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[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[S. 1646 Introduced in Senate (IS)]

103d CONGRESS
  1st Session
                                S. 1646

  To amend the Food Stamp Act of 1977 to reduce food stamp fraud and 
        improve the food stamp program, and for other purposes.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

             November 8 (legislative day, November 2), 1993

   Mr. Leahy introduced the following bill; which was read twice and 
   referred to the Committee on Agriculture, Nutrition, and Forestry

_______________________________________________________________________

                                 A BILL

 
  To amend the Food Stamp Act of 1977 to reduce food stamp fraud and 
        improve the food stamp program, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Food Stamp Fraud Reduction Act of 
1993''.

SEC. 2. FINDINGS.

    (a) Making Government Work Findings.--In the findings of the report 
entitled ``Making Government Work'' regarding the electronic benefits 
transfer of food stamps and other government benefits, the Office of 
Technology Assessment found that--
            (1) by eliminating cash change and reducing the opportunity 
        for trafficking in benefits, a nationwide electronic benefits 
        transfer system might reduce levels of food stamp benefit 
        diversion by as much as 80 percent;
            (2) electronic benefits transfer is likely to reduce theft 
        and fraud, as well as reduce errors, paperwork, delays, and the 
        stigma attached to food stamp coupons;
            (3) Congress and the President need to act quickly on 
        electronic benefits transfer if opportunities for integrating 
        services and capturing economies of scale are to be realized;
            (4) electronic benefits transfer is proven, reliable, and 
        easy to use;
            (5) electronic benefits transfer can yield significant cost 
        savings to retailers, recipients, financial institutions, and 
        government agencies;
            (6) recipients, retailers, financial institutions, and 
        local program administrators who have tried electronic benefits 
        transfer prefer electronic benefits transfer to coupons; and
            (7) food stamp recipients using electronic benefits 
        transfer experience an added sense of dignity and security.
    (b) Other Findings.--Congress finds that--
            (1) the food stamp program prints more than 375,000,000 
        food stamp booklets per year, including 2,500,000,000 paper 
        coupons;
            (2) food stamp coupons (except for $1 coupons) are used 
        once, and each 1 of the over 2,000,000,000 coupons per year is 
        then counted, canceled, shipped, redeemed through the banking 
        system by the Secretary of the Treasury, stored, and destroyed;
            (3) food stamp recipients can receive cash change in food 
        stamp transactions if the cash does not exceed $1 per purchase; 
        and
            (4) the printing, distribution, handling, and redemption of 
        coupons costs at least $60,000,000 per year.

SEC. 3. ELIMINATION OF FOOD STAMP COUPONS.

    Section 4 of the Food Stamp Act of 1977 (7 U.S.C. 2013) is amended 
by adding at the end the following new subsection:
    ``(d)(1) Except as provided in paragraph (2) and notwithstanding 
any other provision of this Act, effective beginning on the date that 
is 3 years after the date of enactment of this subsection, no State may 
participate in the food stamp program if the State issues or uses food 
stamp coupons to carry out the program.
    ``(2) Paragraph (1) shall not apply to the extent that--
            ``(A) a use of food stamp coupons is specifically 
        authorized by section 7; or
            ``(B) the Secretary grants a waiver to a State to delay 
        implementation of electronic benefits transfer for good cause 
        shown by the State.''.

SEC. 4. NATIONWIDE ELECTRONIC BENEFITS TRANSFER FEASIBILITY TEST.

    (a) In General.--The Secretary of Agriculture, in coordination with 
the Secretary of the Treasury and the Secretary of Health and Human 
Services, shall conduct a nationwide coordinated feasibility test to--
            (1) more fully evaluate technological options, including 
        on-line, off-line, and hybrid electronic benefits transfer 
        technologies, for replacing paper food stamp coupons with 
        electronic benefits transfer systems;
            (2) examine the advantages and disadvantages of 
        centralized, as opposed to decentralized, electronic benefits 
        transfer systems;
            (3) determine the degree to which a nationwide electronic 
        benefits transfer system could be integrated with commercial 
        networks;
            (4) ascertain the likely impact of a nationwide electronic 
        benefits transfer system on recipients, State agencies, and 
        local food stamp offices;
            (5) examine the likely impact of a nationwide electronic 
        benefits transfer system on the banking and retail food 
        industries; and
            (6) examine means of using laser scanner technology with 
        electronic benefits transfer technology so that only eligible 
        food items can be purchased by food stamp participants in 
        stores that use scanners.
    (b) Initial Report.--Not later than 290 days after the date of 
enactment of this Act, the Secretary of Agriculture, in coordination 
with the Secretary of the Treasury and the Secretary of Health and 
Human Services, shall report to the appropriate committees of Congress 
on--
            (1) means of ensuring the confidentiality of personal 
        information in electronic benefits transfer systems and the 
        applicability of section 552a of title 5, United States Code, 
        to electronic benefits transfer systems;
            (2) the need for regulations to coordinate the electronic 
        benefits transfer systems of agencies to maximize the cost 
        savings of electronic benefits transfer technology for Federal 
        programs;
            (3) the need for the National Institute of Standards and 
        Technology to develop standards for card and terminal 
        manufacture and standards for other aspects of electronic 
        benefits transfer technology;
            (4) the best approaches for maximizing the use of then 
        current point of sale terminals and systems to reduce the costs 
        of implementing a nationwide electronic benefits transfer 
        system; and
            (5) the best approaches for maximizing the use of 
        electronic benefits transfer systems for multiple Federal 
        benefit programs so as to achieve the highest cost savings 
        possible through the implementation of electronic benefits 
        transfer systems.
    (c) Two-Year Report.--Not later than 2 years after the date of 
enactment of this Act, the Secretary of Agriculture shall report to the 
appropriate committees of Congress on the results of the feasibility 
test conducted under subsection (a).

SEC. 5. IMPLEMENTATION OF NATIONWIDE ELECTRONIC BENEFITS TRANSFER 
              SYSTEM.

    Section 7 of the Food Stamp Act of 1977 (7 U.S.C. 2016) is 
amended--
            (1) in subsection (i)(2)(A), by inserting after ``startup 
        costs'' the following: ``less estimated savings achieved by 
        reductions in fraud and other diversions of benefits''; and
            (2) by adding at the end the following new subsection:
    ``(j)(1)(A) The Secretary shall coordinate with, and assist, each 
State agency in the conversion from use of coupons to electronic 
benefits transfer technology.
    ``(B) The Secretary shall assist stores located in very rural 
areas, stores without access to electricity or regular telephone 
service, and farmers' markets that are authorized to accept coupons to 
continue to participate in the food stamp program after the conversion 
to electronic benefits transfer technology.
    ``(C) The Secretary may permit the use of coupons or other means of 
providing benefits to food stamp households that use stores or markets 
described in subparagraph (B).
    ``(D) The Secretary shall waive the application of any other 
provision of this Act, to the extent the waiver is necessary to carry 
out subparagraphs (B) and (C).
    ``(2) Not later than 18 months after the date of enactment of Food 
Stamp Fraud Reduction Act of 1993, the Secretary shall--
            ``(A) determine whether using the then current Food and 
        Nutrition Service regions, or other regional configurations of 
        State agencies, would be the most cost-effective means of 
        establishing a nationwide electronic benefits transfer system; 
        and
            ``(B) report to the appropriate committees of Congress on 
        the determination made under subparagraph (A).
    ``(3) Not later than 30 months after the date of enactment of Food 
Stamp Fraud Reduction Act of 1993, the Secretary shall publish proposed 
regulations setting forth the rules and procedures for a nationwide 
electronic benefits transfer system to carry out the food stamp 
program.
    ``(4)(A) Not later than 3 years after the date of enactment of Food 
Stamp Fraud Reduction Act of 1993, subject to subparagraph (B), the 
Secretary shall require, by regulation, a nationwide electronic 
benefits transfer system to carry out the food stamp program.
    ``(B) In establishing the system required under subparagraph (A), 
the Secretary--
            ``(i) shall take into account the results of the test, 
        determination, and reports made under section 4 of the Food 
        Stamp Fraud Reduction Act of 1993 and paragraph (2);
            ``(ii) may establish a national, regional, or State system;
            ``(iii) may use on-line, off-line, or hybrid electronic 
        benefits transfer technologies;
            ``(iv) may waive the application of any other provision of 
        this Act to the extent the waiver is necessary to carry out 
        this paragraph, except that household eligibility and benefit 
        levels may not be reduced as a result of a waiver; and
            ``(v) shall ensure that a personal identification number is 
        issued with each electronic benefits transfer card in order to 
        help protect the integrity of the food stamp program.
    ``(C) The regulations required under subparagraph (A) shall set 
forth standards regarding--
            ``(i) the required level of recipient protection regarding 
        privacy, ease of use, and access to and service in retail food 
        stores;
            ``(ii) the terms and conditions of participation by retail 
        food stores, financial institutions, and other appropriate 
        parties;
            ``(iii) system security;
            ``(iv) system transaction interchange, reliability, and 
        processing speeds;
            ``(v) financial accountability;
            ``(vi) the required testing of system operations prior to 
        implementation; and
            ``(vii) rules prohibiting store participation unless any 
        special equipment necessary to permit households to purchase 
        food with the benefits issued under this Act is operational--
                    ``(I) in the case of a participating retail food 
                store in which benefits 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.
    ``(D) Administrative costs incurred in connection with activities 
under this subsection shall be eligible for reimbursement in accordance 
with section 16, subject to the limitations in section 16(g).''.

SEC. 6. CONFORMING AMENDMENTS.

    (a) Section 3 of the Food Stamp Act of 1977 (42 U.S.C. 2012) is 
amended--
            (1) in subsection (a), by striking ``coupons'' and 
        inserting ``benefits'';
            (2) in the first sentence of subsection (c), by striking 
        ``authorization cards'' and inserting ``allotments'';
            (3) in subsection (d), by striking ``the provisions of this 
        Act'' and inserting ``section 7(g)'';
            (4) in subsection (e)--
                    (A) by striking ``Coupon issuer'' and inserting 
                ``Benefit issuer''; and
                    (B) by striking ``coupons'' and inserting 
                ``benefits'';
            (5) in the last sentence of subsection (i), by striking 
        ``coupons'' and inserting ``allotments''; and
            (6) by adding at the end the following new subsection:
    ``(u) `Electronic benefits transfer card' means a card issued to a 
household participating in the program that is used to purchase 
food.''.
    (b) Section 4(a) of such Act (7 U.S.C. 2013(a)) is amended--
            (1) in the first and second sentences, by striking 
        ``coupons'' each place it appears and inserting ``electronic 
        benefits transfer cards or coupons''; and
            (2) by striking the third sentence and inserting the 
        following new sentence: ``The Secretary, through the facilities 
        of the Treasury of the United States, shall reimburse the 
        stores for food purchases made with electronic benefits 
        transfer cards or coupons provided under this Act.''.
    (c) The first sentence of section 6(b)(1) of such Act (7 U.S.C. 
2015(b)(1)) is amended--
            (1) by striking ``coupons or authorization cards'' and 
        inserting ``electronic benefits transfer cards, coupons, or 
        authorization cards''; and
            (2) in clauses (ii) and (iii), by inserting ``or electronic 
        benefits transfer cards'' after ``coupons'' each place it 
        appears.
    (d) Section 7 of such Act (7 U.S.C. 2016) is amended--
            (1) by striking the section heading and inserting the 
        following new section heading:

 ``issuance and use of electronic benefits transfer cards or coupons'';

            (2) in subsection (a), by striking ``Coupons'' and all that 
        follows through ``necessary, and'' and inserting ``Electronic 
        benefits transfer cards or coupons'';
            (3) in subsection (b), by striking ``Coupons'' and 
        inserting ``Electronic benefits transfer cards'';
            (4) in subsection (f)--
                    (A) by striking ``issuance of coupons'' and 
                inserting ``issuance of electronic benefits transfer 
                cards or coupons'';
                    (B) by striking ``coupon issuer'' and inserting 
                ``electronic benefits transfer or coupon issuer''; and
                    (C) by striking ``coupons and allotments'' and 
                inserting ``electronic benefits transfer cards, 
                coupons, and allotments'';
            (5) by striking subsections (g) through (i); and
            (6) by redesignating subsection (j) (as added by section 
        5(2)) as subsection (g).
    (e) Section 8(b) of such Act (7 U.S.C. 2017(b)) is amended by 
striking ``coupons'' and inserting ``electronic benefits transfer cards 
or coupons''.
    (f) Section 9 of such Act (7 U.S.C. 2018) is amended--
            (1) in subsections (a) and (b), by striking ``coupons'' 
        each place it appears and inserting ``coupons, or accept 
        electronic benefits transfer cards,''; and
            (2) in subsection (a)(1)(B), by striking ``coupon 
        business'' and inserting ``electronic benefits transfer cards 
        and coupon business''.
    (g) The first sentence of section 10 of such Act (7 U.S.C. 2019) is 
amended--
            (1) by inserting after ``provide for'' the following: 
        ``reimbursing stores for purchases made with electronic 
        benefits transfer cards and for''; and
            (2) by inserting after ``food coupons'' the following: ``or 
        use their members' electronic benefits transfer cards''.
    (h) Section 11 of such Act (7 U.S.C. 2020) is amended--
            (1) in the first sentence of subsection (a), by striking 
        ``coupons'' and inserting ``electronic benefits transfer cards 
        or coupons,'';
            (2) in subsection (e)--
                    (A) in paragraph (2)--
                            (i) by striking ``a coupon allotment'' and 
                        inserting ``an allotment''; and
                            (ii) by striking ``issuing coupons'' and 
                        inserting ``issuing electronic benefits 
                        transfer cards or coupons'';
                    (B) in paragraph (7), by striking ``coupon 
                issuance'' and inserting ``electronic benefits transfer 
                card or coupon issuance'';
                    (C) in paragraph (8)(C), by striking ``coupons'' 
                and inserting ``benefits'';
                    (D) in paragraph (9), by striking ``coupons'' each 
                place it appears and inserting ``electronic benefits 
                transfer cards or coupons'';
                    (E) in paragraph (11), by striking ``in the form of 
                coupons'';
                    (F) in paragraph (16), by striking ``coupons'' and 
                inserting ``electronic benefits transfer card or 
                coupons'';
                    (G) in paragraph (20)--
                            (i) by striking ``their coupons'' and 
                        inserting ``the electronic benefits transfer 
                        cards or coupons of the households'';
                            (ii) by striking ``a coupon issuer'' and 
                        inserting ``an electronic benefits transfer 
                        card or a coupon issuer''; and
                            (iii) by striking ``face value of any 
                        coupons'' and inserting ``value of any benefits 
                        or coupons'';
                    (H) in paragraph (21), by striking ``coupons'' and 
                inserting ``electronic benefits transfer cards or 
                coupons'';
                    (I) in paragraph (24), by striking ``coupons'' and 
                inserting ``benefits''; and
                    (J) in paragraph (25), by striking ``coupons'' each 
                place it appears and inserting ``electronic benefits 
                transfer cards or coupons''; and
            (3) in subsection (h), by striking ``face value of any 
        coupon or coupons'' and inserting ``value of any benefits or 
        coupons''.
    (i) Section 12 of such Act (7 U.S.C. 2021) is amended--
            (1) in subsection (b)(3), by striking ``coupons'' each 
        place it appears and inserting ``electronic benefits transfer 
        cards or coupons'';
            (2) in subsection (d)--
                    (A) in the first sentence--
                            (i) by inserting after ``redeem coupons'' 
                        the following: ``and to accept electronic 
                        benefits transfer cards''; and
                            (ii) by striking ``value of coupons'' and 
                        inserting ``value of benefits and coupons''; 
                        and
                    (B) in the third sentence, by striking ``coupons'' 
                each place it appears and inserting ``coupons or 
                benefits''; and
            (3) in the first sentence of subsection (f)--
                    (A) by inserting after ``to accept and redeem food 
                coupons'' the following: ``electronic benefits transfer 
                cards, or to accept and redeem food coupons,''; and
                    (B) by inserting before the period at the end the 
                following: ``or program benefits''.
    (j) Section 13 of such Act (7 U.S.C. 2022) is amended by striking 
``coupons'' each place it appears '' and inserting ``benefits''.
    (k) Section 15 of such Act (7 U.S.C. 2024) is amended--
            (1) in subsection (a), by striking ``issuance or 
        presentment for redemption'' and inserting ``issuance, 
        presentment for redemption, or use of electronic benefits 
        transfer cards or'';
            (2) in the first sentence of subsection (b)(1)--
                    (A) by inserting after ``coupons, authorization 
                cards,'' each place it appears the following: 
                ``electronic benefits transfer cards,''; and
                    (B) by striking ``coupons or authorization cards'' 
                each place it appears and inserting the following: 
                ``coupons, authorization cards, or electronic benefits 
                transfer cards''; and
            (3) in the first sentence of subsection (g), by inserting 
        after ``coupons, authorization cards,'' the following: 
        ``electronic benefits transfer cards,''.
    (l) Section 17 of such Act (7 U.S.C. 2026) is amended--
            (1) in the last sentence of subsection (a)(2), by striking 
        ``coupon'' and inserting ``benefit'';
            (2) in subsection (d)(1)(B), by striking ``coupons'' each 
        place it appears and inserting ``benefits'';
            (3) by striking subsection (f); and
            (4) by redesignating subsections (g) through (k) as 
        subsections (f) through (j), respectively.
    (m) Section 21 of such Act (7 U.S.C. 2030) is amended--
            (1) by striking ``coupons'' each place it appears (other 
        than in subsections (b)(2)(A)(ii) and (d)) and inserting 
        ``benefits'';
            (2) in subsection (b)(2)(A)(ii), by striking ``coupons'' 
        and inserting ``electronic benefits transfer cards or 
        coupons''; and
            (3) in subsection (d)--
                    (A) in paragraph (2), by striking ``Coupons'' and 
                inserting ``Benefits''; and
                    (B) in paragraph (3), by striking ``in food 
                coupons''.
    (n) Section 22 of such Act (7 U.S.C. 2031) is amended--
            (1) in subsection (b)--
                    (A) in paragraph (3)(D)--
                            (i) in clause (ii), by striking ``coupons'' 
                        and inserting ``benefits''; and
                            (ii) in clause (iii), by striking 
                        ``coupons'' and inserting ``electronic benefits 
                        transfer benefits'';
                    (B) in paragraph (9), by striking ``coupons'' and 
                inserting ``benefits'';
                    (C) in paragraph (10)(B)--
                            (i) in the second sentence of clause (i), 
                        by striking ``Food coupons'' and inserting 
                        ``Program benefits''; and
                            (ii) in clause (ii)--
                                    (I) in the second sentence, by 
                                striking ``Food coupons'' and inserting 
                                ``Benefits''; and
                                    (II) in the third sentence, by 
                                striking ``food coupons'' each place it 
                                appears and inserting ``benefits'';
            (2) in subsection (d), by striking ``coupons'' each place 
        it appears and inserting ``benefits'';
            (3) in subsection (g)(1)(A), by striking ``coupon''; and
            (4) in subsection (h), by striking ``food coupons'' and 
        inserting ``benefits''.
    (o) Section 1956(c)(7)(D) of title 18, United States Code, is 
amended by inserting ``electronic benefits transfer cards or'' before 
``coupons having''.
    (p) This section and the amendments made by this section shall 
become effective on the date that the Secretary of Agriculture 
implements a nationwide electronic benefits transfer system in 
accordance with section 7 of the Food Stamp Act of 1977 (7 U.S.C. 2016) 
(as amended by this Act).

                                 <all>

S 1646 IS----2
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