GM 16-012

TANF Final Rule on Restrictions on Use of Electronic Benefit Transfer Transactions

On January 15, 2016, the Department of Health and Human Services (HHS) published the attached Final Rule which requires states to have in place policies and practices to prevent state-funded Temporary Assistance for Needy Families (TANF) assistance from being accessed via electronic benefit transfer cards (EBT) in liquor stores, gaming establishments, or in strip-clubs or other adult-entertainment venues. This Rule was issued pursuant to the requirement of Section 4004 of the Middle Class Tax Relief and Job Creation Act of 2012, PL 112-96 (Act). The provision does not apply to tribally-administered TANF programs, but it does apply to Indian lands where the state is administering the TANF program.

As of January 1, 2015 there were 70 tribal TANF programs administering $192 million. A number of the tribal grantees are consortia, notably in Alaska and California. A list of tribal TANF programs may be found here:

Reporting. The Act requires each state to file an annual report to HHS regarding its TANF plan as required by the Act. The report is to include:

• Description of the implementation of the state policies and practices designed to restrict TANF recipients from using their TANF assistance via EBT transactions in prohibited places;

• How the state identifies the locations specified in the Act;

• The procedures for ongoing monitoring to ensure policies are being carried out as intended;

• How the state responds to findings of non-compliance.

The Secretary may reduce a state’s TANF allocation by up to five percent for noncompliance.

Definitions. The Rule clarifies the Act’s reference to “casino, gambling casino, or gaming establishment” to mean an establishment with a primary [emphasis added] purpose of accommodating the wagering of money.

The definition of “liquor store” is also clarified:

Casino, gambling casino, or gaming establishment means an establishment with a primary purpose of accommodating the wagering of money. It does not include:

(i) A grocery store which sells groceries including staple foods and which also offers, or is located within the same building or complex as, casino, gambling, or gaming activities; or

(ii) Any other establishment that offers casino, gambling, or gaming activities incidental to the principal purpose of the business.

Liquor store means any retail establishment which sells exclusively or primarily intoxicating liquor. Such term does not include a grocery store which sells both intoxicating liquor and groceries including staple foods (within the meaning of Section 3(r) of the Food and Nutrition Act of 2008 (7 U.S.C. 2012 (r))).

HHS did not include in the Rule a definition of “adult-oriented entertainment,” stating that the description in the Act is sufficient.

Enforcement on tribal lands where a state administers the TANF program. HHS addresses the issue of enforcement of the Act on tribal lands where the state is administering the TANF program by stating:

We reiterate that we are not extending the requirements to tribal TANF programs. We agree that Congress did not apply these requirements to TANF assistance administered by a tribal TANF program. However, states do have a responsibility to develop appropriate policies for preventing TANF cash assistance administered by state programs from being used at any of the three types of businesses, including those located on tribal land, to the extent practicable. As we stated in the NPRM, we encourage states to work with tribes to try to prevent state TANF assistance from being used at the prohibited locations on sovereign tribal land. We would consider it sufficient for states to provide notice to recipients that the prohibition of use extends to tribal lands.

Please let us know if we may provide additional information regarding the matters in this Memorandum.