Federal Register / Vol. 63, No. 75 / Monday, April 20, 1998 / Proposed Rules 19415

available information. The Committee

recommended to the Secretary that the

application be granted and the Secretary

approved the application on March 16,

1998.

Before a new market can be officially

designated, a referendum must be held

to determine that a two-thirds majority

of producers favor the designation. It is

hereby determined that the referendum

will be held by mail during the period

of April 27–May 1, 1998. The purpose

of the referendum is to determine

whether farmers who sold their tobacco

on the designated markets at Tabor CityWhiteville and Loris are in favor of, or

opposed to, the designation of the

consolidated market for the 1998 and

succeeding crop years. Accordingly, if a

two-thirds majority of those tobacco

producers voting in the referendum

favor the consolidation, a new market

will be designated as and will be called

Tabor City-Whiteville-Loris.

To be eligible to vote in the

referendum a tobacco producer must

have sold flue-cured tobacco on either

the Tabor City-Whiteville, North

Carolina, or Loris, South Carolina,

auction markets during the 1997

marketing season. Any farmer who

believes he or she is eligible to vote in

the referendum but has not received a

mail ballot by April 27, 1998, should

immediately contact William Coats at

(202) 205–0508.

The referendum will be held in

accordance with the provisions for

referenda of the Tobacco Inspection Act,

as amended (7 U.S.C. 511d) and the

regulations for such referendum set

forth in 7 CFR 29.74.

Dated: April 15, 1998.

Enrique E. Figueroa,

Administrator, Agricultural Marketing

Service.

[FR Doc. 98–10458 Filed 4–17–98; 8:45 am]

BILLING CODE 3410–02–P

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 29

[Docket No. TB–97–16]

Tobacco Inspection—Growers

Referendum

AGENCY: Agricultural Marketing Service,

USDA.

ACTION: Notice of referendum.

SUMMARY: This document announces

that a referendum will be conducted by

mail during the period of April 27–May

1, 1998, for producers of flue-cured

tobacco who sell their tobacco at

auction in Clarksville and Chase City,

Virginia, to determine producer

approval of the designation of the

Clarksville and Chase City tobacco

markets as one consolidated auction

market.

DATES: The referendum will be held

April 27–May 1, 1998.

FOR FURTHER INFORMATION CONTACT:

William Coats, Associate Deputy

Administrator, Tobacco Programs,

Agricultural Marketing Service, United

States Department of Agriculture, P.O.

Box 96456, Washington, D.C. 20090–

6456; telephone number (202) 205–

0508.

SUPPLEMENTARY INFORMATION: Notice is

hereby given of a mail referendum on

the designation of a consolidated

auction market at Clarksville and Chase

City, Virginia. Clarksville and Chase

City were designated on June 26, 1942

(7 CFR 29.8001) as flue-cured tobacco

auction markets under the Tobacco

Inspection Act (7 U.S.C. 511 et seq.).

Under this Act those markets have been

receiving mandatory grading services

from USDA.

On September 3, 1997, an application

was made to the Secretary of

Agriculture to consolidate the

designated markets of Clarksville and

Chase City, Virginia. The application,

filed by warehouse operators on those

markets, was made pursuant to the

regulations promulgated under the

Tobacco Inspection Act (7 CFR Part

29.1–29.3). On November 7, 1997, a

public hearing was held in Clarksville,

Virginia, pursuant to the regulations. A

Review Committee, established

pursuant to § 29.3(h) of the regulations

7 CFR 29.3(h)), has reviewed and

considered the application, the

testimony presented at the hearing, the

exhibits received in evidence, and other

available information. The Committee

recommended to the Secretary that the

application be granted and the Secretary

approved the application on March 16,

1998.

Before a new market can be officially

designated, a referendum must be held

to determine that a two-thirds majority

of producers favor the designation. It is

hereby determined that the referendum

will be held by mail during the period

of April 27–May 1, 1998. The purpose

of the referendum is to determine

whether farmers who sold their tobacco

on the designated markets at Clarksville

and Chase City are in favor of, or

opposed to, the designation of the

consolidated market for the 1998 and

succeeding crop years. Accordingly, if a

two-thirds majority of those tobacco

producers voting in the referendum

favor this consolidation, a new market

will be designated as and will be called

Clarksville-Chase City.

To be eligible to vote in the

referendum a tobacco producer must

have sold flue-cured tobacco on either

Clarksville or Chase City, Virginia,

auction markets during the 1997

marketing season. Any farmer who

believes he or she is eligible to vote in

the referendum but has not received a

mail ballot by April 27, 1998, should

immediately contact William Coats at

(202) 205–0508.

The referendum will be held in

accordance with the provisions for

referenda of the Tobacco Inspection Act,

as amended (7 U.S.C. 511d) and the

regulations for such referendum set

forth in 7 CFR 29.74.

Dated: April 15, 1998.

Enrique E. Figueroa,

Administrator, Agricultural Marketing

Service.

[FR Doc. 98–10457 Filed 4–17–98; 8:45 am]

BILLING CODE 3410–02–P

DEPARTMENT OF AGRICULTURE

Food and Nutrition Service

7 CFR Part 246

RIN 0584–AC50

Special Supplemental Nutrition

Program for Women, Infants and

Children (WIC): WIC/Food Stamp

Program (FSP) Vendor Disqualification

AGENCY: Food and Nutrition Service,

USDA.

ACTION: Proposed rule.

SUMMARY: This proposed rule would

amend regulations governing the

Special Supplemental Nutrition

Program for Women, Infants and

Children (WIC) to implement a mandate

of the Personal Responsibility and Work

Opportunity Reconciliation Act of 1996,

which requires the disqualification of

WIC vendors who are disqualified from

the Food Stamp Program (FSP).

According to the law, the

disqualification shall be for the same

length of time as the FSP

disqualification and may begin at a later

date than the FSP disqualification.

Furthermore, the law states that

disqualification from WIC on the basis

of an FSP disqualification is not subject

to judicial or administrative review.

This proposed rule would also

mandate uniform sanctions across States

for the most serious WIC Program

vendor violations, including seven

specific WIC Program violations that

result in FSP disqualification in

addition to WIC Program
19416 Federal Register / Vol. 63, No. 75 / Monday, April 20, 1998 / Proposed Rules

disqualification. The implementation of

these mandatory sanctions is intended

to promote WIC and FSP coordination

in the disqualification of retailers and

vendors who violate program rules.

DATES: To be assured of consideration,

written comments must be postmarked

by July 20, 1998.

ADDRESSES: Comments should be sent to

Barbara Hallman, Acting Director,

Supplemental Food Program Division,

FNS, USDA, 3101 Park Center Drive,

Room 540, Alexandria, Virginia 22302.

Comments on this rule should be

labeled ‘‘WIC/Food Stamp Vendor

Disqualification.’’ All written comments

will be available for public inspection

during regular business hours (8:30 a.m.

to 5:00 p.m., Monday through Friday) at

the above noted address.

FOR FURTHER INFORMATION CONTACT:

Barbara Hallman, at (703) 305–2730.

SUPPLEMENTARY INFORMATION:

Executive Order 12866

This proposed rule has been

determined to be not significant for

purposes of Executive Order 12866 and

therefore has not been reviewed by the

Office of Management and Budget.

Regulatory Flexibility Act

This proposed rule has been reviewed

with regard to the requirements of the

Regulatory Flexibility Act of 1980 (5

U.S.C. 601–612). Yvette Jackson,

Administrator of the Food and Nutrition

Service, has certified that this rule will

not have a significant impact on a

substantial number of small entities.

This rule will only impact WIC vendors

who have committed fraud and abuse

against the WIC Program or who have

been disqualified from the Food Stamp

Program.

Paperwork Reduction Act

This proposed rule imposes no new

reporting or recordkeeping requirements

that are subject to OMB review in

accordance with the Paperwork

Reduction Act of 1995.

Executive Order 12372

The Special Supplemental Nutrition

Program for Women, Infants and

Children is listed in the Catalog of

Federal Domestic Assistance Programs

under 10.577. For reasons set forth in

the final rule in 7 CFR Part 3015,

Subpart V, and related notice (48 FR

29115) this program is included in the

scope of Executive Order 12372 which

requires intergovernmental consultation

with State and local officials.

Executive Order 12988

This proposed rule has been reviewed

under Executive Order 12988, Civil

Justice Reform. This rule is intended to

have preemptive effect with respect to

any State or local laws, regulations or

policies which conflict with its

provisions or which would otherwise

impede its full implementation. This

rule is not intended to have retroactive

effect unless so specified in the

EFFECTIVE DATE paragraph of the final

rule. Prior to any judicial challenge to

the application of provisions of this

rule, all applicable administrative

procedures must be exhausted.

Public Law 104–4

Title II of the Unfunded Mandates

Reform Act of 1995 (UMRA), Pub. L.

104–4, establishes requirements for

Federal agencies to assess the effects of

their regulatory actions on State, local

and tribal governments and the private

sector. Under section 202 of the UMRA,

the Food and Nutrition Service

generally must prepare a written

statement, including a cost-benefit

analysis, for proposed and final rules

with ‘‘Federal mandates’’ that may

result in expenditures to State, local or

tribal governments, in the aggregate, or

the private sector, of $100 million or

more in any one year. When such a

statement is needed for a rule, section

205 of the UMRA generally requires the

Food and Nutrition Service to identify

and consider a reasonable number of

regulatory alternatives and adopt the

least costly, more cost-effective or least

burdensome alternative that achieves

the objectives of the rule.

This rule contains no Federal

mandates (under the regulatory

provisions of Title II of the UMRA) for

State, local and tribal governments or

the private sector of $100 million or

more in any one year. Thus, this rule is

not subject to the requirements of

sections 202 and 205 of the UMRA.

Background

Section 729(j) of Pub. L. 104–193, the

Personal Responsibility and Work

Opportunity Reconciliation Act of 1996

(PRWORA), amends section 17 of the

Child Nutrition Act of 1996 (42 U.S.C.

1786) (CNA), by adding a new section(n)

that requires the Secretary of

Agriculture to issue regulations

providing the criteria for the

disqualification of WIC vendors who

have been disqualified as retailers from

the FSP. This provision also states that

the WIC disqualification shall be for the

same length of time as the FSP

disqualification. It may begin at the

same time or at a later date than the FSP

disqualification, and shall not be subject

to judicial or administrative review.

This new provision is designed to

strengthen WIC Program integrity by

promptly removing vendors from the

WIC Program who have been

disqualified from the FSP due to FSP

violations.

In addition, a September 1995 Office

of Inspector General (OIG) audit,

number 27601–0004–Ch, on

Disqualification of Vendors from Food

and Nutrition Service (FNS) Programs

recommended that FNS develop

uniform regulatory sanction provisions

to be applied to WIC vendors for each

of seven specific WIC Program vendor

violations. These WIC violations are

deemed to be so serious that, under

current FSP regulations, they result in

the loss of FSP authorization in

response to the WIC Program

disqualification. This proposed rule

would establish mandatory uniform

sanctions against violating WIC vendors

and would also remove the current

three-year limit on WIC vendor

disqualification, thus permitting

permanent WIC vendor disqualification

under specified circumstances. State

agencies can sanction vendors for

violations other than those listed in

proposed § 246.12(k)(1) as long as

vendors are made aware of such

violations and sanctions, and such

sanctions do not result in

disqualification from the WIC Program

for more than six months.

Criteria for Disqualification of WIC

Vendors Who Have Been Disqualified

From the FSP

Section 729(j) of the PRWORA

amends section 17 of the CNA by

adding a new section(n) that requires

the Secretary of Agriculture to issue

regulations providing the criteria for the

disqualification of WIC vendors who

have been disqualified from

participating as retailers in the FSP. In

response to that mandate, the

Department has determined that any

FSP violation that is serious enough to

warrant disqualification from the FSP

should also warrant disqualification

from the WIC Program. The Department

believes that retailers that are

disqualified from the FSP should not be

eligible to participate in either the WIC

Program or the FSP. This proposed rule

would require the disqualification of

such vendors from WIC, with the only

exception being for participant

hardship. That is, WIC State agencies

would not be required to disqualify a

WIC vendor that has been disqualified

from the FSP when such WIC

disqualification would cause undue

hardship for WIC participant access.

The Department recognizes that WIC

vendors play a vital role in ensuring that

WIC Program goals are achieved. While

the vast majority of vendors follow
Federal Register / Vol. 63, No. 75 / Monday, April 20, 1998 / Proposed Rules 19417

program rules, abuse cannot and will

not be tolerated. Current program rules

(§§ 246.12(k) (iii) and (iv)) allow but do

not require a State agency to disqualify

a WIC vendor who is currently

disqualified from any FNS program or

who has been assessed a civil money

penalty (CMP) by the FSP in lieu of

disqualification. To strengthen program

integrity, WIC State agencies would be

required under this proposed rule to

disqualify a vendor from WIC who has

been disqualified from the FSP, unless

such disqualification would create

undue hardship for WIC participant

access, in which case WIC State

agencies will assess a CMP. In cases

where a retailer has been assessed a

CMP in lieu of disqualification by the

FSP, WIC State agencies will continue

to have the option of disqualifying the

vendor under § 246.12(k)(iv). However,

since the disqualification is not based

upon a reciprocal FSP disqualification,

the vendor must be offered an

opportunity to appeal the WIC

disqualification.

Length of Disqualification

Section 729(j) of the PRWORA also

states that the WIC disqualification shall

be for the same length of time as the FSP

disqualification and may begin at the

same time or at a later date than the FSP

disqualification. Because FSP

regulations provide for permanent

disqualification, there will be instances

in which a WIC vendor is disqualified

for more than the current three-year

maximum disqualification period

reflected in § 246.12(k)(1)(ii) of the WIC

Program regulations. Therefore, this

proposed rule would remove the threeyear limitation from the regulations.

This permits reciprocal permanent

disqualification, as required by the

PRWORA.

Vendor Appeals

This proposed rule would amend

§ 246.18(a) to modify the current

requirement to provide a hearing

procedure whereby a WIC vendor

adversely affected by State or local

agency actions may appeal such action.

Section 729(j) of the PRWORA

specifically states that WIC vendors who

are disqualified as a result of their

disqualification as retailers from the

FSP are not entitled to administrative or

judicial review proceedings in the WIC

Program. As such, § 246.18(a) would be

amended to reflect this change. This

change should reduce WIC State agency

expenses and administrative burdens

and eliminate a duplicative

administrative process. The WIC

Program disqualification will not be

imposed until after all FSP

administrative and judicial processes

have been completed.

Section 729(j) of the PRWORA only

eliminates the WIC appeal for vendors

who are disqualified as a result of the

FSP disqualification. The law does not

eliminate appeal rights for vendors who

are disqualified from WIC because they

have been assessed a CMP in lieu of

disqualification from the FSP.

Therefore, WIC State agencies that

utilize the option at § 246.12(k)(iv)

which allows the State agency to

disqualify a vendor who has been

assessed a CMP in lieu of FSP

disqualification must continue to offer

such vendors an opportunity to appeal

the WIC disqualification.

Vendor Agreements

To ensure that all WIC vendors are

aware that disqualification from the FSP

will result in disqualification from the

WIC Program or, under certain

circumstances, assessment of a CMP in

lieu of disqualification, § 246.12(f) has

been amended to require a statement to

this effect in the vendor agreement.

Mandatory WIC Program Vendor

Sanctions

In September 1995, the OIG released

audit report number 27601–0004–Ch,

Disqualification of Vendors from FNS

Programs. The purpose of the audit was

to evaluate FNS’ controls to ensure that

retailers/vendors who committed

serious violations in one FNS program

are considered for disqualification from

participation in all FNS programs for

which they were authorized.

The audit disclosed widely

inconsistent sanction policies among

the States for WIC vendors who commit

similar or identical WIC Program

violations. A previous nationwide OIG

audit of WIC Program vendor

operations, audit report 27661–2–Ch

issued June 1988, also disclosed

inconsistent sanction policies across

States. For example, a vendor who

overcharged a WIC State agency for WIC

foods could receive a sanction that

varied from additional mandatory

training, to a voluntary withdrawal, to a

warning letter, or a one to three year

disqualification, depending upon the

particular State. To ensure that

appropriate and consistent sanctions are

taken against vendors abusing the WIC

Program, the audit recommended that

FNS revise WIC Program regulations to

mandate specific uniform sanctions for

each of seven categories of WIC Program

violations that, under current

regulations, result in the loss of FSP

authorization in addition to WIC

disqualification. This would promote

consistency of sanction treatment for

violative WIC vendors. This proposed

rule would implement the OIG’s

recommendation.

In 1987, the FSP issued codified

regulations at 7 CFR § 278.1(o) that

required FNS Field Offices to withdraw

the FSP authorization of any firm that

is disqualified from the WIC Program

based in whole or in part on any act that

constitutes a violation of that program’s

regulations, and which is shown to

constitute a misdemeanor or felony

violation of law, or for any of the

following specific program violations:

(1) Claiming reimbursement for the

sale of an amount of a specific food item

which exceeds the store’s documented

inventory of that food item for a specific

period of time;

(2) Exchanging WIC food instruments

for cash or credit;

(3) Receiving, transacting and/or

redeeming WIC food instruments

outside of authorized channels;

(4) Accepting WIC food instruments

from unauthorized persons;

(5) Exchanging non-food items for a

WIC food instrument;

(6) Charging WIC customers more for

food than non-WIC customers or

charging WIC customers more than

current shelf price; or

(7) Charging for food items not

received by the WIC customer or for

food provided in excess of those listed

on the food instrument.

The Department proposes two

modifications to the above-noted seven

violations. First, the Department

proposes to add trafficking to this list of

violations. Trafficking is generally

recognized as the most flagrant and

egregious example of program fraud and

abuse. As such, under this proposed

rule, vendors found to be committing

trafficking would be subject to

permanent disqualification from the

WIC Program upon their first offense, as

in the FSP. The Department proposes to

adopt the FSP’s definition of trafficking,

with some minor revisions to

accommodate WIC terminology.

Trafficking, in this proposal, is defined

as the buying or selling of WIC food

instruments for cash or consideration

other than eligible food; or the exchange

of firearms, ammunition, explosives, or

controlled substances (i.e, drugs) as the

term is defined in section 802 of title 21,

United States Code, for food

instruments. Consideration other than

eligible food would include items such

as furniture, appliances or other

property, etc.

Second, the Department proposes to

add the sale of alcohol, or alcoholic

beverages or tobacco products in

exchange for WIC food instruments to

the list of violations that would result in
19418 Federal Register / Vol. 63, No. 75 / Monday, April 20, 1998 / Proposed Rules

a mandatory sanction in recognition of

their obvious inappropriate nature with

respect to WIC food instrument

exchanges. ‘‘Alcoholic Beverage’’ is

defined by 27 U.S.C. § 214 as ‘‘any

beverage in liquid form which contains

not less than one-half of one percent of

alcohol by volume and is intended for

human consumption.’’ In recognition of

the addition of this new violation,

number (5) above would be modified to

read ‘‘exchanging non-food items, other

than alcohol or alcoholic beverages or

tobacco products, for WIC food

instruments.’’ The proposed penalty for

the first disqualification for this

violation is three years, consistent with

the FSP sanction for this type of

violation.

Third, the Department has removed

the word ‘‘cash’’ from number (2) above,

exchanging WIC Food Instruments for

cash and credit, because exchanging

food instruments for cash is included in

the trafficking violation as explained

earlier in this preamble.

The Department is proposing

mandatory WIC Program

disqualifications for the nine violations.

The proposed WIC disqualifications set

forth herein are similar to

disqualifications imposed by the FSP for

similar violations. This will conform

WIC sanctions among the States, and

establish WIC disqualifications that are

similar to FSP disqualifications. The

following chart illustrates the

mandatory WIC disqualifications that

would be imposed for the noted

violation. Although the Department

only proposes to address nine violations

in this regulation, of course there are

other violations that may occur. We

have left to State agency discretion the

authority to establish disqualifications

for additional violations they deem

appropriate. However, such State

agency established disqualifications

cannot exceed six months.

WIC violation WIC sanction

Trafficking ............................................................................................................................................. Permanent Disqualification (DQ).

Sale of alcohol or alcoholic beverages or tobacco products in exchange for WIC food instruments 1st—3 year DQ; 2nd—6 year DQ; 3rd—Permanent DQ.

Accepting WIC food instruments from unauthorized persons ............................................................. Same as above.

Claiming reimbursement for the sale of an amount of a specific food item which exceeds the

store’s documented inventory for food item for a specific period of time.

Same as above.

Receiving, transacting and/or redeeming WIC food instruments outside authorized channels ......... Same as above.

Charging WIC customers more for food than non-WIC customers or charging WIC customers

more than current shelf price.

Same as above.

Charging for food items not received by the WIC customer or for food provided in excess of those

listed on the food instrument.

Same as above.

Exchanging non-food items, except alcohol or alcoholic beverages or tobacco, for WIC food instruments.1st—1 year DQ; 2nd—2 year DQ; 3rd—Permanent DQ.

Exchanging WIC food instruments for credit ....................................................................................... Same as above.

To ensure that WIC vendors are aware

that disqualification from the WIC

Program will also result in the loss of

FSP authorization, proposed

amendments to § 246.18(b) would

require that the State agency provide

formal written notice of possible

disqualification by FSP in the formal

notice of WIC disqualification. Such

written notice shall be made to such

vendors prior to the time available for

the WIC vendor to request appeal of the

WIC action.

Voluntary Withdrawal and/or Nonrenewal of Contract/Agreements in Lieu

of Disqualification

The September 1995 OIG audit

revealed that some WIC State agencies

allowed vendors to voluntarily

withdraw from the WIC Program or pay

a CMP in lieu of disqualification. The

Department does not support such a

practice. It provides a means for a

vendor to circumvent reciprocal

disqualification from the FSP. The two

programs must cooperate in every

reasonable manner to facilitate the

detection and removal of abusive

vendors and retailers. The result of such

cooperation is more effective and

efficient vendor/retailer management in

both programs. Therefore, under

proposed § 246.12(k)(2), State agencies

would not be able to accept voluntary

withdrawal of the vendor from the

program or an offer by the vendor to pay

a CMP in lieu of disqualification where

a disqualification is required under this

proposed rule.

In addition, some State agencies fail

to disqualify a noncompliant WIC

vendor from the program, opting instead

to not renew the vendor’s contract or

agreement at the next available renewal

period. State agencies take this action

because it is believed to be less costly

and burdensome than disqualifying the

vendor and going through the appeals

process. However, unless the vendor is

actually disqualified from the WIC

Program, the mandatory reciprocal FSP

disqualification cannot be imposed. In

addition, without disqualification, the

opportunity for abuse continues until

expiration of the agreement. Therefore,

the Department proposes at

§ 246.12(k)(2) to prohibit the practice of

nonrenewal of the contract/agreement as

an alternative to or in lieu of

disqualification.

Timely Referral of WIC Disqualified

Vendors

In order to effectively remove

disqualified WIC vendors from

participating as retailers in the FSP,

WIC State agencies must provide the

FNS field offices with timely

information on disqualified WIC

vendors. The September 1995 OIG

report found that timely referrals were

not occurring. The delays in notifying

FNS field offices ranged from 9 to 349

days with the majority of cases over 100

days. These untimely referrals have

delayed or prevented noncompliant

WIC vendors who have been

disqualified from WIC from being

promptly disqualified from the FSP.

Therefore, to assure that action to

remove abusive retailers is taken in a

timely manner, the Department is

proposing at § 246.12(k)(3) that State

agencies provide the FNS field office

with written notification, including fax

or e-mail, on vendors it has disqualified

from WIC for any one of the nine

violations noted above that result in a

mandatory disqualification period. This

information shall be provided within 15

days after the opportunity to file for a

WIC administrative appeal has expired

or all WIC administrative and judicial

appeals have been exhausted.

Participant Access

Impact on participant access has

always been a primary consideration

when determining whether to disqualify

an abusive vendor from the WIC

Program. When disqualifying a vendor
Federal Register / Vol. 63, No. 75 / Monday, April 20, 1998 / Proposed Rules 19419

from WIC, either because of WIC

Program abuse, or based on an FSP

disqualification, the State agency will

continue to be required to document its

determination that participants will

have access to WIC supplemental foods

notwithstanding the disqualification of

the vendor in question.

In assessing participant access, the

State agency would need to consider

factors such as availability of other

authorized vendors in the same area and

geographic barriers to such vendors. The

Department would like to point out that

a FSP CMP, granted in lieu of

disqualification due to a participant

access concern, does not obligate the

WIC State agency to concur with the

FSP hardship determination. Nor does it

require reciprocal disqualification from

the WIC Program. Recognizing that FSP

and WIC serve different populations, it

is possible that there may be instances

where a disqualification in one program

would not negatively affect participant

access for recipients in the other

Program.

For example, a retailer found to be

abusing the FSP may have a large FSP

population that is predominantly

elderly. This establishment may also

serve a small population of younger

more mobile WIC participants. The FSP

may determine that it would jeopardize

FSP participant access if the retailer

were disqualified and instead issues a

CMP in lieu of disqualification. The

WIC State agency may determine that

WIC participant access would not be

unduly harmed and therefore choose to

disqualify the abusive WIC vendor

under § 246.12(k)(iv). Of course, full

appeal rights would be available to the

WIC vendor under these circumstances.

In the rare instance where the State

agency determines that disqualification

of a WIC vendor would jeopardize

access for participants, the State agency

shall assess a CMP against the vendor in

lieu of disqualification. The WIC State

agency should actively monitor the

vendor to ensure that the vendor

complies with program rules as a

condition to remain an authorized

vendor.

The State agency must include in the

file of each WIC vendor who is

disqualified from the Program or

receives a CMP in lieu of

disqualification, a written record of its

participant access determination and

any supporting justification. The State

agency, with its knowledge of the

locations of authorized WIC vendors

and the geographical distribution of

WIC participants, is uniquely qualified

to determine whether any given vendor

is needed to ensure participant access to

WIC foods, and whether a

disqualification will not adversely affect

participant access to authorized foods.

The WIC State agency determination

regarding participant access is,

therefore, not subject to appeal by the

vendor.

Formula for Calculating Civil Money

Penalties

To ensure that WIC State agencies are

using a consistent method in

determining the amount of a CMP

issued in lieu of disqualification, the

Department proposes to establish a

formula for calculating the CMP. The

proposed formula is currently used by

several WIC State agencies and is

identical to the CMP formula used by

the FSP. The proposed formula is as

follows: (1) Determine the vendor’s

average monthly WIC redemptions for

the 12-month period ending with the

month immediately preceding the

month during which the store was

charged with violations; (2) Multiply the

average monthly redemptions figure by

10 percent (.10); (3) Multiply the

product from Step 2 by the number of

months for which the store would have

been disqualified. This is the amount of

the CMP. The amount of the CMP may

not exceed $10,000 for each violation.

Following is an example using this

methodology:

Monthly WIC Redemptions

Jan.—$10,000

Feb.—$8,500

Mar.—$12,300

Apr.—$9,000

May.—$7,000

June—$5,000

July—$6,000

Aug.—$4,000

Sept.—$5,500

Oct.—$7,000

Nov.—$7,000

Dec.—$5,000

Average Monthly Redemptions $7,192.00

Multiply by 10 Percent ............. ×.10

$719.00

Proposed disqualification

period=1 year or 12 months: ×12

Civil Money Penalty .................. $8,630.00

Disposition of Civil Money Penalties

Money collected from imposition of

civil money penalties or vendor fines

shall be treated as program income.

Authority granted the Department in 7

CFR 3016.25 permits the

characterization of such fines as

program income. As program income,

their use will be governed by § 246.15

of the WIC regulations. This change will

be reflected in § 246.15(b).

Definition of Food Instrument

In recognition of emerging technology

in the retail food delivery area relative

to electronic benefits transfer (EBT), the

Department proposes to revise the

definition of ‘‘food instrument’’ to

include an EBT transfer card. ‘‘Food

instrument’’ is now proposed to be

defined as a voucher, check, electronic

benefits transfer card (EBT), coupon or

other document which is used by a

participant to obtain supplemental

foods.

List of Subjects in 7 CFR Part 246

Food assistance programs, Food

donations, Grant programs—social

programs, Indians, Infants and children,

Maternal and child health, Nutrition,

Nutrition education, Public assistance

programs, WIC, Women.

For reasons set forth in the preamble,

7 CFR part 246 is proposed to be

amended as follows:

PART 246—SPECIAL SUPPLEMENTAL

NUTRITION PROGRAM FOR WOMEN,

INFANTS AND CHILDREN

1. The authority citation for part 246

continues to read as follows:

Authority: 42 U.S.C. 1786.

2. In § 246.2, the definition of ‘‘Food

instrument’’ is revised to read as

follows:

§ 246.2 Definitions

* * * * *

Food instrument means a voucher,

check, electronic benefits transfer card

(EBT), coupon or other document which

is used by a participant to obtain

supplemental foods.

* * * * *

3. In § 246.12:

a. paragraphs (f)(2)(xix) and (f)(2)(xx)

are redesignated as paragraphs (f)(2)(xx)

and (f)(2)(xxi), respectively;

b. new paragraph (f)(2)(xix) is added;

c. paragraph (f)(3) is revised;

d. paragraph (k)(1) introductory text is

revised;

e. paragraph (k)(1)(iii) is removed,

paragraphs (k)(1)(i),(k)(1)(ii),(k)(1)(iv)

and (k)(1)(v) are redesignated as

(k)(1)(v), (k)(1)(vi),(k)(1)(vii) and

(k)(1)(viii), respectively, and revised,

and new paragraphs (k)(1)(i) through

(k)(1)(iv) and (k)(1)(ix) are added;

f. paragraphs (k)(2) and (k)(3) are

redesignated as (k)(4) and (k)(5),

respectively; and new paragraphs (k)(2)

and (k)(3) are added.

The revisions and additions read as

follows:

§ 246.12 Food delivery systems.

* * * * *
19420 Federal Register / Vol. 63, No. 75 / Monday, April 20, 1998 / Proposed Rules

(f) * * *

(2) * * *

(xix) The State agency shall disqualify

a vendor who has been disqualified

from the Food Stamp Program.

However, if the State agency determines

that such disqualification will create

hardship for participant access to

authorized foods, the State agency shall

issue a civil money penalty in lieu of

WIC disqualification.

* * * * *

(3) Other provisions shall be added to

the contracts or agreements to

implement the State agency option in

paragraph (r)(5)(iv) of this section.

* * * * *

(k) * * *

(1) The following sanctions shall be

used by each State agency. The State

agency shall provide adequate

procedures for vendors to appeal a

disqualification from participation

under the Program as specified in

§ 246.18. The State agency sanctions

shall include:

(i) Permanent disqualification for:

(A) Buying or selling of WIC food

instruments for cash or consideration

other than eligible food (trafficking); or

the exchange of firearms, ammunition,

explosives, or controlled substances as

defined in 21 U.S.C. 802, for food

instruments; or

(B) When a vendor has twice before

been sanctioned for any violation listed

in paragraphs (k)(1)(ii) and (k)(1)(iii) of

this section.

(ii) Disqualification for three years if

it is the vendor’s first sanction for:

(A) The sale of alcohol or alcoholic

beverages or tobacco products in

exchange for WIC food instruments; or

(B) Claiming reimbursement for the

sale of an amount of a specific food item

which exceeds the store’s documented

inventory of that food item for a specific

period of time; or

(C) Charging WIC customers more for

food than non WIC customers or

charging WIC customers more than the

current shelf or contract price; or

(D) Accepting WIC food instruments

from unauthorized persons; or

(E) Receiving, transacting and/or

redeeming WIC food instruments

outside of authorized channels; or

(F) Charging for food items not

received by the WIC customer or for

food provided in excess of those listed

on the food instrument.

(iii) Disqualification for one year if it

is the vendor’s first sanction for:

(A) Exchanging WIC food instruments

for credit; or

(B) Exchanging non-food items, other

than alcohol or alcoholic beverages or

tobacco, for WIC food instruments.

(iv) The sanctions for violations in

paragraphs (k)(1)(ii) and (k)(1)(iii) of this

section shall be doubled if the vendor

has once before been assigned a

sanction. In addition, the State agency

does not have to provide the vendor

with prior notice that violations were

occurring and the possible

consequences of the violations prior to

implementing any of the mandatory

sanctions in this paragraph.

(v) Food vendors may be subject to

sanctions in addition to, or in lieu of,

disqualification, such as claims for

improper or overcharged food

instruments and the penalties outlined

in § 246.23, in the case of deliberate

fraud.

(vi) The State agency may impose

sanctions for violations that are not

specified in paragraphs (k)(1)(i) through

(k)(1)(iii) of this section as long as the

vendor is made aware of such violations

and sanctions. The period of

disqualification from Program

participation for such State-established

violations shall not be more than six

months as determined by the State

agency.

(vii) The State agency shall disqualify

a vendor who has been disqualified

from the Food Stamp Program. The

disqualification shall be for the same

length of time as the FSP

disqualification; may begin at a later

date than the FSP disqualification; shall

not be subject to administrative or

judicial review under the WIC Program.

If the State agency determines that such

disqualification will create hardship for

participant access to authorized foods,

the State agency shall issue a civil

money penalty in lieu of WIC

disqualification. The State agency may

disqualify a vendor who has been

assessed a civil money penalty in the

Food Stamp Program, as provided under

7 CFR 278.6, only if the State agency:

(A) Documents that any such

disqualification will not create undue

hardship for participants; and

(B) Includes notification that it will

take such disqualification action in its

vendor agreement, in accordance with

paragraph (f)(3) of this section.

(viii) Prior to disqualifying a food

vendor, the State agency shall consider

whether the disqualification would

create undue hardship for participants.

The State agency shall include

documentation of its participant access

determination and any supporting

documentation in the file of each

vendor who is disqualified or receives a

civil money penalty in lieu of

disqualification.

(ix) The State agency shall use the

following formula to calculate a civil

money penalty issued in lieu of

disqualification:

(A) Determine the vendor’s average

monthly WIC redemptions for the 12-

month period ending with the month

immediately preceding the month

during which the store was charged

with violations;

(B) Multiply the average monthly

redemptions figure by 10 percent (.10);

(C) Multiply the product from Step 2

by the number of months for which the

store would have been disqualified.

This is the amount of the civil money

penalty. The amount of the civil money

penalty may not exceed $10,000 for

each violation.

(2) The State agency shall not accept

voluntary withdrawal of the vendor

from the Program as an alternative to

disqualification, but shall enter the

disqualification on the record. In

addition, the State agency shall not use

nonrenewal of the vendor agreement as

an alternative to disqualification.

(3) The State agency shall provide the

appropriate FNS office with written

notification and information on vendors

it has disqualified for any of the

violations listed in (k)(1)(i) through

(k)(1)(iv) of this section. This

information shall include the name of

the vendor, address, identification

number, the type of violation, and the

length of disqualification, and shall be

provided within fifteen days after the

opportunity to file for a WIC

administrative appeal has expired or all

WIC administrative appeals have been

exhausted and all judicial appeal rights

have expired or have been exhausted.

* * * * *

4. In § 246.15, a sentence is added to

the end of paragraph (b) to read as

follows:

§ 246.15 Program income other than

grants.

* * * * *

(b) * * * Money received by the State

agency as a result of civil money

penalties or fines assessed against a WIC

vendor shall be considered as program

income.

5. In § 246.18, paragraphs (a)(1) and

(b)(1) are revised to read as follows:

§ 246.18 Administrative appeal of State

agency decisions.

(a) * * *

(1) The right of appeal shall be

granted when a local agency’s or a food

vendor’s application to participate is

denied or, during the course of the

contract or agreement, when a local

agency or vendor is disqualified or any

other adverse action which affects

participation is taken. The following

actions shall not be subject to judicial or

administrative review:
Federal Register / Vol. 63, No. 75 / Monday, April 20, 1998 / Proposed Rules 19421

(i) Expiration of a contract or

agreement with a food vendor;

(ii) Disqualification of a food vendor

as a result of disqualification from the

Food Stamp Program; and

(iii) The State agency’s determination

that participant access would not be

adversely affected by disqualification of

the vendor.

* * * * *

(b) * * *

(1) Written notification of the

administrative action, the procedures to

file for an administrative review, the

cause(s) for and the effective date of the

action. Such notification shall be

provided to participating food vendors

not less than 15 days in advance of the

effective date of the action. When a

vendor is disqualified due in whole or

in part to violations specified in

§ 246.12(k)(1), such notification shall

include the following statement: ‘‘This

disqualification from WIC may result in

disqualification as a retailer in the Food

Stamp Program.’’

In the case of disqualification of local

agencies, the State agency shall provide

not less than 60 days advance notice of

pending action.

* * * * *

Dated: April 13, 1998.

Yvette S. Jackson,

Administrator, Food and Nutrition Service.

[FR Doc. 98–10255 Filed 4–17–98; 8:45 am]

BILLING CODE 3410–30–U

DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 39

[Docket No. 97–NM–250–AD]

RIN 2120–AA64

Airworthiness Directives; Airbus Model

A320 Series Airplanes

AGENCY: Federal Aviation

Administration, DOT.

ACTION: Notice of proposed rulemaking

(NPRM).

SUMMARY: This document proposes the

adoption of a new airworthiness

directive (AD) that is applicable to

certain Airbus Model A320 series

airplanes. This proposal would require

repetitive rotating probe inspections of

fastener holes and/or the adjacent

tooling hole of a former junction of the

aft fuselage, and corrective action, if

necessary. This AD also provides for

optional terminating action for the

repetitive inspections. This proposal is

prompted by issuance of mandatory

continuing airworthiness information by

a foreign civil airworthiness authority.

The actions specified by the proposed

AD are intended to prevent reduced

structural integrity of the aft fuselage

caused by fatigue cracking of the former

junction at frame 68.

DATES: Comments must be received by

May 20, 1998.

ADDRESSES: Submit comments in

triplicate to the Federal Aviation

Administration (FAA), Transport

Airplane Directorate, ANM–114,

Attention: Rules Docket No. 97–NM–

250–AD, 1601 Lind Avenue, SW.,

Renton, Washington 98055–4056.

Comments may be inspected at this

location between 9:00 a.m. and 3:00

p.m., Monday through Friday, except

Federal holidays.

The service information referenced in

the proposed rule may be obtained from

Airbus Industrie, 1 Rond Point Maurice

Bellonte, 31707 Blagnac Cedex, France.

This information may be examined at

the FAA, Transport Airplane

Directorate, 1601 Lind Avenue, SW.,

Renton, Washington.

FOR FURTHER INFORMATION CONTACT:

Norman B. Martenson, Manager,

International Branch, ANM–116, FAA,

Transport Airplane Directorate, 1601

Lind Avenue, SW., Renton, Washington

98055–4056; telephone (425) 227–2110;

fax (425) 227–1149.

SUPPLEMENTARY INFORMATION:

Comments Invited

Interested persons are invited to

participate in the making of the

proposed rule by submitting such

written data, views, or arguments as

they may desire. Communications shall

identify the Rules Docket number and

be submitted in triplicate to the address

specified above. All communications

received on or before the closing date

for comments, specified above, will be

considered before taking action on the

proposed rule. The proposals contained

in this notice may be changed in light

of the comments received.

Comments are specifically invited on

the overall regulatory, economic,

environmental, and energy aspects of

the proposed rule. All comments

submitted will be available, both before

and after the closing date for comments,

in the Rules Docket for examination by

interested persons. A report

summarizing each FAA-public contact

concerned with the substance of this

proposal will be filed in the Rules

Docket.

Commenters wishing the FAA to

acknowledge receipt of their comments

submitted in response to this notice

must submit a self-addressed, stamped

postcard on which the following

statement is made: ‘‘Comments to

Docket Number 97–NM–250–AD.’’ The

postcard will be date stamped and

returned to the commenter.

Availability of NPRMs

Any person may obtain a copy of this

NPRM by submitting a request to the

FAA, Transport Airplane Directorate,

ANM–114, Attention: Rules Docket No.

97–NM–250–AD, 1601 Lind Avenue,

SW., Renton, Washington 98055–4056.

Discussion

The Direction Ge ́ne ́rale de l’Aviation

Civile (DGAC), which is the

airworthiness authority for France,

notified the FAA that an unsafe

condition may exist on certain Airbus

Model A320 series airplanes. The DGAC

advises that it has received a report

indicating that, during fatigue tests on a

Model A320 test article, at 85,734

simulated flights, four cracks developed

in the fastener holes of the former

junction at frame 68. Such fatigue

cracking, if not detected and corrected

in a timely manner, could result in

reduced structural integrity of the aft

fuselage of the airplane.

Explanation of Relevant Service

Information

Airbus has issued Service Bulletin

A320–53–1089, dated November 22,

1995, which describes procedures for

performing a rotating probe inspection

of the fastener holes and/or the adjacent

tooling hole of the former junction at

frame 68, as applicable (depending

upon the configuration of the airplane),

and follow-on repetitive inspections, if

necessary.

Airbus also has issued Service

Bulletin A320–53–1090, dated

November 22, 1995, which describes

procedures for cold working the fastener

holes and/or adjacent tooling hole

(Modifications 21780 and 21781), which

would eliminate the need for the

repetitive inspections specified in

Airbus Service Bulletin A320–53–1089.

The DGAC classified Airbus Service

Bulletin A320–53–1089 as mandatory

and issued French airworthiness

directive 96–298–093(B)R1, dated

January 29, 1997, in order to assure the

continued airworthiness of these

airplanes in France. (The DGAC

approved Airbus Service Bulletin A320–

53–1090.)

FAA’s Conclusions

This airplane model is manufactured

in France and is type certificated for

operation in the United States under the

provisions of section 21.29 of the

Federal Aviation Regulations (14 CFR

21.29) and the applicable bilateral