446 Federal Register / Vol. 76, No. 3 / Wednesday, January 5, 2011 / Rules and Regulations 

completing and reviewing the collection of 

information. All responses to this collection 

of information are mandatory. Comments 

concerning the accuracy of this burden and 

suggestions for reducing the burden should 

be directed to the FAA at: 800 Independence 

Ave., SW., Washington, DC 20591, Attn: 

Information Collection Clearance Officer, 

AES–200. 

Related Information 

(h) Refer to MCAI AGEˆNCIA NACIONAL 

DE AVIAC ̧A ̃ O CIVIL—BRAZIL (ANAC), AD 

No.: 2010–09–02, dated October 17, 2010; 

and Empresa Brasileira de Aerona ́utica S.A. 

(EMBRAER) Service Bulletin No. SB 500–24– 

0002, dated March 8, 2010, for related 

information. 

Material Incorporated by Reference 

(i) You must use Empresa Brasileira de 

Aerona ́utica S.A. (EMBRAER) Service 

Bulletin No. SB 500–24–0002, dated March 8, 

2010, to do the actions required by this AD, 

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Internet: http://www.embraer.com.br. 

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Issued in Kansas City, Missouri, on 

December 21, 2010. 

Earl Lawrence, 

Manager, Small Airplane Directorate, Aircraft 

Certification Service. 

[FR Doc. 2010–32809 Filed 1–4–11; 8:45 am] 

BILLING CODE 4910–13–P 

SOCIAL SECURITY ADMINISTRATION 

20 CFR Part 416 

[Docket No. SSA–2008–0050] 

RIN 0960–AE59 

Supplemental Security Income (SSI) 

for the Aged, Blind, and Disabled; 

Dedicated Accounts and Installment 

Payments for Certain Past-Due SSI 

Benefits 

AGENCY: Social Security Administration 

(SSA). 

ACTION: Final rules. 

SUMMARY: These final rules adopt, with 

some minor changes, the interim final 

rules with request for comment we 

published in the Federal Register on 

December 20, 1996. 61 FR 67203. The 

interim final rules concerned dedicated 

accounts and installment payments for 

certain past-due SSI benefits and 

reflected amendments to the Social 

Security Act (Act) made by sections 213 

and 221 of the Personal Responsibility 

and Work Opportunity Reconciliation 

Act of 1996 (PRWORA). These final 

rules reflect these provisions, as well as 

subsequent changes to these provisions 

made by the Balanced Budget Act of 

1997 (BBA), the Social Security 

Protection Act of 2004 (SSPA), and the 

Deficit Reduction Act of 2005 (DRA). 

The changes we are making in these 

final rules will ensure that our rules 

accurately reflect the statutory 

provisions on which they are based. 

DATES: These final rules are effective 

February 4, 2011. 

FOR FURTHER INFORMATION CONTACT: 

Brian Rudick, Office of Regulations, 

Social Security Administration, 6401 

Security Boulevard, Baltimore, MD 

21235–6401, (410) 965–7102. For 

information on eligibility or filing for 

benefits, call our national toll-free 

number, 1–800–772–1213 or TTY 

1–800–325–0778, or visit our Internet 

site, Social Security Online, at http:// 

www.socialsecurity.gov. 

SUPPLEMENTARY INFORMATION: 

Electronic Version 

The electronic file of this document is 

available on the date of publication in 

the Federal Register at http:// 

www.gpoaccess.gov/fr/index.html. 

Background 

The interim final rules reflected the 

dedicated account requirements that 

were added by section 213 of the 

PRWORA. Public Law 104–193. 

Congress enacted the PRWORA on 

August 22, 1996. Section 213 of the 

PRWORA added a new section 

1631(a)(2)(F) of the Act for payments 

made after August 22, 1996. Under 

section 1631(a)(2)(F) of the Act, the 

representative payee of an eligible 

person under age 18 must establish in 

certain situations ‘‘an account in a 

financial institution,’’ which we refer to 

as a ‘‘dedicated account.’’ Specifically, 

the representative payee must establish 

a dedicated account if the person is 

eligible for past-due monthly SSI 

benefits, including any federally 

administered State supplementary 

payments, that exceed 6 times the 

maximum ‘‘monthly benefit payable’’ 

under title XVI, which we call the 

Federal benefit rate (FBR), after any 

withholding for interim assistance 

reimbursement (IAR) to a State(s) and 

after payment of attorney fees. Under 

section 1631(a)(2)(F) of the Act, the 

past-due benefits in a dedicated account 

may only be used for certain allowable 

expenses. 

Sections 213(b) and (c) of the 

PRWORA also amended sections 

1613(a) and 1612(b) of the Act, 

respectively, to provide that funds in a 

dedicated account, established and 

maintained in accordance with section 

1631(a)(2)(F) of the Act, including 

accrued interest or other earnings, are 

excluded from resources and from 

income. 

Since we published the interim final 

rules, Congress has enacted three other 

laws that made additional changes to 

the dedicated account requirements. We 

are including these statutory changes in 

the final rules without requesting public 

comment because the changes are 

required by statute and we are making 

no discretionary policy changes. 

The BBA made one clarification and 

one revision to section 1631(a)(2)(F) of 

the Act. Public Law 105–33. Section 

5522(b)(2) of the BBA amended section 

1631(a)(2)(F)(iii) of the Act by clarifying 

which subsequent past-due benefits a 

representative payee may deposit in an 

established dedicated account. Congress 

made this technical change to the 

statute because the PRWORA used the 

two different terms ‘‘underpayment’’ and 

‘‘past-due benefits’’ to describe funds 

that could be deposited in these 

accounts. This terminology caused 

confusion. Section 5522(b)(2) of the 

BBA corrected this technical issue, and 

we are including this change in these 

final rules. As amended by section 

5522(b)(2) of the BBA, section 

1631(a)(2)(F)(iii) of the Act states that 

the representative payee may deposit 

into an established dedicated account 

any other funds representing past-due 

benefits under title XVI of the Act 

which equal or exceed the maximum 

monthly FBR, including any federally 

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Federal Register / Vol. 76, No. 3 / Wednesday, January 5, 2011 / Rules and Regulations 447 

administered State supplementary 

payments. While not required, the 

representative payee may deposit these 

past-due benefits into the dedicated 

account. 

Section 5522(b)(1) of the BBA revised 

section 1631(a)(2)(F)(ii)(III)(bb) of the 

Act and required us to reduce ‘‘future 

benefits payable’’ to a recipient (or to a 

recipient and his or her spouse), who is 

his or her own payee and who 

knowingly misapplies benefits from a 

dedicated account. We must reduce the 

‘‘future benefits payable’’ by an amount 

equal to the amount of benefits that 

were misapplied. 

The interim final rules also reflected 

the installment payment requirements 

that were added to section 1631(a) of the 

Act by section 221 of the PRWORA. 

Under section 1631(a)(10) of the Act, 

past-due benefits paid on or after 

December 1, 1996, had to be paid in 

installments if the amount due equaled 

or exceeded 12 times the maximum 

FBR, after any withholding for IAR to a 

State(s). Section 1631(a)(10) of the Act 

provides limitations on the size of the 

installment payments, as well as 

exceptions to those limitations and 

exceptions to the installment payment 

requirement. 

In 2004, Congress enacted the SSPA. 

Public Law 108–203. Section 302(b)(1) 

of the SSPA amended section 

1631(a)(2)(F)(i)(II) of the Act to specify 

that the past-due monthly benefits for 

dedicated account purposes are those 

that remain after any withholding for 

payment of attorney fees. 

Section 302(b)(2) of the SSPA 

amended section 1631(a)(10)(A) of the 

Act to specify that the past-due monthly 

benefits for installment payment 

purposes are those remaining after any 

withholding for payment of attorney 

fees. Also, section 7502 of the DRA 

amended section 1631(a)(10)(A)(i) of the 

Act to change the threshold amount for 

determining whether past-due payments 

will be made in installments. Public 

Law 109–171. Under section 1631(a)(10) 

of the Act, as amended by section 7502 

of the DRA, effective May 8, 2006, pastdue benefits must be paid in 

installments if the amount due equals or 

exceeds 3 times the maximum FBR after 

any withholding for IAR to a State(s) 

and payment of attorney fees. 

These final rules reflect the statutory 

requirement that past-due benefits, 

including any federally administered 

State supplementary payments, 

generally be made in installments if the 

amount due, after any reimbursement 

for IAR and any withholding of attorney 

fees, equals or exceeds 3 times the 

maximum FBR. We pay these past-due 

benefits in not more than 3 installments, 

with the first and second installments 

not to exceed 3 times the FBR plus any 

federally administered State 

supplementation. We make the 

installment payments at 6-month 

intervals. 

These final rules also reflect the 

statutory exceptions to the installment 

payment requirements and the 

exception to the limit on the amount of 

the first and second installment 

payments, when the recipient has 

certain outstanding debts or current or 

anticipated expenses. 

In these final rules, we have clarified 

our rules on dedicated accounts and 

installment payments as a result of the 

public comments we received. We also 

have clarified the rules governing 

receipt of installment payments when a 

recipient subsequently becomes eligible 

for additional benefit amounts while the 

recipient is already receiving 

installment payments. 

Public Comments 

On December 20, 1996, we published 

an interim final rule with request for 

comments in the Federal Register and 

provided a 60-day comment period. 61 

FR 67203. We received 29 letters, most 

of which were from attorneys and 

advocacy groups. We carefully 

considered all of the comments in 

publishing these final rules, and we 

have adopted several recommendations 

made by the commenters. 

We have summarized the 

commenters’ views and have responded 

to the significant issues raised by the 

commenters that are within the scope of 

the interim final rules. For ease of 

reference, we have organized the 

comments and responses as follows: 

First, we address general comments, i.e., 

comments that are either about the 

interim final rules as a whole or apply 

to more than one section of the rules; 

then, we address the remaining 

comments about specific sections of the 

rules. 

General Comments 

Comment: Most commenters objected 

to section 213 of the PRWORA, section 

221 of the PRWORA, or both. These 

commenters stated that they did not 

believe these statutory provisions would 

improve the administration of the SSI 

program and that this legislation should 

not have been enacted. Attorneys 

commented that these statutory changes 

were a disservice to their SSI clients and 

that these changes would deny SSI 

recipients access to competent legal 

representation because they did not 

allow for increased installment 

payments to cover attorney fees or for 

attorney fees to be recognized as 

allowable dedicated account expenses. 

The commenters also were concerned 

that paying SSI in installments could 

distress SSI recipients. These 

commenters requested that we not 

implement the enacted requirements. 

Response: We have not adopted these 

comments because we must implement 

statutes that affect the programs we 

administer. Further, as we explained 

above, when we decide whether the 

representative payee must establish a 

dedicated account, we consider the 

amount of the past-due benefits after 

payment of attorney fees. Public Law 

104–193 affects many aspects of the SSI 

program, and we are not authorized to 

ignore any of the legislative provisions 

or to reconsider implementing these 

changes. While sections 213 and 221 of 

the PRWORA restrict the use and 

payment of certain SSI payments, 

Congress has also provided some 

flexibility in determining appropriate 

uses and for increasing the installment 

payment amounts when the SSI 

recipient’s circumstances involve 

certain debts and expenses, which we 

enumerate in § 416.545. Also, we do not 

count an installment payment as a 

resource for nine months after the 

month in which the payment is made. 

This exclusion from resources allows an 

eligible person to spend down the 

installment payment before it affects his 

or her eligibility for SSI. The funds in 

a dedicated account are excluded 

entirely from income and resources for 

determining SSI eligibility and payment 

amounts. 

Comment: Two commenters 

questioned whether due process would 

be afforded in misapplication situations. 

Response: Misapplication of benefits 

occurs when a representative payee 

knowingly uses dedicated account 

funds for expenditures that are not 

permitted. A determination that a 

representative payee misapplied funds 

and therefore is liable to us for such 

misapplication is an initial 

determination with appeal rights under 

§ 416.1402. 

Comment: One commenter stated that 

a regulatory flexibility analysis is 

needed. The commenter expressed 

concern that banks would profit from 

the establishment of dedicated accounts 

while landlords, grocers, and public 

utilities would not. The commenter’s 

concern is that there could be 

significant economic impact because 

persons would not have access to their 

entire lump sum amount. 

Response: We do not agree with the 

commenter. A regulatory flexibility 

analysis under the Regulatory 

Flexibility Act, 5 U.S.C. 601–612, is 

only required if a proposed or final 

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448 Federal Register / Vol. 76, No. 3 / Wednesday, January 5, 2011 / Rules and Regulations 

regulation would have a significant 

economic impact on a substantial 

number of small entities. It is not 

required if the head of the agency 

certifies that the proposed or final rule 

would not have a significant economic 

impact on a substantial number of small 

entities. In such a case, the agency will 

publish the certification in the Federal 

Register at the time it publishes a 

proposed or final rule and provide a 

statement providing the factual basis for 

the certification. 5 U.S.C. 605. 

Commissioner Chater certified that 

the interim final rule did not require a 

regulatory flexibility analysis, and we 

provided an appropriate factual basis for 

the certification in the preamble to the 

interim final rule. 61 FR 67203, 67205 

(1996). We have also certified that these 

final rules do not require a regulatory 

flexibility analysis, and we have 

included that certification, along with 

the appropriate factual basis for the 

certification, in the preamble below. 

The commenter’s concern about the 

possible effect of the rule on landlords, 

grocers, and public utilities does not 

require us to do a Regulatory Flexibility 

Act analysis. Neither the interim final 

nor the final rules would directly 

regulate any small entities, including 

any landlords, grocers or public 

utilities. An agency is not required to 

perform a regulatory flexibility analysis 

in order to assess the indirect effects of 

a regulation on small entities that are 

not subject to the regulation. 

Comments About Specific Regulatory 

Sections 

Section 416.538(d) Amount of 

Underpayment or Overpayment— 

Limited Delay in Payment of Underpaid 

Amount to Eligible Persons Under Age 

18 Who Has a Representative Payee 

Comment: One commenter stated that 

we should not require a representative 

payee to establish a dedicated account 

prior to our paying past-due benefits. 

The commenter suggested that we issue 

the past-due payments to the payee and 

the payee will, at a later date, tell us that 

he or she established the account. 

Response: Section 1631(a)(2)(F)(i)(I) of 

the Act explicitly requires that a 

representative payee must ‘‘establish 

* * * an account in a financial 

institution into which such benefits 

shall be paid * * *.’’ The intent of the 

legislation is to ensure that the funds are 

placed in a separate dedicated account 

to be used only for certain specified 

expenses primarily related to the child’s 

impairment. Accordingly, we must 

deposit these past-due benefits directly 

into the dedicated account as directed 

by Congress. We have made no changes 

to § 416.538(d) as previously published. 

Comment: One commenter believed 

that directly depositing title XVI pastdue benefits into the dedicated account 

would make these funds subject to 

attachment, garnishment, or levy by 

creditors, which usually they are not. 

They no longer would be ‘‘benefit 

checks’’ but simply funds in an account. 

This would leave the door open to 

creditors to attach the funds because the 

funds no longer would be protected by 

section 207 of the Act. 

Response: Section 207 of the Act, 42 

U.S.C. 407, generally prevents benefit 

payments from being subject to 

execution, levy, attachment, 

garnishment, or other legal process or to 

the operation of any bankruptcy or 

insolvency law. The protections 

afforded by section 207 apply to SSI 

payments pursuant to section 1613(d)(1) 

of the Act, 42 U.S.C. 1382(d). We have 

operated a successful direct deposit 

program for more than two decades. 

Courts have generally ruled that title II 

and title XVI benefits do not lose their 

identity as benefits protected under 

section 207 of the Act when they are 

directly deposited into a bank account. 

Further, the funds clearly retain such 

protection in the dedicated account 

because they are not commingled with 

other funds. 

In addition, we are currently pursuing 

another rulemaking that we expect will 

address the commenter’s concerns. On 

April 19, 2010, we published a joint 

notice of proposed rulemaking, along 

with the Department of the Treasury, 

the Department of Veterans Affairs, the 

Office of Personnel Management, and 

the Railroad Retirement Board. 75 FR 

20299 (2010). The joint proposed rule 

would implement statutory restrictions 

on the garnishment of Federal benefit 

payments. The agencies took this action 

in response to recent developments in 

technology and debt collection practices 

that have led to an increase in the 

freezing of accounts containing Federal 

benefit payments. 

The proposed rule would establish 

procedures that financial institutions 

must follow when a garnishment order 

is received for an account into which 

Federal benefit payments have been 

directly deposited. The proposed rule 

would require financial institutions that 

receive a garnishment order to 

determine whether any Federal benefit 

payments were deposited to the account 

within 60 calendar days prior to 

receiving the order. If so, the financial 

institutions must ensure that the 

account holder has access to an amount 

equal to the sum of such payments in 

the account or to the current balance of 

the account, whichever is lower. 

Section 416.542 Underpayments—To 

Whom Underpaid Amount Is Payable 

Comment: One commenter objected to 

our following § 416.542(b) if the eligible 

person dies before all installment 

payments have been paid. 

Response: The installment payment 

requirement in section 1631(a)(10) of 

the Act did not amend the law regarding 

the payment of past-due benefits after a 

person’s death. We believe that 

provision applies to installment 

payments of past-due benefits the same 

way it applies to regular payments of 

past-due benefits. Thus, we did not 

modify § 416.542. 

Section 416.545 Paying Large Past-Due 

Benefits in Installments 

Comment: One commenter suggested 

that we clarify the reference to the 6- 

month resource exclusion rule, which 

applies to benefits received before 

March 2, 2004. 

Response: We did add § 416.1247, 

which explains the exclusion from 

resources of dedicated accounts and 

interest or other earnings on the 

account. Section 431 of the SSPA 

changed the 6-month resource exclusion 

for title XVI underpayments in effect at 

the time we published the interim final 

rules to a 9-month resource exclusion. 

Our rules at § 416.1233 specifically state 

that we exclude from countable 

resources the unspent portion of any 

title II or title XVI retroactive payment 

for 9 months ‘‘following the month of 

receipt’’ (6 months for retroactive 

payments received before March 2, 

2004). Also, the notice that we send 

with the installment payment explains 

how the resource exclusion period is 

applied. 

Comment: One commenter asked 

whether the unpaid past-due benefits 

would accrue interest until the 

installment payments are paid in full to 

the SSI recipient. 

Response: We have no statutory 

authority to pay interest on unpaid 

benefits, including those being held for 

future installments. 

Comment: One commenter stated that 

a recipient who is awarded SSI benefits 

11 months after filing should not be 

subject to the installment payment 

provisions, since the provision only was 

applicable because it had taken us an 

additional 6 weeks to complete the 

award and payment process. 

Response: Since section 1631(a)(10) of 

the Act requires us to compute the 

amount of past-due SSI benefits before 

determining if installment payments are 

required, we determine whether the 

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Federal Register / Vol. 76, No. 3 / Wednesday, January 5, 2011 / Rules and Regulations 449 

installment payment provisions apply at 

the time the claim is paid. The number 

of months from the date of filing an 

application until a determination or 

decision is made and the reason for the 

amount of past-due benefits are not 

factors in the computation. 

Section 416.545(b) Paying Large PastDue Benefits in Installments— 

Installment Formula 

Comment: One commenter stated that 

we should change the formula for 

determining when benefits must be paid 

in installments to eliminate the 

reference for including any State 

supplementary payments a recipient 

may receive since a recipient who 

receives a State supplementary payment 

would automatically have that amount 

factored into the formula used in 

determining whether installments 

apply. 

Response: We did not adopt this 

comment. Section 1631(a)(10)(D) of the 

Act specifies that the benefits subject to 

installment payments ‘‘includes 

supplementary payments pursuant to an 

agreement for Federal administration 

under section 1616(a)’’ of the Act, and 

‘‘under section 212(b) of Public Law 93– 

66.’’ Accordingly, any federally 

administered State supplementary 

payments payable to the recipient must 

be included in the amount of past-due 

benefits when we determine if the 

amount is large enough to require 

installment payments. We believe the 

interim final rules accurately reflected 

the statutory formula and avoided 

potential confusion about whether State 

supplementation payments are included 

in applying the formula. Further, not all 

States provide a supplementary 

payment to the SSI benefit, so it is 

important to include references to the 

State supplement when providing the 

formula for dedicated account 

requirements, as well as the formula for 

the installment payment requirement. 

Comment: Another commenter asked 

that we make the formula clearer by 

adding language to indicate that the 

amount of past-due benefits used in 

determining whether installment 

payments are required is based upon the 

amount of past-due benefits remaining 

after any reimbursement has been made 

to a State for interim assistance. 

Response: We adopted this comment 

and are adding the parenthetical phrase 

‘‘reimbursement to States for interim 

assistance’’ to § 416.545(b). We are also 

adding this phrase in § 416.546(a), 

which sets forth a similar formula used 

to determine whether a dedicated 

account is required. 

Comment: One commenter suggested 

that we clarify the formula to indicate 

the amount of past-due benefits subject 

to installments that is determined after 

interim assistance is paid to States. 

Response: We added the phrase 

‘‘reimbursement to States for interim 

assistance’’ to both §§ 416.545(b) and 

416.546(a) after the phrase ‘‘§ 416.525,’’ 

which is the section that explains 

reimbursement to States for interim 

assistance. 

Section 416.545(c) Paying Large PastDue Benefits in Installments— 

Exception—When Installment Payments 

Are Not Required 

Comment: Another commenter asked 

that we clarify when the exceptions to 

the installment payment process apply. 

The commenter stated that the interim 

final rules did not make clear when the 

12-month period starts for determining 

whether death is likely to result from a 

medically determinable impairment 

within 12 months or when a recipient 

is likely to remain ineligible for 12 

months. 

Response: We did not adopt this 

comment. Section 1631(a)(10)(C) of the 

Act states and § 416.545(c) reflects that 

the installment requirement does not 

apply to a recipient who, at the time we 

determine that past-due benefits are 

payable, meets either of these two 

exceptions. We believe the language is 

clear that we consider the 12-month 

period beginning after we determine the 

recipient’s eligibility for payment of 

past-due SSI benefits. 

Section 416.545(d) Paying Large PastDue Benefits in Installments— 

Exception—Increased First and Second 

Installment Payments 

Comment: We received several 

comments objecting to the interim final 

rules because they did not include 

attorney fees as an expense for which 

we may increase the first or second 

installment payment. 

Response: Section 1631(a)(10)(B)(iii) 

of the Act lists six kinds of debt or 

expenses for which we may increase an 

installment payment. Congress itemized 

certain outstanding debts relating to 

food, clothing, shelter, and medical 

treatment, or current or anticipated 

expenses relating to medical treatment, 

and the purchase of a home. The statute 

provides that we may increase the first 

and second installment payments by the 

amount of such debt or expenses 

beyond the normal statutory limit. 

Congress did not include attorney fees 

as one of the items that we could 

consider to increase the installment 

payments. 

In addition, to the extent that the 

comment related to attorney fees 

payable under section 206 of the Act, 

after we published the interim final 

rules, Congress changed the law to 

provide that past-due benefits for 

purposes of dedicated accounts and 

installment payments include only 

those benefits remaining after the 

withholding of attorney fees. We have 

revised final § 415.545(b) to reflect that 

change in the Act. Our longstanding 

policy also has considered attorney fees 

incurred in the pursuit of a child’s 

disability claim as an example of an 

expense that could properly be 

considered payable from a dedicated 

account. We are revising 

§ 416.640(e)(2)(iii) to add that provision 

to our rules. Together, these two 

provisions greatly reduce, if not 

eliminate, the need to increase 

installment payments based on attorney 

fees payable. 

Comment: A commenter believed that 

we should broaden the exceptions for 

increasing the installment payments and 

include various expenses, such as 

transportation, child support, or 

education. 

Response: The statute is very explicit 

as to what expenses we may consider to 

find an exception to the limit on the 

first and second installment payments. 

The statute affords us no discretion to 

add to these exceptions to the basic rule. 

Comment: Another commenter asked 

what criteria we use to determine 

whether we will make an increased 

installment payment due to certain 

debts or expenses. 

Response: Since the statute refers to 

‘‘outstanding debt’’ and ‘‘current or 

anticipated expenses,’’ we require 

evidence from an SSI recipient that 

shows that payment is due for a 

particular item or that an obligation is 

being or will be incurred. The evidence 

could include, but is not limited to, 

outstanding bills from electric or utility 

companies, overdue rent bills, or letters 

of intent for purchasing a home. Under 

certain circumstances, we may not 

approve an increase to the installment 

payment based on documented debts 

that we consider excessive. The 

recipient may appeal that 

determination. 

Section 416.546 Payment Into 

Dedicated Accounts of Past-Due 

Benefits for Eligible Persons Under Age 

18 Who Have a Representative Payee 

Comment: One commenter suggested 

eliminating the reference to including 

any federally administered State 

supplementation in the formula for 

determining whether a dedicated 

account must be established. 

Response: We are not adopting this 

comment because section 

1631(a)(2)(F)(i)(II) of the Act defines 

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450 Federal Register / Vol. 76, No. 3 / Wednesday, January 5, 2011 / Rules and Regulations 

benefits for purposes of that provision to 

‘‘include State supplementary 

payments’’ that we make. 

Comment: Another commenter 

questioned our interpretation of the 

dedicated account formula. The 

commenter felt the statute required only 

the deposit of the amount of past-due 

benefits, which exceeded the formula, 

not the entire amount. 

Response: We did not adopt this 

comment because we believe the 

statutory language requires deposit of 

the entire amount of past-due benefits if 

the entire amount exceeds 6 times the 

FBR. Section 1631(a)(2)(F) of the Act 

requires the representative payee to 

establish a dedicated account ‘‘into 

which such benefits shall be paid’’ if the 

amount of the past-due benefits exceeds 

6 times the maximum FBR. The 

language does not say that the 

representative payee must establish a 

dedicated account into which the 

amount that exceeds 6 times the 

maximum FBR shall be paid. 

Comment: Three commenters 

expressed concern that if an institution 

required a minimum deposit to open an 

account, many recipients (or 

representative payees) would not have 

funds available to open a dedicated 

account in a financial institution as a 

prerequisite to payment of past-due 

benefits, as required by the interim final 

rules. 

Response: Our experience with the 

dedicated account provision is that 

recipients and representative payees 

have not generally had difficulty 

opening dedicated accounts due to the 

lack of funds. If we receive reports that 

SSI recipients are unable to establish the 

required accounts, we will enter into a 

dialogue with national banking 

organizations concerning the 

requirements of the law. We will 

encourage their member banks to accept 

our notice of past-due benefits to 

recipients as a guarantee of the deposit 

of a Federal payment in excess of $3,000 

into their institution and to waive any 

minimum deposit amounts or fees to 

establish an account for such recipients. 

Section 416.570 Adjustment—General 

Rule 

Comment: One commenter suggested 

that the rule state that an underpayment 

cannot be used to recover an 

overpayment that occurred prior to the 

computation of the underpayment. 

Response: We did not adopt the 

comment. Section 1631(b)(1) of the Act 

and § 416.543 of our rules allow the use 

of an underpayment to recover an 

overpayment that occurred in a different 

period. Congress did not change this 

authority when it enacted the dedicated 

account provision. Accordingly, the rule 

applies to situations where past-due 

amounts must be deposited into a 

dedicated account. 

We may recover an overpayment 

before we determine whether the pastdue benefits must be deposited into the 

dedicated account. If recovery of the 

overpayment reduces past-due benefits 

below the formula, a dedicated account 

is not required. However, once these 

funds are deposited into the dedicated 

account, they may not be used to repay 

an overpayment to us. 

Section 416.640(e) Dedicated 

Accounts for Eligible Persons Under 

Age 18 

Comment: One commenter stated we 

must clarify ‘‘misapplication’’ in the 

dedicated account rules and how it 

relates to the misuse rules. 

Response: We did not adopt this 

comment because we believe the 

regulatory definition of misapplication 

is sufficiently clear. Section 

416.640(e)(4) of our rules defines 

misapplication of benefits as the use of 

funds from a dedicated account in any 

manner not authorized by our rules. It 

provides that when a representative 

payee knowingly uses dedicated 

account funds for the recipient for 

expenditures that are not permitted, that 

representative payee will be liable in an 

amount equal to the total amount of the 

misapplied funds. 

Section 1631(a)(2)(A)(iv) of the Act 

defines misuse as occurring when a 

representative payee receives payment 

under title XVI for the use and benefit 

of another person and converts the 

payment, or any part of it, to a use other 

than for the use and benefit of the 

recipient. As reflected in these 

definitions, misapplication of benefits is 

different than misuse of benefits 

because misapplied benefits might 

benefit the recipient, but were not used 

for allowable expenses. 

Comment: One commenter questioned 

the absence of any provision in 

§ 416.640(e) dealing with the penalty for 

misapplication of funds from a 

dedicated account by a recipient who is 

his or her own payee, as provided in 

section 1631(a)(2)(F)(ii)(III)(bb) of the 

Act, as added by section 213 of the 

PRWORA. 

Response: The version of the 

PRWORA passed by the House of 

Representatives contained a provision to 

reinstate the penalty for the transfer of 

resources for less than fair market value 

at section 1613(c) of the Act. The 

dedicated account provision crossreferenced section 1631(c) as the 

penalty applicable when a recipient 

who is his or her own payee misapplies 

funds from a dedicated account (i.e., 

misapplied funds were to be considered 

transfers of resources resulting in a 

period of ineligibility, the length of 

which is related to the amount of funds 

misapplied). When the provision to 

reinstate the penalty for transfer of 

resources was dropped from the 

Conference Committee version, the 

cross-reference in section 

1631(a)(2)(F)(ii)(III)(bb) to section 

1613(c) was not deleted, nor was an 

alternative penalty provision 

substituted. As a result of this drafting 

error, there was no penalty for a 

recipient who is his or her own payee 

and misapplies funds from a dedicated 

account because there was no penalty 

for transfers of resources for less than 

fair market value in the SSI program. 

Subsequently, in 1997, Congress 

passed the BBA, which provided that if 

a recipient becomes his or her own 

payee and misapplies funds from a 

dedicated account, future benefits will 

be withheld in the amount of the 

misapplied funds. Although Congress 

passed this amendment after the 

publication of the interim final rules, we 

are not requesting public comment on 

that provision in these final rules 

because we are merely conforming the 

regulations to the statutory change and 

not making any discretionary policy 

changes. 

Comment: One commenter questioned 

why this provision applies primarily to 

children, and why children’s cases 

should be treated differently. 

Response: In section 213 of the 

PRWORA, Congress specifically 

addressed eligible persons under the age 

of 18 with representative payees. This 

was a legislative choice. Public Law 

104–193. 

Comment: One commenter expressed 

the opinion that ‘‘requiring the 

beneficiaries to have a bank account 

seems like an impermissible tying 

arrangement since it has nothing to do 

with disability.’’ 

Response: The commenter’s specific 

objection is not clear. However, as we 

stated above, the statutory provisions 

regarding dedicated accounts are not 

discretionary. We must implement this 

mandatory provision in the statute. 

Comment: One commenter expressed 

the opinion that because we require a 

representative payee to maintain two 

separate accounts, we should pay the 

bank service charges at least on the 

dedicated account. 

Response: This provision is required 

by statute. The statute does not 

authorize us to pay bank service 

charges. 

Comment: Two commenters requested 

that we revise § 416.640(e)(1) to allow a 

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Federal Register / Vol. 76, No. 3 / Wednesday, January 5, 2011 / Rules and Regulations 451 

dedicated account to be in the form of 

a trust. 

Response: We did not adopt this 

comment. These accounts are intended 

to ensure ready access to the funds and 

to facilitate the monitoring of 

representative payee accountability. 

Furthermore, § 1613(e), except in 

limited circumstances defines trust 

assets as resources; whereas, funds in 

dedicated accounts are excluded from 

resources for the nine-month period. 

By law, trusts are administered by 

trustees according to the terms of the 

trust. In many cases, a trustee would not 

be the representative payee. Thus, if a 

dedicated account were established in 

the form of a trust, the representative 

payee might have no authority over the 

use of benefits in the trust. In that 

situation, we would be unable to fulfill 

the requirement that we monitor and 

hold the representative payee liable for 

the misapplication of funds. 

Comment: One commenter requested 

that we revise this section of the interim 

final rules to provide an exception for 

situations in which dedicated account 

funds will not be able to be used in a 

manner authorized by this provision, 

e.g., when a child is healthy but 

mentally challenged, with virtually no 

medical expenses and no plans for 

education or job training. 

Response: This section implements 

section 1631(a)(2)(F)(i) of the Act, which 

neither provides nor gives us authority 

to make exceptions of this type. We can 

only approve impairment-related 

expenses. 

Comment: Several commenters 

requested that we revise or clarify this 

section to allow the use of dedicated 

account funds for basic living expenses 

such as food, rent, utilities, and 

replacing lost family income if a parent 

cannot work full time because of a 

child’s impairments. 

Generally, these commenters 

suggested that disabled children’s 

impairments are exacerbated by living 

in impoverished conditions and, 

therefore, we should consider using 

these funds to provide for basic needs 

as an authorized impairment-related 

expenditure. One commenter opined 

that the requested revision would make 

§ 416.640(e)(2) consistent with existing 

§ 416.640(a). 

Response: We did not adopt the 

comment to revise § 416.640(e)(2) in the 

manner requested. Section 

1631(a)(2)(F)(ii)(II) of the Act allows 

expenditures from dedicated accounts 

for specific items or services and for 

other items or services that we consider 

to be appropriate, provided that they 

benefit the eligible recipient and are 

related to his or her impairment(s). 

However, based on these public 

comments, we revised 

§ 416.640(e)(2)(iii) specifically to 

include the use of funds to prevent 

malnourishment or homelessness and to 

pay attorney fees incurred in pursuit of 

the child’s disability claim as types of 

items and services that could be 

considered appropriate expenditures. 

We did not make a complete list of 

‘‘other items and services’’ because we 

believe each situation must be 

considered on a case-by-case basis. The 

procedural instructions we issued to our 

field offices contain examples of a broad 

range of items and services that could be 

allowable as impairment-related. Some 

examples are special foods for children 

with special dietary needs, increased 

electrical bills resulting from needed 

mechanical devices that must run 

constantly, attorney fees in pursuit of 

the child’s disability claim, and 

emergency situations in which the 

unavailability of dedicated account 

funds for basic living expenses may 

result in the child’s becoming homeless 

or malnourished. 

We do not believe that it is consistent 

with the statutory restrictions placed on 

the use of dedicated account funds for 

basic living expenses to be considered 

impairment-related except in limited 

circumstances and situations. In most 

situations, ongoing monthly payments 

can and should be used to pay for the 

recipient’s basic needs, as provided in 

§ 416.640(a). 

Comment: One commenter requested 

that we revise § 416.640(e)(2) to make it 

consistent with § 416.545(d), which 

allows for accelerated installment 

payments if the recipient has 

outstanding debts for food, clothing, or 

shelter, or current or anticipated 

expenses for the purchase of a home. 

Response: We did not make the 

suggested change. Section 416.545(d) of 

our rules implements a statutory 

exception to the defined amount of 

installment payments. We may increase 

the amount of the first and second 

installments when a recipient has 

outstanding debts or anticipated 

expenses. Section 1631(a)(10)(B)(iii) of 

the Act. Among the specified items are 

outstanding debts for food, clothing, or 

shelter, and current or anticipated 

expenses for the purchase of a home. 

However, there is no similar statutory 

exception in section 1631(a)(2)(F) or 

authority for us to consider the payment 

of outstanding debts for food, clothing, 

or shelter, or the purchase of a home in 

the recipient’s name as allowable 

expenditures, unless those items are 

related to the recipient’s impairment. 

The general installment payment rule of 

section 1631(a)(10) applies to all SSI 

recipients. The specific dedicated 

account rule of section 1631(a)(2)(F) 

applies only to payments to 

representative payees of recipients 

under the age of 18. That Congress 

enacted these two provisions in the 

same legislation and did not make them 

uniform gives rise to the logical 

inference that the more restrictive 

dedicated account language takes 

precedence with respect to recipients 

under the age of 18 with representative 

payees even when the past-due benefits 

are being paid into the dedicated 

account in installments. In cases where 

a recipient under age 18 has a 

representative payee and is eligible for 

past-due benefits in an amount 

prescribed in section 1631(a)(10)(A) of 

the Act, both the installment payment 

and the dedicated account provisions 

will apply, and past-due benefits will be 

paid in installments into a dedicated 

account established by the 

representative payee. Public Law 104– 

193. 

Comment: Two commenters requested 

that we revise § 416.640(e)(2)(iii) to 

include a comprehensive list of 

expenses that we determine to be 

allowable. The commenters believed 

that the list should include the basic 

necessities of life such as food, clothing, 

and shelter, as well as child care, respite 

care, items related to education, and 

participating in community and family 

activities such as summer camp. 

Generally, the commenters were 

concerned that our field office 

employees had too much discretion and 

might make arbitrary or conflicting 

decisions. 

Response: We disagree with the 

premise of these comments. We decided 

not to exclusively itemize specific items 

or services that we could consider 

allowable expenditures because, except 

for education, job skills training, and 

medical treatment, section 

1631(a)(2)(F)(ii)(II) of the Act requires 

that the item or service benefit the 

disabled SSI recipient and be related to 

that recipient’s impairment. Since 

disabled recipients do not have 

universally applicable impairmentrelated needs or might not benefit 

universally from certain items or 

services, we conclude that we should 

review these expenditures on a case-bycase basis. Further, Congress specified 

in section 1631(a)(10) of the Act that we 

could increase installment expenses in 

view of debts for basic living expenses 

while it chose not to include similar 

language in section 1631(a)(2)(F) of the 

Act. We interpret this as indicating 

Congress’ intent not to allow basic 

living expenses generally to be paid 

from dedicated account funds. 

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452 Federal Register / Vol. 76, No. 3 / Wednesday, January 5, 2011 / Rules and Regulations 

Thus, rather than include an 

extensive list of specific examples in the 

interim final rules, we provided general 

procedural instructions for the field 

personnel. We issued instructions to our 

field offices to make case-by-case 

determinations based on the payee’s 

explanation about how an item or 

service would benefit the recipient and 

how it is related to the recipient’s 

impairment(s). We included a broad 

non-inclusive list of examples of how 

some items or services could be related 

to certain impairments. 

Some of the items that the 

commenters wanted included in 

§ 416.640(e)(2)(iii), such as child care, 

respite care, items related to education, 

and participating in community and 

family activities could readily be 

considered beneficial to the recipient as 

explained in our procedural guidelines. 

However, as stated in previous 

responses, they are not presumptively 

impairment-related. Therefore, general 

expenses for food, clothing, and shelter 

cannot necessarily be paid from 

dedicated account funds. Ongoing 

monthly payments can and should be 

used to pay for the recipient’s basic 

needs, as provided in § 416.640(a). 

Nevertheless, we expanded the list of 

allowable expenses in 

§ 416.640(e)(2)(iii) to include attorney 

fees incurred in the pursuit of the 

child’s disability claim, and basic living 

expenses where emergency situations 

may result in the child becoming 

homeless or malnourished without 

these funds being made available. 

Comment: Two commenters wanted 

written instructions for representative 

payees, as well as our employees, about 

the proper use of dedicated account 

funds. 

Response: We did not adopt the 

comment. We do not believe such 

written instructions would be 

appropriate in our regulations, but we 

have developed notices and information 

in ‘‘A Guide for Representative Payees’’ 

(http://www.socialsecurity.gov/pubs/ 

10076.pdf) regarding the proper use of 

dedicated account funds. 

Comment: Two commenters requested 

that we establish a time frame for preapproval of expenses from dedicated 

account funds. 

Response: We did not adopt this 

comment. Payees are not required to 

obtain prior approval for dedicated 

account expenditures. However, if a 

payee is uncertain whether an 

expenditure is allowed, the payee 

should seek our approval before making 

the expenditure. We explain this issue 

further in our publication ‘‘A Guide for 

Representative Payees.’’ For instance, 

the Guide notes that payees ‘‘should first 

get approval from us for these kind of 

expenses’’ (i.e., expenses related to the 

child’s disability that we determine are 

appropriate). 

Comment: One commenter stated that 

the potential for second-guessing the 

expenditures of thousands of parents, 

aside from the undue administrative 

burdens this could place on us, is quite 

real and suggested we make a 

presumptive rule that any expenditure 

of less than $1,000 should be presumed 

valid and not subject to review. 

Response: The statutory language 

does not authorize us to establish such 

a presumption that would exempt 

expenditures from the misapplication 

rules. Accordingly, we did not adopt 

this comment. 

Comment: Many commenters were 

concerned that attorney fees were not 

listed as a permitted expenditure from 

dedicated account funds. They urged 

that many SSI recipients are found 

disabled only through the efforts of an 

attorney. 

Response: As noted above, attorney 

fees incurred in pursuit of the child’s 

disability claim may be considered 

‘‘impairment-related’’ and a permitted 

expenditure of dedicated account funds. 

We have long included this provision in 

our operating instructions. However, 

based on the public comments, we 

included attorney fees related to the 

pursuit of the child’s disability claim in 

§ 416.640(e)(2)(iii) as an expenditure 

that could be considered as appropriate. 

As noted previously, section 

1631(a)(2)(F)(i)(II) of the Act provides 

for paying attorney fees from past-due 

benefits and for determining whether a 

dedicated account is required, only after 

deducting such fees. 

Section 416.1247 Exclusion of a 

Dedicated Account in a Financial 

Institution 

Comment: Two commenters opined 

that the resource exclusion for 

dedicated accounts in § 416.1247 should 

continue to apply after a recipient’s 

eligibility has terminated. Not allowing 

continuation of the exclusion could 

become a bar to re-eligibility. 

Response: Section 1613(a)(12) of the 

Act provides an exclusion from 

resources of ‘‘any account, including 

accrued interest or other earnings 

thereon, established and maintained in 

accordance with section 1631(a)(2)(F).’’ 

The maintenance requirements in 

section 1631(a)(2)(F) deal with 

restrictions on the use of funds in the 

dedicated account and requirements of 

the payee to report on and account for 

activity respecting funds in the 

dedicated account. These restrictions 

and accounting requirements continue 

during periods of suspension from SSI 

eligibility and, accordingly, the resource 

exclusion continues during periods of 

suspension due to ineligibility, as long 

as the recipient’s eligibility has not been 

terminated. 

When a recipient’s eligibility 

terminates, the restrictions on the use of 

funds in a dedicated account and the 

payee’s responsibility to account for and 

report on activity in such an account 

also terminate, and the resource 

exclusion ends. Once eligibility 

terminates, any special status given to 

funds in a dedicated account and the 

dedicated account designation itself 

end. 

Comment: One commenter was 

concerned that, although dedicated 

accounts are excluded from resources 

for SSI purposes, they could be a 

resource for Medicaid purposes, causing 

ineligibility. 

Response: Dedicated accounts will be 

excluded for most States for which we 

make Medicaid eligibility 

determinations or that use SSI rules to 

make their own Medicaid eligibility 

determinations. For the 11 States that 

make their own Medicaid eligibility 

determinations using their own rules, 

dedicated accounts may be excluded 

from resources at the option of each 

State. 

Explanation of Revisions 

These final rules reflect the following 

minor changes to the interim final rules: 

• We added a new second sentence to 

§ 416.545(a) to clarify current policy. 

The interim final rule was silent on our 

policy and procedures for issuing 

additional past-due benefits that become 

payable while a recipient is receiving 

installment payments so we are 

including language in § 416.545(a) to 

explain this process more fully. 

• We amended the first sentence of 

§§ 416.545(b) and 416.546(a) to include 

additional language as a result of the 

public comments. 

• We amended § 416.640(e)(2)(iii) by 

adding an additional sentence to the 

end of the section to include attorney 

fees and expenditures to prevent 

malnourishment and homelessness as 

dedicated account expenditures that 

could be considered appropriate. 

These final rules make the following 

changes based on statutes enacted 

subsequent to the interim final rules: 

• We amended §§ 416.545(b) and 

416.546(a) to reflect the SSPA provision 

to specify that past-due benefits for 

dedicated account purposes and 

installment payment purposes are those 

benefits remaining after any 

withholding for payment of attorney 

fees. 

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Federal Register / Vol. 76, No. 3 / Wednesday, January 5, 2011 / Rules and Regulations 453 

• We amended § 416.545(b) to reflect 

changes based on the nondiscretionary 

provision of section 7502 of the DRA to 

specify the formula for past-due benefits 

for payment of installments will be an 

amount which equals or exceeds 3 times 

the maximum monthly benefit payable 

plus any federally administered State 

supplementation. 

• We amended § 416.546(b) to reflect 

the technical amendments in section 

5522(b) of the BBA to clarify what 

subsequent past-due benefits may be 

deposited into a dedicated account by 

the representative payee. 

• We amended § 416.546(e)(4) to 

reflect the technical amendments in 

section 5522(b) of the BBA to clarify 

how we treat misapplication of benefits 

in a dedicated account by a recipient 

who is his or her own payee. 

Except for the changes discussed 

above and set out below, the interim 

final rules remain unchanged and are 

adopted as final. 

Regulatory Procedures 

Pursuant to sections 205(a), 702(a)(5) 

and 1631(d)(1) of the Social Security 

Act, 42 U.S.C. 405(a), 902(a)(5) and 

1383(d)(1), we follow the 

Administrative Procedure Act (APA) 

rulemaking procedures specified in 5 

U.S.C. 553 in the development of our 

regulations. The APA provides 

exceptions to its prior notice and public 

comment procedures when an agency 

finds there is good cause for dispensing 

with such procedures on the basis that 

they are impracticable, unnecessary, or 

contrary to the public interest. 

In the case of this rule, we have 

determined that, under 5 U.S.C. 

553(b)(B), good cause exists for 

dispensing with the notice and public 

comment procedures for the three 

changes we are making based on 

legislation enacted after we published 

the interim final rule because these 

changes all are required by the statutes. 

The statutes do not give us any 

discretion in implementing the 

provisions. Therefore, opportunity for 

prior comment is unnecessary, and we 

are including these changes in this final 

rule. 

Executive Order 12866 

We have consulted with the Office of 

Management and Budget (OMB) and 

determined that these final rules meet 

the criteria for a significant regulatory 

action under Executive Order 12866. 

Thus, they were reviewed by OMB. 

Regulatory Flexibility Act 

We certify that these final rules will 

not have a significant economic impact 

on a substantial number of small 

entities, because they affect persons or 

States only. Therefore, a regulatory 

flexibility analysis is not required under 

the Regulatory Flexibility Act, as 

amended. 

Paperwork Reduction Act 

These final rules do not create any 

new, or affect any existing, collections, 

and therefore, do not require OMB 

approval under the Paperwork 

Reduction Act. 

(Catalog of Federal Domestic Assistance 

Program No. 96.006, Supplemental Security 

Income) 

List of Subjects in 20 CFR Part 416 

Administrative practice and 

procedure, Aged, Blind, Disability 

benefits, Public assistance programs, 

Reporting and recordkeeping 

requirements, Supplemental security 

income (SSI). 

Dated: September 28, 2010. 

Michael J. Astrue, 

Commissioner of Social Security. 

■ For the reasons set forth in the 

preamble, we are amending subparts E 

and F of part 416 of chapter III of title 

20 of the Code of Federal Regulations as 

follows: 

PART 416—SUPPLEMENTAL 

SECURITY INCOME FOR THE AGED, 

BLIND, AND DISABLED 

Subpart E—[Amended] 

■ 1. The authority citation for subpart E 

of part 416 continues to read as follows: 

Authority: Secs. 702(a)(5), 1147, 1601, 

1602, 1611(c) and (e), and 1631(a)–(d) and (g) 

of the Social Security Act (42 U.S.C. 

902(a)(5), 1320b–17, 1381, 1381a, 1382(c) 

and (e), and 1383(a)–(d) and (g)); 31 U.S.C. 

3720A. 

■ 2. Amend § 416.545 by adding a new 

second sentence following the first 

sentence in paragraph (a) and by 

revising the first sentence of paragraph 

(b) to read as follows: 

§ 416.545 Paying large past-due benefits in 

installments. 

(a) * * * If an individual becomes 

eligible for past-due benefits for a 

different period while installments are 

being made, we will notify the 

individual of the amount due and issue 

these benefits in the last installment 

payment. * * * 

* * * * * 

(b) * * * Installment payments must 

be made if the amount of the past-due 

benefits, including any federally 

administered State supplementation, 

after applying § 416.525 (reimbursement 

to States for interim assistance) and 

applying § 416.1520 (payment of 

attorney fees), equals or exceeds 3 times 

the Federal Benefit Rate plus any 

federally administered State 

supplementation payable in a month to 

an eligible individual (or eligible 

individual and eligible spouse). * * * 

* * * * * 

■ 3. Amend § 416.546 by revising 

paragraphs (a) and (b) to read as follows: 

§ 416.546 Payment into dedicated 

accounts of past-due benefits for eligible 

individuals under age 18 who have a 

representative payee. 

* * * * * 

(a) For an eligible individual under 

age 18 who has a representative payee 

and who is determined to be eligible for 

past-due benefits (including any 

federally administered State 

supplementation) in an amount which, 

after applying § 416.525 (reimbursement 

to States for interim assistance) and 

§ 416.1520 (payment of attorney fee), 

exceeds six times the Federal Benefit 

Rate plus any federally administered 

State supplementation payable in a 

month, this unpaid amount must be 

paid into the dedicated account 

established and maintained as described 

in § 416.640(e). 

(b) After the account is established, 

the representative payee may (but is not 

required to) deposit into the account 

any subsequent funds representing pastdue benefits under this title to the 

individual which are equal to or exceed 

the maximum Federal Benefit Rate 

(including any federally administered 

State supplementation). 

* * * * * 

Subpart F—[Amended] 

■ 4. The authority citation for subpart F 

of part 416 continues to read as follows: 

Authority: Secs. 702(a)(5), 1631(a)(2) and 

(d)(1) of the Social Security Act (42 U.S.C. 

902(a)(5) and 1383(a)(2) and (d)(1)). 

■ 5. Amend § 416.640 by adding an 

additional sentence to the end of 

paragraph (e)(2)(iii) and an additional 

sentence to the end of paragraph (e)(4) 

to read as follows: 

§ 416.640 Use of benefit payments. 

* * * * * 

(e) * * * 

(2) * * * 

(iii) * * * Attorney fees related to the 

pursuit of the child’s disability claim 

and use of funds to prevent 

malnourishment or homelessness could 

be considered appropriate expenditures. 

* * * * * 

(4) * * * In addition, if a recipient 

who is his or her own payee knowingly 

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454 Federal Register / Vol. 76, No. 3 / Wednesday, January 5, 2011 / Rules and Regulations 

misapplies benefits in a dedicated 

account, we will reduce future benefits 

payable to that recipient (or to that 

recipient and his or her spouse) by an 

amount equal to the total amount of the 

misapplied funds. 

* * * * * 

[FR Doc. 2010–33272 Filed 1–4–11; 8:45 am] 

BILLING CODE 4191–02–P 

DEPARTMENT OF TRANSPORTATION 

Pipeline and Hazardous Materials 

Safety Administration 

49 CFR Parts 105, 107, and 171 

[Docket No. PHMSA–2009–0410 (HM–233B)] 

RIN 2137–AE57 

Hazardous Materials Transportation: 

Revisions of Special Permits 

Procedures 

AGENCY: Pipeline and Hazardous 

Materials Safety Administration 

(PHMSA), DOT. 

ACTION: Final rule. 

SUMMARY: PHMSA is revising its 

procedures for applying for a special 

permit to require an applicant to 

provide sufficient information about its 

operations to enable the agency to 

evaluate the applicant’s fitness and the 

safety impact of operations that would 

be authorized in the special permit. In 

addition, PHMSA is providing an online application option. 

DATES: Effective date: The effective date 

of these amendments is March 7, 2011. 

Voluntary compliance date: Voluntary 

compliance with the provisions of this 

final rule is authorized January 5, 2011. 

FOR FURTHER INFORMATION CONTACT: Mr. 

Steven Andrews or Mr. T. Glenn Foster, 

Standards and Rulemaking Division, 

PHMSA, at (202) 366–8553 or Mr. Ryan 

Paquet, Approvals and Permits Division, 

PHMSA, at (202) 366–4511. 

SUPPLEMENTARY INFORMATION: 

I. Background 

The Federal hazardous material 

transportation law (Federal hazmat law), 

49 U.S.C. 5101 et seq., directs the 

Secretary of Transportation to prescribe 

regulations for the safe transportation of 

hazardous material in commerce. (49 

U.S.C. 5103) Section 5117(a) authorizes 

the Secretary of Transportation to issue 

a special permit from a regulation 

prescribed in §§ 5103(b), 5104, 5110, or 

5112 of the Federal hazardous materials 

transportation law to a person 

transporting, or causing to be 

transported, hazardous material in a 

way that achieves a safety level at least 

equal to the safety level required under 

the law, or consistent with the public 

interest, if a required safety level does 

not exist. The Pipeline and Hazardous 

Materials Safety Administration 

(PHMSA) is the administration within 

the Department of Transportation (DOT) 

primarily responsible for implementing 

the Federal hazmat law and issuing 

special permits. 

The HMR generally are performanceoriented regulations that provide the 

regulated community with a certain 

amount of flexibility in meeting safety 

requirements. Even so, not every 

transportation situation can be 

anticipated and built into the 

regulations. Innovation is a strength of 

our economy and the hazardous 

materials community is particularly 

strong at developing new materials and 

technologies and innovative ways of 

moving materials. Special permits 

enable the hazardous materials industry 

to quickly, effectively, and safely 

integrate new products and technologies 

into the production and transportation 

stream. Thus, special permits provide a 

mechanism for testing new 

technologies, promoting increased 

transportation efficiency and 

productivity, and ensuring global 

competitiveness. Implementation of 

new technologies and operational 

techniques can enhance safety because 

the authorized operations or activities 

often provide a greater level of safety 

than required under the regulations. In 

addition, each applicant granted a 

special permit undergoes a safety fitness 

evaluation, further assuring the safety of 

transportation under the special permit. 

Special permits also reduce the volume 

and complexity of the HMR by 

addressing unique or infrequent 

transportation situations that would be 

difficult to accommodate in regulations 

intended for use by a wide range of 

shippers and carriers. 

The procedures governing the 

application, issuance, modification, and 

termination of special permits are found 

at Subpart B of 49 CFR Part 107 (see 

§§ 107.101–107.127). As currently 

specified in § 107.105(c), an application 

must include the following information 

that is relevant to the special permit 

proposal: (1) A citation of the specific 

regulation from which the applicant 

seeks relief; (2) specification of the 

proposed mode or modes of 

transportation; (3) a detailed description 

of the proposed special permit (e.g., 

alternative packaging, test, procedure or 

activity) including, as appropriate, 

written descriptions, drawings, flow 

charts, plans and other supporting 

documents; (4) a specification of the 

proposed duration or schedule of events 

for which the special permit is sought; 

(5) a statement outlining the applicant’s 

basis for seeking relief from compliance 

with the specified regulations and, if the 

special permit is requested for a fixed 

period, a description of how compliance 

will be achieved at the end of that 

period; (6) if the applicant seeks 

emergency processing specified in 

§ 107.117, a statement of supporting 

facts and reasons; (7) identification and 

description of the hazardous materials 

planned for transportation under the 

special permit; (8) description of each 

packaging, including specification or 

special permit number, as applicable, to 

be used in conjunction with the 

requested special permit; (9) for 

alternative packagings, documentation 

of quality assurance controls, package 

design, manufacture, performance test 

criteria, in-service performance and 

service-life limitations; and (10) when a 

Class 1 material is forbidden for 

transportation by aircraft except under a 

special permit (see Columns 9A and 9B 

in the table in 49 CFR 172.101), 

certification by an applicant for a 

special permit to transport such Class 1 

material on passenger-carrying or cargoonly aircraft with a maximum 

certificated takeoff weight of less than 

12,500 pounds that no person within 

the categories listed in 18 U.S.C. 842(i) 

will participate in the transportation of 

the Class 1 material. 

In addition, the applicant must 

demonstrate that a special permit 

achieves a level of safety at least equal 

to that required by regulation or, if the 

required safety level does not exist, that 

the special permit is consistent with the 

public interest. To this end, at a 

minimum, the application must include: 

(1) Information on shipping and 

incident history and experience relating 

to the application; (2) identification of 

increased risks to safety or property that 

may result if the special permit is 

granted and a description of measures 

that will be taken to mitigate that risk; 

and (3) analyses, data, or test results 

demonstrating that the level of safety 

expected under the special permit is 

equal to the level of safety achieved by 

the regulation from which the applicant 

seeks relief. 

PHMSA independently reviews and 

evaluates the information provided in 

the special permit application to 

determine whether the special permit 

will achieve an equal level of safety as 

provided by the HMR or, if a required 

level of safety does not exist, that the 

special permit is consistent with the 

public interest. This review includes a 

technical analysis of the alternative 

proposed in the application, an 

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