Participating retailers will no longer be offered free Electronic Benefit Transfer (EBT) equipment, supplies and related services.
The Farm Bill, signed into law on February 7, 2014, imposes additional obligations on retailers that redeem Supplemental Nutrition Assistance Program (SNAP) benefits, including new technological mandates and depth-of-stock requirements. In addition to those obligations, under the new law, retailers participating in SNAP will no longer be offered free Electronic Benefit Transfer (EBT) equipment, supplies and related services.
Under prior law, states were required to provide a no-cost option for retailers’ point of sale EBT equipment, supplies and related services in order to process EBT SNAP transactions. In the new Farm Bill, section 4002 requires non-exempt retailers to pay for their own EBT systems. More specifically:
- Retailers that become SNAP authorized after March 21, 2014, will have to pay for their own EBT equipment, supplies and related services.
- Retailers that became SNAP authorized on or before March 21, 2014, and who have already been given free EBT equipment and services by the state, will have to pay for their own equipment, supplies and related services. At the state’s option, however, those retailers may continue to use their EBT equipment and services for free until Sept. 21, 2014.
- Retailers that already pay for their own EBT equipment and related services without assistance from the state (i.e., retailers with a consolidated system that processes commercial debit, credit and SNAP EBT) may continue paying for their systems as they have been doing pre-Farm Bill — there will be no change.
As a result of these changes, SNAP-authorized retailers utilizing no-cost EBT point-of-sale equipment, supplies and services should arrange to lease or purchase EBT equipment in order to ensure their continued participation in SNAP. Retailers are advised to contact their states’ EBT vendors for more information on this, as well as for information about possible third-party and commercial vendors.
USDA is expected to issue regulatory guidance as soon as possible that will more fully explain these provisions.
SUMMARY OF RELEVANT PROVISIONS FOR SNAP RETAILERS
After more than two years of work, Congress recently passed and President Obama has signed a comprehensive Farm Bill. The newly-enacted legislation contains several provisions that impose additional obligations on retailers that redeem Supplemental Nutrition Assistance Program (SNAP) benefits. This document summarizes these provisions, and provides guidance to current and prospective SNAP retailers on how they can begin planning to comply with these additional obligations.
The Farm Bill imposes the following additional obligations on SNAP retailers:
Preventing Sales of Ineligible Items – The Farm Bill requires SNAP retailers to implement point-of-sale technology systems that will (i) not redeem SNAP benefits for the purchase of ineligible items, and (ii) will further preclude cashiers from manually overriding this prohibition.
- Guidance for SNAP Retailers – As a practical matter, a majority of convenience store operators already have such systems in place. For those that do not, they will eventually need to upgrade their systems, although this provision does not become effective until the Department of Agriculture (USDA) issues regulations implementing it. These regulations – which will likely contain more precise specifications for compliant point-of-sale technology systems – will not be issued for at least several months.
- Increased Variety – The Farm Bill requires SNAP retailers to stock at least seven different “varieties” of food items in each of the four “staple food” categories on a “continuous basis.” Current USDA regulations (pre-dating the Farm Bill) require SNAP retailers to stock at least three different items in each staple food category on a continuous basis.
- Under statutory requirements pre-dating the FARM bill, the four staple food categories are:
o Meat, poultry, or fish
o Bread or cereals
o Vegetables or fruits
o Dairy products
- Staple Food – USDA regulations stipulate that “staple food” means those items intended for home preparation and consumption. Commercially processed foods and prepared mixtures with multiple ingredients are only counted in one staple food category. For example, foods such as cold pizza, macaroni and cheese, multi-ingredient soup, or frozen dinners, are only be counted as one staple food item and will normally be included in the staple food category of the main ingredient as determined by USDA. Hot foods are not eligible for purchase with food stamps and, therefore, do not qualify as staple foods. Accessory food items including, but not limited to, coffee, tea, cocoa, carbonated and uncarbonated drinks, candy, condiments, and spices are not considered staple foods (though they may be purchased with SNAP benefits).
- Continuous Basis –To stock food on a “continuous basis,” USDA regulations pre-dating the Farm Bill stipulate that the SNAP retailer must, on any given day of operation, offer for sale and normally display an item in a public area.
- Variety – Different “varieties” means, pursuant to USDA regulations pre-dating the Farm Bill, different types of foods (such as apples, cabbage, tomatoes, and squash in the fruit or vegetable category, or milk, cheese, butter, and yogurt in the dairy category), rather than different brands, nutrient values, or packaging.
The Farm Bill requires SNAP retailers to stock at least one “perishable” food item in at least three of the four staple food categories. Prior to the Farm Bill, SNAP retailers were required to stock at least one perishable food item in at least two of the four staple food categories.
- “Perishable” foods are items which are either frozen staple food items or fresh, unrefrigerated or refrigerated staple food items that will spoil, or suffer significant deterioration in quality within 2-3 weeks.
Guidance for SNAP Retailers
USDA has released a “guidance document” discussing the implementation process for the Farm Bill. This document says that the depth-of-stock provisions discussed above will not be implemented until USDA undertakes a formal rulemaking. As a practical matter, this means that the depth-of-stock provisions will not be enforced until after the rulemaking process concludes, which at least several months, likely longer.
- Although much uncertainty remains regarding the date on which SNAP retailers will be required to comply with them, any current or prospective SNAP retailer should promptly begin planning to comply with the Farm Bill’s new depth-of-stock requirements.