New SNAP Retailer Regulations Released -- USDA Accommodates Many Truckstop Industry Concerns

The Department of Agriculture (USDA) today released final regulations governing retailer eligibility for redeeming Supplemental Nutrition Assistance Program (SNAP) benefits. The final rules accept many of the arguments that NATSO has made throughout the rulemaking process, both in comments filed with USDA as well as in testimony before the House Agriculture Committee.

NATSO will be providing a more detailed analysis of the final rule, including a SNAP retailer compliance guide, in the coming days. Below, however, is a quick overview of the final rule’s key provisions.

Summary – As a general matter, the final rule is positive in that does not functionally ban truckstops from redeeming SNAP benefits; but there are negative aspects of the final rule as well, particularly with respect to the far more arduous stocking requirements necessary for retailers to qualify.

1) The Final Rule Allows Truckstops to Redeem SNAP Benefits – In the initial proposal, USDA would have banned the truckstop industry from redeeming SNAP benefits. This is because the proposal contained a provision stating that if 15% or more of a retailer’s total food sales came from items that were “cooked of heated on-site before or after purchase,” it would automatically be ineligible to participate in SNAP. That threshold included in its calculation, sales from restaurants that happen to be operating “under the same roof” as a convenience store. Since most truckstops share space with restaurants, the industry would have effectively been precluded from redeeming SNAP benefits.

Acknowledging NATSO’s concerns in this respect, the final rule was changed dramatically. In its final rule, USDA stated that “it was never the Agency’s intent... to consider multiple businesses operating within one truck stop... as a single firm even if they shared some commonalities, such as management and personnel.”

The final rule was changed in the following ways: First, rather than looking to whether a restaurant is “operating under the same roof” as a convenience store, the final rule only considers businesses to be the same if they share all three of the following attributes: common ownership; sale of similar or same food products; and shared inventory. Second, rather than tying eligibility to 15% or more of a SNAP retailer’s total food sales being for items that are cooked or heated on-site, that number was raised to 50% and it would be 50% of total gross retail sales (as opposed to simply food sales).

These changes are a substantial improvement from the proposed rule, and reflect that USDA took seriously the truckstop industry’s perspective. USDA states that given these changes from the initial proposal, the provision “is unlikely to affect the vast majority of retailers.” NATSO agrees.

2) Stocking Requirement Increases – The final rule increases the minimum stocking units required for retailers that want to redeem SNAP benefits. Currently authorized SNAP retailers will have approximately one year to come into compliance. New applicant stores will be expected to stock the new augmented thresholds starting in approximately four months.

Specifically, the new rule requires SNAP retailers to stock seven different “varieties” of food in each of the four “staple food’ categories. The four staple food categories are: (1) Vegetables or fruits; (2) Dairy products; (3) Meat, Poultry, or Fish; and (4) Bread of cereals. Under the final rule, SNAP retailers will have to stock three units of each of those items on shelf, a minimum of 84 “staple food” stock-keeping units (down from the proposal of 168). Moreover, USDA included a provision in the final rule that would allow a retailer, when subject to a USDA inspection, to prove that he is in compliance with the stocking requirements by showing that he had ordered and/or received the required stock no more than 21 days prior to being inspected.

Similar to the proposed rule, the final rule includes what USDA terms a “clarification” regarding what different “varieties” of food means. In essence, it states that different types of the same food item (e.g., tomatoes and tomato juice; ground beef and beefsteak; turkey burgers and sliced turkey) only count as one “variety” of each staple food item. It will make participating in SNAP quite onerous for many retailers (most convenience stores are not inclined to stock seven different “varieties” of meat). This represents a stark departure from what the retail community understood to be the rules of the game.

The final rule also states that “accessory” food items – defined as those generally considered snack foods or desserts such as chips, crackers, cookies, popcorn, and other foods that “supplement” meals – do not count toward the staple food item threshold.

3) Multi-Ingredient Items – The final rule also makes a significant change from the proposal with regard to multiple ingredient items. Under the proposal, retailers would not have been able to count any food item with multiple ingredients (such as a can of chicken noodle soup) towards the stocking requirements. NATSO and other groups were highly critical of this provision, given the nutrient density and economic value of multi-ingredient items for SNAP beneficiaries. Under the final rule, however, retailers will be able to count multiple-ingredient items towards their depths of stock requirements depending on the main ingredient. For example, if the main ingredient in chicken noodle soup is chicken, it would count towards in the meat, poultry, or fish category. If, on the other hand, the main ingredient were the noodles, it would count towards the breads and cereals category.

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David Fialkov

David Fialkov is the Vice President of Government Relations, as well as the Legislative and Regulatory Counsel, at NATSO. In this capacity, Mr. Fialkov directs NATSO's legislative, regulatory, and legal strategy on a range of issues, including transportation, energy and fuels, labor, data security, and taxes. Mr. Fialkov also oversees NATSO's political engagement program, including individualized legal and political counsel to member companies. Prior to joining NATSO, Mr. Fialkov was the senior associate in the Government Affairs and Public Policy practice at the law firm of Steptoe and Johnson in Washington, D.C. At Steptoe, Mr. Fialkov advised clients on legislative, regulatory, and political issues, as well as legal concerns. His primary clients included trade associations representing the motor fuel wholesale and retail industries, including the National Association of Convenience Stores and the Society of Independent Gasoline Marketers of America. Mr. Fialkov's focus was not only on the motor fuels business, but also the litany of other issues that retailers confront, including labor matters, foodservice issues, healthcare and employment issues, tax matters and data security. Prior to joining Steptoe, Mr. Fialkov graduated with honors from George Washington University Law School. He received his B.S. Summa cum laude with highest honors from Clark University in Worcester, MA. He lives in Washington, D.C. with his wife Allison and daughter Lilah. More
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