Rule Making Process Case Study: Food Stamps and Fast Food

Bloomberg Businessweek reported in November of 2011 on an interesting and controversial fast-food and government benefits controversy. The giant fast-food company, Yum Brands, wants government to allow low-income people to use food stamps at its Taco Bell and KFC restaurants. Health care advocates as well as the U.S. Department of Agriculture, which funds the food stamp program, have criticized the proposal; and the Agriculture Department is asking the states not to accede to Yum Brand’s request. The Under Secretary of Agriculture for Food and Nutrition stated that not to be concerned with the quality of the food is a serious mistake, and that the government should be promoting access to healthy foods. Bloomberg Businessweek indicated that Yum Brands has lobbied government officials in Ohio, Pennsylvania, and Florida to permit its restaurants to participate in the food stamp program, which is called the Supplemental Nutrition Assistance Program (SNAP). SNAP, though funded by the federal government, is administered by the states. The program is approximately five decades old, and distributed in 2010 a record amount of $64.4 billion. With that money available, one university professor of nutrition stated that “Everyone wants to get a piece of that action.” The professor also noted that now the bulk of that money is going to grocery stores, and restaurants think that the current situation is unfair.

Bloomberg Businessweek related that the demand for food stamps has “exploded” since the recession began in 2007, and consequently as of August 2012 a record 45.8 million Americans participated in the food stamp program, which number was an 8.1% increase over the previous year. The magazine also pointed out that though the name “food stamp” is used, actual paper coupons were discontinued several years ago to be replaced by an electronic debit card system. The SNAP program has restrictions on the types of products that can be purchased with food stamps, for example, alcohol, tobacco, pet food, vitamins, and hot food. Approximately 85% of food stamps are redeemed at large grocery stores and supermarkets. However, in the last few years several states, including California, Arizona, Michigan, Rhode Island, and Florida, have been allowing people who cannot cook for themselves, such as the disabled, the homeless, and the elderly, to buy hot meals at authorized fast food restaurants.

In 2011, Bloomberg Businessweek reported that certain restaurants, such as McDonald’s, Wendy’s, Taco Bell, and KFC collected approximately $21 million in food stamp redemptions. A Yum Brands spokesperson stated that it makes “perfect sense” to expand the program, which is working well in certain states, to allow the aforementioned types of people to use food stamps in restaurants as they would in supermarkets. A member of Congress, whose district in Kentucky includes the headquarters of Yum Brands, stated that even though there may be a profit motive to Yum Brand’s request, there nonetheless is “some merit” to allow the company to more fully participate in the SNAP program. However, a spokesperson for the Pennsylvania Welfare Department stated that fast food is “not really a healthy way to get food,” and that it is “not always the best choice financially.” Another member of Congress, also from Kentucky, stated that to allow the expansion of the SNAP program would harm the needy in the long-term since they are going to get less food for their food stamps.

Bibliography: Patton, Leslie, “Food Stamps for Chalupa? Not Likely,” Bloomberg Businessweek, November 21-November 27, 2011, pp. 32-34.

Questions for Discussion:

1. The appointed administrative head of the U.S. Department of Agriculture (USDA), has decided to make a new regulation. The regulation will prevent any individual state agency administrating the SNAP program within their state and individual recipient of SNAP benefits from using SNAP benefits or funds towards “fast food”. The USDA agency head has decided that Informal Rule Making will be used to promulgate this new federal regulation using the Administrative Procedure Act (APA) process. Explain the following using our materials and readings this week:

· Explain all the material steps involved under the APA for Informal Rule Making for such a new regulation;

· Explain how Formal Rule Making is different then Informal Rule Making; and

· Explain how Negotiated Rule Making Process is different then Informal Rule Making.

2. Would it be ethical for the USDA or an individual state agency to expand the SNAP program to cover “fast food”? Pick one of the below ethical theories ( utilitarianism), explain it, then apply it to the facts of this case and conclude under it if it is moral/ethical to expand the SNAP program to cover “fast food”? You will have to do some independent research on each of the below ethical theories online to learn about them and how they work.

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