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U.S. Code as of:
01/03/05
Section 2016. Issuance and use of coupons
(a) Printing
Coupons shall be printed under such arrangements and in such
denominations as may be determined by the Secretary to be
necessary, and (except as provided in subsection (j) of this
section) shall be issued only to households which have been duly
certified as eligible to participate in the food stamp program.
(b) Approved food stores; receipt of cash in change for coupons
used to purchase food
Coupons issued to eligible households shall be used by them only
to purchase food in retail food stores which have been approved for
participation in the food stamp program at prices prevailing in
such stores: Provided, That nothing in this chapter shall be
construed as authorizing the Secretary to specify the prices at
which food may be sold by wholesale food concerns or retail food
stores: Provided further, That eligible households using coupons to
purchase food may receive cash in change therefor so long as the
cash received does not equal or exceed the value of the lowest
coupon denomination issued.
(c) Design of coupons
Coupons issued to eligible households shall be simple in design
and shall include only such words or illustrations as are required
to explain their purpose and define their denomination. The name of
any public official shall not appear on such coupons.
(d) Coupon level inventories; monitorship; monthly operations
report
The Secretary shall develop an appropriate procedure for
determining and monitoring the level of coupon inventories in the
hands of coupon issuers for the purpose of providing that such
inventories are at proper levels (taking into consideration the
historical and projected volume of coupon distribution by such
issuers). Such procedures shall provide that coupon inventories in
the hands of such issuers are not in excess of the reasonable needs
of such issuers taking into consideration the ease with which such
coupon inventories may be resupplied. The Secretary shall require
each coupon issuer at intervals prescribed by the Secretary, but
not less often than monthly, to send to the Secretary or the
Secretary's designee, which may include the State agency, a written
report of the issuer's operations during such period. In addition
to other information deemed by the Secretary to be appropriate, the
Secretary shall require that the report contain an oath, or
affirmation, signed by the coupon issuer, or in the case of a
corporation or other entity not a natural person, by an appropriate
official of the coupon issuer, certifying that the information
contained in the report is true and correct to the best of such
person's knowledge and belief.
(e) Delivery and control procedures
The Secretary shall prescribe appropriate procedures for the
delivery of coupons to coupon issuers and for the subsequent
controls to be placed over such coupons by coupon issuers in order
to ensure adequate accountability.
(f) State issuance liability
Notwithstanding any other provision of this chapter, the State
agency shall be strictly liable to the Secretary for any financial
losses involved in the acceptance, storage and issuance of coupons,
including any losses involving failure of a coupon issuer to comply
with the requirements specified in section 2020(e)(20) (!1) of this
title, except that in the case of losses resulting from the
issuance and replacement of authorizations for coupons and
allotments which are sent through the mail, the State agency shall
be liable to the Secretary to the extent prescribed in the
regulations promulgated by the Secretary.
(g) Alternative system or documents; costs
(1) If the Secretary determines, in consultation with the
Inspector General of the Department of Agriculture, that it would
improve the integrity of the food stamp program, the Secretary
shall require a State agency -
(A) to issue or deliver coupons using alternative methods,
including an automatic data processing and information retrieval
system; or
(B) to issue, in lieu of coupons, reusable documents to be used
as part of an automatic data processing and information retrieval
system and to be presented by, and returned to, recipients at
retail food stores for the purpose of purchasing food.
(2) The cost of documents or systems that may be required
pursuant to this subsection may not be imposed upon a retail food
store participating in the food stamp program.
(h) Staggered issuance procedures
(1) The State agency may establish a procedure for staggering the
issuance of coupons to eligible households throughout the month.
Upon the request of the tribal organization that exercises
governmental jurisdiction over the reservation, the State agency
shall stagger the issuance of benefits for eligible households
located on reservations for at least 15 days of a month.
(2) Any procedure established under paragraph (1) shall not
reduce the allotment of any household and shall ensure that no
household experiences an interval between issuances of more than 40
days. The procedure may include issuing a household's benefits in
more than one issuance.
(i) Electronic benefit transfers
(1) In general. -
(A) Implementation. - Not later than October 1, 2002, each
State agency shall implement an electronic benefit transfer
system under which household benefits determined under section
2017(a) or 2035 of this title are issued from and stored in a
central databank, unless the Secretary provides a waiver for a
State agency that faces unusual barriers to implementing an
electronic benefit transfer system.
(B) Timely implementation. - Each State agency is encouraged to
implement an electronic benefit transfer system under
subparagraph (A) as soon as practicable.
(C) State flexibility. - Subject to paragraph (2), a State
agency may procure and implement an electronic benefit transfer
system under the terms, conditions, and design that the State
agency considers appropriate.
(D) Operation. - An electronic benefit transfer system should
take into account generally accepted standard operating rules
based on -
(i) commercial electronic funds transfer technology;
(ii) the need to permit interstate operation and law
enforcement monitoring; and
(iii) the need to permit monitoring and investigations by
authorized law enforcement agencies.
(2) The Secretary shall issue final regulations that establish
standards for the approval of such a system. The standards shall
include -
(A) defining the required level of recipient protection
regarding privacy, ease of use, and access to and service in
retail food stores;
(B) the terms and conditions of participation by retail food
stores, financial institutions, and other appropriate parties;
(C)(i) measures to maximize the security of a system using the
most recent technology available that the State agency considers
appropriate and cost effective and which may include personal
identification numbers, photographic identification on electronic
benefit transfer cards, and other measures to protect against
fraud and abuse; and
(ii) effective not later than 2 years after August 22, 1996, to
the extent practicable, measures that permit a system to
differentiate items of food that may be acquired with an
allotment from items of food that may not be acquired with an
allotment;
(D) system transaction interchange, reliability, and processing
speeds;
(E) financial accountability;
(F) the required testing of system operations prior to
implementation;
(G) the analysis of the results of system implementation in a
limited project area prior to expansion; and
(H) procurement standards.
(3) In the case of a system described in paragraph (1) in which
participation is not optional for households, the Secretary shall
not approve such a system unless -
(A) a sufficient number of eligible retail food stores,
including those stores able to serve minority language
populations, have agreed to participate in the system throughout
the area in which it will operate to ensure that eligible
households will not suffer a significant reduction in their
choice of retail food stores or a significant increase in the
cost of food or transportation to participating food stores; and
(B) any special equipment necessary to allow households to
purchase food with the benefits issued under this chapter is
operational -
(i) in the case of a participating retail food store in which
coupons are used to purchase 15 percent or more of the total
dollar amount of food sold by the store (as determined by the
Secretary), at all registers in the store; and
(ii) in the case of other participating stores, at a
sufficient number of registers to provide service that is
comparable to service provided individuals who are not members
of food stamp households, as determined by the Secretary.
(4) Administrative costs incurred in connection with activities
under this subsection shall be eligible for reimbursement in
accordance with section 2025 of this title, subject to the
limitations in section 2025(g) of this title.
(5) The Secretary shall periodically inform State agencies of the
advantages of using electronic benefit systems to issue benefits in
accordance with this subsection in lieu of issuing coupons to
households.
(6) This subsection shall not diminish the authority of the
Secretary to conduct projects to test automated or electronic
benefit delivery systems under section 2026(f) of this title.
(7) Replacement of benefits. - Regulations issued by the
Secretary regarding the replacement of benefits and liability for
replacement of benefits under an electronic benefit transfer system
shall be similar to the regulations in effect for a paper-based
food stamp issuance system.
(8) Replacement card fee. - A State agency may collect a charge
for replacement of an electronic benefit transfer card by reducing
the monthly allotment of the household receiving the replacement
card.
(9) Optional photographic identification. -
(A) In general. - A State agency may require that an electronic
benefit card contain a photograph of 1 or more members of a
household.
(B) Other authorized users. - If a State agency requires a
photograph on an electronic benefit card under subparagraph (A),
the State agency shall establish procedures to ensure that any
other appropriate member of the household or any authorized
representative of the household may utilize the card.
(10) Applicable law. - Disclosures, protections,
responsibilities, and remedies established by the Federal Reserve
Board under section 1693b of title 15 shall not apply to benefits
under this chapter delivered through any electronic benefit
transfer system.
(11) Application of anti-tying restrictions to electronic benefit
transfer systems. -
(A) Definitions. - In this paragraph:
(i) Affiliate. - The term "affiliate" has the meaning
provided the term in section 1841(k) of title 12.
(ii) Company. - The term "company" has the meaning provided
the term in section 1971 of title 12, but shall not include a
bank, a bank holding company, or any subsidiary of a bank
holding company.
(iii) Electronic benefit transfer service. - The term
"electronic benefit transfer service" means the processing of
electronic transfers of household benefits, determined under
section 2017(a) or 2035 of this title, if the benefits are -
(I) issued from and stored in a central databank;
(II) electronically accessed by household members at the
point of sale; and
(III) provided by a Federal or State government.
(iv) Point-of-sale service. - The term "point-of-sale
service" means any product or service related to the electronic
authorization and processing of payments for merchandise at a
retail food store, including credit or debit card services,
automated teller machines, point-of-sale terminals, or access
to on-line systems.
(B) Restrictions. - A company may not sell or provide
electronic benefit transfer services, or fix or vary the
consideration for electronic benefit transfer services, on the
condition or requirement that the customer -
(i) obtain some additional point-of-sale service from the
company or an affiliate of the company; or
(ii) not obtain some additional point-of-sale service from a
competitor of the company or competitor of any affiliate of the
company.
(C) Consultation with the federal reserve board. - Before
promulgating regulations or interpretations of regulations to
carry out this paragraph, the Secretary shall consult with the
Board of Governors of the Federal Reserve System.
(j) State option to issue benefits to certain individuals made
ineligible by welfare reform
(1) In general
Notwithstanding any other provision of law, a State agency may,
with the approval of the Secretary, issue benefits under this
chapter to an individual who is ineligible to participate in the
food stamp program solely as a result of section 2015(o)(2) of
this title or section 1612 or 1613 of title 8.
(2) State payments to Secretary
(A) In general
Not later than the date the State agency issues benefits to
individuals under this subsection, the State agency shall pay
the Secretary, in accordance with procedures established by the
Secretary, an amount that is equal to -
(i) the value of the benefits; and
(ii) the costs of printing, shipping, and redeeming
coupons, and other Federal costs, incurred in providing the
benefits, as determined by the Secretary.
(B) Crediting
Notwithstanding section 3302(b) of title 31, payments
received under subparagraph (A) shall be credited to the food
stamp program appropriation account or the account from which
the costs were drawn, as appropriate, for the fiscal year in
which the payment is received.
(3) Reporting
To be eligible to issue benefits under this subsection, a State
agency shall comply with reporting requirements established by
the Secretary to carry out this subsection.
(4) Plan
To be eligible to issue benefits under this subsection, a State
agency shall -
(A) submit a plan to the Secretary that describes the
conditions and procedures under which the benefits will be
issued, including eligibility standards, benefit levels, and
the methodology the State agency will use to determine amounts
due the Secretary under paragraph (2); and
(B) obtain the approval of the Secretary for the plan.
(5) Violations
A sanction, disqualification, fine, or other penalty prescribed
under Federal law (including sections 2021 and 2024 of this
title) shall apply to a violation committed in connection with a
coupon issued under this subsection.
(6) Ineligibility for administrative reimbursement
Administrative and other costs incurred in issuing a benefit
under this subsection shall not be eligible for Federal funding
under this chapter.
(7) Exclusion from enhanced payment accuracy systems
Section 2025(c) of this title shall not apply to benefits
issued under this subsection.
(k) Interoperability and portability of electronic benefit transfer
transactions
(1) Definitions
In this subsection:
(A) Electronic benefit transfer card
The term "electronic benefit transfer card" means a card that
provides benefits under this chapter through an electronic
benefit transfer service (as defined in subsection (i)(11)(A)
of this section).
(B) Electronic benefit transfer contract
The term "electronic benefit transfer contract" means a
contract that provides for the issuance, use, or redemption of
coupons in the form of electronic benefit transfer cards.
(C) Interoperability
The term "interoperability" means a system that enables a
coupon issued in the form of an electronic benefit transfer
card to be redeemed in any State.
(D) Interstate transaction
The term "interstate transaction" means a transaction that is
initiated in 1 State by the use of an electronic benefit
transfer card that is issued in another State.
(E) Portability
The term "portability" means a system that enables a coupon
issued in the form of an electronic benefit transfer card to be
used in any State by a household to purchase food at a retail
food store or wholesale food concern approved under this
chapter.
(F) Settling
The term "settling" means movement, and reporting such
movement, of funds from an electronic benefit transfer card
issuer that is located in 1 State to a retail food store, or
wholesale food concern, that is located in another State, to
accomplish an interstate transaction.
(G) Smart card
The term "smart card" means an intelligent benefit card
described in section 2026(f) of this title.
(H) Switching
The term "switching" means the routing of an interstate
transaction that consists of transmitting the details of a
transaction electronically recorded through the use of an
electronic benefit transfer card in 1 State to the issuer of
the card that is in another State.
(2) Requirement
Not later than October 1, 2002, the Secretary shall ensure that
systems that provide for the electronic issuance, use, and
redemption of coupons in the form of electronic benefit transfer
cards are interoperable, and food stamp benefits are portable,
among all States.
(3) Cost
The cost of achieving the interoperability and portability
required under paragraph (2) shall not be imposed on any food
stamp retail store, or any wholesale food concern, approved to
participate in the food stamp program.
(4) Standards
Not later than 210 days after February 11, 2000, the Secretary
shall promulgate regulations that -
(A) adopt a uniform national standard of interoperability and
portability required under paragraph (2) that is based on the
standard of interoperability and portability used by a majority
of State agencies; and
(B) require that any electronic benefit transfer contract
that is entered into 30 days or more after the regulations are
promulgated, by or on behalf of a State agency, provide for the
interoperability and portability required under paragraph (2)
in accordance with the national standard.
(5) Exemptions
(A) Contracts
The requirements of paragraph (2) shall not apply to the
transfer of benefits under an electronic benefit transfer
contract before the expiration of the term of the contract if
the contract -
(i) is entered into before the date that is 30 days after
the regulations are promulgated under paragraph (4); and
(ii) expires after October 1, 2002.
(B) Waiver
At the request of a State agency, the Secretary may provide 1
waiver to temporarily exempt, for a period ending on or before
the date specified under clause (iii), the State agency from
complying with the requirements of paragraph (2), if the State
agency -
(i) establishes to the satisfaction of the Secretary that
the State agency faces unusual technological barriers to
achieving by October 1, 2002, the interoperability and
portability required under paragraph (2);
(ii) demonstrates that the best interest of the food stamp
program would be served by granting the waiver with respect
to the electronic benefit transfer system used by the State
agency to administer the food stamp program; and
(iii) specifies a date by which the State agency will
achieve the interoperability and portability required under
paragraph (2).
(C) Smart card systems
The Secretary shall allow a State agency that is using smart
cards for the delivery of food stamp program benefits to comply
with the requirements of paragraph (2) at such time after
October 1, 2002, as the Secretary determines that a practicable
technological method is available for interoperability with
electronic benefit transfer cards.
(6) Funding
(A) In general
In accordance with regulations promulgated by the Secretary,
the Secretary shall pay 100 percent of the costs incurred by a
State agency under this chapter for switching and settling
interstate transactions -
(i) incurred after February 11, 2000, and before October 1,
2002, if the State agency uses the standard of
interoperability and portability adopted by a majority of
State agencies; and
(ii) incurred after September 30, 2002, if the State agency
uses the uniform national standard of interoperability and
portability adopted under paragraph (4)(A).
(B) Limitation
The total amount paid to State agencies for each fiscal year
under subparagraph (A) shall not exceed $500,000.
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