Appendix B - Farm Bill Implementation Memo

Appendix B: SNAP Provisions of the Agricultural Act of 2014 Implementing Memo

USDA
~

-

Food and
Nutrition
Service
31 01 Park
Center Drive
Alexandria, VA
22302-1500

United States Department of Agriculture

MAR 21 2014
SUBJECT:

Supplemental Nutrition Assistance Program Provisions of the
Agricultural Act of 2014 - Implementing Memorandum

TO:

Regional Administrators
Food and Nutrition Service

On February 7, 2014, the Supplemental Nutrition Assistance Program (SNAP) was
reauthorized as part ofThe Agricultural Act of2014 (the Act), P.L.113-79. Attached
is an implementing memorandum describing SNAP provisions. Regulations
reflecting revisions to SNAP made by the Act will be published as soon as possible.
Please forward the attached memorandum to your State commissioners.
Please keep us advised of any implementation problems and how States choose to
implement these changes. If you have any questions, please contact the appropriate
person from the list below:
Contact

Ronald Ward

Email

Ronald. W ard@fns. usda.gov

Provisions of the Act

4010, 4013 , 4017, 4019,
4020, 4021 , 4023 , 4028,
4032, 4212

Andrea Gold

Andrea.Gold@fns .usda. gov

4001 , 4002, 4003 , 4011 ,
4012, 4014,4029

Liz beth

Lizbeth. S il bermann@fns. usda. gov 4005, 4006, 4007, 4008,

Silbermann

4009, 4015, 4016, 4018,
4022, 4025, 4031

Associate Administrator
Supplemental Nutrition Assistance Program
Attacliment
AN EQUAL OPPORTUNITY EMPLOYER

The Agricultural Act of 2014 -Implementation Memorandum
The Supplemental Nutrition Assistance Program (SNAP) was recently reauthorized as
part ofThe Agricultural Act of2014 (the Act), P.L.ll3-79, enacted February 7, 2014.
The law contains various provisions that affect SNAP eligibility, benefits, and program
administration, including changes mandated by the law and those that provide additional
flexibility for State agencies. All provisions in the Act related to SNAP are effective as
of the date of enactment, unless otherwise stated.
This memorandum describes the various SNAP related provisions and the
implementation action required. In some cases, the provisions can be fully or partially
implemented prior to final regulations being issued, while other provisions require
regulations before implementation can be enforced. The provisions are grouped below
by the implementation action required and listed chronologically within each group.
As with previous legislative changes to the Program, the Food and Nutrition Service (FNS)
will, as appropriate, hold States harmless for Quality Control (QC) purposes for a certain
period to be determined to allow implementation. Additional details will be forthcoming.

AGRICULTURAL ACT OF 2014 PROVISIONS AND EFFECTIVE
DATES
A. Provisions that States must implement immediately

Section 4001. Preventing Payment of Cash to Recipients of Supplemental Nutrition
Assistance Benefits for the Return of Empty Bottles and Cans Used to Contain Food
Purchased with Benefits Provided Under the Program.
This provision prevents SNAP benefits from being used to purchase any deposit fee in
excess of the State fee reimbursement required to purchase food in a returnable bottle or
can. This exclusion applies even to cases where the fee is included in the shelf price for
the product. This provision will be implemented by FNS working directly with SNAP
authorized retailers.
However, it is also important that States are aware of this change for the purposes of
recipient integrity and understand their responsibility to provide up-to-date information to
recipients with regards to eligible purchases.
Section 4002. Retailers.
This Section makes many changes to SNAP retailer qualifications and administration of
SNAP Electronic Benefits Transfer (EBT). While implementation of other provisions
within this section will be described later in this Implementation Memorandum, the
following provisions are to be implemented immediately as described:
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1) Requires that manual vouchers no longer be used or accepted as payment in EBT
systems, except in disasters or in the event of an EBT system failure. The provision
also allows for the Secretary to exempt specific categories of retailers based on
established criteria. This provision becomes effective immediately for any new
retailer. However, until regulations are promulgated, the Secretary is exempting:
(a) any retailer that is exempt under Section 4002 (b)(l) ofthe Act (e.g. , farmers
markets and other direct-to-consumer markets, and organizations, programs or
group living arrangements so described); and (b) any current retailer currently
accepting manual vouchers as a means to conduct ongoing business- i.e., for
purposes other than disasters or EBT system failure- until regulations can be
promulgated. The Secretary is also exempting any new retailer that purchases a
store that has one of the above exemptions. It is the intent of the Secretary to
largely eliminate manual vouchers as a means to conduct ongoing business through
regulations, but will use the regulatory process to fully define the extent continued
usage will be permitted.
FNS recognizes that States will need to make suitable arrangements with
contractors to no longer provide new retailers with the ability to utilize manual
vouchers except under the conditions noted in (a) above or in the event of disasters
or EBT system failures . Therefore, FNS will begin holding States accountable for
implementing changes associated with this provision 60 days from the issuance date
ofthis memorandum.
2) Requires non-exempt retailers to pay for EBT equipment and supplies,
implementation, and related services. Other than for those the Secretary has
authority to exempt-- i.e. farmer' s markets, direct marketing farmers, military
commissaries, non-profit food buying cooperatives, and establishments,
organizations, programs or group living arrangements described in paragraphs
(3), (4), (5), (7), (8) and (9) of section 3(k) in the Food and Nutrition Act, as
amended -- this provision will be effective immediately:
a. for all retailers who become newly SNAP authorized following issuance
of the implementing memo; and
b. for all current manual-voucher retailers who are now no longer permitted
to utilize manual vouchers to conduct EBT transactions.
FNS recognizes that States will need to make suitable arrangements with
contractors and retailers to no longer subsidize the cost of equipment for authorized
EBT -only retailers outside of the exceptions noted above. FNS also recognizes that
retailers who currently receive EBT-only State equipment would need to make
other arrangements if they wish to continue participating in the Program.
Therefore, FNS will begin holding States accountable for implementing the changes

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associated with this provision six months from the issuance date of this
memorandum.
A regulation will follow which will more fully consider those establishments that
the Secretary has authority to exempt that should be exempt from this requirement.
3) With the removal ofthe requirement that the costs ofEBT equipment and
supplies not be imposed on retailers (item# 2 above), came the removal of the
requirement that retailers with 15 percent or more oftheir sales in SNAP must
have operational EBT equipment at all its registers. Instead, the Act now requires
that retailers ensure they provide adequate EBT service, defined as having EBT
equipment at a sufficient number of registers to provide comparable check-out
service to SNAP and non-SNAP customers.
As required by existing regulations, this provision is intended to ensure that
SNAP customers are treated in the same manner as non-SNAP customers at store
level.
4) Prohibits charging interchange fees for any SNAP EBT transaction. This
provision reinforces an existing statutory provision and is already in effect,
however, rulemaking will codify this requirement.

Section 4013. Improved Wage Verification Using the National Directory of Hires
This provision requires States to verify applicant wage data through the National
Directory of New Hires to determine eligibility and the correct amount of SNAP benefits
at the time of certification.
To comply with this provision, States will need to enter into contracts with the
Department of Health and Human Services (HHS) to use the National Directory of New
Hires.

Section 4015. Mandating State Immigration Verification.
Section 4015 makes two changes to eligibility determinations. The piece regarding
income and eligibility determination is discussed in category B. The provision also
requires States to establish an immigration verification system to verify immigration
status. FNS expects that most, if not all, States have procedures in place that would meet
this requirement.

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Section 4018. Prohibiting Government-Sponsored Recruitment Activities.
Section 4018 makes several changes to recruitment activities allowed with Federal
funding. Some of the changes will be implemented immediately by States, whereas,
others will require rulemaking before implementation. States are to implement
immediately the following provisions. Federal funds are banned from being used for
television, radio, or billboard advertisements that are designed to promote SNAP benefits
and enrollment. In addition, Federal funding is banned from being used for any
agreements with foreign governments designed to promote SNAP. These prohibitions do
not apply to D-SNAP.

Section 4019. Tolerance Level for Excluding Small Errors.
This provision changes the Quality Control (QC) tolerance level from $50 to $37. As this
affects all fiscal year (FY) 2014 active cases, FNS locked all released State active QC
reviews in the SNAP Quality Control System (SNAP-QCS) as ofFebruary 11 , 2014. The
data lock is a temporary measure while formal guidance is developed, which FNS expects
to release shortly.

Section 4020. Quality Control Standards.
This provision eliminates the Department of Agriculture's (USDA) ability to waive any
portion of a State's Quality Control liability. FNS may continue to require reinvestments
and hold money at risk as provided for in statute and regulations; good cause adjustments
still apply per 7 CFR 275.23([).

Section 4021. Performance Bonus Payments.
This provision requires high performance bonus payments to be used only for SNAP
expenses including investments in technology, improvements in administration and
distribution, and actions to prevent fraud, waste and abuse.
This provision will take effect for the high performance bonus payments awarded in 2014
(i.e., the performance bonus payments for high or improved performance in FY 2013).

Section 4023. Cooperation with Program Research and Evaluation.
This provision requires State agencies, local agencies, institutions, facilities such as data
consortiums, and contractors participating in programs authorized under the Act to
cooperate with USDA and its contractors on evaluations and research. The provision
ensures privacy protections for SNAP households continue to apply.

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B. Provisions that are not to be implemented until Federal rulemaking occurs

Section 4002. Retailers.
This Section makes many changes to SNAP retailer qualifications and administration of
SNAP EBT. The following provisions are not to be implemented until Federal
rulemaking occurs, whereas other provisions, listed in categories A and D, must be
implemented as directed or, in the latter case, are already SNAP policy.
1) In order to meet SNAP retailer eligibility criteria A, which currently requires
stocking perishable items in 2 staple food categories and stocking 3 varieties of
staple foods in 4 categories, this provision requires stocking at least 7 varieties of
staple foods in each of the 4 staple food categories and stocking perishable foods
in at least 3 categories;
2) Requires a unique Terminal ID for each EBT transaction;
3) Requires retailers to employ scanning or product look-up systems that also
prohibit manually entered sales of ineligible items in SNAP authorized locations
to ensure that only SNAP eligible items are sold; exceptions to scanning
requirements are limited to firms determined by the Secretary to be located in an
areas with limited access to food; and
4) Allows discretion in the approval of retailers who do not meet the statutory and
regulatory eligibility requirements to participate, but are located in areas with
limited access to food.

Section 4003. Enhancing Services to Elderly and Disabled SNAP Recipients.
The provision expands the definition of "Retail food store" in the Act to include
governmental or private nonprofit food purchasing and delivery services that purchase
and deliver food to the elderly and/or disabled. The provision requires the service entity
to inform the participant of any delivery fees, specifies that these fees are ineligible to be
paid for with SNAP benefits, and prohibits the service entity from increasing the price of
food for SNAP recipients beyond what the service entity paid. USDA is limited to
approving no more than 20 entities prior to rules being released.

Section 4007. Eligibility Disqualifications.
This provision addresses student eligibility by clarifying that participants in a SNAP
Employment and Training Program are still eligible if they are enrolled in a course or
program of study that is part of a career and technical education program (as defined in
Section 3 ofthe Carl D. Perkins Education Act of2006), or are participating in remedial
courses, basic adult education, literacy instruction, or English as a Second Language.

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Section 4008. Eligibility Disqualifications for Certain Convicted Felons.
This provision prohibits anyone convicted of aggravated sexual abuse, murder, sexual
exploitation and abuse of children, sexual assault as defined in the Violence Against
Women Act of 1994, or a similar State law, and who is also not in compliance with the
terms of their sentence or a fleeing felon from receiving SNAP benefits. During the
application process the individual will have to attest whether he or she, or any other
member of the household, has been convicted of such a crime. If such an individual is in
an otherwise eligible household, the income and resources of the individual will be
considered when determining eligibility. Convictions for conduct that occurred on or
before the date of enactment do not apply.

Section 4009. Ending Supplemental Nutrition Assistance Program Benefits for
Lottery or Gambling Winners.
This provision states that any household in which a member receives substantial
gambling or lottery winnings (as determined by USDA) will immediately lose eligibility
for SNAP benefits until they again meet normal income and resource standards. In
addition, States shall establish agreements with entities responsible for gaming in their
State to identify individuals who have received substantial lottery or gambling winnings.

Section 4010. Improving Security of Food Assistance.
This provision allows USDA to require States to decline to issue a replacement EBT card
to households who make excessive requests for card replacements unless the households
provide an explanation for the loss of the card. The provision provides protections for
vulnerable persons (such as the homeless, persons with disabilities, and victims of
crimes). The provision does not allow State refusal of card replacement to mean denial
or limitation of eligibility.
A final rule providing States with the option to implement this process was issued on
August 21, 2013. The Department will determine whether any additional regulatory
action is warranted.

Section 4014. Restaurant Meals Program.
This provision requires States to submit plans and reports to USDA if they elect to
operate a restaurant meal program. The plans must show how the State program meets
the needs of homeless, elderly, and disabled clients in particular geographic areas, limits
participation to only the necessary private establishments, and meets any other conditions
USDA may prescribe. The provision requires annual reports from the State agencies on
the number served and whether the program is meeting established needs. Only private
establishments that are determined by the Secretary to meet an established need are
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authorized to participate. USDA must report annually (starting within 90 days of
September 30, 2014) to Congress.

Section 4015. Mandating State Immigration Verification.
Section 4015 makes two changes to eligibility determinations. The piece regarding
immigration status is discussed above in category A. The second piece requires that the
State establish an income and eligibility verification system in accordance with standards
set by the Secretary. These standards will be established through rulemaking.

Section 4016. Data Exchange Standardization for Improved Interoperability.
This provision requires USDA to consult with an interagency workgroup established by
the Office of Management and Budget to create data exchange standards for information
required to be reported by States under the Act. The provision establishes a series of data
exchange requirements. A proposed rule implementing the standards is due two years
from the date of enactment.

Section 4018. Prohibiting Government-Sponsored Recruitment Activities.
This provision makes several changes to recruitment activities allowed with Federal
funding. Some of the provisions will be implemented immediately by States (see
category A), whereas others will require rulemaking before implementation. USDA will
issue rules before implementing the provision that bans Federal funds from being used
for recruitment activities that are "designed to persuade an individual to apply for
SNAP." In addition, USDA is required by the Act to issue regulations that would forbid
outside entities from receiving funds under the Food and Nutrition Act if compensation
for any person at the outside entity is based on the number of individuals that person
recruits to apply for SNAP.

Section 4022. Pilot Project to Reduce Dependency and Increase Work Requirements
and Work Effort under SNAP.
This provision makes several changes to the SNAP Employment and Training Program
(SNAP E&T). Several ofthese changes are included in category C, however, the
provision also requires the Secretary to develop performance measures to monitor how
well SNAP E&T prepares participants for employment and the number who obtain
employment after participation. The Secretary can require States with inadequate
performance outcomes to modify their E&T plans. These measures are to be released as
an interim rule.

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Section 4032. Annual State Report on Verification of SNAP Participation.
This provision requires States to submit an annual report to USDA verifying that the
State did not issue benefits to individuals who are deceased or disqualified from SNAP as
a result of an intentional program violation (IPV). USDA shall reduce State
administration funds by up to half if the State does not submit the report. Standards for
these reports and the process for deciding on administrative fund reductions will be
established through rulemaking. This provision also directs FNS to report on a pilot
program on duplicate participation. This pilot is discussed in category C below.

C. Provisions that require FNS action only

Section 4005. Exclusion of Medical Marijuana from Excess Medical Expense
Deduction.
This provision requires FNS to issue rules ensuring that medical marijuana is not treated
as a medical expense for the purposes of determining the excess medical expense
deduction. This provision is not new SNAP policy. It directs FNS to codify its
longstanding policy in regulation.

Section 4011. Technology Modernization for Retail Food Stores.
The provision allows for redemption of benefits through mobile devices. Approved
retailers must: establish recipient protections; pay for the technology themselves; price
food the same as that bought under other payment methods; and document authorized
transactions. The provision requires demonstration projects testing the feasibility and
implications of mobile technology to be completed by July 1, 2016. If these
demonstration projects are successful, mobile technology will be authorized in all States
by January 1, 2017. If the demonstration projects are unsuccessful, the Secretary must
report to Congress.
The provision also allows retailers to accept benefits through online transactions. The
provision requires demonstration projects testing the feasibility of online transactions by
July 1, 2016. Retailers must provide the same protections as above, including ensuring
security of transactions. States must ensure that their EBT system allows for online
purchases. If successful, online purchasing will be available to all States on January 1, 2017.
If unsuccessful, the Secretary must report to Congress on the results.

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Section 4012. Use of Benefits for Purchase of Community-Supported Agriculture
Share.
This provision allows EBT to be accepted in advance of food delivery by agricultural
producers who market directly to consumers.

Section 4017. Pilot Projects to Improve Federal State Cooperation at Identifying
and Reducing Fraud in SNAP
This provision requires FNS to carry out pilot projects to identify, investigate, and reduce
retailer fraud in SNAP (including allowing States to operate retailer investigations). The
provision defines selection criteria, including a State's current activities to address
recipient fraud, and requires an evaluation of pilot projects with a report to Congress due
by September 30, 2017.

Section 4022. Pilot Project to Reduce Dependency and Increase Work
Requirements and Work Effort under SNAP.
This section makes many changes to SNAP E&T, some of which will be implemented via
rulemaking (category B), while other actions will be implemented by FNS soon after
enactment and are discussed here. The provision funds SNAP E&T annually at $90 million
a year. This funding shall be available for 24 months from the date of allocation and the
Secretary can reallocate unexpended funds to States in such a way as to allow at least
270 days to spend the reallocated funds.
The provision creates up to ten 3-year pilot projects to raise the number of work
registrants with unsubsidized employment, increase earned income, and reduce reliance
on public assistance. Pilot projects should target those with low skills, urban and rural
communities, opportunities for quick employment, and both mandatory and voluntary
E&T programs. The Secretary must develop and publish the process for selecting pilot
projects within 180 days of enactment.
The provision also requires an independent evaluation of the pilot projects and annual
reports. The provision provides $200 million for E&T pilots ($10 million in FY 2014;
$190 million in FY 20 15). Funds are available until the end of FY 2018.
In addition, the provision requires the Secretary to review, at least every 5 years, research
and practice that best connects SNAP participants to work. The standards for these
reviews will be developed through the rulemaking process.

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Section 4025. Review, Report, and Regulation of Cash Nutrition Assistance Benefits
Provided in Puerto Rico.
This provision requires the Secretary to review cash nutrition assistance benefits in
Puerto Rico by studying: the history of cash benefits, barriers to redemption with non-cash
benefits, usage of cash benefits for the purchase of nonfood items, and other factors. This
report is due 18 months after enactment and $1 million is provided for the report.
The provision also restricts the Secretary from approving any nutrition assistance plan for
FY 201 7 that provides more than 20 percent of benefits in cash. In FY 2018 cash is
limited to 15 percent of benefits; in FY 2019 cash is limited to 10 percent of benefits; in
FY 2020 cash is limited to 5 percent; and in FY 2021 no benefits shall be in the form of
cash. The Secretary may make exemptions if discontinuation of cash benefits will have
significant adverse effects.

Section 4029. Retail Food Store and Recipient Trafficking.
This provision authorizes $5 million annually beginning in FY 2014 through FY 2018 for
USDA to fund retail food store and recipient integrity activities, especially through the
use of information technology. The provision also provides $15 million in mandatory
funds for FY 2014 to remain available until expended.

Section 4031. Commonwealth of the Northern Mariana Islands (CNMI) Pilot
Program.
This provision authorizes $1 million in each ofFY's 2014 and 2015 to conduct a
feasibility study on implementing SNAP (in a manner similar to SNAP in the States) in
CNMI. If as a result of this study, the Secretary deems that a pilot project to implement
SNAP is feasible, a pilot project will be conducted with funding limited to $13.5 million
(FY 2016) and $8.5 million (for each ofFY's 2017 and FY 2018). A report to Congress
on the pilot project is due by June 30, 2019. The provision permits CNMI to keep any
unspent pilot funds as part of their block grant, if the pilot is deemed not feasible.

Section 4032. Annual State Report on Verification of SNAP Participation.
Among the requirements in Section 4032 discussed in category B, the provision also
requires USDA to conduct a pilot testing the detection and the prevention of duplicate
participation. A report is due within 90 days of completion that outlines the feasibility,
effectiveness, and cost of a nationwide expansion of efforts to prevent duplicate
participation. FNS is currently conducting a pilot on duplicate participation in five States
that meets the requirements of this provision.

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Section 4212. Review of Sole-source Contracts in Federal Nutrition Programs
This provision requires the Secretary to conduct an evaluation of sole-source contracts in
Federal nutrition programs, and the effect such contracts have on program participation,
program goals, non-program consumers, retailers, and free-market dynamics. The
findings must be reported back to Congress within one year from enactment.

D. Provisions that are already in effect.
Section 4002. Retailers
Section 4002 makes many changes to SNAP retailer qualifications and administration of
SNAP EBT. The provision that permits requiring purchase invoice or program-related
records of applicant retailers is already in Federal regulations at 7 CFR 278.1 (b), so no
further action is required. Other provisions are listed in categories A and B.

Section 4028. Nutrition Education.
This provision authorizes physical activity as a nutrition education activity.
It is consistent with the definition of nutrition education and obesity prevention specified
in the SNAP-Ed interim rule published on AprilS , 2013.

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