A-51604, MAY 10, 1971

A-51604: May 10, 1971

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FOOD STAMP PROGRAM - RETURN OF CASH CHANGE ADVISING THAT THERE IS NO LEGAL OBJECTION TO PERMITTING AUTHORIZED FOOD STORES TO RETURN CASH CHANGE NOT EXCEEDING 49 CENTS TO AN ELIGIBLE HOUSEHOLD IN A FOOD STAMP TRANSACTION. SINCE THE SECRETARY OF AGRICULTURE DETERMINED THAT THE PROVISION FOR PERMITTING THE ISSUANCE OF CASH FOR CHANGE OF LESS THAN 50 CENTS IS NECESSARY AND APPROPRIATE FOR THE EFFECTIVE AND EFFICIENT ADMINISTRATION OF THE FOOD STAMP PROGRAM. IT IS OUR VIEW THAT THE REGULATION IN QUESTION CANNOT BE SAID TO HAVE BEEN ILLEGALLY ISSUED UNDER SECTION 4 (C) OF THE FOOD STAMP ACT OF 1964. SECRETARY: REFERENCE IS MADE TO YOUR LETTER OF MARCH 3. ASKING WHETHER THERE IS LEGAL OBJECTION TO THE REVISED PROVISION IN THE REGULATIONS GOVERNING THE FOOD STAMP PROGRAM WHICH PERMITS AUTHORIZED FOOD STORES TO RETURN CASH CHANGE NOT EXCEEDING 49 CENTS TO AN ELIGIBLE HOUSEHOLD IN A FOOD STAMP TRANSACTION.

A-51604, MAY 10, 1971

FOOD STAMP PROGRAM - RETURN OF CASH CHANGE ADVISING THAT THERE IS NO LEGAL OBJECTION TO PERMITTING AUTHORIZED FOOD STORES TO RETURN CASH CHANGE NOT EXCEEDING 49 CENTS TO AN ELIGIBLE HOUSEHOLD IN A FOOD STAMP TRANSACTION. SINCE THE SECRETARY OF AGRICULTURE DETERMINED THAT THE PROVISION FOR PERMITTING THE ISSUANCE OF CASH FOR CHANGE OF LESS THAN 50 CENTS IS NECESSARY AND APPROPRIATE FOR THE EFFECTIVE AND EFFICIENT ADMINISTRATION OF THE FOOD STAMP PROGRAM, IT IS OUR VIEW THAT THE REGULATION IN QUESTION CANNOT BE SAID TO HAVE BEEN ILLEGALLY ISSUED UNDER SECTION 4 (C) OF THE FOOD STAMP ACT OF 1964.

TO MR. SECRETARY:

REFERENCE IS MADE TO YOUR LETTER OF MARCH 3, 1971, ASKING WHETHER THERE IS LEGAL OBJECTION TO THE REVISED PROVISION IN THE REGULATIONS GOVERNING THE FOOD STAMP PROGRAM WHICH PERMITS AUTHORIZED FOOD STORES TO RETURN CASH CHANGE NOT EXCEEDING 49 CENTS TO AN ELIGIBLE HOUSEHOLD IN A FOOD STAMP TRANSACTION.

QUESTION ARISES AS TO THE VALIDITY OF SUCH REVISED REGULATION BECAUSE OF SECTION 6(B) OF THE FOOD STAMP ACT OF 1964, AS AMENDED, 7 U.S.C. 2015(B), WHICH PROVIDES IN PART THAT -

"COUPONS ISSUED TO ELIGIBLE HOUSEHOLDS SHALL BE USED BY THEM ONLY TO PURCHASE FOOD IN RETAIL STORES WHICH HAVE BEEN APPROVED FOR PARTICIPATION IN THE FOOD STAMP PROGRAM *** ."

IT IS EXPLAINED THAT UNDER THE FOOD STAMP PROGRAM, AUTHORIZED FOOD RETAILERS ACCEPT FOOD COUPONS FROM PARTICIPATING HOUSEHOLDS IN PAYMENT FOR ELIGIBLE FOOD. THE SMALLEST DENOMINATION OF COUPON USED IN THE PROGRAM IS 50 CENTS. CONSEQUENTLY, THERE ARE TRANSACTIONS IN WHICH IT IS NECESSARY FOR RETAILERS TO MAKE CHANGE FOR FOOD CUSTOMERS IN AMOUNTS OF LESS THAN 50 CENTS.

THE REVISED REGULATIONS WERE PUBLISHED IN THE FEDERAL REGISTER OF DECEMBER 30, 1970, 35 F.R. 19737, AND PRIOR THERETO, THE PROGRAM REGULATIONS PROVIDED FOR THE USE OF CREDIT SLIPS AS CHANGE. IN THIS REGARD THE REGULATIONS SET OUT IN 7 CFR 1602.2(D) PROVIDED AS FOLLOWS:

"CHANGE IN CASH SHALL NOT BE GIVEN FOR COUPONS, BUT AN AUTHORIZED RETAIL FOOD STORE MAY USE FOR THE PURPOSE OF MAKING CHANGE, THOSE UNCANCELLED AND UNENDORSED COUPONS HAVING A DENOMINATION OF 50 CENTS WHICH WERE PREVIOUSLY ACCEPTED IN EXCHANGE FOR ELIGIBLE FOODS. IF CHANGE IN AN AMOUNT OF LESS THAN 50 CENTS IS REQUIRED, THE ELIGIBLE HOUSEHOLD SHALL HAVE THE OPTION OF PAYING IN CASH OR RECEIVING CREDIT FROM THE AUTHORIZED RETAIL FOOD STORE FOR FUTURE DELIVERY OF AN EQUIVALENT VALUE OF ELIGIBLE FOODS. AT NO TIME MAY CREDIT RETURNED AS CHANGE TO ELIGIBLE HOUSEHOLDS BE IN EXCESS OF 49 CENTS."

AS INDICATED ABOVE, SUCH PART OF THE REGULATIONS (NOW SECTION 272.2(D)) HAS BEEN REVISED AND READS AS FOLLOWS:

"AN AUTHORIZED RETAIL FOOD STORE MAY USE FOR THE PURPOSE OF MAKING CHANGE, THOSE UNCANCELLED AND UNENDORSED COUPONS HAVING A DENOMINATION OF 50 CENTS WHICH WERE PREVIOUSLY ACCEPTED IN EXCHANGE FOR ELIGIBLE GOODS. IF CHANGE IN AN AMOUNT OF LESS THAN 50 CENTS IS REQUIRED, THE ELIGIBLE HOUSEHOLD SHALL RECEIVE THE CHANGE IN CASH. AT NO TIME MAY CASH CHANGE IN EXCESS OF 49 CENTS BE RETURNED TO AN ELIGIBLE HOUSEHOLD."

IT IS REPORTED THAT VARIOUS DIFFICULTIES WERE ENCOUNTERED IN CONNECTION WITH THE ISSUANCE BY RETAILERS OF SO-CALLED "CREDIT SLIPS" AS CHANGE. FIRST, THE ISSUANCE OF CREDIT SLIPS WAS THE MOST DIFFICULT PART OF FOOD STAMP TRANSACTIONS FOR RETAILERS AND RESULTED IN MISUNDERSTANDINGS AND MANY CHANGE-MAKING VIOLATIONS. THE PREPARATION AND ISSUANCE OF CREDIT SLIPS SLOWED DOWN THE CHECKOUT PROCESS, AND CONSEQUENTLY SOME RETAILERS RESISTED ISSUING CREDIT SLIPS. FURTHER, FOOD STAMP FAMILIES WERE LOSING A SIGNIFICANT AMOUNT OF COUPON BUYING POWER BY FAILING TO USE THEIR CREDIT SLIPS. THE CREDIT SLIPS WERE REDEEMABLE ONLY AT THE RETAIL STORES WHICH ISSUED THEM.

IN VIEW OF SUCH DIFFICULTIES THERE WERE CONSIDERED THE THREE FOLLOWING ALTERNATIVES (1) TO MAKE COUPONS IN DENOMINATIONS OF LESS THAN 50 CENTS (2) TO AUTHORIZE STORES TO ISSUE CREDIT SLIPS OR TOKENS WHICH COULD BE ACCEPTED FOR ELIGIBLE FOOD AT ANY AUTHORIZED RETAIL STORE AND (3) TO PERMIT THE RETURN OF CASH CHANGE UP TO 49 CENTS.

YOU STATE THAT THE FIRST ALTERNATIVE WAS REJECTED BECAUSE PRINTING AND HANDLING OF COUPONS IN SMALLER DENOMINATIONS THAN 50 CENTS WOULD HAVE ADDED SUBSTANTIALLY TO THE ADMINISTRATIVE COSTS OF THE PROGRAM, AND THAT THE SECOND ALTERNATIVE WAS REJECTED ON ADVICE OF THE OFFICE OF THE GENERAL COUNSEL OF THE DEPARTMENT OF THE TREASURY THAT THE USE OF COUPONS OR TOKENS INTERCHANGEABLY AMONG AUTHORIZED STORES IS PROHIBITED BY FEDERAL MONETARY LAWS.

CONSEQUENTLY IN VIEW OF THE UNSATISFACTORY EXPERIENCE WITH THE "CREDIT SLIP" METHOD OF CHANGE-MAKING, AND AFTER CONSIDERING THE ALTERNATIVES SET OUT ABOVE, IT WAS DETERMINED ADMINISTRATIVELY THAT THE PROVISION PERMITTING THE ISSUANCE OF CASH FOR CHANGE OF LESS THAN 50 CENTS IN FOOD COUPON TRANSACTIONS WAS NECESSARY AND APPROPRIATE FOR THE EFFECTIVE AND EFFICIENT ADMINISTRATION OF THE FOOD STAMP PROGRAM.

WE NOTE THAT SECTION 6(A) OF THE FOOD STAMP ACT OF 1964 PROVIDES THAT COUPONS SHALL BE PRINTED IN SUCH DENOMINATIONS AS MAY BE DETERMINED TO BE NECESSARY. THE CONGRESS THUS HAS LEFT THE MATTER OF PRESCRIBING THE DENOMINATIONS OF THOSE COUPONS TO THE DISCRETION OF THE SECRETARY. CONSEQUENTLY, SINCE IT OBVIOUSLY WOULD BE IMPRACTICABLE TO ISSUE MINOR DENOMINATIONS OF THE COUPONS IN THE SAME DENOMINATIONS AS CURRENCY, SOME PROVISION WOULD HAVE TO BE MADE TO MAKE CHANGE IN A TRANSACTION INVOLVING COUPONS.

SECTION 4(C) OF THE FOOD STAMP ACT OF 1964, AS AMENDED, PROVIDES:

"THE SECRETARY SHALL ISSUE SUCH REGULATIONS, NOT INCONSISTENT WITH THIS ACT, AS HE DETERMINES NECESSARY OR APPROPRIATE FOR THE EFFECTIVE AND EFFICIENT ADMINISTRATION OF THE FOOD STAMP PROGRAM."

SINCE YOU HAVE DETERMINED THAT THE PROVISION FOR PERMITTING THE ISSUANCE OF CASH FOR CHANGE OF LESS THAN 50 CENTS IS NECESSARY AND APPROPRIATE FOR THE EFFECTIVE AND EFFICIENT ADMINISTRATION OF THE FOOD STAMP PROGRAM, IT IS OUR VIEW THAT THE REGULATION IN QUESTION CANNOT BE SAID TO HAVE BEEN ILLEGALLY ISSUED UNDER THE FOREGOING PROVISION OF LAW.

WE BELIEVE, HOWEVER, THAT THE PROVISION FOR CASH CHANGE COULD BE MORE EASILY JUSTIFIED UNDER THE DE MINIMUS RULE IF 25-CENT COUPONS WERE ISSUED AND THE CASH CHANGE RESTRICTED TO NOT MORE THAN 24 CENTS. SINCE THE CHANGE CAN BE USED TO PURCHASE INELIGIBLE ITEMS AND IT IS NOT APPARENT TO US THAT THE PRINTING AND HANDLING COST OF ONE ADDITIONAL DENOMINATION OF 25 CENTS WOULD ADD SUBSTANTIALLY TO THE ADMINISTRATIVE COSTS OF THE PROGRAM, WE SUGGEST THAT THIS ALTERNATIVE BE CONSIDERED. IF YOU DETERMINE THAT SUCH ALTERNATIVE IS NOT APPROPRIATE FOR THE EFFECTIVE AND EFFICIENT ADMINISTRATION OF THE FOOD STAMP PROGRAM, THE JUSTIFICATION FOR YOUR DETERMINATION SHOULD BE DOCUMENTED FOR CONSIDERATION IN OUR REVIEW OF THE PROGRAM.