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Rule2026-22679

Special Supplemental Nutrition Program for Women, Infants, and Children (WIC): Online Ordering and Transactions and Food Delivery Revisions To Meet the Needs of a Modern, Data-Driven Program

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Published

November 6, 2026

Effective

December 7, 2026

Issuing agencies

Agriculture DepartmentFood and Nutrition Administration

Abstract

This final rule considers public comments submitted in response to the proposed rule to remove barriers to online ordering and internet-based transactions in the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) published on February 23, 2023. USDA FNA is issuing this regulatory action to support State innovation and develop and implement modernized systems, while underscoring program integrity. It allows for the use of new technologies to improve the WIC shopping experience while increasing access to healthy foods for WIC participants. This final rule also complements the Program's complete transition to electronic benefit transfer (EBT) by streamlining and modernizing certain WIC food delivery regulations to support current technology and future innovation, and introduces measures to support a modern, data-driven program that uses new technologies for food delivery.

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[Federal Register Volume 91, Number 214 (Friday, November 6, 2026)]
[Rules and Regulations]
[Pages 70250-70281]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-22679]

[[Page 70249]]

Vol. 91

Friday,

No. 214

November 6, 2026

Part IV

Department of Agriculture

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Food and Nutrition Administration

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7 CFR Part 246

Special Supplemental Nutrition Program for Women, Infants, and Children
(WIC): Online Ordering and Transactions and Food Delivery Revisions To
Meet the Needs of a Modern, Data-Driven Program; Final Rule

Federal Register / Vol. 91, No. 214 / Friday, November 6, 2026 /
Rules and Regulations

[[Page 70250]]

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DEPARTMENT OF AGRICULTURE

Food and Nutrition Administration

7 CFR Part 246

[FNA-2026-0595]
RIN 0584-AE85

Special Supplemental Nutrition Program for Women, Infants, and
Children (WIC): Online Ordering and Transactions and Food Delivery
Revisions To Meet the Needs of a Modern, Data-Driven Program

AGENCY: Food and Nutrition Administration (FNA), Department of
Agriculture (USDA).

ACTION: Final rule with request for comment.

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SUMMARY: This final rule considers public comments submitted in
response to the proposed rule to remove barriers to online ordering and
internet-based transactions in the Special Supplemental Nutrition
Program for Women, Infants, and Children (WIC) published on February
23, 2023. USDA FNA is issuing this regulatory action to support State
innovation and develop and implement modernized systems, while
underscoring program integrity. It allows for the use of new
technologies to improve the WIC shopping experience while increasing
access to healthy foods for WIC participants. This final rule also
complements the Program's complete transition to electronic benefit
transfer (EBT) by streamlining and modernizing certain WIC food
delivery regulations to support current technology and future
innovation, and introduces measures to support a modern, data-driven
program that uses new technologies for food delivery.

DATES:
Effective Date: This rule is effective December 7, 2026. Online
comments submitted through the Federal eRulemaking Portal must be
received on or before January 5, 2027 to be assured of consideration.
Implementation Dates: See section VI of the SUPPLEMENTARY
INFORMATION.
Compliance Dates: This rulemaking consists of multiple provisions.
Compliance for each provision is referenced in section VI of the
SUPPLEMENTARY INFORMATION section of this final rule and detailed in
the section-by-section analysis.
<bullet> Severability. If any provision of such section promulgated
through this final rule, ``Special Supplemental Nutrition Program for
Women, Infants, and Children (WIC): Online Ordering and Transactions
and Food Delivery Revisions to Meet the Needs of a Modern, Data-Driven
Program'' (FNA-2026-0595; RIN 0854-AE85) is held to be invalid or
unenforceable by its terms, or as applied to any person or
circumstances, it shall be severable and not affect the remainder
thereof.

ADDRESSES: The Food and Nutrition Administration, USDA, invites
interested persons to submit written comments on this final rule. USDA
seeks comment on the impacts to stakeholders, specifically State
agencies and their Management Information Systems (MIS), Electronic
Benefit Transfer (EBT), and vendor system partners. Comments may be
submitted to the Federal eRulemaking Portal at <a href="http://www.regulations.gov">http://www.regulations.gov</a>. Follow the online instructions for submitting
comments. All comments submitted in response to this final rule will be
included in the record and will be made available to the public. Please
be advised that the substance of the comments and the identity of the
individuals or entities submitting the comments will be subject to
public disclosure. FNA will make the comments publicly available on the
internet via <a href="http://www.regulations.gov">http://www.regulations.gov</a>.

FOR FURTHER INFORMATION CONTACT: Allison Post, Supplemental Nutrition
and Safety Programs, Food and Nutrition Administration, USDA, 201 14th
Street SW, Washington, DC 20227, 703-457-7708 or
<a href="/cdn-cgi/l/email-protection#cab9a7e4aca4e49d83899aa5a6a3a9b38abfb9aeabe4ada5bc">[email&#160;protected]</a>.

SUPPLEMENTARY INFORMATION:

I. Overview

This rule sets forth regulatory flexibilities, encourages
innovation, and modernizes WIC food delivery regulations. The rule
ensures WIC participants have the same shopping options as non-WIC
shoppers to transact their WIC benefits as the retail marketplace
innovates and evolves. This rule also clarifies requirements so that
State agencies can effectively carry out a modern, data-driven program
that uses current technologies for food delivery. This final rule
considers public comments on the proposed rule ``Special Supplemental
Nutrition Program for Women, Infants, and Children (WIC): Online
Ordering and Transactions and Food Delivery Revisions to Meet the Needs
of a Modern, Data-Driven Program'' (88 FR 11516) published on February
23, 2023, referred to as ``the proposed rule.'' The changes finalized
in this rule better serve families across the country by improving the
WIC shopping experience and ensuring that WIC participants have access
to healthy foods, while maintaining security and oversight measures at
the federal and State agency levels. This rule:
(1) Removes barriers to online shopping and internet-based
transactions in WIC, including a current prohibition of the
authorization of internet-based vendors. This provides State agencies
the flexibility to determine how to offer online shopping to
participants in a way that maintains program integrity. The revisions
support oversight measures and policies appropriate for current
technologies, and adaptable for future ones (e.g., Europay, Mastercard,
and Visa (``EMV'') chip cards, mobile apps), as well as security
requirements to support program integrity as the retail marketplace
innovates.
(2) Streamlines and modernizes WIC food delivery requirements to
reflect the Program's complete transition to electronic benefit
transfer (EBT), supports current technology and future innovation, and
expands opportunities for WIC participants to utilize innovations in
the retail grocery industry. The revisions allow State agencies to use
new types of food instruments (e.g., mobile payments) and provide State
agencies with more flexibility in the issuance of WIC benefits.
(3) Updates reporting requirements to reflect a modern, data-driven
program.

II. Background

This part provides an overview of the WIC Program and key terms
used throughout this preamble.

A. Overview of the WIC Program

The WIC Program is administered by 88 WIC State agencies, including
the 50 States, 32 Indian Tribal Organizations, the District of
Columbia, and 5 U.S. Territories (American Samoa, the Commonwealth of
the Northern Mariana Islands, Guam, Puerto Rico, and the U.S. Virgin
Islands).\1\ WIC is an evidence-based public health program, with a
long history of improving health outcomes for nutritionally at risk and
income-eligible pregnant, breastfeeding, and non-breastfeeding
postpartum women, and infants and children up to age five. In fiscal
year (FY) 2025, WIC served an average of 6.9 million participants per
month.\2\ As of the most recent published estimates (2023), WIC

[[Page 70251]]

participants included around 40 percent of all infants in the United
States.\3\
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\1\ The number of WIC State agencies operating as of September
2026.
\2\ U.S. Department of Agriculture Food and Nutrition
Administration, ``WIC Data Tables,'' 2026. <a href="https://www.fna.usda.gov/pd/wic-program">https://www.fna.usda.gov/pd/wic-program</a>.
\3\ U.S. Department of Agriculture, Food and Nutrition Service,
``National- and State-Level Estimates of WIC Eligibility and WIC
Program Reach in 2023: Final Report, Volume I,'' pp. 65, by
Courtenay Kessler et al. Project Officer Grant Lovellette,
Alexandria, VA: December 2025. <a href="https://www.fna.usda.gov/research/wic/eer-2023">https://www.fna.usda.gov/research/wic/eer-2023</a>.
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The USDA provides grants to WIC State agencies to provide
supplemental foods, referrals to health care and other social services,
and nutrition education, including breastfeeding promotion and support,
to WIC participants. WIC participation is associated with purchasing
healthier foods and improved diets for pregnant women and children and
has been shown to reduce prevalence of childhood obesity.4 5
According to their participant category and nutritional needs, WIC
participants receive supplemental foods on a monthly basis from one of
seven evidence-based food packages. The amounts and categories of foods
provided in each package are intended to supplement participants' diets
and provide specific nutrients known to be lacking in the diets of
WIC's target population.
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\4\ Caulfield LE, Bennett WL, Gross SM, Hurley KM, Ogunwole SM,
Venkataramani M, Lerman JL, Zhang A, Sharma R, Bass EB. Maternal and
Child Outcomes Associated With the Special Supplemental Nutrition
Program for Women, Infants, and Children (WIC). Comparative
Effectiveness Review No. 253. (Prepared by the Johns Hopkins
University Evidence-based Practice Center under Contract No.
75Q80120D00003.) AHRQ Publication No. 22-EHC019. Rockville, MD:
Agency for Healthcare Research and Quality; April 2022. DOI: <a href="https://doi.org/10.23970/AHRQEPCCER253">https://doi.org/10.23970/AHRQEPCCER253</a>.
\5\ Kenney EL, Lee MM, Barrett JL, Ward ZJ, Long MW, Cradock AL,
Williams DR, Gortmaker SL. Cost-effectiveness of Improved WIC Food
Package for Preventing Childhood Obesity. Pediatrics. 2024 Jan; 153.
<a href="https://doi.org/10.1542/peds.2023-063182">https://doi.org/10.1542/peds.2023-063182</a>.
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WIC participants typically access supplemental foods through a
retail food delivery system. In such systems, a WIC shopper goes to a
WIC-authorized vendor (i.e., a retail grocery store authorized by the
State agency), selects foods available in their benefit balance, and
uses an electronic benefit transfer (EBT) card to purchase the items.
In FY 2023, there were approximately 37,368 WIC-authorized vendors
nationwide and, as of August 2024, all WIC State agencies completed the
transition from paper vouchers to EBT. This rule does not fully remove
references to paper food instruments because when the proposed rule was
published in early 2023, there were still State agencies in the midst
of implementing EBT. The Department intends to use a future rulemaking
to update WIC regulations to reflect that EBT is now the sole benefit
delivery method in the retail food delivery system.
WIC State agencies are responsible for making sure the distribution
of WIC-authorized vendors in their geographic area provides sufficient
access to WIC foods for participants, and vendors stock an adequate
amount and variety of WIC foods. The regulatory changes in this final
rule aim to reduce some of the burden associated with shopping for WIC
foods, and support State agency vendor management operations in
maintaining strong program integrity efforts. The Department recognizes
that the development and expansion of online shopping is a novel and
developing component in WIC. In order to protect both participants and
taxpayer funds, the Department is committed to ensuring all available
resources are deployed toward increased oversight and prevention of
potential vendor fraud and abuse.

B. Introduction of Key Terms

The following are key terms used throughout this final rule
preamble:
<bullet> ``WIC shopper'' means a person shopping using WIC benefits
(i.e., a WIC participant, proxy, or a parent or caretaker of an infant
or child participant).
<bullet> ``Online shopping'' means the general use of an online,
internet-based ordering system, platform, or site. It can encompass
online ordering with or without internet-based transactions (i.e., the
transaction can occur via the internet, in store, curbside, or at the
point of delivery).
<bullet> ``Online ordering'' means the process a customer
(including a WIC shopper) uses to select food items for purchase via an
internet-based ordering system, platform, or site.
<bullet> ``Transaction'' means the process by which a WIC shopper
exchanges their WIC benefits for supplemental foods.
<bullet> ``Internet-based transaction'' means a transaction where
the WIC payment is completed through the payment section of the online
ordering system, platform, or site. This terminology is being used in
lieu of ``online transaction'' to avoid confusion with transactions
that occur using online EBT technology.
<bullet> ``Redemption'' means the process in which a vendor submits
records of electronic benefit transactions for redemption and the State
agency (or its financial agent) makes payment to the vendor.

III. Approach To Rulemaking and Status of WIC Online Shopping

This rulemaking finalizes regulatory changes in consideration of
public comments received on the proposed rule published February 23,
2023. In developing the proposed rule, the Department considered
technical materials developed by a wide variety of WIC stakeholders,
lessons learned from the Supplemental Nutrition Assistance Program
(SNAP) online shopping projects that began in 2019, as well as feedback
from WIC State agencies, Indian Tribal Organizations, and participants.
The following technical resources informed the Department's
identification of regulatory barriers to online shopping and provisions
in this rulemaking:
<bullet> Blueprint for WIC Online Ordering: Through a cooperative
agreement with FNA, The Center for Nutrition and Health Impact (CNHI),
an independent non-profit research institute, developed a comprehensive
plan for implementing online shopping in WIC. This Blueprint, which
initially identified waivers to federal regulations necessary to begin
online shopping projects and provided guidance to begin implementing,
has since been revised and republished in May 2026, with up-to-date
information to support WIC State agencies as they develop their WIC
online shopping projects.\6\
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\6\ <a href="https://www.wicshopplus.org/the-blueprint">https://www.wicshopplus.org/the-blueprint</a>.
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<bullet> The Task Force on Supplemental Foods Delivery: This task
force convened WIC providers, retailers, manufacturers, EBT processors,
advocacy organizations, and WIC participants to develop an online
shopping Recommendation Report for the Department.\7\
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\7\ <a href="https://www.fna.usda.gov/wic/food-delivery-task-force-recommendations-report">https://www.fna.usda.gov/wic/food-delivery-task-force-recommendations-report</a>.
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The Department initially supported WIC State agencies in pursuing
online shopping projects by issuing waivers under the American Rescue
Plan Act (ARPA, Pub. L. 117-2) authority, which allowed FNA to waive
regulatory barriers to support outreach, innovation and modernization
in WIC and the WIC Farmers' Market Nutrition Program (FMNP). Online
shopping waivers were issued through September 2024 and remain in
effect to support ongoing projects. With these waivers, the Department
provided State agencies with the necessary regulatory flexibility and
technical assistance to pursue online shopping projects, regardless of
whether or not they received a subgrant from CNHI. The Department
recognizes and appreciates the WIC State agencies and authorized
retailers that have developed different ways to provide online ordering
to WIC participants. Through the cooperative agreement with CNHI, 22
WIC State agencies have received subgrants to pursue online shopping
including the necessary

[[Page 70252]]

development of internet-based transactions.
This final rulemaking permanently removes regulatory barriers to
allow State agencies to implement online shopping in WIC and eliminates
the need for waiver flexibility; therefore, the online shopping waivers
will be superseded by regulation once this rulemaking is effective.
Additional waivers supporting mobile pay and remote issuance will also
be superseded by this rulemaking once effective.

IV. Proposed Rule Comment Summary

The proposed rule published in the Federal Register on February 23,
2023, with a 90-day comment period closing on May 24, 2023. During this
time, USDA received 1,664 comments. Five form letter campaigns
comprised 881 submissions. There were 752 unique comments of which 216
were substantive, providing specific input on the topics included in
this final rule. A total of 31 comments were either duplicates or out
of the scope of this rule, as they did not provide feedback related to
topics in this final rule. The comments came from a variety of sources,
including WIC State and local agencies, state representatives,
professional organizations and associations, advocacy groups, health
care professionals, universities, the food industry, WIC participants,
and private citizens. USDA worked in collaboration with a data analysis
company to code and analyze the public comments using a commercial web-
based software product. This analysis provided data showing support for
or opposition to each proposed change. Over 1,070 commenters provided
broad support for revisions to the regulations while approximately 10
commenters provided general comments in opposition to the proposed
rule. The Final Summary of Public Comments is available online at
<a href="http://www.regulations.gov">www.regulations.gov</a> in docket FNS-2022-0015. The Final Summary of
Public Comments includes the specific number of comments in support or
opposition to each provision in the proposed rule, with a detailed
narrative describing the key points made by commenters. USDA used the
Final Summary of Public Comments and a supplementary review of
individual comments to finalize provisions within this final rule. USDA
refers to the Final Summary of Public Comments for numbers of comments
received on each provision, with general summaries of comments provided
in the preamble of this final rule.
As required under the Administrative Procedure Act, FNA considered
all relevant, timely-submitted comments received on the proposed rule.
Some comments addressed topics out of scope for the revisions and
therefore are not addressed in this final rule.

V. Discussion of Final Rule

The following is a discussion of the provisions set forth in the
proposed rule, a summary of the comments received that addressed these
provisions, and the Department's rationale for either retaining or
modifying the proposed provisions in the final rule. Provisions not
discussed in this preamble did not receive significant or substantial
public comments and are retained in this final rule as proposed.
This preamble communicates the rationale for modifications to the
proposed rule codified in this final rulemaking. The Department re-
examined the goals of this rulemaking while reviewing the comments to
determine the continued applicability of each proposed change. Unless
otherwise stated in the preamble of this final rule, the rationales
included in the preamble of the proposed rule are regarded as a basis
for the final regulations. Therefore, an understanding of the
rationales for the final regulations may require reference to the
preamble of the proposed rule.
USDA appreciates the many comments expressing support for the
proposed revisions and urging USDA to implement the changes included in
the proposed rule. USDA agrees the changes improve access to healthy
foods and the efficiency of the WIC shopping experience while ensuring
State agencies have the flexibility to oversee new types of vendors and
to maintain program integrity and security. Before addressing each
provision specifically, the following is a summary of overarching
themes related to online shopping that the Department is acknowledging
broadly.
(i) Technical assistance to support online shopping: the Department
received numerous comments requesting guidance and technical assistance
to support the implementation of online shopping in WIC.
The Department is committed to providing ongoing technical
assistance and guidance to State agencies to ensure they have the
support and resources necessary to implement online shopping and can do
so while preserving program integrity. The Department is developing
best practices, lessons learned, and technical resources to support
State agencies in the implementation of online shopping using the many
recommendations and ideas stakeholders provided during the public
comment period for the proposed rule.
(ii) Internet vendor authorization: Many commenters expressed
concern the State agency-by-State agency approach to internet vendor
authorization would be lengthy and cumbersome, and instead recommended
the Department adopt a national authorization process for online
shopping, including national monitoring and management, similar to that
of SNAP.
The Department notes there is a significant difference in how SNAP
and WIC are authorized in legislation. The Child Nutrition Act
expressly delegates responsibility for vendor authorization,
monitoring, and oversight to WIC State agencies. Therefore, the
Department did not propose a national process related to the
authorization of WIC internet vendors.
(iii) Costs of technology innovations and online shopping: Many
comments discussed concerns around the cost of adopting new
technologies and stated the need for more federal funding to implement
the various changes included in this rulemaking.
The Department notes the majority of the changes in this rulemaking
either, (1) increase options and flexibilities for State agencies in
vendor management activities without increased costs, or (2) provide
the opportunity for State agencies to pursue new technologies at their
discretion. The Department recognizes funding is a consideration for
State agencies and therefore is not requiring implementation of any new
technologies at this time. This rulemaking allows State agencies the
opportunity to determine an appropriate and feasible timeline to
implement new technologies. The Department recognizes the costs
associated with authorizing internet vendors, largely due to the EBT
and MIS changes necessary to allow new types of transactions and is
therefore prioritizing flexibility and has recently supported State
agencies through various funding opportunities, including subgrant
opportunities from CNHI.
(iv) Modernizing offline EBT systems: Some commenters questioned
how State agencies with offline EBT systems (i.e., chipped EBT cards in
which benefits cannot be used or issued online) would be able to
implement some of the provisions in this rule, such as those related to
online shopping or issuing benefits remotely. Commenters asked for
technical assistance and funding to help transition to online EBT
systems.
The Department recognizes that offline EBT systems will not be able
to operate WIC online shopping or issue

[[Page 70253]]

benefits remotely. The Department is actively working with all offline
State agencies to transition to online EBT systems so that they can
also take part in these opportunities. The Department also highlights
that neither online shopping nor remote benefit issuance are
requirements for State agencies under this rulemaking. This rule
creates the necessary flexibilities for the State agencies that are
interested and able to develop online shopping and encourages the
flexible issuance of benefits where possible.
(v) Impact to small vendors and accessibility: Some commenters
expressed concerns that implementing online shopping would be
especially challenging for small vendors.
To support small vendors, CNHI conducted a survey and hosted
listening sessions to hear directly from small, Tribal, and rural
vendors, and farmers and farmers' markets, to understand the
perceptions, experiences, and potential barriers vendors face in
implementing online shopping.\8\ The Department recognizes different
types of support and guidance may be needed to initiate WIC online
shopping. USDA is committed to gathering feedback and learning from
implementation projects to develop technical resources and assistance.
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\8\ Akers, L, Anderson-Steeves ET, Crespo-Bellido M,
[Aacute]ngel-L[oacute]pez M, Vest D, Nitto AM, Hill JL. WIC Online
Shopping Brief Report: Small, Tribal, and Rural Vendors and Farmers
and Farmers Market (STRFM) Study. Prepared for: USDA Food and
Nutrition Service. December 2024. <a href="https://www.wicshopplus.org/resource-library/wic-online-shopping-strfm-brief-report">https://www.wicshopplus.org/resource-library/wic-online-shopping-strfm-brief-report</a>.
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Commenters also noted that access to online shopping through the
inclusion of alternative languages to English, as well as alternative
online formats for persons with disabilities are key to ensuring all
participants can access online shopping opportunities. The Department
will explore opportunities to provide ongoing technical assistance to
ensure that State agencies are encouraging vendors to equip their
online platforms to meet the needs of their participants.
Following this summary of overarching themes, the Department
presents a summary comparison of the proposed and final provisions of
this rule with detailed discussion on each following.
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\9\ Special Supplemental Nutrition Program for Women, Infants,
and Children (WIC): Implementation of the Access to Baby Formula Act
of 2022 and Related Provisions (88 FR 86545). <a href="https://www.federalregister.gov/d/2023-26641">https://www.federalregister.gov/d/2023-26641</a>.

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Summary of final
Section Summary of revisions based on
proposed revision public comment
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1. Remove Barriers to Allow for Clarify which Finalize as
Online Ordering and Internet vendor agreement proposed.
Based Transactions. provisions apply
only to paper
food instruments
and modernize the
purchase price
provision to be
inclusive of EBT
transactions.
(section 1.a.i).
Remove the Finalize as
requirement that proposed.
WIC shoppers must
sign printed food
instruments in
the presence of a
cashier. (section
1.a.ii).
Remove the Finalize as
requirement to proposed.
use a personal
identification
number (PIN) in
lieu of a
signature.
(section 1.a.iii).
Create new Modify to remove
provisions to reference to
allow WIC State Department
agencies to standards that
explore and are not yet
identify options published and
to authenticate require FNA
EBT transactions approval to use
and require an authentication
vendors, farmers, method other than
and farmers' PIN.
markets to
authenticate EBT
transactions in
accordance with
State agency
policy. (section
1.a.iv).
Create a new Finalize as
definition for proposed.
``brick-and-
mortar vendor.''
(section 1.b.i).
Create a new Modify to clarify
definition for the transactions
``internet at each internet
vendor.'' vendor must be
(section 1.b.ii). assigned to that
internet vendor.
Create a new Modify to clarify
definition for the transactions
``mobile at mobile vendors
vendor.'' must be assigned
(section 1.b.iii). to that specific
vendor.
Update the Finalize as
definition of proposed.
``above-50-
percent vendor''
to be applicable
to all vendor
types. (section
1.b.iv).
Modernize the Modify to remove
current the reference to
definition of SNAP and clarify
``vendor'' by each entity must
removing the be separately
requirement that authorized.
vendors must have
a single, fixed
location,
simplifying the
definition of
vendor, and
clarifying that
all vendors must
be authorized
separately.
(section 1.c.i).
Remove a clause in Finalize as
the definition of proposed.
``vendor''
requiring a
special needs
justification for
mobile vendors
and remove
associated
language from the
State Plan
requirements.
(section 1.c.ii).
Clarify that cash Modify the refunds
refunds are still provision to
prohibited and clarify the
update the different types
exchange policy of cash refunds
to accommodate that are
recalls, ensuring prohibited and
that WIC shoppers modify the
are treated the exchange
same as other provision to
customers in the reflect changes
event of a from the
recall. (section Implementation of
1.d.i). the Access to
Baby Formula Act
of 2022 and
Related
Provisions Final
Rule \9\ by
clearly defining
a supplemental
food recall in 7
CFR Sec. 246.2.
Allow for the Modify to allow
return of returns for
electronic purchases that
benefits to a took place at any
participant's vendor type, not
balance when just online
items in an orders.
online order are
not fulfilled and
for the use of
returned
electronic
benefits.
(section 1.d.ii).

[[Page 70254]]

Require State Modify to clarify
agencies to that State
provide agencies must
participants with allow
no less than participants to
seven (7) days to use returned
transact returned electronic
electronic benefits through
benefits, which the end of the
could go beyond benefit issuance
the last date of month.
use (LDTU). Make the use of
(section 1.d.iii). returned
electronic
benefits after
the last date of
use (LDTU) a
State agency
option and set a
maximum of seven
(7) days for
benefit use
beyond the LDTU.
The Department is
requesting
comment on the
impacts this
would have on
stakeholders and
their systems if
this flexibility
were to be a
requirement.
Update the Finalize as
definitions of proposed.
``routine
monitoring'' and
``compliance
buy'' to remove
the on-site
requirement.
(section 1.e.i).
Introduce virtual Finalize as
visits as an proposed.
allowable type of
preauthorization
visit. (section
1.e.ii).
Prohibit vendors, Modify to apply
farmers or the prohibition
farmers' markets to all fees
from charging associated with a
State agencies WIC purchase
fees associated (e.g., delivery,
with WIC service,
purchases and convenience, bag
permit WIC fees) for any
shoppers to pay vendor type, not
such fees. just online
(section 1.f.i). shopping fees, to
ensure consistent
treatment of all
vendor types.
Clarify costs Modify to further
associated with clarify that food
home food funds can be used
delivery and to pay for the
direct cost of
distribution to transporting
ensure State foods in home
agencies still food delivery and
pay for the cost direct
of transporting distribution but
food under these cannot be used in
two food delivery retail food
systems. (section delivery systems.
1.f.ii).
2. Streamline and Modernize WIC Allow the remote Modify to ensure
Food Delivery. issuance of State agencies
electronic have procedures
benefits by for recipient
separating the proof of receipt
benefit issuance to ensure program
provisions for integrity
paper food measures, and to
instruments and clarify that
cash-value signatures are
vouchers from required only
electronic when benefits are
benefit issuance received in
and updating person.
signature
requirements.
(section 2.a.i).
Create new Finalize as
definitions of proposed.
``electronic
benefits,''
``cash-value
benefit,'' and
``cash-value
voucher'' to
reflect a modern
WIC Program.
(section 2.a.ii).
Expand the Finalize as
definition of proposed.
``food
instrument.''
(section 2.b).
Allow State Modify to clarify
agencies to that State
develop and test agencies can have
new WIC food more than one
instrument types. food instrument
Clarify uniform type within a
food delivery food delivery
systems and system at a time.
system
combinations.
(section 2.c.i).
Remove the Modify to clarify
requirement for that State
State agencies to agencies can use
collect shelf existing EBT data
price data, as for vendors
EBT data are a applying for re-
sufficient authorization.
replacement.
(section 2.d).
Allow State Modify to allow
agencies using a State agencies to
non-retail, home confirm delivery
food delivery location of
system to ship supplemental
supplemental foods as an
foods to a additional
location measure of
designated by program
participants and integrity.
approved by the
State agency.
(section 2.e).
Extend vendor FNA will not
application and finalize as
agreement periods proposed; no
from three to change to current
five years. provision.
3. Meet the Needs of a Modern, Update the Modify to remove
Data Driven Program. reporting the proposed
requirements for requirement for
WIC food delivery quarterly
systems, submissions,
including the maintaining the
timing of current annual
reporting and minimum.
information
required.
(section 3.a).
Increase the FNA will not
staffing finalize as
standards for the proposed; no
position of the change to current
WIC Food Delivery provision. State
Coordinator. agencies may
optionally
implement more
stringent
standards at the
State level.
Add staffing FNA will not
standards to finalize as
create a WIC proposed; no
Quality change to current
Improvement provision. State
Coordinator. agencies may
optionally
implement more
stringent
standards at the
State level.
4. Request for Public Comment on The Department Due to feedback
Key Topic Areas. requested comment received
on whether there discussing
is a need to concerns related
authorize vendors to cost
that sell a containment,
specific subset program
of supplemental integrity, and
foods (e.g., the impact on
dairies, small vendors,
bakeries, produce the Department
sellers) but will not allow
would not meet exceptions to
the minimum minimum stocking
variety and requirements for
quantity of authorizing
supplemental specialty vendors
foods, as in this
required by WIC rulemaking.
regulations.
(section 4.a).
------------------------------------------------------------------------

[[Page 70255]]

1. Remove Barriers To Allow for Online Ordering and Internet-Based
Transactions
This final rule allows vendors and WIC shoppers to complete
internet-based transactions, creates new definitions for internet and
mobile vendors, modernizes the definition of brick-and-mortar and
above-50-percent vendors, allows vendors to return benefits to a
participant's benefit balance, allows State agencies to develop virtual
methods of oversight, permits WIC shoppers to pay fees associated with
WIC purchases, and clarifies that State agencies may use non-WIC funds
to pay fees associated with WIC purchases.
a. Allow vendors and WIC shoppers to complete internet-based
transactions [Sec. Sec. 246.12(h)(3)(v), (vi), and (xxxii),
246.12(v)(1)(iv), and 246.12(bb)(2)]. The changes to provisions in this
section that clarify which vendor agreement provisions apply only to
paper food instruments and modernize the purchase price provision,
Sec. 246.12(h)(3)(v) and (vi), are finalized as proposed. The
provisions that allow vendors, farmers and farmers' markets, and WIC
shoppers to complete internet-based transactions by removing
requirements that WIC shoppers must sign food instruments, or enter a
personal identification number (PIN), in the presence of a cashier,
Sec. 246.12(h)(3)(v) and (vi), and Sec. 246.12(v)(1)(iv), are also
finalized as proposed. The provisions requiring vendors, farmers and
farmers' markets to authenticate transactions in accordance with State
agency policies, Sec. 246.12(h)(3)(xxxii) and Sec. 246.12(v)(1)(iv),
are finalized as proposed, and the provision requiring State agencies
to develop policies on transaction authentication methods, Sec.
246.12(bb)(2), is finalized with modifications.
i. Clarify which vendor agreement provisions apply only to paper
food instruments and modernize the purchase price provision to be
inclusive of EBT transactions. (Sec. 246.12(h)(3)(v) and (vi))
This final rule codifies the change from ``printed'' to ``paper''
at Sec. 246.12(h)(3)(vi) as proposed to clarify which vendor agreement
provisions apply only to paper food instruments. This final rule also
codifies proposed revisions to the purchase price provision at Sec.
246.12(h)(3)(v) to ensure the requirement that WIC shoppers are made
aware of the total purchase price before transactions are completed
continues to be applicable to EBT transactions.
Commenters expressed general support for the changes that clarify
which provisions apply to paper food instruments versus EBT
transactions, especially the requirement that participants be made
aware of the purchase price before the transaction is completed,
affirming these requirements enable WIC participants to make informed
choices and ensure program integrity. No comments were opposed.
Some commenters requested flexibility on how State agencies meet
the requirement that participants be made aware of the total purchase
price, and recommended the Department require vendors ensure the price
of produce for online purchases does not increase during fulfillment so
that the amount of cash-value benefits transacted is not higher than
what the participant agreed to during the shopping process.
The Department does not define in regulation how vendors must
ensure participants are made aware of the total purchase price. Vendors
should make WIC participants aware of prices in the same ways they show
all other customers prior to the completion of the transaction, while
still meeting the WIC receipt requirements outlined in the WIC EBT
Operating Rules.\10\ The Department will incorporate feedback on best
practices on handling produce during the fulfillment process into
future policy guidance.
---------------------------------------------------------------------------

\10\ <a href="https://www.fna.usda.gov/wic/ebt/technical-implementation-guide-operating-rules">https://www.fna.usda.gov/wic/ebt/technical-implementation-guide-operating-rules</a>.
---------------------------------------------------------------------------

ii. Remove the requirement that WIC shoppers must sign in the
presence of a cashier. (Sec. 246.12(h)(3)(vi))
This final rule codifies revisions as proposed at Sec.
246.12(h)(3)(vi) to remove the requirement that WIC shoppers must sign
printed food instruments in the presence of a cashier.
This change received overwhelming support, with commenters stating
this change will enhance convenience for participants and reduce
burdens associated with the current WIC shopping experience. The
Department agrees this change supports modernization of the WIC Program
and the changing retail landscape, and makes WIC shopping less
burdensome, which also supports greater benefit utilization. No
comments were opposed.
iii. Remove the requirement to use a personal identification number
(PIN) in lieu of a signature. (Sec. 246.12(h)(3)(vi))
This final rule codifies revisions as proposed at Sec.
246.12(h)(3)(vi) to remove the requirement to use a PIN in lieu of a
signature.
Many comments supported removing the requirement to use a PIN in
lieu of a signature, stating it would allow State agencies to modernize
alongside the grocery industry as PIN authentication is just one of
many authentication models employed in the commercial marketplace. The
Department agrees that allowing for new types of authentication methods
facilitates security innovation in the WIC Program.
An opposed commenter expressed concern that eliminating the PIN
requirement could lead to fraud. The Department clarifies this change
does not remove the State agency's responsibility to ensure a secure
transaction, nor the requirement for transaction authentication, but
instead eliminates regulatory barriers, supporting State agency
innovation, and allows State agencies to use new types of transaction
authentication methods to better reflect industry modernization.
The Department expects State agencies that do not choose to use new
transaction authentication methods will continue to use the PIN as the
required transaction authentication methodology for their jurisdiction.
Modifications to the provision at Sec. 246.12(bb)(2) establish this
expectation by requiring State agencies to receive written approval to
adopt an authentication method other than the PIN. The Department will
provide further detail on expectations for transaction authentication
in forthcoming guidance, discussed in section 1.a.iv below.
Some commenters stated the differences in WIC and SNAP PIN
requirements could lead to confusion among participants using both
programs, as all SNAP online purchase transactions still require the
PIN. Commenters encouraged the Department to implement uniform
authentication standards and payment models across all programs that
use EBT.
The Department agrees there is value in consistency across SNAP and
WIC and works to achieve this where possible while allowing for new
types of authentication methods when feasible and appropriate. With the
implementation of new technologies in WIC, the Department encourages
State agencies to continue educating participants on the use of any
modern food instruments and how to transact their WIC benefits.
iv. Create new provisions to allow WIC State agencies to explore
and identify options to authenticate EBT transactions and require
vendors, farmers, and farmers' markets to authenticate EBT transactions
in accordance with State agency policy. (Sec. Sec. 246.12(bb)(2),
246.12(h)(3)(xxxii) and 246.12(v)(1)(iv))

[[Page 70256]]

This final rule codifies a new provision at Sec. 246.12(bb)(2)
requiring that State agencies have appropriate transaction
authentication policies for the specific technologies they choose to
allow in their jurisdiction, with modifications to remove reference to
FNA standards that have not yet been developed. The Department has also
modified this provision to establish PIN authentication as the default
authentication method. As discussed above, the expectation that State
agencies utilize a PIN until more modern technology meets or exceeds
the security of a PIN is reinforced by codifying specific reference to
the PIN in the amendatory text.
This final rule also codifies a new provision as proposed requiring
vendors to authenticate transactions in accordance with State agency
policies at Sec. 246.12(h)(3)(xxxii), and that transactions at farmers
and farmers' markets also occur in accordance with the procedures
established by the State agency at Sec. 246.12(v)(1)(iv).
Multiple commenters expressed support for these changes, agreeing
they will allow State agencies flexibility to create a plan that works
for their participants and a variety of modern vendors, while ensuring
program integrity. No comments were opposed.
The Department appreciates the extensive feedback that commenters
provided regarding the transaction authentication standards referenced
in the proposed rule, including the recommendations on the content of
the standards and on where the standards will be posted. Because the
standards are not yet published, the Department is removing the
reference to them in this final rule. The Department will, however,
still develop guidance on transaction authentication for State agencies
that incorporates this feedback. Commenters recommended that
transaction authentication standards be developed via the Technical
Standards Workgroup (TSW) to ensure they can continue to be updated on
an ongoing basis with stakeholder feedback as technology evolves. The
Department agrees that input from the WIC community is important for
the development of standards in the evolving retail marketplace.
Therefore, transaction authentication standards will be developed and
finalized via the TSW to allow for maximum engagement with affected
parties and partners.
Commenters requested that the implementation of the provisions
related to new transaction authentication methods not be required until
the Department's transaction authentication standards are published.
The Department recognizes the development of transaction
authentication standards will take time and does not want to prevent
State agencies from exploring modernization initiatives. Because FNA
has not yet published such standards, the Department has removed the
regulatory reference to the FNA standards as noted above. While the
provisions in this section will be effective upon publication of the
final rule to allow State agencies to take advantage of the
flexibilities created in this rulemaking, State agencies will not be
expected to wait for publication of final transaction authentication
standards to continue their online shopping projects. Following this
rulemaking, the Department will provide interim guidance on transaction
authentication. The Department encourages State agencies to explore new
payment technologies and expects that State agencies will continue to
use PIN authentication until more modern technology meets or exceeds
the security of a PIN.
Some commenters questioned how these changes would impact industry
partners, such as vendors and EBT processors. They expressed concerns
that competing transaction standards across WIC State agencies could
result in challenges for multi-state retailers, and that current EBT
contractual provisions may not allow new transaction authentication
methods.
As discussed above, the Department will develop transaction
authentication standards for State agencies, with interim guidance
provided following this rulemaking, to support implementation of new
technologies and encourage uniformity across State agencies. The
Department recommends vendors continue to work closely with the State
agencies in which they are authorized to ensure they are following all
respective State agency specific policies. The Department also
recognizes each State agency has different procurement policies and
procedures and recommends that State agencies continue to work closely
and maintain open communication with their procurement offices and EBT
contractors as they pursue any new technologies.
Some commenters stated that participants should be able to use
their EBT cards with farmers or farmers' markets and purchase farm
fresh produce online. WIC regulations currently allow State agencies to
authorize farmers and farmers' markets to accept cash-value benefits
(CVB). The Department encourages all State agencies to allow
participants to transact their CVB with farmers and at farmers' markets
to support the purchase of local produce. With the changes from this
rulemaking, authorized farmers and farmers' markets will be allowed to
sell their produce online.
b. Create new types of vendors [Sec. 246.2]. The provisions to
define ``Brick-and-mortar vendor'' and ``Above-50-percent vendor'' are
finalized as proposed. The provisions to define ``Internet vendor'' and
``Mobile vendor'' are finalized with modifications to ensure all
vendors are authorized separately and transactions that take place at
each vendor are assigned specifically to that vendor.
There was a significant discussion from commenters regarding the
new vendor types, and while many commenters supported the proposed
definitions, other commenters shared concerns and requests for
clarification from the Department. The following discussion is related
to overarching concerns regarding the new vendor types. A discussion on
the specific definitions for each vendor type follows.
Commenters requested guidance from USDA on how the creation of new
vendor types will impact various State agency vendor management
activities such as selection criteria, peer groups, preauthorization,
above-50-vendor assessment, cost containment, monitoring, training, and
sanctions. Many commenters also provided recommendations for how vendor
management activities should take place for the new vendor types. Some
commenters requested clarification on whether the authorization of
internet and mobile vendors is a State agency option. The Department
recognizes adding new vendor types warrants revised approaches to
vendor management. The Department appreciates the feedback and
recommendations on how to adequately manage the new vendor types and
will incorporate this feedback into the development of guidance and
technical assistance, expanding on current efforts to develop guidance
and technical assistance based on lessons learned from online shopping
projects. While the Department confirms the authorization of internet
and mobile vendors is a State agency option, the Department also
encourages State agencies to consider authorizing these new vendor
types to better serve families across the country, including in rural
areas.
Many commenters strongly agreed with the Department's proposal that
all vendors, regardless of type, must adhere to all regulations
pertaining to vendors

[[Page 70257]]

and discussed the importance of applying consistent and fair program
requirements regardless of vendor type. However, some commenters
disagreed and recommended different requirements by vendor type, such
as different federal selection criteria or minimum stock for internet
and mobile vendors than brick-and-mortar vendors.
The Department recognizes that different vendor types will
inherently have different training, monitoring, and investigative
needs, and the specific ways in which vendor management activities take
place may be different. However, the State agency must hold all vendors
to the same federal accountability measures and minimum requirements to
ensure effective management and oversight. Therefore, the Department
maintains that all authorized vendors, no matter the type, are subject
to federal regulations governing authorized WIC vendors, but that State
agencies may tailor their vendor management approach depending on
vendor type. For example, State agency training for internet vendors
may include new content for web designers, such as online shopping
navigation and pricing, and may focus less on transaction details which
may not be applicable for an internet vendor using automated product
compliance controls. Further, as discussed in section 1.e, the
Department is introducing virtual methods of oversight to provide State
agencies with the appropriate tools for monitoring all vendor types.
While different vendor types do not have distinct requirements, vendors
of different types may be able to show compliance with requirements in
distinct manners. For example, an authorized internet vendor sourcing
orders from multiple fulfillment locations would not need to
demonstrate that each fulfillment location meets stocking standards so
long as the vendor can prove to the State agency that their online
ordering operations as a whole meet those standards. Similarly,
internet vendors may have different mechanisms for demonstrating
compliance with inventory audits, which are just one State agency
option for investigating their vendor population.
Some commenters stated that the word ``store'' as used throughout
the current regulations appears to refer to a single, fixed location,
and therefore would only apply to brick-and-mortar stores. Commenters
requested clarification of the Department's application of the word
``store'' considering the new vendor types that do not have single,
fixed store locations.
The Department clarifies that the word ``store'' as used throughout
the regulation is synonymous with the term ``vendor'' and applies to
brick-and-mortar, internet, and mobile vendors.
Many commenters requested the inclusion of a ``hybrid vendor''
defined by the Task Force Report as a ``physical store location that
also operates a virtual platform,'' \11\ so internet vendors do not
have to be separately authorized if they fulfill orders from a brick-
and-mortar vendor. Commenters requested a similar inclusion for mobile
vendors.
---------------------------------------------------------------------------

\11\ Task Force on Supplemental Foods Delivery in the WIC
Program--Recommendations Report, page 16 (September 2021). <a href="https://www.fna.usda.gov/wic/food-delivery-task-force-recommendations-report">https://www.fna.usda.gov/wic/food-delivery-task-force-recommendations-report</a>.
---------------------------------------------------------------------------

The Department appreciates the input from commenters and thoroughly
considered the Task Force report as well as the public comments
recommending the inclusion of ``hybrid vendor'' as another vendor type.
While the Department recognizes the fulfillment of many online orders
may come from brick-and-mortar vendors, the Department determined
``hybrid vendors'' are not feasible due to challenges they would pose
for cost containment and program integrity. State agencies must be able
to apply cost containment methods to brick-and-mortar vendor operations
independently from any affiliated internet operations as prices for
food purchased online are often higher than prices for food purchased
in-store.\12\ To ensure vendors are charging State agencies appropriate
and reasonable prices for WIC foods and are remaining cost competitive
relative to peer vendors, State agencies must authorize internet,
mobile, and brick-and-mortar vendors separately, regardless of any
association. Further, State agencies must maintain the ability to take
administrative action against individual vendors at fault for
violations when they occur. If the State agency found a violation
associated with the internet operations of a ``hybrid vendor'' while
the brick-and-mortar operations remained in compliance, the State
agency would be required to take action against both entities together
if they were under one authorization. Such action could limit
participant access if the brick-and-mortar operations were no longer
authorized. By separating the authorizations by brick-and-mortar
operations from internet operations, the State agency is better
equipped to manage program integrity. Finally, it is an important
component of vendor management and cross program integrity efforts that
WIC and SNAP can take reciprocal administrative action against vendors
when a vendor commits a violation. For these reasons, the Department
decided the use of a ``hybrid vendor'' is not feasible for the WIC
Program and maintains that brick-and-mortar, internet, and mobile
vendors are the only three vendor types and must be separately
authorized, with their own distinct vendor identification numbers
(vendor IDs).
---------------------------------------------------------------------------

\12\ Roerink, A.M. (June 2021). Grocery E-Commerce--Opportunity
Remains. Produce Business, 37(6), p.12. <a href="https://producebusiness.com/issue/produce-business-june-2021/">https://producebusiness.com/issue/produce-business-june-2021/</a>.
---------------------------------------------------------------------------

i. Create a new definition for ``brick-and-mortar vendor.'' (Sec.
246.2)
This final rule codifies the new definition of ``brick-and-mortar
vendor'' as proposed, requiring this type of vendor to be defined
separately and distinctly from internet or mobile vendors.
Multiple commenters supported the proposed definition and reasoned
that permitting new types of WIC vendors enhances program
modernization, and expanding vendor definitions supports small
businesses and participant access. No comments were opposed.
Some commenters requested clarification if brick-and-mortar vendors
can offer online ordering, that is, when a WIC participant places an
order through the internet and then comes to the store to swipe their
EBT card and pick up their order. Online ordering with curbside payment
and pick-up remains allowable with the new vendor types. In this
scenario, the transaction is occurring at the brick-and-mortar store,
so this transaction would be assigned to the brick-and-mortar vendor.
ii. Create a new definition for ``internet vendor.'' (Sec. 246.2)
This final rule codifies the new definition of ``internet vendor''
with modifications to clarify transactions that take place at the
internet vendor must be assigned to the internet vendor, and each
internet vendor must be separately authorized.
Many commenters supported the creation of a new definition for
internet vendor, stating it will enhance access to healthy foods for
participants and could facilitate the use of more modern retail
solutions. No comments were opposed.
Some commenters requested the language used in the brick-and-mortar
vendor definition indicating ``transactions that take place at a brick-
and-mortar vendor must be assigned to that vendor'' should be
applicable to internet vendors as well. Further, multiple commenters
requested clarification on the meaning of ``location'' for each vendor
type, as the brick-and-mortar vendor explicitly specifies the meaning
of a ``single, separate location'' for the vendor.

[[Page 70258]]

For internet vendors, the location of the transaction is online,
which could include the online ordering system, platform, or site used
by an internet vendor to transact benefits. To ensure consistency in
the authorization of vendor types, the Department added language to the
definition to indicate that all transactions taking place via an online
ordering system, platform, or site must be assigned to the authorized
internet vendor. This is to ensure all vendor types are held to the
same requirements and that transactions are properly assigned. A
similar change was made to the definition of ``mobile vendor.'' The
Department recognizes that internet vendors may use different eCommerce
platform providers, eCommerce Marketplaces, or delivery partners to
transact WIC benefits. These third-party platforms may not be
authorized as vendors themselves, and all transactions that take place
on these platforms must be assigned to the internet vendor authorized
to transact WIC benefits.
Some commenters requested clarification on whether an internet
vendor can have any affiliation with a brick-and-mortar vendor, while
others requested a new definition of ``internet only vendor'' for
vendors that have no affiliation with a brick-and-mortar storefront.
The Department reiterates that internet vendors provide authorized
supplemental foods to participants through internet-based transactions,
regardless of their affiliation with any physical store. This includes,
but is not limited to:
<bullet> Vendors operating only online with no physical storefront,
<bullet> Vendors operating online and fulfilling from a brick-and-
mortar vendor, and
<bullet> Vendors operating online and fulfilling from a warehouse
and a separately authorized brick-and-mortar vendor.
Regardless of where the order is fulfilled from or if the order is
delivered to the participant or picked up in a physical store, the
vendor type depends on the location of the transaction. Therefore, if
the transaction happened online then it must be assigned to the
internet vendor. This is consistent with SNAP's authorization and
management of internet retailers.
iii. Create a new definition for ``mobile vendor.'' (Sec. 246.2)
This final rule codifies the new definition of ``mobile vendor''
with modifications to clarify transactions that take place at the
mobile vendor must be assigned to the mobile vendor, and each mobile
vendor must be authorized separately.
Multiple commenters supported the proposed definition, stating that
allowing mobile vendors will enhance participant access to healthy
foods. No comments were opposed.
Some commenters requested the language used in the ``brick-and-
mortar vendor'' definition indicating ``transactions that take place at
a brick-and-mortar vendor must be assigned to that vendor'' should be
applicable to mobile vendors as well. Further, multiple commenters
requested clarification on the meaning of ``location'' for each vendor
type, as the definition of a brick-and-mortar vendor explicitly
specifies there is a ``single, separate location'' for the vendor.
For a mobile vendor, the location of the transaction is the truck,
bus, pushcart, or other mobile vehicle at which the transaction takes
place. To ensure consistency in the authorization of vendor types, the
Department added language to the definition to indicate that all
transactions that take place at a mobile vendor must be assigned to
that authorized mobile vendor. This is to ensure all vendor types are
held to the same requirements and transactions are properly assigned.
Multiple commenters expressed concern about the feasibility for
mobile vendors to operate the WIC Program, including their ability to
meet minimum stocking requirements, manage updating the authorized
product list (APL), and use EBT systems. Commenters also recommended
prices for mobile vendors be restricted to the same prices as brick-
and-mortar vendors.
The Department clarifies authorizing mobile vendors is an option,
not a requirement, for State agencies. If a State agency chooses to
authorize this type of vendor, all vendor requirements must be met. The
Department highlights that State agencies have flexibility in managing
their vendor populations and can set different minimum stocking
requirements by peer group, as long as they meet the federal minimum
stocking requirements defined at Sec. 246.12(g)(3)(i). State agencies
that choose to authorize mobile vendors as a new vendor type must meet
all vendor regulations, including cost containment.
iv. Update the definition of ``above-50-percent vendors'' to be
applicable to all vendor types. (Sec. 246.2)
This final rule codifies the revised definition of ``above-50-
percent vendor'' as proposed to ensure any type of authorized vendor
could also be classified as an above-50-percent vendor if it meets the
conditions of the definition.
Commenters expressed general support for the new definition.
An opposed comment requested the ``above-50-percent vendor''
classification not apply to internet vendors for fear it would inhibit
small vendors starting their internet presence with WIC. Other
commenters stated that assessing for above-50-percent status would not
be relevant for internet vendors as their statewide sales operations
would be so large that they would never derive more than half of their
sales from WIC.
Assessing for and monitoring above-50-percent vendors is an
important part of the WIC Program's efforts to ensure State agencies
can continue containing costs and avoiding fraudulent activity. The
Department believes it remains important to evaluate all vendors,
including internet and mobile vendors, for above-50-percent vendor
status to ensure vendors that derive more than 50 percent of their
annual sales revenue from WIC are appropriately monitored to prevent
fraud. While it may be the case for some internet vendors, the
Department cannot say with full certainty that all internet vendors
will operate statewide and process enough in online sales to not meet
the above-50-percent threshold. Therefore, it will remain a requirement
for all vendor types to be assessed for ``above-50-percent vendor''
status.
The Department received a comment requesting clarification on
whether an above-50-percent vendor is considered a vendor type, similar
to how brick-and-mortar, internet, and mobile vendors are all types of
vendors, or if instead it is a classification of vendor.
The Department clarifies an above-50-percent vendor is not a vendor
type, but a classification of vendor. Any vendor that meets the
definition of above-50-percent vendor, regardless of type, must be
classified as an above-50-percent vendor.
Finally, a commenter recommended that USDA include a definition of
``regular vendor'' to account for vendors not classified as above-50-
percent vendors.
The Department considered this request but concluded it was
unnecessary and may cause additional confusion. The regulations at
Sec. 246.12 refer to ``regular vendors'' only when making comparisons
to above-50-vendor vendors. As a ``regular vendor'' is any type of
vendor that is not classified as an above-50-vendor, it is the assumed
normal classification and does not need further defining.
c. Modernize the definition of ``vendor'' to be inclusive of new
vendor types. [Sec. Sec. 246.2 & 246.4(a)(14)(xv)]. The

[[Page 70259]]

provision revising the definition of vendor at Sec. 246.2 is finalized
with modifications to streamline the definition and remove the SNAP
reference while maintaining that all vendors, regardless of type, must
be separately authorized. The provision requiring State agencies to
justify the need for mobile stores in their State Plans at Sec.
246.4(a)(14)(xv) is removed as proposed.
i. Remove the requirement that vendors must have a single, fixed
location, simplify the definition of vendor, and clarify that all
vendors must be authorized separately. (Sec. 246.2)
This final rule codifies the revised definition of vendor at Sec.
246.2 allowing State agencies to authorize the vendor types included in
this final rule by removing the requirement that vendors must have a
single, fixed location and that State agencies must delineate the
different business structures of vendor applicants. The Department
modified the provision to streamline the definition and removed the
reference to SNAP.
Comments were overwhelmingly supportive of removing the requirement
that State agencies may only authorize vendors with a single, fixed
location. Commenters also supported simplifying the definition of
vendor by replacing current regulatory language delineating different
business structures that a vendor may have (i.e., a sole
proprietorship, partnership, cooperative association, corporation, or
other business entity) with the term ``business entity.'' Commenters
asserted this would benefit State agencies and vendors by decreasing
the burden of determining the business structure during the vendor
application process. No comments were opposed. Commenters generally
supported the requirement that all vendors be authorized separately to
support vendor management activities.
Some commenters stated the new vendor definition complicated
whether each vendor, regardless of type, must be separately authorized,
and recommended the definition be more concise. Some expressed concern
about how to interpret the entity to be authorized as an internet or
mobile vendor, as the proposed definition only discussed separate
``store'' locations. Some commenters expressed concern about the
general reference to SNAP authorization in the definition, with some
stating the reference should be either further clarified or removed.
The Department added ``each store, internet retailer, and mobile
vehicle constitutes a unique vendor and must be authorized separately''
to the revised definition of vendor to clarify the unique entity that
must be separately authorized as a vendor, regardless of affiliation
with other vendors. This will require internet and mobile vendors to be
separately authorized from brick-and-mortar vendors, which will support
State agency vendor management activities such as authorizing,
monitoring, and sanctioning individual vendors without impacting other
authorized vendors that may be under the same responsible entity.
The Department agrees with streamlining the definition by removing
the reference to SNAP authorization. At the time of the proposed rule,
the Department believed that tying one SNAP authorization to one WIC
authorization per State agency would be the most efficient way to
ensure that cross-program integrity efforts could continue without
interruption following the introduction of internet vendors. However,
the WIC online shopping projects have since demonstrated that doing so
may limit State agency options and flexibility for effectively managing
their internet vendor population.
Requiring State agencies to authorize internet vendors separately
from brick-and-mortar vendors (as discussed above in section V.1.b.ii)
is sufficient to allow for ongoing coordination of vendor/retailer
activities between WIC and SNAP (e.g., reciprocal disqualifications,
etc.) and enables WIC vendor integrity efforts to move forward
consistently. Removing the reference to SNAP authorization in the
vendor definition provides WIC State agencies the flexibility to
authorize internet vendors using a method that best meets their vendor
management needs. The separate authorization of each unique vendor is
consistent with how the WIC Program currently authorizes vendors, and
the separate authorization of internet vendors from brick-and-mortar
vendors aligns with SNAP's authorization practices.
The Department would like to highlight that Sec. 246.12(g)(9),
which requires the State agency to collect a vendor applicant's SNAP
authorization number if the vendor applicant is authorized in SNAP, is
maintained in this final rule, which will continue to support State
agency ability to ensure cross-program integrity efforts.
Commenters requested clarification on whether Sec. 246.12(h)(1)(i)
remains applicable, which permits State agencies to use a single
agreement to cover multiple vendors operated by the same responsible
entity (e.g., chain stores).
The Department confirms Sec. 246.12(h)(1)(i) remains applicable,
and a vendor representative may obligate more than one vendor (e.g., a
single agreement to cover multiple vendors), as long as each vendor
itself is authorized separately, and the agreement specifies all
vendors covered by the agreement. Any administrative action the State
agency applies must only be applied to the specific vendor with which
the violation was found. This allows the State agency to, for example,
disqualify a single store of a large chain without impacting other
stores that are in compliance. This will continue to support State
agencies in ensuring adequate participant access to vendors throughout
their jurisdictions. As Sec. 246.12(h)(1) is maintained in this final
rule, State agencies can continue to sanction multiple vendors for a
vendor violation committed by owners, officers, or managers of the
responsible entity if the State agency determines that the vendor
violation involves multiple vendors. Requirements related to changes in
ownership of the vendor, per Sec. 246.12(h)(3)(xviii), will apply to
all vendors under the responsible entity as is currently required.
Some commenters expressed concern that the separate authorization
of internet vendors would substantially increase the number of
authorized vendors and associated vendor management activities.
The Department reiterates that an internet vendor completing
internet-based WIC transactions through an online ordering system,
platform, or site must be authorized as a unique vendor. However, the
Department clarifies that a State agency may choose to authorize an
internet vendor that fulfills its orders from any number of brick-and-
mortar stores, fulfillment centers, or warehouses to serve throughout a
State agency's entire jurisdiction as a single authorized vendor. The
Department believes this will mitigate a State agency's vendor count
increasing exponentially and allow retailers sourcing orders from
multiple fulfillment locations the flexibility to participate in WIC in
a minimally burdensome manner. The Department further notes an
authorized internet vendor sourcing orders from multiple fulfillment
locations would not need to show that each fulfillment location meets
federal and State agency selection criteria, such as the minimum
variety and quantity of supplemental foods, so long as the vendor can
prove that their online ordering operations as a whole meet those
criteria. State agencies retain the option to authorize each
fulfillment location that meets the definition of a vendor and all
federal and State agency selection criteria as a unique internet

[[Page 70260]]

vendor, if that approach allows them to best manage and oversee their
internet vendor population.
ii. Remove a clause in the definition of ``vendor'' requiring a
special needs justification for mobile vendors and remove associated
language from the State Plan requirements. (Sec. Sec. 246.2 and
246.4(a)(14)(xv))
This final rule codifies the removal of the requirement in the
definition of vendor at Sec. 246.2 for State agencies to justify
mobile vendors in the State Plan at Sec. 246.4(a)(14)(xv).
This change received overwhelming support, with commenters stating
this will allow State agencies to authorize mobile vendors more
efficiently and will remove the burden of justifying authorization.
Commenters suggested this change will better serve WIC participants
with barriers to accessing brick-and-mortar vendors. No comments were
opposed.
d. Allow vendors to return electronic benefits to a participant's
benefit balance [Sec. Sec. 246.12(h)(3)(ii) No substitutions, cash,
credit, cash refunds, or exchanges, (ii)(A) and (C), Sec.
246.12(x)(2)(iii), and Sec. 246.12(x)(4) Return of benefits, (4)(i),
(4)(ii), and (4)(iii)]. The provisions clarifying cash refunds are
still prohibited, Sec. 246.12(h)(3)(ii) No substitutions, cash,
credit, cash refunds, or exchanges, and (ii)(A), are finalized with
modifications to clarify further what types of cash refunds are
prohibited. The provision to update the exchange policy to accommodate
recalls, Sec. 246.12(h)(3)(ii)(C), is finalized with modifications to
reflect changes from the Implementation of the Access to Baby Formula
Act of 2022 and Related Provisions Final Rule by clearly defining a
supplemental food recall in 7 CFR 246.2. The provision to allow vendors
to return electronic benefits to a participant's balance, Sec.
246.12(x)(4) Return of benefits, is finalized with modifications to
allow returns with any vendor type, not just internet vendors, and to
include timeframes in which benefits must be returned in Sec.
246.12(x)(4)(i) and (ii), and to clarify State agencies must provide at
least until the end of the original benefit issuance period for
participants to use returned electronic benefits, and that it is a
State agency option to allow participants to transact returned benefits
after the last date of use (LDTU) for up to seven (7) days after the
LDTU, Sec. 246.12(x)(4)(iii). The provision describing the last date
of use, Sec. 246.12(x)(2)(iii), is finalized with modifications to
reflect this new flexibility of using returned benefits after the last
date of use.
i. Clarify that cash refunds are still prohibited and update the
exchange policy to accommodate recalls, ensuring that WIC shoppers are
treated the same as other customers in the event of a recall. (Sec.
246.12(h)(3)(ii) No substitutions, cash, credit, cash refunds, or
exchanges, (ii)(A), and (ii)(C))
This final rule codifies the revised provision regarding
prohibition of cash refunds, Sec. 246.12(h)(3)(ii) No substitutions,
cash, credit, cash refunds, or exchanges, and (ii)(A), with
modification to specify the types of refunds for supplemental foods
that are not allowable. This final rule also codifies the provision
Sec. 246.12(h)(3)(ii)(C) explaining the requirement for exchanging
supplemental foods to ensure all customers, including WIC shoppers, are
treated the same in the event of a supplemental food recall, as defined
at Sec. 246.2.
Multiple commenters supported the clear prohibition of cash
refunds, and no comments were opposed. One commenter noted there are
other types of refunds commonly used beyond cash that should also be
prohibited, such as store credit and gift cards.
The Department agrees that refunds other than cash should not be
provided in exchange for supplemental foods and modified Sec.
246.12(h)(3)(ii)(A) accordingly to include a prohibition on cash-like
refunds, including but not limited to store credit and gift cards.
Many commenters supported the new provision at Sec.
246.12(h)(3)(ii)(C) requiring vendors to treat all customers, including
WIC shoppers, the same in the event of a supplemental food recall.
Commenters referenced the infant formula recall of 2022 and how the
changes would help ensure that WIC participants can be treated like all
other customers.
One commenter understood this new provision to conflict with the
updated prohibition on cash refunds at Sec. 246.12(h)(3)(ii)(A), and
other commenters requested clarification on what is considered a
``substitute product.'' Others expressed concern that customers would
be charged for new items in the replacement process.
The Department clarifies that under ordinary circumstances, cash
refunds are not allowed in WIC. Vendors are only allowed to provide
cash refunds when supplemental foods are recalled, as described in
Sec. 246.12(h)(3)(ii)(C), and only if (1) doing so aligns with store
policies and (2) cash refunds are also provided to non-WIC customers
impacted by the recall. Similarly, if the vendor provides replacement
products or store credit during a recall, this provision requires WIC
participants to be allowed those same courtesies.
Following publication of the Implementation of the Access to Baby
Formula Act of 2022 and Related Provisions Final Rule, which codified
the definition of recall at Sec. 246.2 as it pertains to supplemental
foods, the Department modified the provision at Sec.
246.12(h)(3)(ii)(C) to clarify this provision only applies during a
supplemental food recall, rather than any type of supply chain
disruption. The Department will not strictly define ``substitute
product'' or require the vendor or State agency to approve substitute
products for supplemental foods in the event of a recall. The
Department believes doing so would negate the intent of this provision,
that vendors treat WIC participants the same as non-WIC shoppers in the
event a supplemental food is recalled. Vendors treating WIC
participants the same as any non-WIC shopper in the instance of a
supplemental food recall includes not charging participants for
replacement items.
ii. Allow for the return and use of returned electronic benefits.
(Sec. 246.12(x)(4) Return of benefits, (4)(i), and (4)(ii))
This final rule codifies provisions for the return of electronic
benefits to a participant's benefit balance at Sec. 246.12(x)(4)
Return of benefits, with modifications to allow for the return and use
of electronic benefits for all WIC shoppers regardless of vendor type
and clarifies the timeframes in which benefits must be returned in
Sec. 246.12(x)(4)(i) and (ii). Many commenters supported these
provisions with no comments opposed.
The Department originally proposed that benefits only be returned
in instances when an online order is not fulfilled. Multiple commenters
discussed concerns related to this provision as proposed, stating that
WIC participants shopping in-store do not have the option to make
returns and suggesting the return of benefits should not only apply to
those shopping online. Commenters also discussed the technical
infeasibility of only allowing returns for online orders, and that if
implemented as proposed, the burden of confirming the original
transaction took place online would fall on each individual cashier.
The Department recognizes and agrees with the concerns raised by
commenters. With the proposed provision, the Department intended to
ensure WIC participants shopping online have recourse in the event an
item is missing or incorrectly fulfilled and that the State agency is
only

[[Page 70261]]

charged for foods received by the participant. The Department modified
this provision to allow for the return of electronic benefits for all
vendor types. This is intended to promote an improved WIC shopping
experience for participants, to ensure vendors are treated consistently
regardless of vendor type, and to accommodate the technical
capabilities of vendor systems. If the State agency authorizes internet
vendors, they must also allow for the return of electronic benefits for
all other vendor types, to include transactions that take place at a
brick-and-mortar or mobile vendor. If a State agency does not authorize
internet vendors, they have the option--but are not required--to allow
for the return of electronic benefits for other authorized vendor
types.
Some commenters expressed concern with the lack of required
timeframe for an internet vendor to initiate the return of electronic
benefits. The Department agrees that a required timeframe for the
return of electronic benefits will help ensure participants can use
returned electronic benefits within a reasonable timeframe. Therefore,
the Department modified the provision to include language requiring the
timeframes in which the vendor must process the return of electronic
benefits. If the participant returns an item in-person, regardless of
where the item was purchased, the vendor must process the return of
electronic benefits immediately so that the participant has the option
to use their benefits while at the store. For post-delivery returns,
such as those returned via mail or for an order that was incorrectly
fulfilled or not fulfilled at all, the vendor must process the return
of electronic benefits within two (2) company business days after
receipt of the returned item or indication of an incorrectly fulfilled
or unfulfilled item. This aligns with SNAP policies for returning items
ordered online.
One commenter noted current regulations require State agencies to
issue a three-year sanction to vendors that charge for food not
received, without exceptions for returned electronic benefits.
The commenter is correct that per Sec. 246.12(l)(1)(iii)(E), the
State agency must disqualify a vendor for three years for a pattern of
charging for supplemental foods not received by the participant. The
Department highlights that each State agency develops their own
definition of a pattern for each violation, with discretion over what
constitutes a pattern including frequency of violation, time periods,
and dollar amounts. As discussed above, the Department added language
requiring vendors to initiate the return of electronic benefits within
two (2) days of indication that an order was unfulfilled. So, for
example, if the State agency determines there is a pattern of
unfulfilled orders from a given vendor and the electronic benefits are
not being appropriately returned to the participant's balance, the
State agency may use its definition of pattern to identify this as a
violation and take appropriate follow up action per Sec.
246.12(l)(1)(iii)(E).
Some commenters stated that as EBT, MIS, and vendor systems exist
now, it is not possible to return electronic benefits to the
participant's balance. The Department understands that currently,
systems do not allow for the return of electronic benefits because of
the previous regulatory prohibition. With this final rulemaking, the
Department encourages system updates to accommodate the return of
electronic benefits, a requirement for State agencies authorizing
internet vendors and an option for all others.
Many commenters highlighted the need for guidance on managing
substitutions when an order is submitted but the specific item
requested is not available when the order is fulfilled.
The Department agrees and intends to work with State agencies to
develop guidance and provide best practices for managing substitutions
separate from this rulemaking.
iii. At State agency option, allow participants the flexibility to
transact returned electronic benefits up to seven (7) days beyond the
last date of use (LDTU). (Sec. Sec. 246.12(x)(2)(iii) and
246.12(x)(4)(iii))
This final rule codifies a State agency option to allow
participants to use returned electronic benefits up to seven (7) days
beyond the LDTU at Sec. 246.12(x)(4)(iii) and makes related
modifications to the last date of use provision at Sec.
246.12(x)(2)(iii). This is a modification from the proposed rule which
required State agencies to provide this flexibility. This final rule
requests comment specifically on the impacts of requiring the return of
benefits after the LDTU to better understand the costs and burdens that
these required flexibilities could have on stakeholders and their
systems.
Multiple commenters expressed support for this provision noting it
allows participants time to use electronic benefits returned to their
benefit balance.
The Department originally proposed that State agencies must allow
returned benefits to be available for participant use for a minimum of
seven (7) days after the return, which could extend into the next
benefit period. Many commenters expressed concerns related to the
technical challenges of allowing for the use of electronic benefits
after the LDTU, explaining this would require significant changes to
MIS and EBT systems, and could impact vendor systems. Many commenters
strongly recommended that returned electronic benefits only be allowed
for use within the current benefit period to implement this change more
easily and cost-effectively. Multiple commenters also said the
instances in which participants would need to use returned benefits
after the LDTU would be rare and that these situations were better
mitigated with continued participant education that encourages
participants to use their electronic benefits well before the benefit
LDTU.
The Department recognizes the technical challenges of allowing the
use of returned electronic benefits after the LDTU and does not want
these to be a barrier to innovating the WIC shopping experience,
including implementing online shopping. Due to the concerns raised and
the desire to support State agencies implementing online shopping, the
Department modified the minimum amount of time State agencies must
provide participants to use returned electronic benefits from ``no less
than 7 calendar days'' to ``the remainder of the benefit issuance
month.'' Electronic benefits that are returned to a participant's
balance must be available for use within the original benefit issuance
month, but the State agency is not required to allow use of returned
electronic benefits beyond the LDTU. This minimum amount of time better
aligns with program operations and benefit issuance systems. To support
those State agencies with providing greater flexibility to their
participants, the Department is making the use of returned electronic
benefits after the LDTU allowable as a State agency option. The
Department recognizes that for State agencies that do not take this
option, there may be some participants who will have a reduced amount
of time to transact their returned benefits if they are returned in the
last few days of the benefit issuance month. However, the Department
agrees with public comment that the instances in which participants
would need to use returned benefits beyond the LDTU would be rare and
are better mitigated with continued participant education. In these
situations, where State agencies do not opt to allow the use of
returned benefits beyond the LDTU, the Department notes

[[Page 70262]]

that all participants maintain the ability to exchange identical
authorized supplemental foods per Sec. 246.12(h)(3)(ii)(A).
To support State agencies in implementing this flexibility in the
long term, the Department is requesting comment regarding the impact on
stakeholders if State agencies were required to allow the use of
returned electronic benefits beyond the LDTU. The Department requests
input that includes a discussion of:
<bullet> The technical changes that would be necessary to allow
this functionality,
<bullet> The cost of changing the MIS and EBT systems to allow this
functionality,
<bullet> The cost of this type of change for vendor systems,
<bullet> The specific impact on reporting and infant formula
rebates and contracts, and
<bullet> Any other comments or concerns related to this type of
functionality.
The Department appreciates specific, detailed comments on the use
of returned electronic benefits beyond the LDTU and will use feedback
received to inform future rulemaking.
Commenters also requested clarification on whether there was a
maximum number of days beyond the LDTU in which a participant may use
returned electronic benefits, expressing concern that as proposed,
returned electronic benefits would be available in the benefit balance
indefinitely.
It is a core tenet of the WIC Program that benefits are intended to
be used within the month they are issued, and it would be inconsistent
with that tenet for benefits to be available indefinitely. The
Department has modified the provision to establish a maximum of seven
(7) days that returned electronic benefits can be used after the LDTU
for State agencies that allow this flexibility. This provides uniform
direction for State agencies regarding how long returned electronic
benefits may be available for participants to transact, should State
agencies pursue this option.
Commenters discussed issues of fairness with the provision as
proposed, stating that participants facing transaction challenges in-
store do not have an opportunity to use their electronic benefits
beyond the LDTU in the event of issues such as vendor system problems,
card errors, or family crises. As a solution to this issue, many
commenters requested a full rollover of all unredeemed electronic
benefits to the next month.
The Department clarifies that because the return of electronic
benefits is allowed for all vendors and not just internet vendors, the
option for using returned benefits beyond the LDTU applies to all
participants, not just those using online shopping. Additionally, it is
important to note this provision is addressing a specific situation
that applies to those electronic benefits that have been transacted but
subsequently returned to the participant's benefit balance. This
provision is not permitting the ``rollover'' of electronic benefits
that were never transacted. Other scenarios that impact benefit
transaction, such as issues related to vendor system problems and card
errors, are out of the scope of this rulemaking.
Some commenters expressed concern about the over-issuance of
electronic benefits if participants are allowed to transact electronic
benefits from one issuance month during the following issuance month.
The Department clarifies that this is not over-issuance as the State
agency is not issuing benefits in excess of the participant's maximum
quantities of supplemental foods but is instead extending the dates of
use for validly issued electronic benefits.
e. Allow State agencies to develop virtual methods of oversight
[Sec. Sec. 246.2 and 246.12(g)(5) and (j)(6)(ii)(B)]. Provisions in
this section allowing virtual methods of routine monitoring, compliance
buys, and preauthorization visits are finalized as proposed.
i. Update the definitions of ``routine monitoring'' and
``compliance buy'' to remove the on-site requirement. (Sec. 246.2)
This final rule codifies revisions to the definitions at Sec.
246.2 of ``routine monitoring'' and ``compliance buy'' as proposed to
remove the requirement that routine monitoring visits and compliance
buys must occur on-site.
Multiple commenters expressed general support for allowing State
agencies to develop virtual methods of oversight, stating that it will
be necessary to support the authorization of internet vendors.
Commenters also stated it would support consistent monitoring in the
face of environmental challenges and referenced the success of virtual
monitoring during the COVID-19 pandemic. No comments were opposed.
Commenters requested clarification on whether on-site monitoring is
still an option, or if all oversight must take place virtually.
The new definitions do not require State agencies to use virtual
methods of oversight, they instead provide State agencies the
opportunity to develop virtual methods of oversight to ensure that
monitoring and investigative methods are appropriate for the types of
vendors authorized (e.g., internet vendors) and environmental
conditions. With this change, State agencies can pursue new types of
monitoring and investigative methodologies, yet still retain discretion
over how these activities are implemented.
Commenters requested clarification on if the new vendor types
change the requirements regarding monitoring and compliance,
specifically the number of monitoring and compliance activities the
State agency must complete each fiscal year.
The only changes to routine monitoring and compliance buys in this
rulemaking are to remove the on-site requirement. The number of
monitoring and compliance investigation activities that the State
agency must complete remains the same.
ii. Introduce virtual visits as an allowable type of
preauthorization visit. (Sec. 246.12(g)(5))
This final rule codifies revisions as proposed to introduce virtual
visits as an allowable type of preauthorization visit at Sec.
246.12(g)(5). Commenters supported this provision, stating the proposed
change is effective and will reduce costs, and the flexibility proved
helpful in supporting State agencies in continued authorization of
vendors during the COVID-19 pandemic. No comments were opposed.
Some comments sought clarification on whether virtual
preauthorization visits were a requirement and asked the Department to
define a virtual visit.
As with virtual options for routine monitoring and compliance buys
made possible through this rulemaking, virtual preauthorization visits
are not a requirement, but an option for the State agency to use to
authorize new vendor types efficiently and to respond to environmental
conditions appropriately. The Department clarifies virtual
preauthorization visits can be used for any vendor type and are not
just for internet vendors. The Department does not define a virtual
visit in regulation but clarifies the purpose of the preauthorization
visit is to verify the information provided on the vendor application,
and to ensure the vendor applicant meets the selection criteria used by
the State agency to select vendors for program authorization. This
applies to internet and mobile vendors the same as it applies to brick-
and-mortar vendors.
f. Prohibit vendors, farmers or farmers' markets from charging
State agencies fees associated with WIC purchases and permit WIC
shoppers to pay such fees [Sec. Sec. 246.12(h)(3)(xxxiii) and
(v)(1)(ix) and 246.14(b)(1)(i)]. The finalized provisions prohibiting
vendors at Sec. 246.12(h)(3)(xxxiii) and farmers or farmers' markets
at Sec. 246.12(v)(1)(ix)

[[Page 70263]]

from charging State agencies fees associated with online shopping are
modified to include the prohibition of charging fees associated with
any WIC purchase, not just online shopping purchases. The provisions
clarifying that State agencies can still pay costs associated with home
food delivery and direct distribution at Sec. 246.14(b)(1)(i) and
(c)(4) are modified to clarify that State agencies can continue using
food funds to pay for the cost of transporting food under these two
food delivery systems, as opposed to the retail food delivery system in
which State agencies cannot use food funds to pay for the cost of
transporting food.
i. Prohibit vendors, farmers, and farmers' markets from charging
State agencies fees associated with WIC purchases and permit WIC
shoppers to pay such fees. (Sec. Sec. 246.12(h)(3)(xxxiii) and
246.12(v)(1)(ix))
This final rule codifies the provision at Sec.
246.12(h)(3)(xxxiii) prohibiting vendors from charging State agencies
fees associated with online ordering and with modifications to clarify
this prohibition applies to all vendors and fees associated with WIC
purchases to ensure consistency for vendors and shoppers. The provision
at Sec. 246.12(v)(1)(ix) regarding farmers and farmers' markets is
finalized with similar modifications to reflect the prohibition on all
fees, rather than just online shopping fees. This final rule also
codifies in both provisions that participants must be allowed to pay
such fees using a different form of tender.
Many commenters supported these provisions, expressing that State
agencies should not pay online shopping fees as online shopping is a
customer preference. Commenters also supported the requirement that
participants be allowed to pay these fees using another tender type, if
the same fees are charged to non-WIC shoppers, to ensure WIC customers
are treated the same as non-WIC customers.
As the proposed provision only prohibited vendors from charging
fees associated with online ordering, some commenters recommended
modification to include fees charged by other WIC vendor types, such as
bag fees or convenience fees. Commenters stated that to ensure vendor
types are treated equally, any fees vendors charge shoppers as part of
or in addition to their purchase should not be charged to State
agencies.
The Department agrees the prohibition of vendors charging State
agencies fees associated with WIC purchases should not be dependent on
the type of vendor. To ensure State agencies hold all vendor types to
the same federal regulatory requirements, the Department modified the
regulatory language to reflect that vendors must not charge State
agencies for any fees associated with a WIC purchase, including but not
limited to delivery, service, convenience, or bag fees. If there is a
fee associated with the purchase, the participant must have the
opportunity to pay that fee using another tender type. To ensure the
same policy applies to farmers and farmers' markets, related changes
were made to Sec. 246.12(v)(1)(ix). These provisions are not
applicable to EBT costs, including operational costs, interchange fees,
and third-party processing fees. The regulations related to EBT fees
are governed by Sec. 246.12(h)(3)(xxviii), (xxix), (xxx), Sec.
246.12(aa)(3) and (4) and remain unchanged by this rulemaking.
The Department requested specific feedback on whether State
agencies should have the option to pay for fees associated with online
shopping in a retail food delivery system with either (1) non-federal
funding at State agency discretion and/or (2) federal funding in
situations where it is deemed necessary to meet special needs. The
Department appreciates the robust discussion provided by commenters and
addresses this below.
Many commenters requested State agencies retain discretion on the
use of non-federal funds to pay for such fees. Commenters shared that
the use of federal funds under special circumstances would be
particularly helpful for rural, remote, isolated, under-resourced, and
participants with disabilities, and those impacted by disasters and
public health emergencies, if targeted appropriately. Some commenters,
however, stated that expanding the food package and serving all
eligible participants should be the focus of discretionary federal WIC
funds, and expressed concern about adequately containing the costs and
ensuring program integrity if paying such fees using federal funds was
deemed necessary.
The Department appreciates concerns regarding access to WIC
benefits and efficient use of taxpayer funds. The Department also
acknowledges State agencies are best suited to understand the unique
needs of their participant population and believes State agencies
should have flexibility to use non-WIC funds when available. Therefore,
the Department confirms that non-WIC funds can be used at State agency
discretion. This includes but is not limited to funds provided to the
State agency by state, tribal or territorial governments, funds
provided from non-profit organizations, or non-WIC federal funds
available to the State agency, if it is an allowable use of those
funds.
The Department thoroughly considered the comments regarding the
special circumstances under which it would benefit participants to use
federal WIC funds to pay these fees, especially to support access for
participants in rural and remote locations or participants with
disabilities. However, the Department also recognizes the concerns
related to the limited federal funding available and the many questions
related to how costs would be adequately contained, and ensuring
program integrity if federal funds were to be used to pay such fees.
Therefore, to maintain the integrity of the WIC Program and ensure that
federal WIC dollars continue to be used for only food costs and the
administration of WIC, the Department finalizes that federal WIC funds
may not be used to pay these fees.
Some commenters requested the Department amend the equal treatment
provision at Sec. 246.12(h)(3)(iii) to allow for preferential
treatment of WIC shoppers so that vendors can waive delivery fees for
WIC customers. Some commenters likened delivery fees to sales taxes,
and requested the Department create a similar regulation to Sec.
246.12(h)(3)(vii) which prohibits the collection of sales tax on WIC
foods.
The equal treatment provision at Sec. 246.12(h)(3)(iii) has
implications for program integrity and vendor management, both of which
support cost containment in the WIC Program. Any revision to the equal
treatment provision is out of the scope of this rulemaking. The
Department acknowledges the collection on sales tax on WIC foods is
prohibited, pursuant to the Child Nutrition Act at 42 U.S.C.
1786(c)(4). However, sales tax generates revenue for government
services and is inherently different from the costs associated with
shopping, such as delivery fees, which are fees charged by the vendor
to provide a service. If the Department were to prohibit vendors from
charging these fees altogether, it could force vendors to cover a cost
that they do not cover for non-WIC shoppers and discourage vendors from
providing online shopping options for WIC.
ii. Clarify costs associated with home food delivery and direct
distribution to ensure State agencies still pay for the cost of
transporting food under these two food delivery systems. (Sec.
246.14(b)(1)(i))
This final rule codifies the provision Sec. 247.14(b)(1)(i) with
modifications clarifying that WIC State agencies operating home food
delivery or direct distribution food delivery systems may

[[Page 70264]]

continue using the food grant to pay for the cost of transporting food
under these delivery systems. Commenters expressed general support for
the clarifications, and no comments were opposed.
One comment recommended revising the provision on the grounds that
it was difficult to understand.
The revisions to Sec. 246.14(b)(1)(i) are intended to
differentiate the costs that the State agency can charge to the food
grant by food delivery system. To summarize, food funds can be used to
pay for:
<bullet> Supplemental foods purchased by participants using WIC
electronic benefits in a retail food delivery system, and/or
<bullet> The acquisition of supplemental foods provided to State
agencies, local agencies, or participants, whichever receives the
supplemental foods first, in a home food delivery system or a direct
distribution delivery system.
The edits clarify that in a retail food delivery system,
participants, not State agencies, purchase supplemental foods from
retail vendors and that food funds cannot be used to pay for the
delivery of those foods. In home food delivery and direct distribution
systems, food funds can continue to be used to pay for shipping
supplemental foods to State or local agencies, or participants,
whichever receives the supplemental foods first.
2. Streamline and Modernize WIC Food Delivery
This final rule permits the remote issuance of electronic benefits
to a participant's benefit balance, expands the definition of food
instrument, updates the uniform food delivery systems provision to
support State agency innovation, streamlines food delivery operations
by recognizing that EBT data are a sufficient replacement for routine
shelf price collection, and allows State agencies using a non-retail,
home food delivery system to ship supplemental foods to a location
designated by participants.
a. Permit the remote issuance of electronic benefits to a
participant's benefit balance [Sec. Sec. 246.4(a)(23),
246.7(f)(2)(iv), and 246.12(r)(2), (4), and (5)]. The provisions
clarifying that paper food instruments must be picked up in person when
in-person nutrition education or certification appointments are
scheduled, Sec. 246.12(r)(4), is finalized as proposed. The provision
updating processing timeframes to support the remote issuance of
benefits, Sec. 246.7(f)(2)(iv), and the State Plan provision
discussing remote benefit issuance policies, Sec. 246.4(a)(23), are
finalized as proposed. The provision allowing for the remote issuance
of benefits and mailing of EBT cards at Sec. 246.12(r)(5) is finalized
with modifications that ensure the State agency has adequate program
integrity measures in place for proof of participant receipt when EBT
cards are issued remotely, and the provision at Sec. 246.12(r)(2)
describing signature requirements for benefit issuance is finalized
with modifications that clarify a signature is only required when
benefits are received in person.
i. Allow for the remote issuance of electronic benefits by
separating the benefit issuance provisions for paper food instruments
and cash-value vouchers from electronic benefit issuance, and update
signature requirements. (Sec. Sec. 246.12(r)(2), (4) and (5), and
246.7(f)(2)(iv))
This final rule codifies revisions separating paper food instrument
and cash-value voucher issuance requirements from EBT card and
electronic benefit issuance requirements. Changes to Sec. 246.12(r)(4)
describing the paper food instrument and cash-value voucher pick up are
finalized as proposed. The EBT card and electronic benefit issuance
provision, Sec. 246.12(r)(5), is finalized with modifications
requiring the State agency to have program integrity procedures in
place for EBT cards that are issued remotely. This final rule codifies
signature requirements for benefit issuance at Sec. 246.12(r)(2),
modifying the language to more explicitly state that a signature is
required only when benefits are received in person. Updates to the
processing timeframe requirements to support remote benefit issuance at
Sec. 246.7(f)(2)(iv) are finalized as proposed.
Many commenters offered significant support for changes supporting
remote benefit issuance, stating it would allow for benefit
administration in the event of a disaster or other public health
emergencies and would provide maximum flexibility for WIC participants
and staff. No comments were opposed.
Commenters requested clarification as to when participants could
receive EBT cards and electronic benefits remotely, stating the
language was unclear.
The Department clarifies that State agencies may mail EBT cards and
issue electronic benefits remotely under any circumstances, including
when the participant is scheduled for in-person appointments, as long
as participants are still offered nutrition education in accordance
with Sec. 246.11(a)(2), the EBT cards and electronic benefits are
issued within the processing timeframe requirements at Sec.
246.7(f)(2)(iv), and the integrity of the program is not jeopardized.
Some commenters requested clarification of when participants must
sign for the receipt of food instruments, cash-value vouchers, or
authorized supplemental foods. The comments noted that language in the
proposed rule did not explicitly state when signatures are required.
Other comments expressed concern regarding how State agencies can
ensure program integrity when EBT cards are mailed and benefits are
issued remotely, as the participant is not receiving the EBT card in-
person.
To clarify when a signature is required, the Department modified
language at Sec. 246.12(r)(2) to specify a participant must sign for
the receipt of their food instruments/benefits only when receiving them
in person. When food instruments are mailed and/or benefits are issued
remotely, a signature is not required.
The Department agrees it is important to maintain integrity while
allowing for remote benefit issuance. While signatures are not required
when EBT cards are mailed and benefits are remotely issued, the
Department added language in Sec. 246.12(r)(5) to clarify State
agencies must have procedures in place to ensure receipt of the EBT
card by the intended recipient. WIC State agencies have discretion in
developing procedures, and the Department expects State agencies to
utilize best practices and lessons learned from remote issuance
previously available through time-limited waiver authority. The
Department intends to assist State agencies by sharing such best
practices and providing additional technical assistance, as needed, to
ensure the security of mailed EBT cards.
ii. Create new definitions of ``electronic benefits'' and ``cash-
value benefits'' and update the definition of ``cash-value voucher.''
(Sec. 246.2)
This final rule codifies as proposed the new definitions at Sec.
246.2 of ``electronic benefits'' and ``cash-value benefits'' to clearly
define the benefits available to participants in the modern WIC
Program. The rule codifies as proposed the revised definition of
``cash-value voucher'' to differentiate this type of paper food
instrument from the newly defined ``cash-value benefits,'' which are a
type of electronic benefit.
Commenters largely supported these changes, stating the new and
updated definitions provide important flexibility.
Commenters recommended that all instances of ``cash-value voucher''
throughout the regulations be updated

[[Page 70265]]

to ``cash-value benefit'' to reflect the new definition. Other
commenters expressed concerns that without appropriate edits to
existing mandatory sanction language, inadvertent gaps will inhibit
State agencies' ability to sanction vendors and recommended amending
the sanctions provisions to reflect the new definitions.
The intent of this rule is to remove barriers to online shopping
and take the first step in modernizing the language to reflect today's
program. Due to the nature of this rulemaking, the Department could not
fully update all regulations to reflect the new definitions. The
Department intends to fully update and modernize the language,
including updating regulations from ``cash-value voucher'' to ``cash-
value benefit'' and the mandatory sanction language, in future
rulemaking. However, the Department recognizes the need for consistent
application of the definition of ``electronic benefits'' to ensure
program integrity with respect to sanctions, and therefore affirms the
remaining regulatory language enables State agencies to issue
appropriate sanctions in the instances of vendor violations related to
food instruments, cash-value vouchers, WIC electronic benefits, and
supplemental foods.
b. Expand the definition of food instrument [Sec. 246.2]. This
final rule codifies the proposed definition of ``food instrument'' in
Sec. 246.2 to allow WIC State agencies to explore and adopt new food
instrument technologies.
Many commenters supported the updated definition of food
instrument, stating this would enhance program flexibility and that
updates allowed by this change could draw in younger WIC participants,
mitigate stigma associated with the checkout process, and decrease
program costs. No comments were opposed.
Some commenters recommended removing the word ``food instrument''
altogether, while others included recommendations to allow specific
technology types, such as mobile wallets, near field communication
(NFC) and quick response (QR) technology. Commenters also urged
alignment with the SNAP mobile payments pilot.\13\
---------------------------------------------------------------------------

\13\ SNAP Mobile Payment Pilot. <a href="https://www.fna.usda.gov/snap/mobile-payment-pilot">https://www.fna.usda.gov/snap/mobile-payment-pilot</a>.
---------------------------------------------------------------------------

The Department decided not to name types of allowable technologies
so as to not limit future innovation. Maintaining the term ``food
instrument'' allows the Department to be inclusive of any future
technologies beyond the EBT card. Where possible, the Department works
to implement WIC and SNAP consistently. However, this rulemaking only
governs regulations related to the WIC Program. With the implementation
of new technologies, the Department will glean information from pilot
projects in SNAP to inform technology development in WIC.
c. Update the uniform food delivery systems provision to support
State agency innovation [Sec. Sec. 246.2 and 246.12(b)]. The
definition of ``electronic benefit transfer'' at Sec. 246.2 is
finalized as proposed to clarify that it is a benefit delivery method
and not a food delivery system, and the food delivery provision at
Sec. 246.12(b) is finalized with modifications, allowing State
agencies to permanently use more than one food instrument throughout a
food delivery system.
i. Allow State agencies to develop and test new WIC food instrument
types and clarify uniform food delivery systems and system combinations
(Sec. 246.12(b)).
This final rule codifies the proposed uniform food delivery systems
provision at Sec. 246.12(b) to clarify that there are three food
delivery systems--retail, home food delivery, and direct distribution.
Modifications to the provision allow State agencies to make permanent
new food instruments as long as the food instrument type is uniform and
described and approved in the State Plan.
Many commenters supported allowing State agencies to develop and
test new WIC food instrument types within a single food delivery system
(e.g., retail food delivery system). Supporters stated that this could
enhance access to nutritious foods and provide State agencies with the
ability to address the needs of different participants. No comments
were opposed.
Multiple comments were concerned the conditions placed on the
development and implementation of new food instruments would prevent
State agencies from maintaining more than one food instrument type
permanently. Commenters requested clarification from the Department
about the intent of this provision and recommended that more than one
food instrument type be allowed permanently.
The intent of this provision is to allow State agencies to explore
new food instrument types to meet the needs of their diverse vendor and
participant populations and to modernize benefit delivery as the
grocery and payment industries innovate. For that reason, the
Department has revised the language in this provision to clarify that
State agencies can have more than one food instrument type (e.g., an
EBT card and a mobile wallet) within a single food delivery system.
State agencies may introduce and make permanent new food instrument
types but must keep the technology and functionality uniform within
each type of food instrument. The Department will still require the use
of new food instrument types to be described in the State Plan and
approved by FNA per Sec. 246.4(a)(14)(i).
Many commenters supported updates clarifying State agencies may use
a combination of retail, home food delivery, and direct distribution
systems. Supporters stated that allowing all three food delivery
systems mitigates barriers to participant access related to geographic
limitations and cited feedback from WIC participants expressing support
for home food delivery options. Commenters also supported updates to
the definition of electronic benefit transfer (EBT) clarifying it is a
benefit delivery method, not a food delivery system. Supporters said
these changes facilitate a better understanding of the definition of
the term EBT and would allow for future modernizations.
Some comments requested clarification on the meaning of
``procedurally uniform'' and whether it relates to food instrument
types, authorization processes, or transaction procedures.
The Department clarifies the meaning of ``procedurally uniform''
extends to the management of each food delivery system, as well as the
use of food instruments by participants, to be consistent throughout
the entire jurisdiction of the State agency. The intent of this is to
ensure that State agencies are consistently applying vendor management
and food delivery operations and procedures, and that the participant's
experience using each food delivery system remains consistent
throughout the State agency's jurisdiction.
d. Remove the requirement for State agencies to collect shelf price
data, as EBT data are a sufficient replacement [Sec. 246.12(g)(4)
Vendor selection criteria: competitive price, (g)(4)(ii)(B), and
(g)(9)]. The removal of shelf price collection requirements in Sec.
246.12(g)(4) Vendor selection criteria: competitive price, and
(g)(4)(ii)(B), which allows State agencies to use EBT redemption data
instead of shelf prices to monitor vendor compliance, is finalized with
modifications that clarify State agencies re-authorizing currently
authorized WIC vendors can use existing EBT data for price analysis.
This final rule also removes the requirement at Sec. 246.12(g)(9) that
State agencies obtain

[[Page 70266]]

shelf price data at vendor authorization if they have access to EBT
data.
Many commenters provided support for these changes, stating they
could mitigate burden and save time for State agencies and vendors.
Other supporters asserted that using EBT data is more efficient and
accurate for pricing trend analysis. No comments were opposed.
Some commenters highlighted that currently, State agencies can use
an applicant vendor's EBT data if they are re-applying for
authorization and questioned whether this would remain allowable under
the revised regulation.
The Department clarifies that State agencies may continue using EBT
data for an applicant vendor that is reapplying for authorization and
made conforming edits to regulatory text.
Multiple commenters sought more information as to how pricing will
continue to be monitored so that WIC participants are not charged more
for foods than non-WIC participants.
The Department agrees with commenters on the importance of ensuring
that vendors are not charging WIC participants higher prices than non-
WIC shoppers. The Department clarifies the purpose of shelf price
collection was to ensure cost competitiveness of a vendor applicant and
that authorized vendors remained cost competitive when compared to
vendors within their peer groups. With EBT, State agencies receive
current data about vendors' prices in real time and can consistently
ensure vendors are meeting cost competitiveness. While the regulatory
requirement for collecting shelf prices is removed, the requirement to
ensure cost competitiveness remains. The Department encourages State
agencies to continue using EBT data in combination with effective peer
groups, regular routine monitoring, and compliance investigations to
ensure that participants are not being charged inappropriate prices for
WIC supplemental foods.
Some commenters pointed out that by removing the requirement for
shelf prices to be collected every six months, the Department also
removed any timeframe requirement in which State agencies must collect
price data and requested clarification if any timeframe requirements
for analyzing price data remain.
The Department removed the requirement to collect shelf prices
every six months where State agencies have EBT data, as updated EBT
data is available to the State agency in real time. While the
Department is not imposing a requirement for how often this data must
be monitored, the practice of sound cost containment requires ongoing
monitoring of EBT prices. The Department expects this monitoring to
continue according to the timeframes defined in Sec. 246.12. State
agencies remain responsible for having procedures in place to ensure
authorized vendors do not increase prices to levels that would make
them ineligible for authorization by the program, per Sec.
246.12(g)(4)(iii).
e. Allow State agencies using a non-retail, home food delivery
system to ship supplemental foods to a location designated by
participants and approved by the State agency [Sec. Sec. 246.2 and
246.12(m)]. This final rule codifies revisions to the definitions of
``home food delivery contractor'' and ``home food delivery system'' in
Sec. 246.2 and Sec. 246.12(m) with modifications to allow
participants receiving supplemental foods under a home food delivery
system to designate the location of food delivery. As an additional
measure of program integrity, the provisions are finalized with
modifications to allow State agencies to approve the location of
delivery so that supplemental foods are delivered to a reasonable
location.
Many commenters supported this change, stating that it promotes
access and convenience for participants in remote areas, and works to
enhance food access for participants. Other commenters shared this
would promote flexibility and choice for participants, especially those
in vulnerable communities.
A few commenters shared concerns that this change leaves the
program vulnerable to fraud and benefit misuse, and recommended changes
to the description of where food can be delivered in home food delivery
systems. These commenters suggested State agencies should have the
opportunity to confirm supplemental foods are being delivered to a
reasonable location as an additional measure of program integrity.
Commenters also asked if participants are required to designate the
location of the delivery.
The Department confirms the intent of this provision is to
accommodate State agencies whose participants cannot receive foods at
their home and agrees allowing the State agency to designate or approve
the participant's preferred delivery location supports this intent and
provides for continued program integrity. In response, the Department
made appropriate modifications to the regulatory language. The
Department also clarifies the participant is not required to designate
the location of the delivery and that State agencies retain the option
to designate the location of the delivery.
Many commenters requested clarification on whether this provision
applies to delivery options for participants using online shopping. The
Department clarifies this provision is specifically for home food
delivery food systems and does not apply to participants using online
shopping in a retail food delivery system.
The Department will not adopt the proposed revisions to Sec.
246.12(g)(8) and Sec. 246.12(h)(1)(i), which proposed to increase the
maximum length of vendor agreement periods in Sec. 246.12(h)(1)(i),
and the minimum frequency that State agencies must accept and process
applications in Sec. 246.12(g)(8), from three to five years. The
Department received extensive feedback, and while many commenters
supported these changes, asserting the alleviation of administrative
burden on State agencies would lead to improved program efficiency,
other commenters expressed concern this could negatively impact
participant access if State agencies with five-year application periods
only review vendor applications with that frequency. Other commenters
encouraged USDA to not allow State agencies to limit application
periods to every five years.
The Department will not finalize these two proposed revisions in
this rulemaking. Therefore, the minimum frequency that State agencies
must accept and process applications in Sec. 246.12(g)(8), and the
maximum length of vendor agreement periods in Sec. 246.12(h)(1)(i)
will remain at three years.
The Department notes that State agencies may and are encouraged to
continue to reassess compliance with vendor selection criteria on an
ongoing basis to ensure that vendors are adequately serving the WIC
Program. State agencies retain the discretion to accept vendors at any
time or establish application periods, with procedures for processing
vendor applications outside of their timeframes.
3. Meet the Needs of a Modern, Data-Driven Program
The final rule updates reporting requirements necessary for federal
oversight but will not adopt the proposed staffing standards for the
food delivery coordinator role or new WIC State agency staff position.
a. Update reporting requirements for federal oversight [Sec.
246.12(j)(5)]. The provision in this section updating the reporting
requirements for WIC food delivery systems is finalized with
modifications at Sec. 246.12(j)(5) to better reflect what WIC State
agencies report to the Food Delivery Portal, and to

[[Page 70267]]

maintain the current requirement that State agencies report data
annually.
Multiple commenters expressed general support asserting this will
support the WIC Program's transition to an enhanced data collection
system.
Multiple opposed commenters stated that allowing the Department to
request quarterly data submissions would create a larger administrative
burden on State agencies and their staff.
The Department appreciates the feedback provided by stakeholders on
the impact this change would have on State agencies. After further
analysis of the burden estimate associated with this change, as well as
a thorough review of the public feedback provided on the Agency
Information Collection Activities: Special Supplemental Nutrition
Program for Women, Infants and Children (WIC); Food Delivery Portal
(FDP),\14\ the Department will not include the ability to request
quarterly data submissions for federal reporting in regulation at this
time. Therefore, the frequency of federal reporting requirements will
be maintained as annual, and the Department is confident that the
continued submission of annual data is sufficient to ensure federal
oversight.
---------------------------------------------------------------------------

\14\ Agency Information Collection Activities: Special
Supplemental Nutrition Program for Women, Infants and Children
(WIC); Food Delivery Portal (FDP) (89 FR 14622). <a href="https://www.federalregister.gov/d/2024-04064">https://www.federalregister.gov/d/2024-04064</a>.
---------------------------------------------------------------------------

The Department proposed revisions to Sec. 246.3(e)(3) to update
the WIC Food Delivery Coordinator standard and to create a new WIC
State agency staff position, the WIC Customer Service Coordinator.
The Department received extensive feedback on the proposed staffing
standards and appreciates input from various stakeholders on the impact
the standards may have on State agencies and the program. Some
commenters expressed concern related to the stringency of the standards
and potential to limit the pool of candidates from which they can hire.
Other commenters recommended the Department not regulate the education
and experience of these positions but instead describe the roles and
associated responsibilities, leaving education and experience
requirements to State agency discretion. The Department believes it is
vital that State agencies have staff with the skills necessary to
successfully operate the modern WIC Program. While the Department is
working to provide increased opportunities for State agency staff to
build the necessary skills, including providing opportunities for
technical assistance and digital services capacity building, the
Department acknowledges the concerns raised and to retain State agency
flexibility and discretion in hiring decisions, the Department will not
finalize the proposed provisions in this rulemaking. State agencies may
optionally implement more stringent standards at the State level.
Additionally, the Department may consider options to address the above
concerns in future rulemaking.
4. Request for Public Comment on Key Topic Areas of Proposed Rule
a. Exceptions to minimum stocking requirements.
The Department received significant feedback and input from
stakeholders related to the specific request for public comment on
whether there is a need to authorize vendors that sell a specific
subset of supplemental foods (e.g., dairies, bakeries, produce sellers)
but would not meet the minimum variety and quantity of supplemental
foods, as required by WIC regulations (i.e., two different fruits,
three different vegetables, and at least one whole grain cereal per
Sec. 246.12(g)(3)(i)).
Given the overwhelming majority of comments shared concerns about
the implementation of this change, including the impact it would have
on State agency costs and oversight capacity, as well as the possible
negative impact on small vendors, the Department will not introduce any
changes to the minimum stocking requirements in this rulemaking.
Commenters shared concerns that specialty stores sell fewer options at
higher prices than non-specialty counterparts which would likely mean
higher food costs, impacting peer grouping and cost-containment.
Commenters also shared concerns about the extra workload for State
agencies to authorize and monitor additional vendors that will likely
have only a small amount of WIC transactions, and that retaining
minimum stocking requirements helps make it more challenging for bad
actors to fraud the program. Some commenters expressed concern that
specialty stores would create competition with small vendors who
struggle to meet requirements currently, potentially resulting in small
vendors leaving the program. Due to these concerns, the Department will
not introduce any changes to the minimum stocking requirements in this
rulemaking. The Department will use the feedback provided to inform any
future rulemaking related to exceptions to minimum stock and specialty
vendors.

VI. Implementation

As most of the changes in this rule are optional and increase
flexibility for State agencies, the Department proposed that the final
rule would take effect 30 days after publication, except for the
provisions related to the return of electronic benefits which State
agencies would have 18 months to implement. The Department requested
comments in the proposed rule on the administrative burden associated
with the proposed implementation timeline.
Commenters generally highlighted time, limited resources, and
extensive system changes needed to successfully implement some of the
provisions in this final rule, especially those related to developing
new transaction authentication policies. The Department reiterates that
this rulemaking in large part introduces optional flexibilities that
State agencies can choose to pursue on their own timeline and based on
their capacity and interest. However, the Department acknowledges that
several provisions will require all State agencies to update vendor
agreements, policies, and procedures, and that many State agencies are
currently using waivers to offer flexibilities that will be codified in
this rulemaking. The Department is therefore extending the
implementation deadline for the final rule to 90 days after
publication, or no later than February 4, 2027, except for the
provisions related to the return of electronic benefits.
Among the implementation challenges that commenters discussed were
the EBT and MIS updates necessary to enable the return of electronic
benefits. To provide WIC State agencies the time to develop and refine
the technological solutions needed to allow for the return of
electronic benefits, State agencies have until 24 months after the
publication of the final rule, or no later than November 6, 2028, to
comply with Sec. 246.12(x)(4) Return of benefits (x)(4)(i), (x)(4)(ii)
and (x)(4)(iii).
The final rule's effective date remains 30 days after publication,
or December 7, 2026, as proposed. State agencies may choose to
implement the rule's provisions in advance of the implementation
deadlines listed above, following the effective date.

VII. Procedural Matters

Executive Orders 12866, 13563, and 14192

Executive Orders 12866 and 13563 direct agencies to assess all
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory

[[Page 70268]]

approaches that maximize net benefits (including potential economic,
environmental, public health and safety effects, distributive impacts,
and equity). Executive Order 13563 emphasizes the importance of
quantifying both costs and benefits, of reducing costs, of harmonizing
rules, and of promoting flexibility. This final rule has been
determined to be economically significant under Executive Order 12866
section 3(f)(1) and was reviewed by the Office of Management and Budget
(OMB).
Executive Order 14192 directs agencies to ensure the cost of new
regulations does not place unnecessary burdens on the public. This
final rule is an enabling regulation and therefore a deregulatory
action under Executive Order 14192. The rule provides WIC State
agencies with the flexibility to expand shopping options and explore
new payment technologies, thereby resulting in potential time savings
for participants and more efficient operations for State agencies.

Regulatory Impact Analysis

As required for all rules that have been designated as economically
significant by the Office of Management and Budget, a Regulatory Impact
Analysis (RIA) was developed for this rule. The complete RIA follows
this rule as an Appendix. The following summarizes the conclusions of
the regulatory impact analysis:
Need for Action
To ensure that participants in the Special Supplemental Nutrition
Program for Women, Infants, and Children (WIC) have access to the same
shopping options as non-WIC shoppers, with the expansion of online
shopping in the retail grocery industry and the development of new
payment types, the Department is removing barriers to online shopping
and modernizing certain food delivery regulations in the WIC Program
through this rulemaking. This rule complements the Program's complete
transition to electronic benefit transfer (EBT) and aims to meet the
needs of a modern, data-driven program that uses current technologies
for food delivery. These changes are expected to improve the WIC
shopping experience while increasing access to healthy foods for WIC
participants.
Costs
The Department estimates that the provisions under this rule will
reduce costs for some stakeholders and increase costs and/or transfers
for other stakeholders (Table 1).
The Department estimates that allowing WIC online shopping will
increase federal WIC food spending, in the form of transfers, by a
total of $315 million over the 5-year estimate period of FY 2027 to FY
2031. This is driven by an understanding that shoppers sometimes pay
higher prices for online groceries and an expectation that online
shopping will moderately increase WIC benefit redemption by making the
WIC shopping experience more convenient for some participants.
The Department estimates that the rule will also result in around
$32 million in net WIC State agency savings from FY 2027 to FY 2031.
State agency savings will be driven by a large reduction in State
agency reporting burden and recordkeeping burden, which is estimated to
result in a savings of $50 million over 5 years and is largely
attributable to the removal of shelf price collection requirements for
EBT State agencies.\15\ These savings will be partially offset by an
estimated $18 million in total 5-year expenses required to update State
agency systems to enable online transaction of WIC electronic benefits
in State agencies adopting online shopping during this time.
---------------------------------------------------------------------------

\15\ In a comment, one State agency noted that, since they have
an exemption allowing them to forego collecting shelf prices, this
provision does not result in administrative savings for them.
Nevertheless, the Department recognizes this provision as a cost
savings to State agencies in this analysis because this regulatory
change makes the temporary savings permanent. This is consistent
with how the Department has valued both savings and costs associated
with making temporary program changes permanent via regulation in
the past; see, for example, the Child Nutrition Program Integrity
final rule (available online at <a href="https://www.federalregister.gov/documents/2023/08/23/2023-17992/child-nutrition-program-integrity">https://www.federalregister.gov/documents/2023/08/23/2023-17992/child-nutrition-program-integrity</a>)
or the Revisions in the WIC Food Package final rule (available
online at <a href="https://www.federalregister.gov/documents/2024/04/18/2024-07437/special-supplemental-nutrition-program-for-women-infants-and-children-wic-revisions-in-the-wic-food">https://www.federalregister.gov/documents/2024/04/18/2024-07437/special-supplemental-nutrition-program-for-women-infants-and-children-wic-revisions-in-the-wic-food</a>).
---------------------------------------------------------------------------

In State agencies that allow WIC online shopping, WIC participants
who choose to redeem at least some of their food benefits online are
expected to save time by reducing how often they travel to purchase
groceries in-store. Over 5 years from FY 2027 to FY 2031, the amount of
travel time WIC participants save by replacing one in-store shopping
trip with an online order per month is expected to be valued at a total
of $103 million. This time savings will increase as more State agencies
offer online shopping and as more participants choose redeem benefits
online. Similarly, the provision allowing remote issuance of benefits
also generates notable time savings to WIC participants by enabling
less frequent visits to WIC clinics to reload their benefits between
regular appointments. This time savings is estimated to be worth $92
million over 5 years for WIC participants.
Finally, the removal of shelf price collection requirements is also
expected to significantly reduce burden on WIC vendors. The Department
estimates that the reductions in vendor reporting burden under the rule
will save WIC vendors $18 million over 5 years.

Table 1--Summary of Estimated Impacts on Transfers and Costs, FY 2027-2031
----------------------------------------------------------------------------------------------------------------
Fiscal year (millions)
-----------------------------------------------------------------
2027 2028 2029 2030 2031 Total
----------------------------------------------------------------------------------------------------------------
Federal Transfers:
Impact of online shopping on federal WIC $33.5 $41.8 $59.0 $78.8 $101.4 $314.5
food spending............................
State Agency Costs:
Systems development and maintenance for 2.8 1.9 3.1 4.7 5.2 17.7
online shopping..........................
Changes to reporting and recordkeeping -9.5 -9.8 -10.0 -10.2 -10.4 -49.9
burden...................................
WIC Vendor Costs:
Changes to administrative burden.......... -3.4 -3.5 -3.6 -3.7 -3.8 -18.0
WIC Participant Costs:
Time savings of online grocery shopping... -11.0 -13.7 -19.4 -25.9 -33.3 -103.4
Changes to administrative burden.......... -17.6 -18.0 -18.4 -18.9 -19.3 -92.3
----------------------------------------------------------------------------------------------------------------
Notes: All monetary figures are adjusted for annual inflation.

[[Page 70269]]

Benefits
The provisions under this rule modernize the ways that WIC
participants can receive and transact their electronic benefits. An
estimated 14 percent of the U.S. population lives in low-income census
tracts with limited access to food stores,\16\ and 21 percent of WIC
participants report using a means of transportation other than their
own personal car to travel to a vendor to use their WIC benefits.\17\
By comparison, 95 percent of higher income households (above 185
percent of the federal poverty line) use their own vehicle to travel to
a grocery store.\18\ Once at the vendor, participants also report
challenges shopping for WIC foods. Recent USDA survey data indicate
that finding the right WIC-approved products in stores, WIC-approved
products being out of stock, and feeling embarrassed shopping for WIC
foods are some of the most cited challenges among WIC participants who
report difficulties shopping for WIC supplemental foods.\19\ Online
shopping may alleviate some of these issues for WIC participants and
has the potential to provide benefits during supply chain disruptions.
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\16\ Rhone, A., Williams, R., & Dicken, C. (June 2022). Low-
Income and Low Foodstore-Access Census Tracts, 2015-19, EIB-236,
U.S. Department of Agriculture, Economic Research Service. Available
online at: <a href="https://www.ers.usda.gov/publications/104157">https://www.ers.usda.gov/publications/104157</a>.
\17\ Magness, A., Williams, K. Gordon, E., Morrissey, N., Papa,
F., Garza, A., Okyere, D., Nisar, H., Bajowski, F., & Singer, B.
(2021). Third National Survey of WIC Participants: WIC Participant
Satisfaction and Shopping Experience: Brief Report #6. Prepared by
Capital Consulting Corporation and 2M Research Services. Contract
No. AG-3198-K-15-0077. Alexandria, VA: U.S. Department of
Agriculture, Food and Nutrition Service, Office of Policy Support,
Project Officer: Karen Castellanos-Brown. Available online at:
<a href="https://www.fna.usda.gov/wic/third-national-survey-wic-participants">https://www.fna.usda.gov/wic/third-national-survey-wic-participants</a>.
\18\ Ver Ploeg, Michele, Lisa Mancino, Jessica E. Todd, Dawn
Marie Clay, and Benjamin Scharadin. Where Do Americans Usually Shop
for Food and How Do They Travel To Get There? Initial Findings From
the National Household Food Acquisition and Purchase Survey, EIB-
138, U.S. Department of Agriculture, Economic Research Service,
March 2015. Available online at: <a href="https://www.ers.usda.gov/publications/pub-details/?pubid=79791">https://www.ers.usda.gov/publications/pub-details/?pubid=79791</a>.
\19\ Gleason, S., Wroblewska, K., Trippe, C., Kline, N., Meyers
Mathieu, K., Breck, A., Marr, J., Bellows, D. (2022). WIC Food Cost-
Containment Practices Study. Prepared by Insight Policy Research,
Contract No. AG-3198-C-15-0022. Alexandria, VA: U.S. Department of
Agriculture, Food and Nutrition Service, Office of Policy Support,
Project Officer: Ruth Morgan. Available online at: <a href="https://www.fna.usda.gov/wic/wic-food-cost-containment-practices-study">https://www.fna.usda.gov/wic/wic-food-cost-containment-practices-study</a>.
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Enabling online shopping in WIC under this rule is expected to
ensure that WIC participants have access to innovations in the retail
marketplace while maintaining program integrity, and to increase
participant purchases of supplemental foods. Online shopping may also
expand WIC participants' choices when they shop, particularly for
authorized substitutions needed to meet certain dietary restrictions
that may not be readily available at the closest WIC-authorized grocery
stores. The rule will further make WIC more convenient and accessible
by encouraging State agencies to remotely issue electronic benefits and
mail EBT cards whenever possible, potentially reducing the number of
clinic visits that WIC participants are required to make. The rule also
includes provisions that will streamline and modernize WIC food
delivery by promoting innovation and ensuring that State agency
reporting requirements reflect a modern, data-driven program. These
provisions provide necessary measures to ensure that State agencies can
deliver a more efficient and effective program for WIC participants.
Finally, preliminary evidence suggests online ordering generally
supports higher diet quality or more healthful food purchasing
decisions among SNAP participants.20 21 To the extent that
this rule facilitates healthier food shopping among WIC participants,
this rule is likely to lead to better nutrition outcomes for WIC
participants.
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\20\ Avelino DC, Duffy VB, Puglisi M, Ray S, Lituma-Solis B,
Nosal BM, Madore M, Chun OK. Can Ordering Groceries Online Support
Diet Quality in Adults Who Live in Low Food Access and Low-Income
Environments? Nutrients. 2023 Feb 8;15(4):862. https://doi/org/
10.3390/nu15040862. PMID: 36839221; PMCID: PMC9964317.
\21\ Kuan, I., Liu, Y., Jones, J., Zhou, P. (2025). ``SNAP
Online Purchasing and the Healthfulness of Food Purchases.'' Applied
Economic Perspectives and Policy 47(3): 914-932. <a href="https://doi.org/10.1002/aepp.13528">https://doi.org/10.1002/aepp.13528</a>.
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Regulatory Flexibility Act

The Regulatory Flexibility Act (5 U.S.C. 601-612) requires Agencies
to analyze the impact of rulemaking on small entities and consider
alternatives that would minimize any significant impacts on a
substantial number of small entities. Pursuant to that review, it has
been certified that this final rule does not have a significant impact
on a substantial number of small entities.
The provisions of this final rule primarily affect WIC State
agencies and WIC-authorized vendors. Otherwise, all other provisions
apply to all State agencies administering the WIC Program, regardless
of size, and largely can be implemented at State agency option. The
Department does not expect this final rule to have a significant impact
on small State agencies.
Large retailers may be able to implement WIC online shopping more
readily than other store types. However, the Department does not expect
the final rule to have a lasting or significant negative impact on
smaller WIC vendors as WIC sales represent a relatively small share of
these stores' revenue. The Department does not routinely track data
necessary to determine how WIC benefit redemptions vary by most vendor
characteristics, including indicators for whether the store is a small
business or independent grocer. USDA's ERS estimated, by merging WIC
and SNAP redemption databases, that 76 percent of WIC retail
redemptions occurred in larger stores (super stores, supermarkets, or
large grocery stores) in FY 2012; however, the study's definition of
supermarkets and large grocery stores is inclusive of many independent
grocers.\22\ The Department does not have data on the extent to which
small businesses and independent grocers have implemented online
shopping to date, but is aware of products on the market being employed
by independent grocers to provide online ordering currently for WIC
participants (with in-store or curbside transactions).
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\22\ Tiehen, L. and Fraz[atilde]o, E. Where Do WIC Participants
Redeem Their Food Benefits? An Analysis of WIC Food Dollar
Redemption Patterns by Store Type, EIB-152, U.S. Department of
Agriculture, Economic Research Service, April 2016. Available online
at: <a href="https://www.ers.usda.gov/publications/44076">https://www.ers.usda.gov/publications/44076</a>.
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If smaller WIC vendors (such as convenience stores or small and
medium grocery stores) do not adopt online shopping solutions, then
they may see some of their WIC revenues lost to larger retailers that
provide online shopping. According to ERS data, in FY 2012, small
grocery stores, medium grocery stores, and convenience stores accounted
for 2.9 percent, 3.5 percent, and 3.8 percent of WIC retail
redemptions, respectively. For example, the 3.8 percent of total WIC
benefits transacted at convenience stores in FY 2012 amounts to about
$228 million. U.S. convenience stores reported an estimated $193
billion in total in-store sales, not including fuel, in 2012,
suggesting that WIC redemptions represented only about 0.12 percent of
non-fuel sales for convenience stores that year.\23\ As WIC sales make
up a relatively small fraction of the total revenue of smaller stores,
and especially convenience stores, the Department expects any lost
revenue for smaller vendors that do not adopt an online

[[Page 70270]]

shopping solution to be relatively minor.
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\23\ Statista. ``Sales of the convenience store industry in the
United States from 2011 to 2020, by format'' 27 January 2022.
Available online at: <a href="https://www.statista.com/statistics/308767/sales-of-the-us-convenience-store-industry-by-format/">https://www.statista.com/statistics/308767/sales-of-the-us-convenience-store-industry-by-format/</a>.
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Unfunded Mandates Reform Act

Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public
Law 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
Department generally must prepare a written statement, including a cost
benefit analysis, for proposed and final rules with ``Federal
mandates'' that may result in expenditures by State, local or Tribal
governments, in the aggregate, or the private sector, of $100 million
or more (adjusted annually for inflation) in any one year. When such a
statement is needed for a rule, section 205 of the UMRA generally
requires the Department to identify and consider a reasonable number of
regulatory alternatives and adopt the most cost effective or least
burdensome alternative that achieves the objectives of the rule.
This final rule does not contain 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
(adjusted annually for inflation) in any one year. Thus, this rule is
not subject to the requirements of sections 202 and 205 of the UMRA.

Executive Order 12372

The Special Supplemental Nutrition Program for Women, Infants and
Children (WIC) is listed in the Catalog of Federal Domestic Assistance
under Number 10.557 and is subject to Executive Order 12372, which
requires intergovernmental consultation with State and local officials
(see 2 CFR chapter IV). Since WIC is State-administered, USDA's FNA
Regional Offices have formal and informal discussions with State and
local officials, including representatives of Indian Tribal
Organizations, on an ongoing basis regarding program requirements and
operations. This provides USDA with the opportunity to receive regular
input from program administrators and contributes to the development of
feasible program requirements.

Federalism Summary Impact Statement

Executive Order 13132 requires Federal agencies to consider the
impact of their regulatory actions on State and local governments.
Where such actions have federalism implications, agencies are directed
to provide a statement for inclusion in the preamble to the regulations
describing the agency's considerations in terms of the three categories
called for under section (6)(b)(2)(B) of Executive Order 13132. The
Department has considered the impact of this rule on State and local
governments and has determined that this rule does not have federalism
implications. Therefore, under section 6(b) of the executive order, a
federalism summary is not required.

Executive Order 12988, Civil Justice Reform

This final 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
and timely implementation. This rule is not intended to have
retroactive effect. Prior to any judicial challenge to the provisions
of this final rule, all applicable administrative procedures must be
exhausted.

Civil Rights Impact Analysis

FNA has reviewed the final rule, in accordance with the Agriculture
Improvement Act of 2018, ``2018 Farm Bill,'' Section 12403, Civil
Rights Analyses, to identify and address any major civil rights impacts
the final rule might have on participants on the basis of race, sex,
national origin, disability, or age. The requirements outlined in the
final rule aim to remove barriers to online ordering and internet-based
transactions, streamline and modernize WIC food delivery, and meet the
needs of a modern, data-driven program that uses current food delivery
technologies. The changes impact WIC State agencies, including ITOs,
WIC local agencies and clinics, and WIC vendors in ways that are
expected to increase equity and access for WIC participants and enhance
the overall shopping experience.
In particular, the final rule allows State agencies to authorize
new types of vendors and explore modern payment technologies and
authentication methods. To comply with revised regulations and
implement the changes, staff at State agencies, local agencies, and WIC
clinics will need to update operations and communicate these changes to
participants. The rule will increase the number of WIC-authorized
vendors by allowing different types of vendors (e.g., internet and
mobile vendors) to participate in WIC, while also reducing
administrative burdens on vendors through the elimination of certain
collection requirements. As a result, this rule will benefit
participants by expanding participant shopping options and reducing in-
person requirements.
To mitigate potential impacts on vital program access for
populations with limited English proficiency and persons with
disabilities, FNA will provide State agencies with technical assistance
aimed at ensuring that online shopping platforms and communications
about program changes are available in appropriate languages and in
alternative formats for persons with disabilities. FNA will also
support State agencies as they work to engage small vendors in online
shopping in the WIC Program. After reviewing the potential impacts, FNA
does not believe the final rule will result in civil rights impacts on
specific groups of WIC participants and applicants. However, the FNA
Civil Rights Division will propose further outreach and mitigation
strategies to alleviate any unforeseen impacts, if deemed necessary.

Executive Order 13175

Executive Order 13175 requires Federal agencies to consult and
coordinate with Tribes on a government-to-government basis on policies
that have Tribal implications, including regulations, legislative
comments or proposed legislation, and other policy statements or
actions that have substantial direct effects on one or more Indian
Tribes, on the relationship between the Federal Government and Indian
Tribes, or on the distribution of power and responsibilities between
the Federal Government and Indian Tribes. On November 30, 2021, FNA
provided opportunity for consultation on the rule to discuss key issues
related to the proposed rule. Tribal leaders were generally supportive
of online ordering for WIC, which may increase access to food benefits
for those with limited access to a physical store. Once the proposed
rule was published in the Federal Register, FNA encouraged stakeholders
representing ITOs to provide input on whether the proposed rule poses
any adverse tribal implications. FNA requested and received public
comment on the impacts on small and Tribal stores in response to the
proposed rule, which included the importance of continuing to support
small, Tribal-owned stores and brick-and-mortar vendors, and their
concern for the barriers that fees related to online ordering could
pose to participants using WIC online shopping. FNA is committed to
providing targeted technical assistance to support small, Tribal-owned
stores and brick-and-mortar vendors and will continue to explore
additional opportunities for engagement. The Department

[[Page 70271]]

considered all comments, including those received by ITOs. No Tribes
requested additional consultation after the proposed rule was
published. We are unaware of any current Tribal laws that could be in
conflict with this final rule. If a Tribe requests consultation in the
future, FNA will work with the Office of Tribal Relations to ensure
meaningful consultation is provided.

Paperwork Reduction Act

The Paperwork Reduction Act of 1995 (44 U.S.C. Chap. 35; 5 CFR part
1320) requires that the Office of Management and Budget (OMB) approve
all collections of information by a Federal agency before they can be
implemented. Respondents are not required to respond to any collection
of information unless it displays a current valid OMB control number.
In accordance with the Paperwork Reduction Act of 1995, this final
rule revises existing information collection requirements currently
approved under OMB Control Number 0584-0043, ``Special Supplemental
Nutrition Program for Women, Infants, and Children (WIC) Program
Regulations--Reporting and Recordkeeping Burden'' (expiration date
August 31, 2027), and contains new requirements for the same
information collection. These information collection requirements are
subject to review and approval by OMB.
The Department published the proposed rule, ``Special Supplemental
Nutrition Program for Women, Infants, and Children (WIC): Online
Ordering and Transactions and Food Delivery Revisions to Meet the Needs
of a Modern, Data-Driven Program'' in the Federal Register on February
23, 2023 (88 FR 11516). The proposed rule requested public comment on
proposed changes in the information collection burden that would result
from this rule. The Department received approximately 20 comments on
the proposed information collection requirements and associated
burdens. Commenters also provided feedback on the burden associated
with activities not impacted by this rule, which were incorporated as
adjustments into this burden. Based on public comment feedback, the
Department revised the burden estimates for this final rule as follows:
<bullet> Travel time for vendor visits: The Department received
feedback that a 20-minute round trip travel time for visiting vendors
for various activities was an underestimate. Therefore, the Department
is adjusting the estimated travel time for round trip vendor visits to
30 minutes and incorporated this edit into the various activities
involving vendor visits.
<bullet> On-site preauthorization visits: To reflect the feedback
received related to travel time for State agencies visiting vendors,
the Department adjusted the total burden for this activity from 60
minutes to 70 minutes (1.17 hours).
<bullet> Vendor applications and agreements: The Department
proposed the burden for this activity to be 40 minutes (0.67 hours) per
vendor applicant. However, multiple commenters stated that this
underestimated the amount of time necessary to complete a full review
and completion of vendor applications and agreements. Based on the
feedback, the Department adjusted the estimated burden to 120 minutes
(2 hours) per vendor applicant for this activity to account for the
increased estimate of review and processing of applications and
agreements.
<bullet> On-site routine vendor monitoring: To reflect feedback
from stakeholders that routine monitoring takes longer than the
proposed 80 minutes including travel time, the Department adjusted the
estimated burden to 100 minutes (1.67 hours) per vendor for this
activity to account for both increased estimates in travel time and the
routine monitoring activities that take place.
<bullet> Virtual routine vendor monitoring: The Department proposed
the burden for this activity to be 60 minutes per vendor. However
multiple commenters stated that routine monitoring, including remote
monitoring, is likely to take longer. Based on this feedback, the
Department increased the estimated burden to 70 minutes (1.17 hours)
per vendor for this activity to account for an increased estimate.
<bullet> On-site compliance investigations: To reflect feedback
from stakeholders that on-site compliance investigations take longer
than 120 minutes per vendor, the Department increased the estimated
burden to 300 minutes (5 hours) per vendor for this activity to account
for both increased estimates in travel time and the activities that
take place.
<bullet> Virtual compliance investigations: The Department proposed
the burden for this activity to be 120 minutes per vendor. Multiple
commenters stated that compliance buys take a significantly longer
amount of time, even if done remotely. Based on this feedback, the
Department increased the estimated burden to 270 minutes (4.5 hours)
per vendor for this activity, removing the 30-minute travel time
accounted for in the on-site compliance investigations burden.
<bullet> System updates to allow online shopping, including return
of benefits: The Department did not initially include the burden
associated with updates to State agency systems (EBT and MIS) and
vendor systems necessary to implement online shopping. Commenters
discussed the significant cost and impact related to these necessary
changes and based on feedback provided by State agencies currently
implementing online shopping projects, FNA estimates that, on average,
State agencies will need to spend 50 hours modifying their EBT and MIS
to enable online shopping. The Department estimates that internet
vendors will also have a 50-hour burden to update their systems to
implement online shopping and incorporated that into this burden
estimate.
<bullet> Development of transaction authentication policies: The
Department proposed the burden for this activity to be 25 hours per
State agency. Commenters stated that this was an underestimate and did
not take into consideration the hours that it will take a State agency
to clear these types of policies through State level review. Based on
this feedback, and to account for modifications to this provision that
require State agencies to receive written approval from FNA to adopt an
authentication method other than the PIN, the Department increased the
estimated burden to 50 hours for this activity.
The Department appreciates the feedback provided and incorporated
it into the estimates for the final burden. The Department did not
change the estimated burden based on public comment feedback for the
following provisions:
<bullet> Shelf price exemptions: Some State agencies stated that
because they utilize shelf price exemptions and do not collect shelf
prices, they would not be realizing the benefits of the new provision
and therefore the burden estimate was inaccurate. While FNA recognizes
that some State agencies have already realized the benefits of not
collecting shelf prices through the use of exemptions, the goal of this
burden assessment is to recognize the decrease in burden hours from an
overall regulatory perspective. As this rulemaking permanently removes
the requirement to collect shelf prices, the burden reflects the impact
on all State agencies, regardless of if they had an exemption.
<bullet> Participant travel time to clinic: One commenter stated
that the participant travel time to the clinic for benefit pick-up was
underestimated. The Department recognizes that the travel time for
participants in the commenter's State agency may be different than the
Department's

[[Page 70272]]

estimate. However, the Department's estimate was based on a survey data
\24\ that represents an accurate sample of participants nation-wide,
rather than in just one State agency. Therefore, the Department
maintains its estimate for participant benefit pick up travel time.
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\24\ This estimate is based on the amount of time WIC
participants reported traveling to the WIC clinic. U.S. Department
of Agriculture, Food and Nutrition Service, ``Appendix G. Program
Experiences Survey Tables.'' Third National Survey of WIC
Participants, Alexandria, VA: 2021, Table 5c.2. Available online at:
<a href="https://www.fna.usda.gov/wic/third-national-survey-wic-participants">https://www.fna.usda.gov/wic/third-national-survey-wic-participants</a>.
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<bullet> Reporting requirements: Some commenters stated that the
estimated burden impact of quarterly reporting submissions to Food
Delivery Portal (FDP) were underestimated. The Department has reviewed
this feedback and will incorporate changes to the burden related to FDP
in a separate burden revision under OMB Control Number 0584-0401.
The Department has made several additional changes to the estimated
burden:
<bullet> Baseline numbers: The baseline number of hours currently
approved under OMB Control Number 0584-0043 have been updated since the
proposed rule was published, due to the regular revision of the WIC
Program Information Collection Request (ICR). The impact of this final
rule on the overall WIC Program information collection burden therefore
reflects estimated changes to the updated baseline numbers.
<bullet> Updated program data: Since the WIC Program ICR was last
approved, there has been a decrease in the number of State agencies, an
increase in the number of vendors, and an increase in the number of
participants. The estimated burden associated with this final rule is
calculated using the most recent available program data. Changes to the
burden estimates from updated program data are classified as ``program
adjustments,'' while changes to the burden as a result of the final
rule are classified as ``program changes.''
<bullet> Revised estimates of online shopping uptake: In the
proposed rule, the Department estimated that 80 State agencies would
implement online shopping and that each State agency would authorize
approximately 5 internet vendors, resulting in 400 internet vendors.
These estimates were based on the number of State agencies with online
EBT systems and SNAP's experiences with online shopping. The Department
is revising these numbers to estimate that approximately half of WIC
State agencies (44) will implement online shopping in the first five
years following the rule's publication and that each State agency will
authorize 2 to 3 internet vendors, resulting in 110 internet vendors.
These updated estimates are based on experiences with ongoing WIC
online shopping projects.
<bullet> Correction of error in a previous submission: The
currently approved burden for State agency recordkeeping activities
related to vendor incentive items has an inaccurate number of above-50-
vendors. A more accurate, updated number is used in this revision and
therefore the change in burden hours associated with vendor incentive
items reflects both program changes from the final rule and adjustments
from the updated program data.
<bullet> Additional implementation burden: The Department has also
added a one-time implementation burden associated with activities that
FNA may ask State agencies that are changing their food delivery
systems to complete, such as status reports, additional trainings, and
reviewing guidance materials.
<bullet> Adjusted for provisions that were not finalized: The
Department is not adopting the proposed revisions that would have
increased the maximum length of vendor agreement periods and the
minimum frequency that State agencies must accept and process vendor
applications from three to five years. Therefore, the burden associated
with vendor agreements and applications have been adjusted to no longer
reflect this decreased frequency.
As summarized above, this final rule changes the information
collection requirements that were proposed in the proposed rule. The
revisions to the existing information collection requirements and the
introduction of new information collection requirements that will take
effect with the final rule will result in an overall decrease in burden
hours for State and local agencies, applicants for Program benefits and
businesses responding to these requirements. These changes are
contingent upon OMB approval under the Paperwork Reduction Act of 1995.
When the information collection requirements have been approved, the
Department will publish a separate action in the Federal Register
announcing OMB approval.
1. Revisions to OMB Control Number 0584-0043
Title: Special Supplemental Nutrition Program for Women, Infants,
and Children (WIC) Program Regulations--Reporting and Recordkeeping
Burden.
OMB Number: 0584-0043.
Expiration Date: August 31, 2027.
Type of Request: Revision of a currently approved collection.
Abstract: This is a revision of existing information collection
requirements approved under OMB Control Number 0584-0043 that are
affected by this rulemaking. This final rule removes regulatory
barriers to online ordering and internet-based transactions in the WIC
Program, streamlines and modernizes WIC food delivery, and meets the
needs of a modern, data-driven program that uses current technologies
for food delivery. This final rule impacts the burden associated with
reporting requirements for State agencies, individuals and households,
and vendors, as well as the burden associated with recordkeeping
requirements for State agencies and vendors. The burden estimates
affected by the rule have also been updated to include the most recent
available program data, resulting in changes to the number of State
agencies (a decrease from 89 to 88), vendors (an increase from 37,267
to 37,368), and participants (an increase from 6,243,960 to 6,866,085)
since the last submission of OMB Control Number 0584-0043. The average
burden per respondent and the annual burden hours are summarized and
explained below.
a. Burden Revisions Related to Internet Vendor Authorization,
Monitoring and Oversight, and Training
The final rule allows State agencies to authorize internet vendors,
in addition to brick-and-mortar vendors and mobile vendors. In FY 2023,
the most recent available year, there were 37,368 WIC-authorized
vendors. Using the new definitions, all vendors authorized under
current WIC regulations are classified as brick-and-mortar vendors
except for one mobile vendor. FNA estimates that 110 internet vendors
in 44 State agencies will be authorized initially following the
rulemaking (this estimate takes into consideration recent experiences
with online shopping projects and the fact that, due to technological
constraints, offline EBT systems would not be able to support online
transactions), increasing the total number of WIC-authorized vendors
from 37,368 to 37,478 vendors. In the proposed rule, the Department had
estimated that 400 internet vendors would be authorized by 80 State
agencies. These estimates were based on SNAP's experiences and have
been adjusted to better reflect information from the WIC online
shopping grant projects.
Due to public comment feedback on the proposed rule, the Department
removed the requirement for State agencies to justify their use of
alternative food instruments in the State

[[Page 70273]]

Plan. Instead, State agencies will have to indicate via a checkmark
which food instrument types they are using as part of the annual State
Plan submission. This check mark will have a negligible impact on the
estimated burden hours needed to submit the annual State Plan and
therefore there is no change to the burden associated with State Plan
submissions due to this final rule. There is a decrease in the number
of burden hours associated with State Plan submissions due to the
decrease in the number of WIC State agencies since the previous ICR
submission.
WIC regulations at Sec. 246.12(g)(5) require that State agencies
visit a vendor prior to their initial authorization in the Program. As
noted above, based on feedback on the proposed rule, the Department is
estimating that during an on-site preauthorization visit, State agency
staff spend approximately 40 minutes verifying information provided by
the vendor applicant, and 30 minutes traveling to and from the vendor,
for a total of 70 minutes. The adjusted travel time, combined with the
decrease in the number of WIC State agencies, results in an increase in
the currently approved burden associated with on-site preauthorization
by 237.32 total hours. The final rule allows initial preauthorization
visits of internet vendors to take place virtually, therefore not
requiring travel time for State agency staff. Therefore, the initial
authorization of 110 internet vendors would add 73.48 reporting burden
hours for both State agencies and vendors.
The proposed rule included a provision to increase the maximum
length of vendor agreements and the minimum frequency that State
agencies must accept and process applications from three to five years.
The final rule does not include this change. Therefore, the only
program change reflected in the State agency burden associated with
reviewing vendor agreements is the added burden for internet vendors'
applications and agreements (72.60 burden hours). In response to the
proposed rule, FNA received feedback that the current estimate for
reviewing, processing, and approving vendor applications was too low
and therefore the Department adjusted the estimated burden from 40
minutes to 120 minutes. This adjustment, combined with the increase in
the number of WIC-approved vendors since the previous ICR submission,
increases the burden estimate by 16,447.74 hours. Taking the program
change and the adjustments into account, the burden associated with
this activity would increase by 16,520.34 hours over the currently
approved burden, from 8,215.14 hours to 24,735.48 hours.
Additionally, the estimated burden for vendors to submit
applications and agreements and the estimated burden for State agencies
to maintain records of vendor applications and agreements would
increase by 36.30 hours each due to the addition of internet vendors.
The increase in the number of WIC-authorized vendors since the previous
ICR submission also increases these burdens by 33.33 hours. Taken
together, the program change and the adjustments to the number of
vendors result in net increases in the vendor reporting burden and
State agency recordkeeping burden associated with vendor applications
and agreements by 69.63 hours each, from 12,298.11 to 12,367.74 hours.
Although the final rule does not change procedures for vendor
oversight, the rulemaking allows routine vendor monitoring and
compliance investigations to be conducted virtually so that State
agencies may use oversight methods appropriate for the vendors they
authorize. As with initial vendor preauthorization visits, the
Department adjusted its estimate for round trip travel time to a brick-
and-mortar or mobile vendor from 20 minutes to 30 minutes based on
feedback on the proposed rule. The adjustment of the travel time, along
with the increase in the number of WIC-authorized vendors since the
previous ICR submission, increases the burden associated with on-site
routine monitoring visits by 634.52 hours. The additional virtual
routine monitoring visits of internet vendors authorized under the
final rule adds 6.44 more hours to State agencies' reporting burden.
The State agency recordkeeping burden for routine vendor monitoring
would also increase by 5.27 hours, from 931.68 to 936.95 hours. Of this
increase, 2.75 hours are due to the addition of internet vendors
authorized under the final rule, and 2.52 hours are due to the increase
in the number of WIC-authorized vendors since the previous ICR
submission.
State agency staff conduct on-site compliance investigations of
five percent of vendors each year. As with on-site vendor
preauthorization visits and on-site routine monitoring visits, FNA
adjusted its estimate for round trip travel time to a brick-and-mortar
or mobile vendor from 20 minutes to 30 minutes based on feedback on the
proposed rule. To reflect feedback that the compliance investigations
take longer than the Department estimated, the Department adjusted the
time to 4.5 hours, for a total of 5 hours including travel time. This
adjustment, along with the increase in the number of WIC-authorized
vendors since the previous ICR submission, increases the burden hours
for on-site compliance investigations by 4,992.94 hours, from 4,349.06
hours to 9,342 hours.
The Department estimated that it would take State agencies 2 hours
to conduct virtual compliance investigations of internet vendors each
year. Public comments on the proposed rule provided feedback that
virtual investigations will take more time. Therefore, the Department
increased the burden associated with virtual compliance investigations
to 4.5 hours, which adds a total of 24.75 hours to the State agency
reporting burden. Additionally, the authorization of internet vendors
as a result of this rulemaking would increase the State agency
recordkeeping burden for compliance investigations by 11 hours, and the
increase in WIC-authorized vendors since the previous ICR submission
would add another 10.10 hours to this recordkeeping burden.
The addition of 110 internet vendors under the final rule would
increase State agencies' reporting burden for vendor training by 220
hours per year. The Department estimates that it takes two hours for
vendors to attend annual training provided by State agencies.
Authorizing 110 internet vendors results in an additional 220 hours of
reporting burden for those new vendors to receive the training. The
Department estimates that it takes one hour for each vendor to
subsequently train their staff. Due to the additional internet vendors,
this will increase the burden for vendor training of their staff by 110
hours. Each of these estimated burdens for State agencies and vendors
associated with vendor training activities would also increase due to
the increase in the number of WIC-authorized vendors since the previous
ICR submission.
Further, FNA estimates that the addition of internet vendors will
result in proportionate increases in both the number of vendors that
State agencies must assess for ``above-50-percent'' status and the
number of vendors that demonstrate a pattern of violations during
investigations. These changes would result in associated increases in:
the State agency reporting burden related to assessing a vendor's food
sales data to determine if they are an ``above-50-percent'' vendor
(8.80 additional hours); the vendor reporting burden required to
provide such sales data (4.40 additional hours); the reporting burden
for above-50-percent vendors who request approval from their State
agency to provide incentive items to WIC shoppers (0.98 additional
hours); and

[[Page 70274]]

the State agency recordkeeping burden to collect information on above-
50-percent vendors' incentive items (0.98 additional hours). Since the
previous ICR submission, the number of vendors that State agencies
assess for ``above-50-percent'' status has decreased from 840 to 795,
the number of WIC State agencies has decreased from 89 to 88, and the
number of WIC-authorized vendors has increased from 37,267 to 37,368.
These program adjustments have additional impacts on each of the State
agency and vendor burdens listed above.
Per 246.12(l)(3), State agencies are required to notify a vendor in
writing when an investigation reveals an initial violation for which a
pattern of violations must be established in order to impose a sanction
before another violation is documented, unless the State agency
determines notifying the vendor would compromise an investigation.
Accounting for the addition of internet vendors due to this final rule,
the associated reporting burden for this requirement would increase by
0.26 hours and the associated recordkeeping burden would increase by
3.09 hours. These burdens would also increase by 0.23 hours and 2.79
hours, respectively, due to the increase in the number of WIC-
authorized vendors since the previous ICR submission.
Finally, vendors are required to maintain inventory records for
federal tax reporting purposes, a recordkeeping burden that takes
vendors approximately 10 minutes (0.167 hours) to complete. To account
for the new internet vendors, the Department estimates an additional
18.37 hours associated with this requirement. The increase in the
number of WIC-authorized vendors since the previous ICR submission also
results in 16.87 additional hours for this requirement.
b. Burden Revisions Related to Program Modernization
In recognition of the efficiency of using electronic benefit
redemption data to analyze the prices vendors charge for supplemental
foods, the final rule removes the requirement that State agencies with
access to EBT data collect shelf prices from vendors on a biannual
basis or seek an exemption from FNA. As all State agencies are
operating EBT at the time of this rule publication, removing the shelf
price collection requirement for State agencies significantly decreases
the reporting burden for WIC State agencies (-149,068 hours for
collecting shelf prices and -40 hours for preparing exemption requests)
and WIC-authorized vendors (-132,318.79 hours).
To operationalize online shopping, State agencies will have to
update their systems to support new technology in alignment with the
Department's standards per Sec. 246.12(bb)(1). The proposed rule did
not account for this burden and therefore the Department is adding a
burden associated with system updates to allow online shopping,
including the return of benefits. The Department estimates that these
updates will take 50 hours, and therefore

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This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.