SUPPLEMENTARY INFORMATION:

Acronyms or Abbreviations

Code of Federal Regulations, CFR

Fiscal Year, FY

Food and Nutrition Act of 2008, the Act

Food and Nutrition Administration, FNA

One Big Beautiful Bill Act of 2025, OBBB

State agency, State agencies, or States

State Administrative Expenses, SAE

Supplemental Nutrition Assistance Program, SNAP or the Program

U.S. Department of Agriculture, the Department or USDA

I. Background

A. Statutory Authority

On July 4, 2025, President Donald J. Trump signed Public Law 119-21, the One Big Beautiful Bill Act of 2025 (OBBB). Section 10106 of OBBB amends section 16(a) of the Act by reducing the Federal share of administrative costs involved in the State administration of SNAP, from 50 percent to 25 percent, beginning in FY 2027.

B. Existing Requirements

Under existing Program rules, the Secretary is authorized to pay an amount equal to 50 percent of all administrative costs State agencies incur in the operation of SNAP. The enactment of OBBB reduces the Federal administrative cost share (also known as the Federal reimbursement rate) to 25 percent starting in FY 2027. However, OBBB did not amend the State administrative expense (SAE) categories included in Section 16(a) of the Act or current SNAP policies and procedures governing State agencies that participate in the program. Therefore, the proposed rule would only codify the change in percentage—other requirements including expense categories and reimbursement procedures will remain the same. State agencies shall continue to refer to Section 16(a) of the Act and regulations at 7 CFR 272.2(c)(1)(i) and 277 for detailed information about administrative costs and expense categories.

II. Discussion of Proposed Rule Changes

FNA proposes revising the following regulations that mention the Federal administrative cost reimbursement rate to reflect the new 25 percent rate starting in FY 2027:

Part 272

* Part 272 sets forth policies and procedures governing State agencies which participate in the Program.

* 7 CFR 272.5(c) specifically addresses the reimbursement of Program informational activities for low-income households.

Part 274

* Part 274 provides requirements for the issuance of Program benefits to eligible households and establishes related issuance responsibilities.

* 7 CFR 274.1(k)(4) addresses Federal funding for the costs State agencies incur when switching and settling SNAP interstate transactions under SNAP's interoperability and portability of Electronic Benefits Transfer (EBT) standards. Under Section 7(j) of the Act, State agencies may receive 100 hundred percent Federal funding for these costs. The 100 percent Federal funding is available annually but limited to $500,000 nationwide and once this limitation is exceeded the Federal reimbursement rate for costs reverts to the standard reimbursement rate of 50 percent. The proposed rule would amend the Federal reimbursement rate to 25 percent.

* 7 CFR 274.8(f) provides guidance to State agencies implementing the requirements for photo EBT. The proposed rule would amend language addressing allowable administrative costs for photo EBT (7 CFR 274.8(f)(13)) to the new Federal reimbursement rate, from 50 percent to 25 percent. ( printed page 37838)

Part 277

* Part 277 outlines procedures for payment of administrative costs of State agencies.

* Regulations at 7 CFR 277.4(b), 7 CFR 277.4(g), 7 CFR 277.9(c)(1) and (2) and 277.18(f)(1) would be amended to reflect the new Federal reimbursement rate of 25 percent.

OBBB changes to Section 16(a) of the Act (7 U.S.C. 2025(a)) do not amend SNAP Employment and Training (E&T) 50 percent reimbursement rates for E&T administrative costs and E&T-related participant reimbursements (ex. transportation, child care) established in Section 16(h)(2) and Section 16(h)(3) of the Act. Therefore, reimbursement rates for SNAP E&T administrative costs and participant reimbursements remain unchanged. FNA is proposing to add language to regulations at 7 CFR 277.4(b)(3) to clarify that the reimbursement rate will remain at the 50 percent for these E&T costs as outlined in 7 CFR 273.7(d)(2).

Similarly, the new Federal reimbursement rate will not impact State agencies or Indian Tribal Organizations (ITOs), acting as State agencies, administering SNAP on a reservation.^[1] FNA will continue to pay each State agencies administering SNAP on a reservation 75 percent of all approved administrative costs in accordance with Section 16(a) of the Act, 7 CFR 277.4(b)(2), and 7 CFR 281.9. Additionally, FNA is authorized to pay to each Indian Tribal Organization acting as a State agency and administering SNAP on a reservation 75 percent of all administrative costs approved by FNA as needed for operation of a SNAP on a reservation.

III. Procedural Matters

Executive Order 12866 and 13563

Executive Orders 12866 and 13563 direct agencies to assess all costs, benefits, and changes in transfers of available regulatory alternatives and, if regulation is necessary, to select regulatory 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 proposed rule has been determined to be economically significant under section 3(f)(1) of Executive Order 12866 and was reviewed by the Office of Management and Budget (OMB) in conformance with Executive Order 12866.

Regulatory Impact Analysis

As required for all rules that have been designated as significant by OMB, a Regulatory Impact Analysis (RIA) was developed for this proposed rule. It is posted in the docket for this proposed rule on www.regulations.gov. The following summarizes the conclusions of the RIA:

This rulemaking is needed to amend SNAP regulations to reflect the OBBB's reduction of the amount of the Federal government's share of annual SNAP administrative costs from 50 percent to 25 percent, beginning in FY 2027.

The Department estimates the total decrease in Federal administrative spending associated with this proposed rule to be approximately $16.9 billion over FYs 2027 to 2031, averaging $3.4 billion per year. Concomitantly, State administrative spending to implement this proposed rule is estimated to increase by a total of $16.9 billion over FY 2027 to FY 2031, or an annual average of $3.4 billion. The total net change in spending of this proposed rule is $0 as it shifts Federal costs to State agencies with no changes in administrative burden for the Federal government or State agencies. We assume this proposed rule will have a negligible impact on SNAP benefit spending or SNAP participation. We request comment on ways in which this shift in spending from the Federal Government to the States could change overall program spending or program operations.

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 rule would not have a significant impact on a substantial number of small entities.

This proposed rule would not have an impact on small entities because it only impacts the State agencies that administer SNAP, which are large government entities.

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 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 proposed rule contains Federal mandates (under the regulatory provisions of Title II of UMRA) that are expected to result in aggregate expenditures by State governments of more than $100 million or more in one year. Thus, this rule is subject to the requirements of Sections 202 and 205 of UMRA. The proposed change is required by statute and there are no alternatives.

The Regulatory Impact Analysis conducted by FNA in connection with this proposed rule includes a spending analysis and explains the requirement set forth in statute regarding the change in cost sharing between States and the Federal government for administrative costs for operating SNAP. Based on this analysis and the language in OBBB, the Department believes there are no alternatives to this proposal.

Executive Order 12372

This Supplemental Nutrition Assistance Program is listed in the Catalog of Federal Domestic Assistance under Number 10.551 and is subject to Executive Order 12372, which requires intergovernmental consultation with State and local officials. (See 2 CFR chapter IV.)

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. ( printed page 37839)

Executive Order 12988, Civil Justice Reform

This proposed 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 unless so specified in the Effective Dates section of the final rule. Prior to any judicial challenge to the provisions of the final rule, all applicable administrative procedures must be exhausted.

Civil Rights Impact Analysis

FNA has reviewed this proposed rule in accordance with USDA Regulation 4300-4, “Civil Rights Impact Analysis,” to identify any major civil rights impacts the rule might have on program participants on the basis of age, race, color, national origin, sex or disability. After a careful review of the rule's intent and provisions, FNA has determined that this rule is not expected to affect the participation of protected individuals in the Supplemental Nutrition Assistance Program.

Executive Order 13175: Consultation and Coordination With Indian Tribal Governments

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. FNA is unaware of any current Tribal laws that could be in conflict with this rule.

This proposed rule does not have issues that rise to the level of requiring Tribal consultation. FNA held a consultation on October 22, 2025, and received no comments that have a direct impact on the rule. If a tribe requests further consultation, FNA will work with OTR to ensure meaningful consultation is provided.

Paperwork Reduction Act

The Paperwork Reduction Act of 1995 (44 U.S.C.3501-352035; 5 CFR part 1320) requires 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.

The proposed rule does not contain new or modified information collection requirements subject to approval by OMB under the Paperwork Reduction Act of 1995. This rule contains information collections that have been approved by OMB under OMB under OMB #0584-0594 and OMB #0584-0083. The reporting requirements relating to the use of the FNS-366A, Program and Budget Summary Statement, Part A—Budget projection, Standard Form (SF)-425, Federal Financial Report, and the FNS-778, Financial Status Report, are approved under OMB No. 0584-0594, Expiration Date: 9/30/2026. The recordkeeping requirements for the FNS-366A, SF-425/FNS-778, are approved under OMB No. 0584-0083, Expiration Date: 9/30/2026.

E-Government Act Compliance

The Department is committed to complying with the E-Government Act, 2002, to promote the use of the internet and other information technologies to provide increased opportunities for citizen access to Government information and services, and for other purposes.

Accordingly, the Food and Nutrition Administration proposes to amend 7 CFR parts 272, 274, and 277 as follows:

1. The authority citation for 7 CFR parts 272, 274, and 277 continues to read as follows:

Authority: 7 U.S.C. 2011-2036

2. In § 272.5, revise the fourth sentence of paragraph (c) to remove the word “fifty” and replace it with the number “25”.

The revision reads as follows:

1. In § 274.1, revise the fourth sentence of paragraph (k)(4) to remove the number “50” and replace it with “25”.

2. In § 274.8, revise the second sentence of paragraph (f)(13) to remove the number “50” and replace it with “25”.

The revision read as follows:

1. In § 277.4, revise the second sentence of paragraph (b) to remove the number “50” and replace it with “25”.

2. In § 277.4, revise paragraph (b)(4) to add “(1)(i)” after the regulation citation ( printed page 37840) “§ 273.7(d)”, and add “and other Employment and Training administrative costs shall be funded at 50 percent as outlined in § 273.7(d)(2).” after the word “federally-funded”.

3. In § 277.4, revise paragraph (g) to remove the number “50” and replace it with “25”.

4. In § 277.9, revise the second sentence on paragraph (c)(1) to remove the number “50” and replace it with “25”.

5. In § 277.9, revise the second sentence on paragraph (c)(2) to remove the number “50” and replace it with “25”.

6. In § 277.18, revise paragraph (f)(1) to remove the number “50” and replace it with “25”.

The revision reads as follows:

91 FR 37837