On February 6, 2014, HHS’s Administration for Children and Families (ACF) published a long overdue proposed regulation regarding provisions in Section 4004 of the Middle Class Tax Relief and Job Creation Act of 2012 (P.L. 112-96) that requires states to implement policies and strategies to prevent TANF EBT cardholders from accessing TANF benefits at specific restricted locations. The federal list of restricted establishments is pretty straightforward in the law, but the proposed rule adds a wrinkle that will cause states a great deal of grief.
Per Section 4004(a) of P.L. 112-96, the three restricted locations are:
1) Any liquor store,
2) Any casino, gambling casino or gaming establishments, and
3) Any retail establishments which provides adult-oriented entertainment in which performers disrobe or perform in an unclothed state for entertainment.
I’ve no complaints with the expanded definitions of ‘liquor store’ and ‘casino, gambling casino or gaming establishment’ ACF uses in the proposed rule, but their definition of ‘adult-oriented entertainment establishment’ needs revision.
The proposed rule reads:
“Retail establishment which provides adult-oriented entertainment in which performers disrobe or perform in an unclothed state for entertainment means such an establishment that prohibits the entrance of minors under the age specified under state law.”
In the ‘Discussion of Regulatory Provision’ section of the proposed rule, ACF explains how it reached this definition:
“The statute is silent of the definition of ‘‘retail establishment which provides adult-oriented entertainment in which performers disrobe or perform in an unclothed state to entertainment.’’ To clarify the intended locations to which restrictions apply, we add to proposed paragraph (b) that this term means ‘‘such an establishment that prohibits the entrance of minors under the age specified by state law.’’ Therefore, a theater or cinema whose primary purpose is not to provide adult-oriented entertainment, but may, for instance, occasionally feature an unrated or X-rated movie, would be excluded from this definition because minors are generally allowed to enter such an establishment (though not permitted to attend the unrated or X-rated film). “
Most states interpreted the language in the law to cover strip clubs and not adult movies. What ACF has done is muddy the definition and add a new subcategory of businesses that states will be required to monitor. If ACF’s intent with this definition is to cover movie theaters in addition to strip clubs, do they also expect states to monitor adult book stores or other retailers selling adult videos, magazines and other materials?
On April 25, 2012, ACF published a Request for Public Comment in which they asked states and interested parties to provide information that would help them in the rule making process. APHSA facilitated several discussions with states and ACF on this subject. As Indiana’s TANF Policy Manager, I participated in these discussions; and the focus was on strip clubs and other live entertainment venues and not adult movie houses or other retailers. My problem with ACF’s proposed definition is the unnecessary administrative complication added to resolve a microscopic issue.
As ACF notes in the ‘Background’ section of the proposed rule, states with existing EBT access restrictions found that 0.01% to 0.05% of all TANF EBT transactions occurred in a restricted location. There are many problems with EBT data, most of which prevent states from accurately identifying restricted locations. To remedy this, Indiana and other states are matching EBT transaction data with liquor and/or gambling license data provided by other state agencies to better target potential violations. Because retails licenses tend to be controlled at the municipality level and not the state level, gathering information on adult movie, video or bookstores will require a great deal of tax dollars and staff time.
To avoid this regulative burden, ACF should revise the definition of adult entertainment establishments to only cover live entertainment. Most of these establishments will have liquor licenses which states will better be able to cross-match and monitor.
Here is a link to the proposed rule: