01/18/2006
CONTACT: Melissa Sharp, (202) 554-9000
Washington, D.C. — Yesterday, the National Federation of Independent Business Legal Foundation filed an amicus brief with the U.S. District Court for the District of Columbia on behalf of NFIB members engaged in the retail grocery business that face a significant economic hit by a proposed final rule of the Food and Nutrition Service.
The rule implements new vendor cost containment requirements for the Women, Infants, and Children Program. NFIB argues that in reaching this rule, FNS violated the Regulatory Flexibility Act, which requires federal agencies to determine if a rule in question would have a significant economic impact on small entities.
"This case is a classic example of why the government needs to do its homework. By failing to consider the impact this rule would have on WIC-only stores, over 1,000 stores stand to go out of business - forcing thousands more out of their livelihood," said Karen Harned, executive director of NFIB’s Legal Foundation.
For instance, a requirement that states implement systems to ensure that small, independently owned, WIC-only stores charge the same prices as all WIC-certified stores (stores that sell both WIC-eligible goods and non WIC-eligible goods) has a clear negative impact on small entities. Large retail chains have a significant purchasing advantage over smaller entities because they can buy products in bulk to stock multiple stores across the country. Small business, such as NFIB members Keith and Grace Bracewell, owners of Basic Foods, in Bakersfield,Calif., would not be able to compete with these larger chains if the FNS mandates that all stores, regardless of their size, charge the same prices.
The Bracewells estimate that nearly 100 percent of their sales take place through the WIC program. Basic Foods operates three stores, all located in areas of the city with high concentrations of women and children who qualify for the WIC program.
“We only carry WIC-eligible goods, which makes it easier and less embarrassing for our customers who would have a difficult time finding such items in larger stores,” said Keith Bracewell. “If I were reimbursed at the statewide average prices, as the FNS rule proposes, at least two of my stores would not be able to compete and would have to be closed.”
In the last five years, NFIB’s Legal Foundation has brought three actions challenging violations of the RFA by federal agencies and has filed over 20 comments with various federal agencies on RFA compliance matters.
This case is National Women, Infants, and Children Grocers Association, et al v. Food and Nutrition Service.
