Final SNAP Retailer Regulations from USDA an Improvement

The agency is heeding NACS comments, but some concerns remain.

December 09, 2016

Washington, D.C. – Yesterday, the U.S. Department of Agriculture’s (USDA) Food and Nutrition Service (FNS) distributed its final rule, changing the eligibility requirements for retailers participating in the Supplemental Nutrition Assistance Program (SNAP). The final rule makes some changes that were necessary to ensure people could get the food they need, but still has some provisions that may be onerous for convenience store owners to implement and could risk hurting SNAP beneficiaries. Notwithstanding the concerns that remain, NACS is pleased to report that USDA listened to many of the concerns NACS highlighted in the comments it filed with the agency.

The Supplemental Nutrition Assistance Program provides more than 44 million Americans, including millions of children, with the resources to buy food and sets the requirements for the 258,632 stores that accept SNAP benefits for food purchases. Small format stores, including the 106,531 convenience stores that currently participate in SNAP, provide critical access to food for many SNAP beneficiaries who may live long distances from a large food retailer or may need to shop for food during non-traditional hours when other food retailers are closed.

The final rule codifies the 2014 Farm Bill’s statutory depth-of-stock provisions, which specify the minimum number of food items a retailer must offer to participate in the program. NACS supported the 2014 Farm Bill, which requires retailers to stock seven varieties of foods in the four “staple food” categories: dairy, meat, poultry, or fish; bread of cereal; and vegetables or fruits.

NACS is heartened that USDA removed several problematic provisions from the final rule, which would have made it impossible for tens of thousands of convenience stores to meet its requirement. Those provisions included a ban on multiple-ingredient items (such as vegetable beef stew), and an expanded definition of “accessory foods” that would have knocked out healthy grab-and-go items (such as hummus and pretzel packs) from counting toward a retailer’s stocking requirements. Under the final rule, multiple ingredient items will continue to count toward a staple food category depending on the main ingredient. (If the vegetable beef stew is mostly vegetables, it would count toward the vegetable category.)

USDA has also changed the provision that retailers stock six of every SNAP item (168 items total) on shelves at all times and now will require retailers to only have three stocking units for every item (84 total items). Significantly, the USDA has also recognized that this requirement presents problems for an industry that has significant supply and store space limitations. Under the final rule, therefore, USDA would permit a retailer to demonstrate compliance with the stocking unit requirements via receipts and other invoices that prove he purchased the necessary items up to 21 days before the date of an agency inspection. 

NACS remains troubled by the definition of “variety” in the final rule, which remained remarkably similar to the unworkable proposed definition, which would have required retailers stock expensive and uncommon items like lamb and duck. The same concerns under the proposal remain with the final rule, which appears to create significant administrative complexity on this front.

The final rule also altered a proposed provision tying retailer eligibility to sales of food to customers who don’t use SNAP. Under the final rule, stores would be disqualified from the program if 50% or more of the store’s gross retail sales (including fuels sales) comes from items that are cooked or heated on site before or after purchase. This is a significant improvement from the proposal, which would have disqualified retailers if 15% or more of their stores’ total food sales came from sales of items that were “cooked or heated on site” before or after purchase. NACS has expressed concerns about any requirement that would tie retailer eligibility to sales of SNAP-ineligible items (e.g., tobacco, gasoline, or hot foods). Congress, in its negotiations during the 2014 Farm Bill expressly rejected policy proposals to disqualify retailers because of what they sell to non-SNAP customers. Although this final rule is much improved compared to the proposal, if NACS members are concerned with this or any other provision, they are encouraged to contact Anna Ready at aready@nacsonline.com.

The rule will go into effect 30 days after publication in the Federal Register. After that time, retailers who are currently licensed to accept SNAP will have approximately one year to come into compliance with the updated requirements. Retailers who are not currently authorized SNAP retailers but who choose to apply for a license will have to be in compliance with the updated regulations approximately 120 days (4 months) after the rule goes into effect.

NACS members should stay tuned to the NACS Daily for more information on the final rule as well as information on publication of a retailer compliance guide.

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