but for school closures lasting at least
five consecutive days during a public health emergency declaration. The
U.S. Department of Agriculture (USDA or the Department) refers to these
benefits created by Section 1101 of the FFCRA as Pandemic Electronic
Benefits Transfer (P-EBT) benefits. The Continuing Appropriations Act,
2021 and Other Extensions Act (CR; Pub. L. 116-159) amended Section
1101 of the FFCRA to extend the authority for P-EBT through FY 2021
(which would cover portions of School Years 2020/2021 and 2021/2022)
and expanded P-EBT to include: (1) Households with children whose
schools reduce the number of days or hours that students attend school
for at least five consecutive days during a public health emergency,
(2) households with at least one child enrolled in a covered childcare
facility and SNAP when the covered child care facility is closed or has
reduced attendance or hours for at least five consecutive days during a
public health emergency, and (3) households with at least one child
enrolled in a covered childcare facility and SNAP when one or more
schools in the area of the covered child care facility are closed or
have reduced attendance or hours for at least five consecutive days
during a public health emergency.
The USDA's Food and Nutrition Service (FNS or the Agency) works to
end hunger and obesity through the Federal administration of 15 Federal
nutrition assistance programs including the National School Lunch
Program (NSLP), which provides free and reduced price lunches to
eligible children, and the Supplemental Nutrition Assistance Program
(SNAP), which provides nutrition benefits to supplement the food
budgets of needy families so they can purchase healthy food and move
towards self-sufficiency. FNS was, therefore, charged by Congress with
the implementation of P-EBT at the Federal level. As of November 4,
2020, 52 States \1\ have been approved by USDA to administer P-EBT.
Collectively, these States have been approved to provide over 30.1
million eligible children with about $10.1 billion in food assistance
benefits.
---------------------------------------------------------------------------
\1\ All 50 states, the District of Columbia, the U.S. Virgin
Islands, and Guam are referred to as ``States'' for this rule, and
all 53 States (as defined in section 3(r) of the Food and Nutrition
Act) were eligible to administer P-EBT under section 1101 of FFCRA
as originally enacted. Of those 53, only 52 have requested P-EBT.
While the CR extended the option to receive P-EBT benefits to other
State Agencies not covered by the original FFCRA--Puerto Rico,
American Samoa, and the Northern Mariana Islands--these territories
manage retailer participation as a part of their block grants.
Retailers in these territories are not currently subject to 7 CFR
part 278 and would not be subject to 7 CFR part 284. As such, for
purposes of this rule, they are not included in any reference to
States or State Agencies.
---------------------------------------------------------------------------
Section 1101(d) of the FFCRA provided States the option to deliver
P-EBT benefits via the Electronic Benefit Transfer (EBT) system
established for SNAP benefits by Section 7 of the Food and Nutrition
Act of 2008 (FNA; 7 U.S.C. 2016). All States, as defined by
[[Page 70044]]
this rule, that have implemented P-EBT have opted to use the EBT system
for such delivery.
Routine Operation of SNAP Benefit Issuance and Redemption
SNAP benefits are issued and redeemed using the EBT system. Each
SNAP household has an account into which SNAP benefits are issued on a
monthly basis. The SNAP benefits are accessed by a household using an
EBT card and a personal identification number (PIN), and may only be
used to purchase SNAP eligible food as defined in 7 CFR 271.2.
In addition, SNAP benefits may only be redeemed at firms \2\
authorized by USDA to accept SNAP benefits. Per Section 9 of the FNA (7
U.S.C. 2018) and 7 CFR 278.1(a), firms must apply to and be authorized
by the Department to accept SNAP benefits as a form of payment. The
Department is responsible for policy and oversight related to firm
eligibility, authorization, and compliance. USDA oversight includes
integrity efforts such as findings of violations on the basis of
evidence obtained through on-site investigations, inconsistent SNAP
redemption data, and evidence obtained through a transaction report
under the EBT system. Per 7 CFR 278.1, 278.6, and 278.7, firms that
violate SNAP rules may face the following:
---------------------------------------------------------------------------
\2\ As defined at 7 CFR 271.2.
---------------------------------------------------------------------------
Adverse Administrative Actions
Denial (a firm applying for SNAP authorization is found
ineligible and may not reapply for a specific period)
Withdrawal (an authorized firm is found ineligible, removed
from the program, and may not reapply for a specific period)
Penalties (imposed after an investigation revealed
violations):
[rtarr8] Warning Letter (the violations found at the firm do not
rise to the level of a sanction, so the firm is only warned)
[rtarr8] Sanctions (the violations found at the firm are serious,
so the firm is subject to a sanction):
[cir] Claim (the firm must repay illicitly obtained benefits)
[cir] Disqualification (the firm may not participate in the program
for a specific period)
[cir] Civil Money Penalty (CMP; the firm must pay a fine)
[ssquf] Hardship CMP (a firm facing a term disqualification in a
low food access area may pay a fine and continue to participate in the
program)
[ssquf] Transfer of Ownership CMP (a firm is sold while serving a
period of disqualification and must pay a fine)
[ssquf] Trafficking CMP (a firm meeting certain criteria may pay a
fine in lieu of permanent disqualification for trafficking)
One of the most serious violations of SNAP rules for firms is
trafficking. SNAP regulations at 7 CFR 271.2 currently define the
violation of trafficking. Trafficking usually means the exchange of
SNAP benefits for cash or other consideration and carries more serious
sanctions for firms. The Department monitors and takes appropriate
administrative action, including sanctions, against firms that engage
in trafficking and other violations. USDA cannot fulfill its primary
purpose of helping individuals and families in need afford a basic diet
without maintaining strong program integrity. USDA takes its role as a
steward of public funds seriously and emphasizes program integrity
throughout all program operations, including the use of a fraud
detection system to analyze data on EBT transactions conducted at
firms.
Implementation of P-EBT and Interaction With SNAP
Per Section 1101(d) of the FFCRA, P-EBT benefits may be issued
through the same EBT system established by Section 7 of the FNA (7
U.S.C. 2016) which is used to issue SNAP benefits. To accelerate the
implementation of P-EBT, ease administrative burden for States, and
more rapidly provide emergency financial relief to families, States
generally issued P-EBT benefits onto a household's existing EBT card if
the household was already receiving SNAP benefits (and therefore
already possessed an EBT card).
Initially, the Department planned to implement P-EBT using a model
similar to that used for certain Child Nutrition Summer EBT
demonstration projects (Summer EBT for Children or SEBTC) as authorized
by the Agriculture, Rural Development, Food and Drug Administration,
and Related Agencies Appropriations Act, 2010 (Pub. L. 111-80). In this
SEBTC model, benefits are issued to a participant's existing EBT card
into an account distinct from SNAP, and the SEBTC benefits remain
separate from SNAP benefits throughout the issuance and redemption
process. However, because this SEBTC model was only ever implemented as
a demonstration project in 7 States, most States were not already
equipped with the infrastructure needed to implement P-EBT in the same
manner.
Due to the experience administering these SEBTC demonstration
projects, USDA determined that it would take several months to modify
SNAP State Agency eligibility and issuance systems to accommodate this
type of model for P-EBT. In addition, due to the ongoing and national
COVID-19 Public Health Emergency, SNAP State Agencies found themselves
extremely short-staffed and unable implement this type of major system
modification.
After consultation with SNAP State Agencies, and in light of the
urgency of the ongoing and national COVID-19 Public Health Emergency,
USDA permitted States to issue SNAP and P-EBT benefits using
essentially the same existing SNAP EBT mechanism every State already
had in place. As a result of this, however, P-EBT and SNAP benefits are
generally indistinguishable throughout the issuance and redemption
process.
Under the process implemented by States, P-EBT benefits were
generally issued onto a household's existing EBT card if the household
was already receiving SNAP benefits (and therefore already possessed an
EBT card). Such SNAP households would have received P-EBT benefit
issuances into their existing SNAP accounts. Once P-EBT benefits were
issued into households' existing SNAP accounts, P-EBT benefits and SNAP
benefits became comingled, and neither SNAP households receiving P-EBT
benefits nor firms accepting P-EBT benefits were able to tell the
difference between these two types of benefits. In at least one State,
new cards were sent to all P-EBT recipient households, regardless as to
their participation in SNAP.
Non-SNAP households that were eligible for P-EBT benefits generally
received EBT cards in the mail that were loaded with only P-EBT
benefits. These cards issued to non-SNAP households functioned
identically to the EBT cards provided to SNAP households.
Despite using the same delivery and funding mechanism, P-EBT
benefits are not SNAP benefits. SNAP was authorized and is governed by
the FNA, while P-EBT was separately created and is governed by the
FFCRA with separate appropriations for a different purpose--to provide
supplemental allotments to households with children who would have
otherwise received free or reduced school meals, but for school
closures related to the ongoing and national COVID-19 Public Health
Emergency. See Section 1101 of the FFCRA. Nevertheless, the
aforementioned implementation mechanisms rendered P-EBT and SNAP
benefits essentially
[[Page 70045]]
indistinguishable for benefit issuance and redemption purposes.
Purpose of the Final Rule
Because P-EBT and SNAP benefits are essentially indistinguishable
for benefit issuance and redemption purposes when the benefits are
loaded onto the same EBT card, neither SNAP households receiving P-EBT
benefits nor firms accepting P-EBT benefits are able to tell the
difference between these two types of benefits. At the same time, the
Department's SNAP fraud detection system also cannot distinguish
between these two types of benefits.
In addition, as discussed earlier, 7 CFR parts 271 and 278 provide
for adverse administrative actions against firms for SNAP violations,
such as trafficking, but those regulations govern violations involving
SNAP benefits, not P-EBT benefits. Since P-EBT benefits are not SNAP
benefits, existing regulations regarding the appropriate use of SNAP
benefits and the consequences for misusing those benefits do not apply
to P-EBT benefits, and there are currently no such provisions for the
misuse of P-EBT benefits. However, USDA finds it appropriate and
necessary to impose certain restrictions on the use of P-EBT benefits
for several reasons described below.
Congress initially authorized P-EBT as food assistance for
households with children who lost free or reduced price school meals
and since then, as mentioned previously, has greatly expanded P-EBT's
scope. P-EBT benefits are not cash assistance, nor are they intended
for misuse such as trafficking. As a type of replacement for the value
of meals at schools or covered child care facilities,\3\ P-EBT is not
intended for certain incongruous uses, including the purchase of
nonfood items such as alcohol and tobacco. To safeguard the integrity
of P-EBT (as well as SNAP), this final rule will ensure that the
Department can hold firms accountable by aligning P-EBT with certain
existing SNAP integrity regulations. The Department believes that
providing an integrity scheme for P-EBT helps ensure that P-EBT
benefits are used for their intended purpose, upholding the
Congressional intent of both the FFCRA and the CR.
---------------------------------------------------------------------------
\3\ As authorized by the originally enacted Section 1101(b) of
FFCRA and explained in Pandemic EBT (P-EBT) Questions and Answers
(April 15, 2020) (available at: https://fns-prod.azureedge.net/sites/default/files/resource-files/SNAP-COVID-PEBTQA.pdf), the
guidelines for P-EBT benefit amounts were based on the value of the
rates for free school meals. All States that issued P-EBT benefits
after the original enactment of the FFCRA did so in amounts
corresponding to the value of the rates for free school meals. The
CR subsequently amended Section 1101(i) of the FFCRA to define
``free rate'' separately for breakfast and lunch, based on the rates
of those free meals under Section 4 of the Child Nutrition Act of
1966 and the Richard B. Russell National School Lunch Act,
respectively.
---------------------------------------------------------------------------
The inability to impose penalties on all firms for misuse of P-EBT
benefits undermines USDA's oversight and integrity efforts, and would
also adversely affect SNAP oversight and integrity. For example, in FY
2019, USDA identified and sanctioned more than one thousand firms
engaged in the trafficking of SNAP benefits.\4\ The overwhelming
majority of these cases were built, at least in part, using the
Department's SNAP fraud detection system's transaction data. Since the
Department's SNAP fraud detection system cannot distinguish between
SNAP and P-EBT benefits in transaction data, USDA would be unable to
use this vital data in program integrity work without considerable
time-consuming modifications and resources, or the promulgation of this
final rule.
---------------------------------------------------------------------------
\4\ Data drawn from USDA's ``Fiscal Year 2019 Year End Summary''
(https://fns-prod.azureedge.net/sites/default/files/resource-files/2019-SNAP-Retailer-Management-Year-End-Summary.pdf).
---------------------------------------------------------------------------
Without this final rule, USDA's ability to hold violators
accountable would be adversely impacted. To illustrate the impact on
USDA's oversight efforts, a 2017 report regarding trafficking
activities from 2012 through 2014 revealed that approximately 12
percent, or about 36,000 firms, engaged in trafficking, totaling
approximately $1.1 billion a year or about 1.5% of all benefits
redeemed. If USDA were unable to use EBT transaction data as is
typically done for detecting trafficking and sanctioning trafficking
firms, then as many as a thousand fewer firms engaging in trafficking
would be identified and sanctioned in a year.\5\ This would mean that
such firms would be able to continue to commit trafficking violations
without consequence, resulting in as much as $31 million in fraud a
year that would remain unchecked.\6\
---------------------------------------------------------------------------
\5\ Data drawn from USDA's ``Fiscal Year 2019 Year End Summary''
(https://fns-prod.azureedge.net/sites/default/files/resource-files/2019-SNAP-Retailer-Management-Year-End-Summary.pdf).
\6\ The 2012-2014 retailer trafficking study estimated that
about 36,000 retailers engage in trafficking totaling about $1.1
billion a year (reflecting about 1.5% of benefits redeemed). Using
an arithmetic mean, the average trafficking retailer traffics about
$31,000 in a year. USDA identified and sanctioned about 1,000 firms
for trafficking in FY 2019 using EBT transaction data analysis as an
investigative tool. If this USDA work were hampered, then these
firms could continue trafficking activities at the same or a greater
rate, resulting in as much as $31 million in trafficking being
unchecked.
---------------------------------------------------------------------------
The purpose of P-EBT was to provide financial relief to families in
the midst of the ongoing national COVID-19 Public Health Emergency.
USDA prioritized expediting the implementation of P-EBT in States that
applied. However, while making expeditious implementation possible, the
co-mingling of SNAP and P-EBT benefits inadvertently introduced this
anomaly into FNS integrity efforts.
If USDA did not promulgate this final rule, then USDA would not be
able to efficiently and effectively address misuse by firms of P-EBT
benefits or SNAP benefits, and both P-EBT and SNAP program integrity
would be adversely impacted. Assuming that P-EBT benefits are
trafficked at a rate similar to SNAP benefits, USDA estimates that $151
million in P-EBT benefits could be trafficked.\7\ Currently, USDA
estimates that about 3 percent of actual EBT fraud is detected through
investigations that utilize EBT transaction data. The limited ability
to use this data would potentially cause this fraud to go unchecked,
which would constitute a serious integrity issue. Furthermore, because
P-EBT benefits may remain in a household's account for months or even
years before being expunged, USDA must address these integrity
problems; otherwise, they could persist for months or even years after
the issuance of P-EBT benefits.\8\ This final rule is crucial in
allowing USDA to address trafficking in a timely manner and ensuring P-
EBT benefits, as well as SNAP benefits, are used in a manner consistent
with Congressional intent.
---------------------------------------------------------------------------
\7\ Total P-EBT benefit issuance is about $10.1 billion and the
estimated 2012-2014 SNAP retailer trafficking rate is 1.5% of
benefits redeemed.
\8\ For administrative ease, most States chose to issue P-EBT
benefits such that these benefits would only be expunged from
beneficiaries' SNAP accounts after a continuous 365-day period of
inactivity per SNAP standards at 7 CFR 274.2(h)(2) as they were when
P-EBT State Plans were submitted. Every time a beneficiary accesses
their benefits, this 365-day expungement clock is reset. Some
beneficiaries may choose to conserve their P-EBT benefits, using
them sparingly over a protracted period. Therefore, although P-EBT
is currently authorized through September 30, 2020, P-EBT benefits
could remain on EBT cards years after that date.
---------------------------------------------------------------------------
This final rule allows USDA to immediately address the integrity
issues, instead of prolonging them and allowing for bad actors to
discover the anomaly and take advantage of it. If USDA were to notify
the public of these integrity issues without implementing a
comprehensive solution, then such a notice would subvert program
integrity. By promulgating this final rule, USDA is ensuring that
traditional mechanisms of ongoing and robust firm oversight
[[Page 70046]]
and enforcement are maintained to protect the integrity of both P-EBT
and SNAP and that the current lack of P-EBT integrity regulations is
addressed without further unnecessary and harmful delay. This will
allow USDA to continue detecting and pursuing administrative remedies
to ensure there is no increase in trafficking and other violations.
Importantly, given the urgency of the issue, it is most efficient
for P-EBT regulations to adopt the structure and meaning of SNAP
regulations instead of crafting an entirely new regulatory scheme and
implementing massive system changes that would accompany such a new
regulatory scheme. Such separate undertakings solely for P-EBT are
impractical and potentially ineffective because of the time, cost, and
effort involved.
For the reasons discussed, this final rule establishes integrity
regulations (as enumerated in this final rule) for P-EBT benefits as
detailed further below in the ``Summary of P-EBT Regulations'' section.
Summary of P-EBT Regulations
This final rule establishes that P-EBT benefits issued pursuant to
Section 1101 of the FFCRA, as amended by the Continuing Appropriations
Act, 2021 and Other Extensions Act (CR; Pub. L. 116-159) or any
subsequent legislation, are subject to integrity regulations, as
enumerated below. This change will ensure that P-EBT (as well as SNAP)
is administered in a manner that safeguards against fraud and abuse.
This final rule renames the previously reserved part 284 as
``Miscellaneous'' and creates Sec. 284.1, titled ``Pandemic Electronic
Benefits Transfer (P-EBT),'' therein.
The following crosswalk summarizes the provisions of this new Sec.
284.1. The left column lists the citation for each final rule
provision, the center column summarizes the effect of the provision,
and the right column indicates the preexisting SNAP integrity
regulation to which the final rule provision refers. In using phrases
such as ``involving P-EBT benefits'', the Department means that the
activity at issue involves P-EBT benefits as well as SNAP benefits, or
only P-EBT benefits. Under 7 CFR 278.6, a firm that commits serious
violations may be subject to a period of disqualification or a civil
money penalty. Under this final rule, if a firm commits violations
involving P-EBT benefits (e.g., trafficking only P-EBT benefits or
trafficking a combination of P-EBT and SNAP benefits), then that firm
shall be subject to the appropriate sanction (e.g., permanent
disqualification or a civil money penalty in lieu of permanent
disqualification). Firms shall not be subject to multiple sanctions for
a single investigation that involves both P-EBT and SNAP benefits
(i.e., firms shall not be subject to one sanction for misuse of P-EBT
benefits and a separate sanction for misuse of SNAP benefits based on a
single investigation).
While this final rule promulgates provisions for P-EBT benefits
that generally track the corresponding SNAP benefit provisions, one
exception is the P-EBT benefits provision concerning judicial review.
As P-EBT benefits arise from FFCRA, as amended regulations at Sec.
284.1(g) will provide for judicial appeal rights pursuant the
Administrative Procedure Act (5 U.S.C. 702 through 706) as opposed to
section 14 of the FNA. Currently, judicial review requests for civil
cases filed pursuant to the Administrative Procedure Act have a six-
year statute of limitations. See 28 U.S.C. 2401(a).
----------------------------------------------------------------------------------------------------------------
Reference to preexisting
Citation in this final rule Purpose of final rule provision regulation
----------------------------------------------------------------------------------------------------------------
7 CFR 284.1(a)...................... background on P-EBT and the function of this n/a.
section.
7 CFR 284.1(b)(1)................... definition of trafficking applies to 7 CFR 271.2.
activities described in such definition
involving P-EBT benefits.
7 CFR 284.1(b)(2)................... definition of firm's practice applies to 7 CFR 271.2.
activities described in such definition
involving P-EBT benefits.
7 CFR 284.1(b)(3)................... definition of involving P-EBT benefits or n/a.
involve P-EBT benefits means activities
involving P-EBT benefits as well as SNAP
benefits, or only P-EBT benefits.
7 CFR 284.1(c)...................... requirements and restrictions on the 7 CFR 278.2, 278.3, and
participation of retail food stores and 278.4.
wholesale food concerns and the redemption of
coupons apply to activities involving P-EBT
benefits, including the restriction that P-
EBT benefits may only be accepted by an
authorized firm and only in exchange for
eligible food.
7 CFR 284.1(d)...................... a firm may be subject to denial or withdrawal 7 CFR 278.1.
for any violations involving P-EBT benefits
as specified in the subparagraphs.
7 CFR 284.1(d)(1)................... firms with certain sanctions for violations 7 CFR 278.1(b)(4).
involving P-EBT benefits must submit a
collateral bond or irrevocable letter or
credit as a condition of authorization; the
calculation of the value of such collateral
bonds or irrevocable letters or credit shall
also include the amount of P-EBT redemptions.
7 CFR 284.1(d)(2)................... authorization will be denied or withdrawn for 7 CFR 278.1(b)(3), (k)(3)
activities indicating a lack of necessary and (6), and (l)(1)(iv).
business integrity and reputation, including
activities involving P-EBT benefits.
7 CFR 284.1(d)(3)................... authorization will be denied or withdrawn for 7 CFR 278.1(k)(7) and
failure to pay fines, penalties, and claims (l)(1)(v) and (vi).
imposed for violations involving P-EBT
benefits.
7 CFR 284.1(e)...................... a firm may be subject to disqualification, 7 CFR 278.6.
monetary penalties, and/or fines for any
violations that include activities involving
P-EBT benefits as specified in the
subparagraphs.
7 CFR 284.1(e)(1)................... permanent disqualification or civil monetary 7 CFR 278.6(e)(1)(i) and
penalty in lieu of permanent disqualification (i).
for trafficking applies to trafficking that
involves P-EBT benefits.
7 CFR 284.1(e)(2)................... permanent disqualification for violations 7 CFR 278.6(e)(1)(ii).
involving P-EBT benefits, such as the sale of
ineligible items, when the firm had already
been sanctioned at least twice.
7 CFR 284.1(e)(3)................... sanctions for unauthorized acceptance apply to 7 CFR 278.6(e)(2)(v),
transactions involving P-EBT benefits. (e)(3)(iv), and (m).
[[Page 70047]]
7 CFR 284.1(e)(4)................... 5-year disqualification for certain firms when 7 CFR 278.6(e)(2)(ii),
collective redemptions exceed food sales in a (iii), and (iv).
certain time period; the amount of
redemptions shall also include the amount of
P-EBT redemptions.
7 CFR 284.1(e)(5)................... 3-year disqualification for any of the 7 CFR 278.6(e)(3)(ii).
violations described in Sec. 278.6(e)(2)
when FNS had not previously advised the firm
of the possibility that violations were
occurring and of the possible consequences of
violating the regulations, when those
violations involve P-EBT benefits.
7 CFR 284.1(e)(6)................... 1-year disqualification for transactions 7 CFR 278.6(e)(4)(ii) and
involving P-EBT benefits where retailer 278.2(f).
accepted benefits in payment for items sold
on credit.
7 CFR 284.1(e)(7)................... disqualifications for sale of ineligible foods 7 CFR 278.6(e)(2)(i),
applies to transactions involving P-EBT (e)(3)(i), (e)(4)(i), and
benefits. (e)(5).
7 CFR 284.1(e)(8)................... periods of disqualification imposed against 7 CFR 278.6(e)(6).
firms will be doubled when such firms have
been sanctioned for committing violations
involving P-EBT benefits.
7 CFR 284.1(e)(9)................... warning letters shall be issued to firms when 7 CFR 278.6(e)(7).
such firms commit violations involving P-EBT
benefits, which are too limited to warrant a
period of disqualification.
7 CFR 284.1(e)(10).................. calculation of hardship and transfer of 7 CFR 278.6(g).
ownership civil money penalties includes
consideration of the firm's average monthly
redemption of P-EBT benefits.
7 CFR 284.1(e)(11).................. calculation of trafficking civil money 7 CFR 278.6(j).
penalties includes consideration of the
firm's average monthly redemption of P-EBT
benefits.
7 CFR 284.1(f)...................... standards regarding the determination and 7 CFR 278.7.
disposition of claims apply to claims based
on P-EBT benefits.
7 CFR 284.1(g)...................... firms aggrieved by administrative action under 7 CFR part 279.
Sec. 284.1(d), (e), and (f) may request
administrative review in accordance with part
279, subpart A. Firms aggrieved by the
determination of such an administrative
review may seek judicial review under 5
U.S.C. 702 through 706.
----------------------------------------------------------------------------------------------------------------
Procedural Matters
Administrative Procedure Act (APA) Statement
The Administrative Procedure Act of 1946, as amended (APA; 5 U.S.C.
553), generally requires that agencies go through notice-and-comment
rulemaking before finalizing regulations and have a 30-day delayed
effective date for final rules. The APA, however, allows for exemptions
to these requirements. This final rule is being promulgated under one
of these exemptions, as described below.
APA Exemption for Rules Pertaining to Benefits
The APA provides that the notice-and-comment and 30-day delay in
the effective date provisions do not apply when a rule concerns ``a
matter relating to agency management or personnel or to public
property, loans, grants, benefits, or contracts.'' 5 U.S.C. 553(a)(2).
P-EBT is a food assistance benefit created by the FFCRA and, therefore,
USDA has the authority under FFCRA to issue a final rule pertaining to
P-EBT without notice-and-comment or a delayed effective date.\9\
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\9\ Previously, USDA utilized APA notice-and-comment rulemaking
procedures regardless of the APA exemption for benefits, pursuant to
the ``Public Participation in Rule Marking: Statement of Policy''
(Statement of Policy), published on July 24, 1971 (36 FR 13804).
However, this Statement of Policy was rescinded in 2013. 78 FR 64194
(Oct. 28, 2013). Additionally, while Section 4(c) of the FNA (7
U.S.C. 2013(c)) generally requires USDA FNS to comply with the APA
requirements when promulgating SNAP regulations under the FNA, this
final rule is promulgated under the FFCRA, not the FNA. Therefore,
this final rule regarding P-EBT benefits is exempt from the APA
notice-and-comment and 30-day delay in the effective date provisions
under 5 U.S.C. 553(a)(2). Furthermore, while notice-and-comment
rulemaking remains an option for matters involving benefits, USDA is
choosing to promulgate a final rule for P-EBT benefits under the
authority in 5 U.S.C. 553(a)(2) because the additional time to
undergo notice-and-comment would further undermine integrity. Firms
are already subject to certain requirements regarding the redemption
of SNAP benefits on EBT cards; therefore, carrying over those
requirements to P-EBT benefits that are often comingled with SNAP
benefits on the same EBT cards does not warrant departure from 5
U.S.C. 553(a)(2).
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Executive Order 12866 and Executive Order 13563
Executive Orders 12866 and 13563 direct agencies to assess all
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health, and safety effects, distributive impacts, and equity).
Executive Order 13563 emphasizes the importance of quantifying both
cost and benefits, of reducing cost, of harmonizing rules, and of
promoting flexibility.
The Office of Management and Budget (OMB) has reviewed this final
rule and determined that it is not significant under Executive Order
12866 (E.O. 12866). E.O. 12866 defines a ``significant regulatory
action'' as one that is likely to: (1) Have an annual effect on the
economy of $100 million or more or adversely affect, in a material way,
the economy, a sector of the economy, productivity, competition, jobs,
the environment, public health or safety, or State, local, or Tribal
governments or communities; (2) create a serious inconsistency or
otherwise interfere with an action taken or planned by another agency;
(3) materially alter the budgetary impact of entitlements, grants, user
fees, or loan programs or the rights and obligations of recipients
thereof; or (4) raise novel legal or policy issues arising out of legal
mandates, the President's priorities, or the principles set forth in
E.O. 12866. This final rule does not meet any of these criteria.
The Department does not anticipate that this final rule will impose
any additional costs on firms, beneficiary households, SNAP State
Agencies, or any other stakeholders. USDA estimates that failure to
promulgate and implement this final rule would significantly hamper the
agency's ability to enforce regulation and law in maintaining SNAP
integrity. USDA considered the regulatory alternatives of taking no
action or promulgating this final rule instead as a notice of proposed
rulemaking, but these approaches were rejected for the reasons provided
in the preamble. As this rule was designated not significant, no
additional regulatory impact analysis has been performed for this rule.
[[Page 70048]]
Regulatory Flexibility Act Certification
The Regulatory Flexibility Act (RFA) generally requires that
agencies must prepare a regulatory flexibility analysis that meets the
requirements of the RFA and publish such an analysis in the Federal
Register. Specifically, the RFA normally requires agencies to describe
the impact of a rulemaking on small entities by providing a regulatory
impact analysis. Such an analysis must address the consideration of
regulatory options that would lessen the economic effect of the rule on
small entities. The RFA defines a ``small entity'' as (1) a proprietary
firm meeting the size standards of the Small Business Administration
(SBA); (2) a nonprofit organization that is not dominant in its field;
or (3) a small government jurisdiction with a population of less than
50,000. Except for such small government jurisdictions, neither State
nor local governments are ``small entities.'' Similarly, for purposes
of the RFA, individual persons are not small entities. The requirement
to conduct a regulatory impact analysis does not apply if the agency
``certifies that the rule will not, if promulgated, have a significant
economic impact on a substantial number of small entities.'' The
Department hereby certifies that this final rule will not have a
significant economic impact on a substantial number of small entities.
Congressional Review Act
Pursuant to the Congressional Review Act (CRA; Pub. L. 104-121),
OMB has designated this action as not a major rule, as defined by 5
U.S.C. 804(2). The CRA defines a ``major rule'' as any rule that has
resulted in or is likely to result in: an annual effect on the economy
of $100,000,000 or more; a major increase in costs or prices for
consumers, individual industries, Federal, State, or local government
agencies, or geographic regions; or, significant adverse effects on
competition, employment, investment, productivity, innovation, or on
the ability of U.S.-based enterprises to compete with foreign-based
enterprises in domestic and export markets.
Executive Order 13771
Executive Order 13771 directs agencies to reduce regulation and
control regulatory costs and provides that the cost of planned
regulations be prudently managed and controlled through a budgeting
process. This rule is not an E.O. 13771 regulatory action because it is
not significant under E.O. 12866.
Executive Order 12988, Civil Justice Reform
This final rule has been reviewed under Executive Order 12988 (E.O.
12988), Civil Justice Reform. This rule is intended to have preemptive
effect with respect to any State or local laws, regulations, or
policies which conflict with its provisions or which would otherwise
impede its full and timely implementation. This final rule is not
intended to have retroactive effect. Prior to any judicial challenge to
the provisions of the final rule, all applicable administrative
procedures must be exhausted.
Executive Order 12372, Intergovernmental Review
Executive Order 12372 (E.O. 12372) requires intergovernmental
consultation with State and local governments that would provide non-
Federal funds for, or that would be directly affected by, proposed
Federal financial assistance or direct Federal development. This is a
final rule regarding benefits fully funded by the Federal Government
and is therefore excluded from the scope of E.O. 12372.
Executive Order 13132, Federalism
Executive Order 13132 (E.O. 13132) requires Federal agencies to
consider the impact of their regulatory actions on State and local
governments. Where such actions have federalism implications, imposes
substantial direct compliance costs on State and local government, and
are not required by statute, 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 E.O. 13132.
The Department has considered the impact of this final rule on
State and local governments and has determined that this rule does not
have federalism implications. Therefore, a federalism impact summary is
not required.
Executive Order 13175, Consultation and Coordination With Indian Tribal
Governments
Executive Order 13175 (E.O. 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. The Department has
considered the impact of this final rule on Indian Tribes and has
determined that this rule does not have Tribal implications. Although
Tribal consultation and coordination is not required under E.O. 13175,
USDA commits to review of this rule at the Department's next scheduled
Tribal listening session in case unexpected Tribal government issues or
concerns emerge during implementation.
Paperwork Reduction Act
The Paperwork Reduction Act of 1995 (44 U.S.C. Chap. 35; 5 CFR part
1320) requires the Office of Management and Budget (OMB) approve
collections of information by a Federal agency before they can be
implemented.
In accordance with 44 U.S.C. 3518(c)(1)(B)(ii), any information
requests or requirements in this rule are not subject to the
requirements of the Paperwork Reduction Act because such collections of
information are pursuant to an administrative action or investigation
by an agency of the United States against specific individuals or
entities. The Secretary hereby certifies that this rule does not impose
reporting or recordkeeping requirements subject to the approval by the
Office of Management and Budget under the requirements of the Paperwork
Reduction Act.
E-Government Act Compliance
USDA is committed to the E-Government Act, which requires
Government agencies in general to provide the public the option of
submitting information or transacting business electronically to the
maximum extent possible. An electronic copy of this final rule will be
made available through the agency's website.
Unfunded Mandates Reform Act
This final rule contains no Federal mandates (under the regulatory
provision of title II of the Unfunded Mandates Reform Act of 1995) for
State, local, and Tribal governments or the private sector. Therefore,
this final rule is not subject to the requirements of section 202 and
205 of the Unfunded Mandates Reform Act.
Civil Rights Impact Analysis
USDA FNS has reviewed this final rule in accordance with USDA
Regulation 4300-4, ``Civil Rights Impact Analysis,'' to identify any
major civil rights impacts this final rule might have on SNAP or P-EBT
participants on the basis of age, race, color, national origin, sex or
disability. After review and
[[Page 70049]]
analysis of the final rule and available data, it has been determined
that this final rule will neither adversely nor disproportionately
impact any protected group. As this final rule has not been designated
a ``significant regulatory action,'' a separate Civil Rights Impact
Analysis (CRIA) is not required per Section 7(a) of USDA Regulation
4300-4, ``Civil Rights Impact Analysis.''
USDA Non-Discrimination Policy
In accordance with Federal civil rights law and USDA civil rights
regulations and policies, the USDA, its Agencies, offices, and
employees, and institutions participating in or administering USDA
programs are prohibited from discriminating based on race, color,
national origin, religion, sex, gender identity (including gender
expression), sexual orientation, disability, age, marital status,
family/parental status, income derived from a public assistance
program, political beliefs, or reprisal or retaliation for prior civil
rights activity, in any program or activity conducted or funded by USDA
(not all bases apply to all programs). Remedies and complaint filing
deadlines vary by program or incident.
Persons with disabilities who require alternative means of
communication for program information (e.g., Braille, large print,
audiotape, American Sign Language) should contact the responsible
Agency or USDA's TARGET Center at (202) 720-2600 (voice and TTY) or
contact USDA through the Federal Relay Service at (800) 877-8339.
Additionally, program information may be made available in languages
other than English.
To file a program discrimination complaint, complete the USDA
Program Discrimination Complaint Form, AD-3027, found online at https://www.ascr.usda.gov/complaint_filing_cust.html and at any USDA office or
write a letter addressed to USDA and provide in the letter all of the
information requested in the form. To request a copy of the complaint
form, call (866) 632-9992. Submit your completed form or letter to USDA
by: (1) Mail: U.S. Department of Agriculture, Office of the Assistant
Secretary for Civil Rights, 1400 Independence Avenue SW, Washington, DC
20250-9410; (2) fax: (202) 690-7442; or (3) email:
[email protected].
USDA is an equal opportunity provider, employer, and lender.
List of Subjects in 7 CFR Part 284
Administrative practice and procedure, Food stamps, Grant programs-
social programs, Pandemic, Penalties.
0
For the reasons set out in the preamble, 7 CFR part 284 is added to
read as follows:
PART 284--MISCELLANEOUS
Sec.
284.1 Pandemic Electronic Benefits Transfer (P-EBT).
284.2 [Reserved]
Authority: Pub. L. 116-127, 134 Stat. 178.
Sec. 284.1 Pandemic Electronic Benefits Transfer (P-EBT).
(a) Overview. Section 1101 of the Families First Coronavirus
Response Act (FFCRA; Pub. L. 116-127), as amended, authorized
supplemental allotments to certain households. These benefits shall be
referred to as Pandemic Electronic Benefits Transfer (P-EBT) benefits
throughout this section. This section establishes the retailer
integrity regulations for P-EBT for retailers in any State as defined
in Section 3(r) of the Food and Nutrition Act.
(b) Definitions. For this section:
(1) Trafficking means the activities described in the definition of
trafficking at Sec. 271.2 of this chapter when such activities involve
P-EBT benefits.
(2) Firm's practice means the activities described in the
definition of firm's practice at Sec. 271.2 of this chapter when such
activities involve P-EBT benefits.
(3) Involving P-EBT benefits or involve P-EBT benefits means
activities involving P-EBT benefits as well as supplemental nutrition
assistance program (SNAP) benefits, or only P-EBT benefits.
(c) Participation of retail food stores and wholesale food
concerns, and redemption of P-EBT benefits. Requirements and
restrictions on the participation of retail food stores and wholesale
food concerns and the redemption of coupons described at Sec. Sec.
278.2, 278.3 and 278.4 of this chapter, including the acceptance of
coupons for eligible food at authorized firms, also apply to activities
involving P-EBT benefits.
(d) Firm eligibility standards. A firm may be subject to the
following actions described at Sec. 278.1 of this chapter for
noncompliance or violations involving P-EBT benefits:
(1) The requirements described at Sec. 278.1(b)(4) of this chapter
regarding a collateral bond or irrevocable letter of credit for
applicant firms with certain sanctions apply to applicant firms with
sanctions imposed for violations involving P-EBT benefits. The amount
of the collateral bond or irrevocable letter of credit shall be
calculated in accordance with Sec. 278.1(b)(4)(i)(D) and shall also
include the amount of P-EBT benefit redemptions when calculating the
average monthly benefit redemption volume.
(2) Authorization shall be denied or withdrawn based on a
determination by the Food and Nutrition Service (FNS) that a firm lacks
or fails to maintain necessary business integrity and reputation, in
accordance with the standards and time periods described at Sec.
278.1(b)(3), (k)(3), and (l)(1)(iv) of this chapter. When making such
determinations, FNS shall consider the criteria referred to in Sec.
278.1(b)(3), (k)(3), and (l)(1)(iv) where the underlying activities
involve P-EBT benefits.
(3) Firm authorization shall be denied or withdrawn for failure to
pay any claims, fines, or civil money penalties in the manner described
at Sec. 278.1(k)(7) and (l)(1)(v) and (vi) of this chapter where such
sanctions were imposed for violations involving P-EBT benefits.
(e) Penalties. For firms that commit certain violations described
at Sec. Sec. 278.6 and 278.2 of this chapter where such violations
involve P-EBT benefits, FNS shall take the corresponding action
prescribed at Sec. 278.6 or Sec. 278.2 for that violation. For the
purposes of assigning a period of disqualification, a warning letter
shall not be considered to be a sanction. Specifically, FNS shall:
(1) Disqualify a firm permanently, as described at Sec.
278.6(e)(1)(i) of this chapter, for trafficking, as defined at Sec.
284.1(b)(1) of this chapter, or impose a civil money penalty in lieu of
permanent disqualification, as described at Sec. 278.6(i) of this
chapter, where such compliance policy and program is designed to
prevent violations of regulations of this section;
(2) Disqualify a firm permanently, as described at Sec.
278.6(e)(1)(ii) of this chapter, for any violation involving P-EBT
benefits committed by a firm that had already been sanctioned at least
twice before under this section or part 278 of this chapter;
(3) Disqualify the firm for 5 years, as described at Sec.
278.6(e)(2)(v) of this chapter, or for 3 years, as described at Sec.
278.6(e)(3)(iv) of this chapter, for unauthorized acceptance violations
involving P-EBT benefits, and impose fines, as described at Sec.
278.6(m) of this chapter, for unauthorized acceptance violations
involving P-EBT benefits;
(4) Disqualify the firm for 5 years in circumstances described at
Sec. 278.6(e)(2) of this chapter when the amount of redemptions, which
shall also include the amount of P-EBT redemptions, exceed food sales
for the same period of time, as described at Sec. 278.6(e)(2)(ii),
(iii), and (iv);
[[Page 70050]]
(5) Disqualify the firm for 3 years as described at Sec.
278.6(e)(3)(ii) of this chapter for situations described at Sec.
278.6(e)(2) of this chapter involving P-EBT benefits;
(6) Disqualify the firm for 1 year for credit account violations as
described at Sec. Sec. 278.6(e)(4)(ii) and 278.2(f) of this chapter,
where such violations involve P-EBT benefits;
(7) Disqualify the firm for ineligibles violations for such
circumstances and corresponding time periods as described at Sec.
278.6(e)(2)(i), (e)(3)(i), (e)(4)(i), and (e)(5) of this chapter, where
such violations involve P-EBT benefits;
(8) Double the appropriate period of disqualification for a
violation, as described at Sec. 278.6(e)(6) of this chapter, where
such violation involves P-EBT benefits, when the firm has once before
been assigned a sanction under this section or part 278 of this
chapter;
(9) Issue a warning letter to the violative firm when violations
are too limited to warrant a period of disqualification, as described
at Sec. 278.6(e)(7) of this chapter, where such violations involve P-
EBT benefits;
(10) Impose a civil money penalty for hardship or transfer of
ownership, as described at Sec. 278.6(g) of this chapter, in amounts
calculated using the described formula at Sec. 278.6(g), which shall
also include the relevant amount of P-EBT redemptions when calculating
the average monthly benefit redemptions; and
(11) Impose a civil money penalty in lieu of permanent
disqualification for trafficking as described at Sec. 278.6(j) of this
chapter in an amount calculated using the described formula at Sec.
278.6(j), which shall also include the relevant amount of P-EBT
redemptions when calculating the average monthly benefit redemptions.
(f) Claims. The standards for determination and disposition of
claims described at Sec. 278.7 of this chapter apply to P-EBT
benefits.
(g) Administrative and Judicial review. Firms aggrieved by
administrative action under paragraphs (d), (e), and (f) of this
section may request administrative review of the administrative action
with FNS in accordance with part 279, subpart A, of this chapter. Firms
aggrieved by the determination of such an administrative review may
seek judicial review of the determination under 5 U.S.C. 702 through
706.
Sec. 284.2 [Reserved]
Pamilyn Miller,
Administrator, Food and Nutrition Service.
[FR Doc. 2020-24303 Filed 11-3-20; 8:45 am]
BILLING CODE 3410-30-P
