WSR 14-15-154

PROPOSED RULES

[Filed July 23, 2014, 11:21 a.m.]

Preproposal statement of inquiry was filed as WSR 13-24-103.

Title of Rule and Other Identifying Information: Chapter 246-790 WAC, Special supplemental nutrition program for women, infants, and children (WIC), proposed amendments to authorizing retailer rules to reflect changes in federal requirements and agency policy.

Hearing Location(s): Department of Health, 310 Israel Road S.E., Point Plaza East Room 251, Tumwater, WA 98504, on September 16, 2014, at 1:30 p.m.

Date of Intended Adoption: September 16, 2014.

Submit Written Comments to: Daniel O'Neill, P.O. Box 47886, Olympia, WA 98504-7886, e-mail Daniel.O'Neill@doh.wa.gov, fax (360) 236-2345, by September 12, 2014.

Assistance for Persons with Disabilities: Contact Jane Basler by September 12, 2014, TTY (800) 833-6388 or 711.

Purpose of the Proposal and Its Anticipated Effects, Including Any Changes in Existing Rules: The proposed rule amends chapter 246-790 WAC which regulates the department's food delivery system within the WIC program. The proposal provides support for the operation of the WIC nutrition program, assists in recontracting with retail partners, and maximizes agency options for determining participant access. Proposed changes will allow for necessary clarifications and consistency with federal rules and directives, including expanding the proposed definition of "full line grocery store" and updating definitions. The proposed rule also provides a solid foundation for WIC modernization, including fulfilling federal directives to implement an electronic benefit transfer system for WIC.

Reasons Supporting Proposal: Stakeholder and contractor transparency, increased accountability, and reduced costs related to the appeals process. Also, in order to continue to receive federal funding the rules need to be in compliance with federal recontracting regulations.

Statutory Authority for Adoption: RCW 43.70.120.

Statute Being Implemented: RCW 43.70.120.

Name of Proponent: Department of health, governmental.

Name of Agency Personnel Responsible for Drafting and Implementation: Daniel O'Neill, 310 Israel Road S.E., Tumwater, WA 98501, (360) 236-3681; and Enforcement: Janet Charles, 310 Israel Road S.E., Tumwater, WA 98501, (360) 236-3697.

The proposed rule amends chapter 246-790 WAC which regulates the department's food delivery system within the WIC program. The proposal will assure support for the operation of the WIC nutrition program, assist in recontracting with our retail partners, and maximize agency options for determining participant access and applying sanctions. Proposed changes will allow for necessary clarifications and consistency with C.F.R. and FNS rules and directives, including expanding the proposed definition of "full line grocery store," updating definitions, and including a sanction table. Although 7 C.F.R. 246 describes the WIC program's purpose and scope in greater detail, there are operational areas where the state has discretion. This will also provide a solid foundation for WIC modernization, including fulfilling federal directives to implement an electronic benefit transfer system for WIC.

The WIC program consists of the two hundred twenty-five contractors representing approximately eight hundred individual grocery stores and supermarket chains, which is a subset of the approximate 1,486 grocery stores in Washington state.

The department used the survey to get input from retailers on the potential impact of proposed changes to what constitutes a "full line grocery store." This includes four main components. The first is the minimum number of items (e.g., cans, packages, gallons of milk) for the existing required food categories. The second component is a minimum number of fresh or perishable items. The third component is having at least five linear feet of refrigerated shelf space for produce. The fourth component is having a cash register on premises that is capable of printing receipts.

The department's assumption is that the proposed rule will not cause businesses to lose sales [or] revenue.

Over ninety percent of the stores that responded to the survey indicated that they already comply with proposed rules. There were, however, a few grocery stores that indicated they would incur costs to comply with the proposed rule. For these few stores, collectively, the potential cost of the rule is significantly lower than the $9,190.00 minor cost threshold. Although not required, the department is electing to complete this analysis.

The proposed rules set consistent requirements for all sizes of full line grocery stores. Consistent requirements were needed to assure that applicant grocery stores are aware of program requirements for authorization, which facilitates a consistent shopping experience for WIC clients.

Given that some of the estimated costs will be incurred by small grocery stores, these costs will have a disproportionate impact, largely because the costs are consistent (e.g., cost for minimum inventory, refrigeration, fresh/perishable produce and cash machines).

The department facilitates a WIC retailer advisory committee. The committee has representatives from the Washington Food Industry Association, and retailers representing a wide range of both size and types of retailers (see Appendix 1 - Full list of Peer Groups). The department created a draft rule and forwarded the draft to the retailer advisory committee in March for review and comment. The committee submitted comments and met with program staff to recommend changes to the draft rules. The department incorporated many of their recommendations. To further gauge the potential impact of the proposed rules on WIC authorized vendors, the department elected to send a survey to all WIC vendors, which included all small businesses that are currently WIC authorized.

In May 2014, the department sent all two hundred twenty-five contractors an opinio [opinion] survey request via e-mail with a response window of ten days. Eighty-seven respondents submitted responses, representing a 38.6 percent response rate. This included fifty-one respondents from Peer Group 1, which are retailers with 1-4 cash registers, which the department assumes are small businesses (i.e., grocery stores with fifty or fewer employees).

The department's assumption is that the proposed rule will not impact the number of jobs in this industry. Grocery stores will not have to hire of [or] fire any employees because of this rule.

Report info. . . .

Question 1: Please indicate your peer group or the number of cash registers in your store. . . .

Question 2: My store stocks at least 20 varieties of

canned foods. . . .

Question 3: My store stocks at least 10 varieties of

frozen foods. . . .

Question 4: My store stocks at least 10 varieties of dairy products. . . .

Question 5: My store stocks at least 6 varieties of fresh and frozen meats. . . .

Question 6: My store stocks at least 20 varieties of fresh fruits and vegetables. . . .

Question 7: My store stocks at least 10 varieties of breads and tortillas. . . .

Question 8: My store stocks at least 10 varieties of grains, pasta and dried beans. . . .

Question 9: My store stocks at least 10 varieties of baby products. . . .

Question 10: My store stocks at least 10 varieties of household cleaners. . . .

Question 11: My store stocks at least 20 varieties of healthcare products. . . .

Question 12: With the proposed minimum varieties for perishable items (dairy products, fresh fruits and vegetables). . . .

Question 13: Does your store currently have a minimum of five linear feet of refrigerated display space. . . .

Question 14: Are your electronic cash registers capable of producing receipts that include a description of. . . .

Please indicate your peer group or the number of cash register in your store. My store is in (check the appropriate row below):

My store stocks at least 20 varieties of canned foods.

My store stocks at least 10 varieties of frozen foods.

My store stocks at least 10 varieties of dairy products.

My store stocks at least 6 varieties of fresh and frozen meats.

My store stocks at least 20 varieties of fresh fruits and vegetables.

My store stocks at least 10 varieties of breads and tortillas.

My store stocks at least 10 varieties of grains, pasta and dried beans.

My store stocks at least 10 varieties of baby products.

My store stocks at least 10 varieties of household cleaners.

My store stocks at least 20 varieties of healthcare products.

With the proposed minimum varieties for perishable items (dairy products, fresh fruits and vegetables), do you anticipate this will increase the total weekly spoilage for your store?

 

Does your store currently have a minimum of five linear feet of refrigerated display space that may be used for fresh fruits and vegetables?

Are your electronic case [cash] registers capable of producing receipts that include a description of the food product, and the total actual purchase price in addition to the already required information?

 

A copy of the statement may be obtained by contacting Daniel O'Neill, 310 Israel Road S.E., Tumwater, WA 98501, phone (360) 236-3681, fax (360) 236-2345, e-mail daniel.o'neill@doh.wa.gov.

A cost-benefit analysis is required under RCW 34.05.328. A preliminary cost-benefit analysis may be obtained by contacting Daniel O'Neill, 310 Israel Road S.E., Tumwater, WA 98501, phone (360) 236-3681, fax (360) 236-2345, e-mail daniel.o'neill@doh.wa.gov

July 22, 2014

John Wiesman, DrPH, MPH

Secretary

Violation	Mandatory Federal Sanction
1. Conviction for trafficking WIC food instruments or cash value vouchers or selling firearms, ammunition, explosives, or controlled substances in exchange for WIC food instruments or cash value vouchers.	Termination of contract, permanent disqualification or, at the discretion of the department, civil monetary penalty (based upon participant access criteria). Termination of the contract shall be effective upon authorized vendor's receipt of termination notice.
2. One incidence of selling firearms, ammunition, explosives or controlled substances (as defined in section 21 of the Controlled Substances Act (U.S.C.) 802) in exchange for WIC food instruments or cash value vouchers.	Termination of contract, six-year disqualification or, at the discretion of the department, civil monetary penalty (based upon participant access criteria).
3. One incidence of buying or selling WIC food instruments or cash value vouchers for cash (trafficking). Trafficking includes some of the violations included in the definition of redeeming WIC food instruments or cash value vouchers outside of authorized channels.	Termination of contract, six-year disqualification or, at the discretion of the department, civil monetary penalty (based upon participant access criteria).
4. Failure to comply fully with the applicable provisions of 7 C.F.R. 278—SNAP. (Authorized vendor is disqualified from SNAP, or chooses not to participate in SNAP.)	Termination of contract and disqualification for time period corresponding to the SNAP disqualification term, or, at the discretion of the department, civil monetary penalty (based upon participant access criteria). No administrative review allowed.
5. One incidence of sale of alcohol or alcoholic beverages or tobacco products in exchange for WIC food instruments or cash value vouchers.	Termination of contract, three-year disqualification or, at the discretion of the department, civil monetary penalty.
6. A pattern of providing credit or nonfood items, other than alcohol, alcoholic beverages, tobacco products, cash, firearms, ammunition, explosives, or controlled substances as defined in 21 U.S.C. 802, in exchange for food instruments or cash value vouchers.	Termination of contract, three-year disqualification or, at the discretion of the department, civil monetary penalty (based upon participant access criteria).
7. A pattern charging for food not received by a participant.	Termination of contract, three-year disqualification or, at the discretion of the department, civil monetary penalty (based upon participant access criteria).
8. A pattern of receiving, transacting, or redeeming a food instrument outside of authorized channels, including the use of an unauthorized store or person.	Termination of contract, three-year disqualification or, at the discretion of the department, civil monetary penalty.
9. A pattern of claiming reimbursement for the sale of an amount of a specific supplemental food item which exceeds the authorized vendor's documented inventory of that supplemental food item for a specific period of time.	Termination of contract, three-year disqualification or, at the discretion of the department, civil monetary penalty (based upon participant access criteria).
10. A pattern of authorized vendor overcharges.	Termination of contract, three-year disqualification or, at the discretion of the department, civil monetary penalty (based upon participant access criteria).
11. A pattern of charging for supplemental foods provided in excess of those listed on the food instrument.	Termination of contract, one-year disqualification or, at the discretion of the department, civil monetary penalty (based upon participant access criteria).
12. A pattern of selling unauthorized food items in exchange for food instruments or cash value vouchers.	Termination of contract, one-year disqualification or, at the discretion of the department, civil monetary penalty (based upon participant access criteria).
13. A pattern of an above-fifty-percent vendor providing prohibited incentive items to customers as set forth in paragraph (g)(3)(iv) of this section, in accordance with the state agency's policies and procedures required by paragraph (h)(8) of this section.	Termination of contract, one-year disqualification or, at the discretion of the department, civil monetary penalty (based upon participant access criteria).
14. Providing false information on its application for authorization.	Termination of contract upon minimum fifteen day notice.
15. The existence of a conflict of interest between the authorized vendor and the department or local agency as defined by state law, regulations or policies.	Termination of contract upon minimum fifteen day notice and disqualification from the WIC program until the conflict of interest no longer exists.
Second Mandatory Sanction
If a vendor has been assessed a sanction for any of the violations in this table, then receives another sanction for any of the same violations, the department must double the second sanction. If a civil monetary penalty is assessed in lieu of disqualification, the amount may be doubled up to the limits specified in Federal WIC Regulations at 7 C.F.R. 3.91(b)(3)(v).
Third or Subsequent Mandatory Sanction
If a vendor, previously assessed two or more sanctions for any of the above sanctions, then receives another sanction for any of the same violations, the department must double the third sanction and all subsequent sanctions. Civil monetary penalties may not be imposed in lieu of disqualification for third or subsequent sanctions.

Violation	Sanction
16. A pattern of adding sales tax or a fee or surcharge to the purchase amount charged to the WIC program (military commissaries may levy a surcharge).	Termination of contract, one-year disqualification or, at the discretion of the department, civil monetary penalty (based upon participant access criteria).
17. A pattern of charging a participant for WIC foods.	Termination of contract, one-year disqualification or, at the discretion of the department, civil monetary penalty (based upon participant access criteria).
18. A pattern of exceeding food instruments costs based upon the state price assessment tool.	Termination of contract, one-year disqualification or, at the discretion of the department, civil monetary penalty (based upon participant access criteria).
19. A pattern of failing to process each food instrument separately (except cash value vouchers for fruits and vegetables which can be combined).	Termination of contract, one-year disqualification or, at the discretion of the department, civil monetary penalty (based upon participant access criteria).
20. A pattern of failing to write the total amount of the purchase amount on the food instrument or cash value voucher.	Termination of contract, one-year disqualification or, at the discretion of the department, civil monetary penalty (based upon participant access criteria).
21. A pattern of vendor having the participant sign the food instrument or cash value voucher before the purchase price is entered on the food instrument or cash value voucher.	Termination of contract, one-year disqualification or, at the discretion of the department, civil monetary penalty (based upon participant access criteria).
22. A pattern of not getting a participant's signature on a WIC food instrument or cash value voucher.	Termination of contract, one-year disqualification or, at the discretion of the department, civil monetary penalty (based upon participant access criteria).
23. A pattern of failing to show program participants, parents or caretakers or infant of child participants, and proxies the same courtesies offered to other customers.	Termination of contract, one-year disqualification or, at the discretion of the department, civil monetary penalty (based upon participant access criteria).
24. A pattern of failing to allow a participant to buy all the foods in the amounts listed on the food instruments or cash value vouchers. This violation also includes refusal to sell WIC foods to a participant. If refusal to sell WIC foods is based on discrimination, use discrimination follow-up procedures.	Termination of contract, one-year disqualification or, at the discretion of the department, civil monetary penalty (based upon participant access criteria).
25. A pattern of giving free items or discounts to participants that are not offered to other customers.	Termination of contract, one-year disqualification or, at the discretion of the department, civil monetary penalty (based upon participant access criteria).
26. A pattern of not meeting the WIC minimum inventory requirements.	Termination of contract, one-year disqualification or, at the discretion of the department, civil monetary penalty (based upon participant access criteria).
27. A pattern of not complying with the vendor selection criteria.	Termination of contract, one-year disqualification or, at the discretion of the department, civil monetary penalty (based upon participant access criteria).
28. A pattern of using the acronym "WIC" without permission in advertising, or for foods identification.	Termination of contract, one-year disqualification or, at the discretion of the department, civil monetary penalty (based upon participant access criteria).
29. A pattern of WIC approved foods when they are defective, spoiled, or have exceeded their "sell by," "best if used by," or other date limiting the sale or use of an item.	Termination of contract, one-year disqualification or, at the discretion of the department, civil monetary penalty (based upon participant access criteria).
30. A pattern of failing to allow exchange of an identical approved food obtained with WIC food instruments or cash value vouchers when the original approved food item is defective, spoiled, or has exceeded its "sell by," "best if used by," or other date limiting the sale or use of the food item. An identical approved food item means the exact brand and size as the original approved food item obtained and returned by the participant.	Termination of contract, one-year disqualification or, at the discretion of the department, civil monetary penalty (based upon participant access criteria).
31. A pattern of failing to train store staff on WIC requirements annually by participating in annual training in the prescribed manner.	Termination of contract, one-year disqualification or, at the discretion of the department, civil monetary penalty (based upon participant access criteria).
32. A pattern of failing to post prices where participants can see them.	Termination of contract, one-year disqualification or, at the discretion of the department, civil monetary penalty (based upon participant access criteria).
33. A pattern of failing to keep training records.	Termination of contract, one-year disqualification or, at the discretion of the department, civil monetary penalty (based upon participant access criteria).
34. A pattern of failing to provide training records upon request.	Termination of contract, one-year disqualification or, at the discretion of the department, civil monetary penalty (based upon participant access criteria).
35. A pattern of failing to participate in the food price survey conducted by the department twice a year.	Termination of contract, one-year disqualification or, at the discretion of the department, civil monetary penalty (based upon participant access criteria).
36. A pattern of failing to keep or submit inventory receipts upon request.	Termination of contract, one-year disqualification or, at the discretion of the department, civil monetary penalty (based upon participant access criteria).
37. Any incidence of refusal to allow the participant to use the WIC appointment and ID folder as identification.	Technical assistance provided.
38. Any incidence of requiring the participant to buy all the food on the food instrument or cash value voucher.	Technical assistance provided.
39. Any incidence of failing to print clearly and carefully on the food instrument or cash value voucher using a black or dark blue ink pen.	Technical assistance provided.
40. Any incidence of accepting WIC food instruments or cash value vouchers that were not signed in the presence of the checker.	Technical assistance provided.
41. Any incidence of failing to treat participants with courtesy or being rude.	Technical assistance provided.
42. Any incidence of failing to attend or assure a representative attends any training identified as mandatory by the department.	Technical assistance provided, may be subject to other penalties as prescribed by department policy.
43. Failure to have a representative from the store attend required WIC training once in a three-year contract period.	Technical assistance provided, may not be eligible for reauthorization in new contract period.
Second Sanction
If an authorized vendor has been assessed a sanction for any of the violations in this table, then receives another sanction for any of the same violations all in the same contract period, the department must double the second sanction. If a civil monetary penalty is assessed in lieu of disqualification, the amount may be doubled up to the limits specified in Federal WIC Regulations at 7 C.F.R. 3.91(b)(3)(v).
Third or Subsequent Sanction
If an authorized vendor, previously assessed two or more sanctions for any of the above sanctions, then receives another sanction for any of the same violations all in the same contract period, the department must double the third sanction and all subsequent sanctions. Civil monetary penalties may not be imposed in lieu of disqualification for third or subsequent sanctions.

The following section of the Washington Administrative Code is repealed: