This section of the FEDERAL REGISTER

contains regulatory documents having general

applicability and legal effect, most of which

are keyed to and codified in the Code of

Federal Regulations, which is published under

50 titles pursuant to 44 U.S.C. 1510.

The Code of Federal Regulations is sold by

the Superintendent of Documents. Prices of

new books are listed in the first FEDERAL

REGISTER issue of each week.

Rules and Regulations Federal Register

33433

Vol. 65, No. 101

Wednesday, May 24, 2000

DEPARTMENT OF AGRICULTURE

Food and Nutrition Service

7 CFR Parts 272, 274 and 277

[Amdt. No. 385]

RIN 0584–AB66

Food Stamp Program: Payment of

Certain Administrative Costs of State

Agencies

AGENCY: Food and Nutrition Service,

USDA.

ACTION: Final rule.

SUMMARY: This final rule amends Food

Stamp Program Regulations to

implement a reduction of the Federal

reimbursement rate for fraud control,

automatic data processing development

and Systematic Alien Verification for

Entitlements costs incurred by State

agencies in administering the Food

Stamp Program. These changes are

mandated by the Mickey Leland

Childhood Hunger Relief Act of 1993. In

addition, this rule limits the period that

a State agency may retroactively claim

Federal funding of administrative costs

for Food Stamp Program activities and

allows the incremental costs of

certifying Temporary Assistance for

Needy Families households for food

stamps to be charged to the Food Stamp

Program for Federal reimbursement

purposes.

DATES: This rule is effective June 23,

2000, except that 7 CFR 277.11(d) is

effective October 1, 2000.

FOR FURTHER INFORMATION CONTACT:

Barbara Hallman, Chief, State

Administration Branch, Program

Accountability Division, Food and

Nutrition Service (FNS), USDA, 3101

Park Center Drive, Room 905,

Alexandria, Virginia, 22302, (703) 305–

2383.

SUPPLEMENTARY INFORMATION:

Executive Order 12866

This rule has been determined to be

significant and was reviewed by the

Office of Management and Budget under

Executive Order 12866.

Executive Order 12372

The Food Stamp Program is listed in

the Catalog of Federal Domestic

Assistance under 10.551. For the

reasons set forth in the final rule and

related notice to 7 CFR 3015, subpart V

(48 FR 29115), this Program is excluded

from the scope of Executive Order

12372 which requires intergovernmental

consultation with State and local

officials.

Executive Order 12988

This 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 implementation. This

rule is not intended to have retroactive

effect unless so specified in the ‘‘Dates’’

section of this preamble. Prior to any

judicial challenge to the provisions of

this rule or the application of its

provisions, all applicable administrative

procedures must be exhausted. In the

Food Stamp Program the administrative

procedures are as follows:

(1) For program benefit recipients—

State administrative procedures issued

pursuant to 7 U.S.C. 2020(e)(10) and 7

CFR 273.15;

(2) For State agencies—administrative

procedures issued pursuant to 7 U.S.C.

2023 set out at 7 CFR 276.7 (for rules

related to non-QC liabilities) or Part 283

(for rules related to QC liabilities);

(3) For program retailers and

wholesalers—administrative procedures

issued pursuant to 7 U.S.C. 2023 set out

at 7 CFR 278.8.

Regulatory Flexibility Act

This action has been reviewed with

regard to the requirements of the

Regulatory Flexibility Act of 1980 (5

U.S.C. 601–612). Shirley R. Watkins,

Under Secretary of the Food, Nutrition

and Consumer Services, has certified

that this rule does not have a significant

economic impact on a substantial

number of small entities. This rule will

affect the State and local agencies which

administer the Food Stamp Program, by

modifying the recordkeeping and

reporting requirements applicable to

them, and modifying the rates of Federal

funding reimbursement for certain Food

Stamp Program activities.

Executive Order 13132/Federalism

Summary Impact Statement

Executive Order 13132 requires

Federal agencies to consider the impact

of their regulatory actions on State and

local governments. FNS has considered

the impact on State agencies. This rule

deals with reimbursements of State

agency costs and codifies a cut in the

reimbursement rate that was effective

April 1, 1994, by law. This rule is

intended to have preemptive effect with

respect to any State law which conflicts

with its provisions or which would

otherwise impede its full

implementation. FNS is not aware of

any case where any of these provisions

would in fact preempt State law and no

comments were made to that effect.

Prior Consultation With State Officials

Prior to drafting this final rule, we

received input from State agencies at

various times. Since the Food Stamp

Program is a State administered,

federally funded program, our regional

offices are having informal and formal

discussions with State and local

officials on an ongoing basis regarding

funding and implementation issues.

This arrangement allows State agencies

to provide feedback that form the bases

for many discretionary decisions in this

and other Food Stamp Program rules. In

addition, we send representatives to

regional, national, and professional

conferences to discuss our issues and

receive feedback on funding issues,

fraud control, and State information

systems. Lastly, the comments on the

proposed rule from State and local

officials were carefully considered in

the drafting of this final rule.

Nature of Concerns and the Need To

Issue This Rule

States were concerned that the cut in

the funding rate would put a burden on

State funding for the Food Stamp

Program and may result in reduced

State effort to combat fraud and upgrade

State information systems. Concern was

also raised that the cutback in the

funding rate while States would need to

continue to submit a fraud control plan

would represent an unfunded mandate.

33434 Federal Register / Vol. 65, No. 101 / Wednesday, May 24, 2000 / Rules and Regulations

Finally, there was concern regarding the

proposed deadline for filing retroactive

claims for reimbursement.

While the cutback in the funding rate

in 1994 had an impact on State

agencies, the reduced reimbursement

rate is mandated by law and does not

involve Department discretion. The rule

is necessary to codify the cut in the

reimbursement rate. The deadline on

retroactive claims is necessary to direct

State and Federal resources toward the

present operation of the program.

Extent to Which We Meet These

Concerns

With the increase in recipient claim

collections since FY 1994, States are

receiving additional funds through the

retention of a part of those increased

collections. In response to State

concerns, FNS did eliminate the

requirement for a fraud control plan

based on State comments in this rule

but will consider what information, if

any, should be required as part of a

separate overall revision to State Plan

requirements. That will be done outside

this rule. We clarified the wording

regarding the deadline and the process

for submitting prior year claims to FNS.

While FNS did not seek State agency

comment in advance regarding the

change in payment systems and the

change in reporting form (from the SF–

270, Request for Advance or

Reimbursement, to the SF–269,

Financial Status Report) for prior year

administrative cost reporting, FNS does

believe the change benefits States

because it streamlines the payment

process. States benefit because the

electronic form SF–269 minimizes

rekeying data in the event of a revised

report and reduces the processing time

to make funds available to the State.

Faster payment processing benefits

States.

Paperwork Reduction Act

In accordance with the Paperwork

Reduction Act of 1995, the Food and

Nutrition Service is submitting for

Office of Management and Budget

(OMB) approval the proposed

information collection resulting from

implementing the provisions contained

in this rule. The proposed information

collection is for a change in use of the

SF–269.

The reporting requirements relating to

the FCS–366A, Budget Projection, are

approved under OMB No. 0584–0083.

The reporting requirements relating to

the use of the Standard Form (SF)-269,

Financial Status Report, and the SF–

269A, Financial Status Report

Addendum, are approved under OMB

No. 0348–0039. The reporting

requirements for the SF–270, Request

for Advance or Reimbursement, are

approved under OMB No. 0348–0004.

Comments on this information

collection must be received by July 24,

2000 to be assured of consideration.

Comments are invited on: (a) Whether

the proposed collection of information

is necessary for the performance of the

functions of the agency, including

whether the information will have

practical utility; (b) the accuracy of the

agency’s estimate of the burden of the

proposed collection of information

including the validity of the

methodology and assumptions used; (c)

ways to enhance the quality, utility and

clarity of the information to be

collected; and (d) ways to minimize the

burden of collection of information on

those who are to respond, including

through the use of appropriate

automated, electronic, mechanical, or

other technological collection

techniques or other forms of information

technology.

Comments may be sent to: Manish

Desai, Desk Officer, Office of

Information and Regulatory Affairs,

Office of Management and Budget, 725

17th Street NW., Washington, DC 20503.

Send requests for additional

information or copies of this

information collection to: Barbara

Hallman, Chief, State Administration

Branch, Program Accountability

Division, Food and Nutrition Service,

U.S. Department of Agriculture, 3101

Park Center Drive, Alexandria, VA

22302 or call (703) 305–2383.

Title: Uniform Administrative

Requirements for Grants and

Cooperative Agreements—7 CFR Parts

3016 and 3019.

OMB Number: 0348–0039.

Expiration Date: Three years from

date of approval.

Type of Request: Revision of a

currently approved collection.

Abstract: Section 16(a) of the Food

Stamp Act of 1977 (7 U.S.C. 2011 et.

seq.) authorizes the Secretary to pay

each State agency an amount equal to 50

percent of all allowable administrative

costs involved in each State agency’s

operation of the Food Stamp Program.

State agencies draw the funds for

administrative costs from the United

States Treasury through a Letter of

Credit. Under corresponding Food

Stamp Program regulations at 7 CFR

277.11(c) State agencies are required to

use the standard Financial Status Report

(Form SF–269) on a quarterly basis to

report program administrative costs to

FNS and to support the claims made for

Federal funding. Final reports are due

December 30 for the preceding Federal

fiscal year which runs from October 1

through September 30 or 90 days after

termination of Federal financial

support.

Beginning in FY 1998, State agencies

were required to use the SF–269, rather

than the SF–270, to revise prior year

expenditure reports. The SF–269 is used

with a Letter of Credit payment system.

Prior to FY 1996, under FNS’ previous

payment system, the Letter of Credit

closed after the end of the fiscal year. In

FY 1996 FNS changed to the

Department of Treasury’s new payment

system, Automated Standard

Application for Payments (ASAP),

which kept the Letter of Credit system

open after the end of the fiscal year. As

a result, the SF–269 could continue to

be used after close-out in the event it

was necessary for a State to revise a

prior year’s report.

The use of the SF–269 and the ASAP

for prior years is much more efficient

both for States and FNS. With the

electronic SF–269 reporting and new

payment system, States get their

reimbursement faster. The SF–270

process is a manual process that is not

tied into State electronic reporting to

FNS. Therefore, FNS believes it would

require more State resources to

complete the SF–270 form compared to

electronic SF–269 reporting. The SF–

270 process would also require more

FNS resources to process the request.

These changes were done at the time

without public comment. The use of the

Letter of Credit system as the payment

system when there is a continuing

relationship with the State agency and

the use of the SF–269 by State agencies

as the reporting form for such systems

are required respectively by 7 CFR

3015.102 and 3015.82. In accordance

with 7 CFR 3015.1(b), Part 3015

provisions take precedence over any

individual agency regulations which

may be inconsistent with Part 3015

unless the inconsistency is based on a

statutory provision or an exception has

been obtained. Because these changes

were in accordance with 7 CFR 3015,

which takes precedence over agency

rules, and because these procedures

have been in effect since FY 1998, the

Department believes requesting public

comment on the procedural change to

use the SF–269 for prior year costs that

is being codified in this final rule would

cause unnecessary delay which is

contrary to the public interest. However,

the Department is interested in

comments regarding the change in the

burden estimate for the SF–269 due to

its continued use as necessary after

fiscal year close-out.

The Financial Status Report

Addendum (SF–269A) is used by State

agencies to report on a quarterly basis

Federal Register / Vol. 65, No. 101 / Wednesday, May 24, 2000 / Rules and Regulations 33435

outlays of program cash-out benefits

where FNS has approved the issuance of

checks in lieu of food coupons. Final

reports are due December 30 for the

preceding Federal fiscal year.

Beginning June 1995, State agencies

were allowed to submit the SF–269 and

SF–269A data electronically to the

national database files stored in FNS’

Food Stamp Program Integrated

Information system in lieu of a paper

report. The voluntary changeover from

paper to electronic reporting of SF–269

and SF–269A data by States was done

as part of FNS’ State Cooperative Data

Exchange (SCDEX) Project. This project

is being expanded each year as more

FNS forms are transformed to electronic

formats for State data entry. As of

January 2000, 47 State agencies submit

the SF–269 (and SF–269A if

appropriate) data electronically and 6

State agencies continue to submit paper

reports.

For FY 1995 and prior fiscal years, the

SF–270 continues to be used until the

funding fiscal year has been canceled

because the Letter of Credit is no longer

open for those years. OMB requires the

use of the Form SF–270 when a State

agency wants to adjust the program’s

financial status when the Letter of

Credit is not used. The Department

regulations at 7 CFR 3015.84(b)

implemented this mandatory use of the

SF–270. The SF–269 is authorized

under 7 CFR 3015.82(a) and 7 CFR

277.11.

Section 277.11(d) of this final rule

contains a deadline for filing claims for

Federal reimbursement. Thus, State

agencies will no longer be able to claim

reimbursement for Fiscal Years 1998

and before effective October 1, 2000.

Section 277.11(d) of this final rule

contains an information collection and

reporting requirement. It requires the

State agency to use a reporting form

specified by FNS to request retroactive

funding. With the time limit on filing

claims, this form will be the SF–269.

Respondents: State agencies that

administer the Food Stamp Program.

Number of Respondents: 53.

Estimated Number of Responses per

Respondent:

Form SF–269: 53 State agencies five

times a year for current year (required)

and three times a year for prior years

(estimated based on an as-needed basis).

Form SF–269A: 12 State agencies five

times a year.

Estimate of Burden:

Form SF–269: The 53 State agencies

submit Form SF–269 for the current

year at an estimate of 16.8 hours per

respondent, or 4,452 hours. The 53 State

agencies submit revised SF–269 (for

prior years) three times annually at an

estimate of 1 hour per respondent for an

additional 159 hours annually. The use

of the electronic SF–269 in FNS

information system will minimize the

amount of information to be rekeyed by

States for a revised SF–269 since States

only need to rekey information that has

changed. Because the additional 159

hour burden had not been previously

approved by OMB, this represents an

increase of 159 hours.

Form SF–269A: Approximately 12

State agencies submit Form SF–269A at

an estimate of 1 hour per respondent or

60 total hours.

Estimated Total Annual Burden on

Respondents: FNS use of the SF–269,

SF–269A, and SF–270 was previously

approved under OMB No. 0505–0008;

however, this package was eliminated.

The SF–269 and SF–269A are approved

under OMB No. 0348–0039. The SF–270

is approved under OMB No. 0348–0004.

Consequently, we are requesting

approval of the burden increase for FNS

use of the SF–269 form. The revised

annual reporting and recordkeeping

burden for the Food Stamp Program for

this form is estimated to be 4,671 hours.

This estimate represents an increase of

159 hours from the previously approved

burden of 4,512 hours.

The remaining provisions of this rule

do not contain reporting or

recordkeeping requirements subject to

approval by OMB.

Unfunded Mandates Reform Act

Title II of the Unfunded Mandates

Reform Act of 1995 (UMRA), Pub. L.

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 FNS generally must prepare a

written statement, including a costbenefit analysis, for proposed and final

rules with ‘‘Federal mandates’’ that may

result in expenditures to State, local, or

tribal governments, in the aggregate, or

to 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

FNS to identify and consider a

reasonable number of regulatory

alternatives and adopt the least costly,

more cost effective or least burdensome

alternative that achieves the objectives

of the rule.

This rule contains no Federal

mandates (under the regulatory

provisions of Title II of the UMRA) for

State, local, and tribal governments or

the private sector. Thus today’s rule is

not subject to the requirements of

sections 202 and 205 of the UMRA.

Background

Section 13961 of the Mickey Leland

Childhood Hunger Relief Act of 1993

(Leland Act) (Pub. L. 103–66, 107 Stat.

679), signed on August 10, 1993,

amended Section 16 of the Food Stamp

Act (Act) (7 U.S.C. 2025) to reduce the

Federal reimbursement rate for fraud

control from 75 percent to 50 percent,

the rate for automatic data processing

(ADP) development from 75 or 63

percent to 50 percent, and the rate for

Systematic Alien Verification for

Entitlements (SAVE) costs from 100

percent to 50 percent. The change in

rates was effective by law April 1, 1994.

In October and November 1993, the

Food and Nutrition Service (FNS)

regional offices briefed State agencies

administering the Food Stamp Program

(FSP) on how to implement the new

Federal funding rates for reporting and

payment purposes effective April 1,

1994. The prompt implementation was

necessary to comply with the Leland

Act’s mandate to reduce the

Department’s share of State agency

administrative costs to the mandated

rate as of April 1, 1994, and to minimize

the need for revised reporting by State

agencies related to budget projections

for FY 1994 and actual cost reporting on

or after April 1, 1994. Beginning April

1, 1994, State agencies began drawing

down Federal funds for expenditures

based on the new funding rate for these

activities. Effective with the SF–269

Financial Status Report for the third

quarter Fiscal Year 1994, State agencies

began reporting costs using the new

funding rate for these activities.

On November 22, 1994, the

Department published in the Federal

Register (59 FR 60079) a proposed rule

which proposed changes in the Federal

reimbursement rates for certain

activities as required by the Leland Act

and a limit on retroactive claiming of

Federal funding for State administrative

costs. Five comment letters were

received which addressed provisions of

the proposed rule. FNS has given

careful consideration to all comments

received. The major concerns of the

commenters are discussed below.

Elimination of Enhanced Funding for

Fraud Control

The proposed rule reduced the

Federal reimbursement rate for fraud

control activity from 75 percent to 50

percent in accordance with Section

13961 of the Leland Act, which

amended Section 16 of the Act. In the

FSP regulations, Federal reimbursement

is also referred to as Federal Financial

Participation (FFP). The new FFP rate

was effective by law April 1, 1994.

33436 Federal Register / Vol. 65, No. 101 / Wednesday, May 24, 2000 / Rules and Regulations

FNS received 4 comments on this part

of the proposed rule, all from State

agencies. All commenters objected to

the cutback in the FFP rate for fraud

control activity.

One commenter stated that fraud

control activity was an important

activity that more than paid for itself in

FSP (Federal) savings and that the

reduction in the Federal reimbursement

rate will result in a reduced level of

effort. The commenter pointed out that

the unprecedented growth in the FSP

demonstrates the need for increased

fraud control activities, but that some

States lack adequate staff to address the

need for fraud control programs.

Another commenter stated that

activities like front-end investigations to

catch fraudulent applicants before the

benefits go out the door, prosecutions of

violators, and claim recovery work are

costly and time consuming activities

that were feasible for States to perform

due to the enhanced Federal funding.

Reinstating the 75 percent FFP rate

would help States combat food stamp

fraud and would recognize the extra

effort that is required to ensure that

benefits go only to the truly needy.

Another commenter stated that the drop

in the funding rate was a step

backwards in efforts to combat fraud

and that it puts a burden on State

funding.

The reduction in the Federal

reimbursement rate for fraud control

activity is mandated by the Leland Act

and does not involve Departmental

discretion. Because the reimbursement

rate is mandated by law, the final

regulation retains the new funding rate

as specified in the proposed rule.

The reduction in the Federal

reimbursement rate for fraud control

reflects a shift in emphasis from upfront funding to performance-based

funding through the retention of claims

collections. State agencies currently

retain 35 percent of claims collected for

intentional program violations and 20

percent of inadvertent household error

claim collections. The Federal Tax

Refund Offset Program provides an

additional fiscal incentive for anti-fraud

activity by making available to State

agencies a new cost-effective means of

claims collection. The Department

encourages State agencies to use this

new tool to boost claims collection and

create additional State funding through

increased retentions. The increase in

retentions would replace some of the

lost Federal administrative funding, and

could be used to do front-end

investigations.

With the elimination of enhanced

fraud funding, the detailed requirements

for funding investigations has been

removed and Section 277.15 has been

removed and reserved. However, the

requirement to conduct investigations of

alleged intentional FSP violations in

§ 273.16, and to operate fraud detection

units in all project areas of 5,000 or

more participating households in

§ 272.4(h) remain in effect.

In the proposed rule, specific

reference to prosecution activity of

intentional program violations as being

an allowable cost would be eliminated

because the regular 50 percent funding

rate would apply to food stamp

prosecutions, thereby eliminating the

need for the reference. However, since

the proposed rule was published, a

revised OMB Circular A–87 has been

issued. The revised circular provides

that prosecution activities are an

unallowable cost unless treated as a

direct cost to a specific program when

authorized by program regulations.

Section 16(a) of the Act authorizes

payment of FSP prosecution costs.

Consequently, the final rule includes

additional specific wording in

Appendix A of 7 CFR part 277 that

reflects that prosecution of FSP

intentional program violations is an

allowable cost of FSP administration.

This wording is intended to continue

the current practice of classifying such

costs as allowable, and ensures that

program regulations continue to reflect

this, consistent with the requirements of

the revised OMB Circular A–87.

However, the provision on prosecutions

will now be found in Appendix A of 7

CFR Part 277, along with other general

cost principles applicable to State

agencies administering the FSP.

The proposed rule retained the

requirement for a fraud control plan in

7 CFR 272.2 and 277.15 but changed the

timing of the submission of the plan.

Two State agencies commented on this

provision. One pointed out that the

fraud control plan was originally

required as part of the request for

enhanced funding and that to require

the plan without providing the

enhanced funding was akin to placing

an unfunded mandate on the States. The

commenter stated that States are

struggling to control costs and reduce

budgets where possible and that

removing the fraud control plan

requirement would be helpful. The

other commenter indicated that the

fraud control plan was for Federal

benefit, not for State benefit.

As a result of these comments, the

Department is dropping its proposal to

continue to require a fraud control plan

although the availability of 75 percent

funding no longer exists. The previous

requirement for a fraud control plan in

conjunction with 75 percent funding

assisted FNS in ensuring that the

enhanced funding was used for

appropriate fraud control activities. FNS

proposed maintaining the fraud control

plan because of the importance of fraud

detection and prevention to FSP

management. However, based on

comments, FNS has decided to defer

consideration on the amount of

information States should routinely

provide FNS regarding State anti-fraud

activity. FNS is currently revising all

regulations governing the State Plan of

Operation and will consider what, if

any, specific information States should

provide on organization structures,

staffing, activities, and budget for fraud

control as part of the overall revisions

to regulations governing the State Plan

of Operations. Therefore, this rule drops

the requirement for a fraud control plan.

Accordingly, the final rule revises 7 CFR

272.2 to eliminate the reference to a

fraud control plan.

ADP Development

The proposed rule proposed to

eliminate enhanced funding for

automated data processing (ADP)

development by reducing the funding

rate for system development from either

75 or 63 percent to 50 percent in

accordance with the Leland Act. We

received one comment on this section.

The commenter stated that States are

burdened when required to update their

current ADP systems due to Federal rule

changes or to develop an electronic

benefit transfer (EBT) system. The

commenter suggested that enhanced

funding should be available for a

particular window period so States can

update their automated systems.

The reduction in the Federal

reimbursement rate for ADP

development is mandated in the Leland

Act and does not involve Departmental

discretion. Because the reimbursement

rate is mandated by law, this final rule

retains the new funding rate as

proposed.

The proposed rule also proposed to

eliminate section 274.12(k)(3) which

states that enhanced funding for coupon

issuance activities occurring on Indian

Reservations and enhanced funding for

the development of EBT systems would

both be accommodated within the

issuance cap for EBT systems. However,

only enhanced funding for the

development of EBT and other

automated systems under 7 CFR 277.18

is eliminated. Enhanced funding for

coupon issuance activities on Indian

Reservations remains available under

Section 16(a) of the Food Stamp Act and

7 CFR 281.9, and thus such enhanced

funding for coupon issuance costs shall

continue to be accommodated within

Federal Register / Vol. 65, No. 101 / Wednesday, May 24, 2000 / Rules and Regulations 33437

the EBT issuance cap. In this final rule

the Department is retaining a portion of

the provision in § 274.12(k)(3)

(redesignated as § 274.12(k)(2)). The

portion that is being retained is the

current wording that enhanced funding

for coupon issuance activities that a

State agency incurs on Indian

Reservations shall still be

accommodated within the EBT issuance

cap. Only the reference in the current 7

CFR 274.12(k)(3) to enhanced funding

for the development of EBT systems is

being removed.

Prior to the elimination of enhanced

funding there were different cost

thresholds for prior FNS approval for

systems funded with enhanced funding

than for systems funded with regular 50

percent funding. The proposed rule

proposed to apply the cost thresholds

that were applicable to the regular

funding requirements to all ADP

systems. Thus, the proposed rule

eliminated references to enhanced

funding but retained in the proposed

regulatory text the dollar thresholds

under standard funding that were in

effect at that time. After the publication

of the proposed rule on which this

rulemaking is based, the Department

published on July 31, 1995, another

proposed rule proposing increases in

the cost thresholds upon which prior

Federal approval is required for Federal

financial participation in State ADP

equipment acquisition. The final rule

raising the cost thresholds for ADP

systems was published June 28, 1996.

Because the new cost thresholds are

now in effect, the final rule drops the

proposed text citing the old cost

thresholds, thus retaining the current

higher cost thresholds. The Department

is modifying the proposed text for

§ 277.18(e)(1), which deletes the

reference to enhanced funding, to reflect

the new $5 million cost threshold for

the submittal of an APD Update. The

references to the standard funding rate

are retained where necessary in the final

text.

In the final rule the Department is

also making a technical correction to

Appendix A, paragraph b(1), which was

inadvertently omitted from the

proposed rule, to remove the reference

to 63 percent ADP development funding

in that paragraph.

SAVE

The Department proposed eliminating

enhanced funding for the Systematic

Alien Verification for Entitlements

(SAVE) Program by dropping the

funding rate for SAVE activity from 100

percent to 50 percent funding in

accordance with the Leland Act. We

received no comments on this section.

Because the reimbursement rate is

mandated by law, the final rule retains

the new funding rate as previously

proposed.

Delaying the Effective Date

The proposed rule announced the

Department’s proposed policy for

reviewing and approving requests to

delay the April 1, 1994 effective date for

the elimination of enhanced funding for

certain States which qualified for such

an extension under the criteria provided

in section 13971 of the Leland Act. For

a full discussion of this issue, the reader

is referred to the proposed rule.

As the proposed rule noted, FNS had

advised States in October/November

1993 of the criteria for a delay of the

effective date and the procedure for

requesting such a delay if States

believed they qualified. To allow

adequate time for review, States were to

submit their requests by December 31,

1993, but FNS indicated it would

consider requests filed after that date.

The proposed rule noted that it was the

Department’s intent that State agencies

submit their requests for a delay of the

effective date early, and not wait for the

completion of the rulemaking process.

Four State agencies received approval of

a delay in March 1994. They were

Arkansas, Texas, Montana, and North

Dakota.

One State agency submitted a

comment requesting a delay of the April

1, 1994 effective date, but did not

submit a formal request demonstrating

that it met the criteria for such a delay.

The Department emphasizes that States

were required to apply, and to

demonstrate that they met the criteria in

order to be granted a delay. The

Department has no authority to grant a

delay of the effective date except under

the specific circumstances specified in

the Leland Act as described in the

proposed rule.

The Department notes that the

elimination of enhanced funding was

effective April 1, 1994 for all but the

four approved States. The four approved

States received enhanced funding

through June 30, 1995, based on their

legislative calendars. All States were

notified by letter and by the proposed

rule of the opportunity to apply for a

delay. Further, the April 1, 1994

effective date has well passed.

Therefore, the Department believes that

the issue of granting delays is now moot

and need not be addressed in regulatory

text.

Enhanced Funding for Low Payment

Error Rates

As stated in the proposed rule, with

the reduction in the funding rate to 50

percent for fraud control, ADP

development, and SAVE, these three

activities now become eligible along

with other costs funded at the 50

percent rate for the increased Federal

reimbursement rate of up to 60 percent

if the State agency achieves a low

payment error rate as specified in

§ 277.4 and 275.23. The incentive

funding for a low error rate is provided

after the end of the Federal fiscal year.

Two State agencies commented on

this policy. One was in favor of this

policy as it rewards State agencies that

achieve a low payment error rate. The

other State agency pointed out that

fraudulent applications make it difficult

for State agencies to attain a low

payment error rate. By denying

enhanced funding to States with a

demonstrated need for additional

support, the State agency believed that

such action will ensure that States with

a disproportionate share of fraudulent

applications will never attain a low

payment error rate to qualify for

enhanced funding. The State agency

believed that moving the reimbursement

rate back to 75 percent, rather than

incentive funding for a low payment

error rate, would assist States in

combating food stamp fraud and help to

ensure that benefits only go to the truly

needy.

The reduction in the funding rate for

fraud control is mandated by the Leland

Act and the payment of enhanced

incentive funding for a low payment

error rate is mandated in Section 16(c)

of the Act. Neither involves

Departmental discretion. The enhanced

funding is available as an incentive to

encourage States to achieve a low

payment error rate and is paid after the

end of the fiscal year as a reward. The

Department has no authority to pay

either enhanced fraud funding or the

incentive funding for a low payment

error rate to States that have not attained

a low payment error rate in order to

help them to do so. Accordingly, the

proposed regulatory text is adopted as

final.

Deadline for Filing Claims for

Retroactive Funding

The proposed rule provided that,

subject to the availability of funds, FNS

would reimburse State agencies for an

allowable expenditure only if the State

agency files a claim with FNS for that

expenditure within two years after the

calendar quarter in which the State

agency obligated the funds.

One State agency pointed out that a

similar Department of Health and

Human Services (DHHS) limitation was

instituted as a result of legislation

enacted by Congress. The State agency

33438 Federal Register / Vol. 65, No. 101 / Wednesday, May 24, 2000 / Rules and Regulations

recommended that the Department seek

an amendment to the Act.

Section 4(c) of the Act allows the

Department to promulgate

administrative rules that are necessary

or appropriate for the effective

administration of the FSP. As the

proposed rule noted, in Fiscal Years

(FYs) 1991 through 1993, FNS had

received requests from State agencies for

retroactive funding going back to FY

1981 even though the Federal record

retention requirement for State agencies

is 3 years. While the Department

recognizes that State laws may require

retention of records that exceed Federal

requirements, the Department believes it

is not efficient administration for State

agencies to manage, store, and retain

financial records well past the 3 years

required by Federal regulations and in

particular to be actively reviewing stale

financial records more than 3 years old.

This is especially the case because FNS

pays 50 percent of State administrative

costs. The intended effect of the

proposed limitation on claiming costs is

to direct State agency and Federal

resources toward the present operation

of the program. The Department

believes State agencies have a

responsibility to properly claim Federal

funding on a timely basis.

The commenter noted that the

deadline in the proposed rule was

calculated based on the quarter in

which the State agency obligated the

funds, and suggested using another

baseline such as date of payment, which

is used by DHHS.

In the final rule the Department has

based the deadline calculation on the

quarter in which the cost was incurred

by the State or local agency, whichever

first incurred the cost. It is at that point

that the cost should have been reported

on the SF–269, Financial Status Report,

for that report period.

One commenter suggested that the

definition of the term ‘‘audit exception’’

which was provided in the preamble of

the proposed rule be included in the

regulatory text. The commenter noted

that the deadline does not apply to an

audit exception and suggested that the

rule clarify what would happen if an

audit were performed by nonDepartment Federal auditors or State or

private auditors. The commenter also

asked whether any procedures will be

established to permit the State to

provide such audits to Department audit

staff in order to gain approval to claim

additional costs.

In the final rule, the Department has

included a definition of the term ‘‘audit

exception’’ in § 277.11(d)(5)(ii) of the

regulatory text. It has also clarified in

the same paragraph that the term

‘‘audit’’ includes Federal and Stateinitiated audits. This includes audits

performed by Department auditors, nonDepartment Federal auditors, State

auditors, or private auditors as long as

the audit complies with Department

audit requirements in 7 CFR 277.17 and

7 CFR part 3015. It also specifies that

the audit must have been started within

3 years of the date of submission of the

final SF–269 report of the relevant fiscal

year to which it applies. Once the audit

is resolved, any claim for retroactive

Federal funding arising from such an

audit should be submitted promptly to

FNS with a copy of the relevant audit

findings. This procedure will

supplement but not replace any other

Federal reporting requirements to the

cognizant agency for audits in § 277.17

and 7 CFR part 3015. Finally, the final

rule makes minor modifications to the

proposed wording in § 277.11(d)(4) to

improve clarity. The change has no

substantive effect.

At the time of the proposed rule and

in accordance with 7 CFR 277.4 and 7

CFR 3015.82, State agencies used the

SF–269, Financial Status Report, to

report costs during the fiscal year as

well as final obligations and

expenditures in a final (or closeout) SF–

269 due December 30 following the

fiscal year. At that time, the Letter of

Credit, which was the payment method,

was closed for that fiscal year. After

that, as the proposed rule noted, the SF–

270 would be used to request funds for

prior year expenditures. Thus, the

proposed rule would have required that

States use the Form SF–270, Request for

Advance or Reimbursement, to request

payment for prior year expenditures.

OMB requires the use of the SF–270

when a State agency wants to adjust the

program’s financial status when the

Letter of Credit is not used. However,

reporting forms follow payment systems

and subsequently FNS’ payment system

was changed.

7 CFR 3015.102 provides that Letters

of Credit are to be used to pay

Department recipients (i.e., State

agencies) when all the following

conditions exist:

(i) There is or will be a continuing

relationship between the recipient and

the USDA awarding agency for at least

a 12 month period and the total amount

of advances to be received within that

period from the awarding agency is

$120,000 or more per year.

(ii) The recipient has established or

demonstrated to the USDA awarding

agency the willingness and ability to

establish procedures that will minimize

the time elapsing between the transfer of

funds from the Treasury and their

disbursement by the recipient.

(iii) The recipient’s financial

management system meets the standards

for fund control and accountability

prescribed in 7 CFR 3015 subpart H.

After the proposed rule was issued,

FNS in 1996 started using the

Department of Treasury’s ASAP

payment system as a funding

mechanism. This grantee-initiated

payment system, which also uses the

Letter of Credit as the payment vehicle,

has allowed FNS to continue to pay by

Letter of Credit well after the end of the

fiscal year. It allowed FNS to streamline

its payment process. In addition, the

extension of the Letter of Credit system

for prior years has allowed FNS to

continue to use the SF–269 for prior

year expenditures.

As a result of this payment system

change, in February 1997 FNS issued

revised procedures for post-close-out

payments and adjustments in Agency

Financial Management System

procedure number 678 (AFMS–678).

Under those procedures, starting in FY

1998, rather than use the SF–270, State

agencies were to revise their ‘‘final’’ or

close-out SF–269’s to report the outlay

of funds for prior FYs 1997 and 1996.

State agencies may request funds for

newly identified prior year expenses on

a revised SF–269 for that year not more

than quarterly. This change in the Letter

of Credit system is gradually being

phased in year by year. However, for FY

1995 and prior years, the SF–270

continues to be used until the funding

fiscal year has been canceled because

the Letter of Credit is no longer open for

those years.

The change in reporting forms

coupled with the use of the new system,

ASAP, for prior years is significantly

more efficient. The SF–270 process is a

manual process that is not tied into

State electronic reporting. Thus, it

would have required more State

resources to complete the paper SF–270

compared to the electronic SF–269. The

continued use of the SF–269 after closeout will allow States to continue to use

the stored electronic SF–269 form (and

its data) to revise their SF–269 reports

for prior years through FNS’ State

Cooperative Data Exchange (SCDEX)

with minimal rekeying. Only data that

has changed would need to be rekeyed

for a revised report. Because the SF–269

data can be transmitted electronically to

FNS, the use of the electronic form by

States will reduce the processing time to

make the funds available to the State

agency. Finally, it means State agencies

do not need to switch reporting forms

after the end of the fiscal year but may

continue to use the SF–269.

The Department notes that under 7

CFR 3015.1(b), Part 3015 supersedes

Federal Register / Vol. 65, No. 101 / Wednesday, May 24, 2000 / Rules and Regulations 33439

and takes precedence over any

individual agency regulations to the

extent such regulations are inconsistent

with the Department regulation. The

proposed use of the SF–270 when the

Letter of Credit system is operating

would be inconsistent with Part 3015.

Because Part 3015 is an existing

Department rule which governs and

takes precedence over the proposed

agency rule, the agency’s final rule is

being changed to comply with the

Department rule. Further, this change

has been in effect since FY 1998 and

affects only 53 State agencies. The

Department believes seeking public

comment on the continued use of the

SF–269, which is based on a provision

of the existing Department rule, would

cause unnecessary delay which is

contrary to the public interest.

As a result of these procedural

changes and to conform to current

practice, FNS has revised Section

277.11 in the final rule to drop the

reference to the SF–270 and in its place

to specify that States use the form

specified by FNS to report prior year

expenditures. This more general

wording gives necessary flexibility to an

area that may be subject to change over

time as payment systems and electronic

reporting procedures evolve.

In addition, because of the continued

use of the SF–269 after the final or

closeout SF–269 (which is due

December 30 immediately following the

fiscal year), it was necessary to add text

to the regulatory language to make it

clear that the audit must have been

started within 3 years of the ‘‘final’’ (or

closeout) SF–269 (which is due

December 30 immediately following the

end of the Federal fiscal year) to get

reimbursement. A revision of the ‘‘final’’

SF–269 after the final or closeout SF–

269 would not start a new 3-year audit

clock.

AFDC/Food Stamp Certification Costs

The Department proposed to amend

the current regulations to correspond to

current practice which allows food

stamp certification costs for Aid to

Families with Dependent Children

(AFDC) cases to be charged to the FSP.

As the proposed rule noted, the current

practice of charging the incremental cost

of certifying AFDC households for food

stamps to the FSP has been in effect

since October 1, 1983, and is based on

a 1983 Memorandum of Understanding

between the Department and DHHS.

Thus, the FSP is only picking up the

incremental costs related to the

certifying AFDC households for FSP

benefits. The incremental cost is the

cost for certification questions which

are FSP specific. One State agency

commented on this provision, agreeing

with the change in wording to reflect

current practice. The final rule retains

the proposed wording as it reflects

current practice.

However, since the proposed rule was

issued, the Personal Responsibility and

Work Opportunity Reconciliation Act

(Pub.L. 104–193) replaced the AFDC

program with a Temporary Assistance

for Needy Families (TANF) block grant.

This change is effective July 1, 1997, or

sooner if a State agency’s request is

approved earlier by DHHS. This change

does not materially affect the charging

of the incremental costs from that

proposed in the proposed rule. The final

rule retains the proposed wording

except for changing the reference from

AFDC to TANF in the final rule.

Effective Date

The provisions in § 277.11(d)

regarding time limits for State agencies

to file claims to amend a prior

expenditure report to request retroactive

funding for costs previously incurred

are effective October 1, 2000.

Pursuant to Section 13971 of the

Leland Act, the reduction in FFP rates

mandated by Section 13961 of the

Leland Act was effective on April 1,

1994, except for those State agencies for

which the Department has granted in

writing a delay of the April 1, 1994

effective date.

The conforming amendments to FSP

regulations in §§ 272.1, 272.2, 272.11,

274.12, 277.4, 277.9, 277.15, 277.18,

277.19, and Appendix A to Part 277 will

be effective June 23, 2000.

List of Subjects

7 CFR Part 272

Alaska, Civil rights, Food stamps,

Grant programs—social programs,

Reporting and recordkeeping

requirements.

7 CFR Part 274

Administrative practice and

procedure, Food stamps, Fraud, Grant

Programs—social programs, Reporting

and recordkeeping requirements.

7 CFR Part 277

Food stamps, Government procedure,

Grant programs—social programs,

Investigations, Records, Reporting and

recordkeeping requirements.

Accordingly, 7 CFR parts 272, 274

and 277 are amended as follows:

1. The authority citation for Parts 272,

274 and 277 continues to read as

follows:

Authority: 7 U.S.C. 2011–2036.

PART 272—REQUIREMENTS FOR

PARTICIPATING STATE AGENCIES

2. In § 272.1, a new paragraph (g)(159)

is added in numerical order to read as

follows:

§ 272.1 General terms and conditions.

* * * * *

(g) * * *

(159) Amendment (385). The

provisions in § 277.11(d) regarding time

limits for State agencies to file claims to

amend a prior expenditure report to

request retroactive funding for costs

previously incurred are effective

October 1, 2000. The conforming

amendments to Food Stamp Program

regulations in §§ 272.1(g), 272.2(c)(3),

272.11(d) and (e), 274.12(k), 277.4(b)

and (g), 277.9(b), 277.18(b), (d), (e), (g)

and (p)(5), and Appendix A to Part 277

and the removal of §§ 277.15 and 277.19

are effective June 23, 2000.

3. In § 272.2, paragraph (c)(3) is

revised to read as follows:

§ 272.2 Plan of operation.

* * * * *

(c) * * *

(3) Additional attachments. Attached

for informational purposes (not subject

to approval as part of the plan

submission procedures) to the Program

Activity Statement and submitted as

required in paragraph (e)(3) of this

section shall be the agreements between

the State agency and the United States

Postal Service for coupon issuance, and

between the State agency and the Social

Security Administration for

supplemental income/food stamp joint

application processing and for routine

user status.

* * * * *

§ 272.11 [Amended]

4. In § 272.11:

a. Paragraph (d)(1)(iii) is amended by

removing the reference to ‘‘§ 277.19’’

and adding in its place a reference to

‘‘§ 277.18 and Appendix A to Part 277’’.

b. Paragraph (e)(2) is amended by

removing from the first sentence the

words ‘‘, as outlined in § 277.19(e)’’.

PART 274—ISSUANCE AND USE OF

COUPONS

§ 274.12 [Amended]

5. In § 274.12:

a. Paragraph (k)(2) is removed and

paragraphs (k)(3) through (k)(6) are

redesignated as paragraphs (k)(2)

through (k)(5) respectively.

b. Newly redesignated paragraph

(k)(2) is amended by removing the

words ‘‘and the enhanced funding

provided in accordance with this

33440 Federal Register / Vol. 65, No. 101 / Wednesday, May 24, 2000 / Rules and Regulations

paragraph for development of an EBT

system’’.

PART 277—PAYMENTS OF CERTAIN

ADMINISTRATIVE COSTS OF STATE

AGENCIES

6. In § 277.4:

a. Paragraphs (b)(1), (b)(10), (b)(11),

and (b)(12) are removed;

b. Paragraphs (b)(2) through (b)(9) are

redesignated as paragraphs (b)(1)

through (b)(8) respectively;

c. The second sentence in newly

redesignated paragraph (b)(7) is revised;

and

d. New paragraph (g) is added.

The revision and addition reads as

follows:

§ 277.4 Funding.

* * * * *

(b) * * *

(7) * * * The rates of Federal funding

for the activities identified in

paragraphs (b)(2) and (b)(3) of this

section shall not be reduced based upon

the agency’s payment error rate.

* * * * *

(g) Investigations of authorized retail

or wholesale food concerns when

performed in coordination with the

USDA Office of Inspector General and

FNS shall be funded at the 50 percent

Federal reimbursement rate.

7. In § 277.9, paragraph (b) is revised

to read as follows:

§ 277.9 Administrative costs principles.

* * * * *

(b) The incremental cost of certifying

TANF households for Food Stamp

Program benefits are allowable costs for

FNS reimbursement.

* * * * *

8. In § 277.11, a new paragraph (d) is

added to read as follows:

§ 277.11 Financial reporting requirements.

* * * * *

(d) Time limit for State agencies to file

claims. (1) After the deadline in

paragraph (c)(4) of this section for the

final SF–269 report, State agencies shall

use the form specified by FNS as needed

within three years of the end of the

Federal fiscal year to amend a prior

expenditure report pertaining to such

Federal fiscal year. The three-year

reporting deadline may be extended by

FNS if litigation, an audit, or a claim is

unresolved at the end of the three-year

period. The reporting form shall be used

to amend prior expenditure reports, and

to request reimbursement for any

additional funding due, or to pay back

to FNS any inadvertent prior overclaim.

Requests for reimbursement will only be

honored if the claim is filed within the

timeframe in paragraph (d)(2) of this

section. FNS reserves the right to bill

State agencies for amounts due FNS

resulting from an overclaim, even if no

reporting form has been submitted.

(2) Subject to the availability of funds

from the appropriation for the year in

which the expenditure was incurred,

FNS may reimburse State agencies for

an allowable expenditure only if the

State agency files a claim with FNS for

that expenditure within two years after

the calendar quarter in which the State

agency (or local agency) incurred the

cost. FNS will consider non-cash

expenditures such as depreciation to

have been made in the quarter the

expenditure was recorded in the

accounting records of the State agency

in accordance with generally accepted

accounting principles.

(3) For Automated Data Processing

(ADP) expenditures approved under

§ 277.18(c), subject to the availability of

funds and required FNS approval

related to the Advance Planning

Document, FNS may reimburse State

agencies for allowable expenditures at

the appropriate rate in effect at the time

the equipment or service was received

only if the State agency files for a claim

with FNS within two years after the

calendar quarter in which the cost was

incurred. FNS will consider non-cash

expenditures such as depreciation to

have been made in the quarter the

expenditure was recorded in the

accounting records of the State agency

in accordance with generally accepted

accounting principles.

(4) States wishing to request an

extension of the deadline in paragraphs

(d)(2) and (d)(3) of this section must

submit the request in writing to FNS

prior to the applicable deadline. The

State agency’s request for an extension

must include a specific explanation,

justification, and documentation of why

the claim will be late and when the

claim will be filed.

(5) The time limits in paragraphs

(d)(2) and (d)(3) of this section will not

apply to any of the following:

(i) Any claim for an adjustment to

prior year costs previously claimed

under an interim rate concept;

(ii) Any claim arising from an audit

exception as defined in this section. An

audit exception means a proposed

adjustment by the Department to any

expenditure claimed by a State agency

by virtue of a Federal-or State-initiated

audit. The audit must comply with the

requirements of § 277.17 and 7 CFR part

3015, and must have been started within

3 years of the date of submission of the

final SF–269 of the relevant Federal

fiscal year to which it applies.

(iii) Any claim resulting from a courtordered retroactive payment. However,

this provision does not bind FNS to a

State or Federal court decision when

FNS was not a party to the action;

(iv) Any claim for which FNS

determines there was good cause for the

State agency’s not filing it within the

time limit. Good cause is lateness due

to circumstances beyond the State

agency’s control such as Acts of God or

documented action or inaction of the

Federal Government. It does not include

neglect or administrative inadequacy on

the part of the State, State agency,

legislature, or any of their offices or

employees.

§ 277.15 [Removed and Reserved]

9. Section 277.15 is removed and

reserved.

10. In § 277.18:

a. Paragraph (b) is amended by

removing the definition of Enhanced

funding or enhanced FFP rate, and by

revising the definition of Regular

funding or regular FFP rate;

b. The introductory text of paragraphs

(d)(1) and (d)(2) are amended by

removing the words ‘‘at the regular or

enhanced funding rate’’ in the first

sentence;

c. Paragraph (d)(1)(ii) is amended by

removing the last sentence;

d. The third sentence of paragraph

(d)(1)(v) is amended by removing the

words ‘‘thresholds of § 277.18(c)(1) are

met’’ and adding the words ‘‘threshold

of § 277.18(c)(1) is met’’ in their place;

e. The first sentence of paragraph

(e)(1) is revised;

f. Paragraph (g) is revised; and

g. Paragraph (p)(5) is revised.

The revisions read as follows:

§ 277.18 Establishment of an Automated

Data Processing (ADP) and Information

Retrieval System.

* * * * *

(b) * * *

Regular funding or regular FFP rate

means any Federal reimbursement rate

authorized by § 277.4(b).

* * * * *

(e) APD Update.—(1) General

submission requirements. The State

agency shall submit an APD Update for

FNS approval for all approved Planning

and Implementation APD’s when total

acquisition costs exceed $5 million.

***

* * * * *

(g) Conditions for receiving FFP.—(1)

A State agency may receive FFP at the

50 percent reimbursement rate for the

costs of planning, design, development

or installation of ADP and information

retrieval systems if the proposed system

will:

Federal Register / Vol. 65, No. 101 / Wednesday, May 24, 2000 / Rules and Regulations 33441

(i) Assist the State agency in meeting

the requirements of the Food Stamp Act;

(ii) Meet the program standards

specified in § 272.10(b)(1), (b)(2), and

(b)(3) of this chapter, except for the

requirements in § 272.10(b)(2)(vi),

(b)(2)(vii), and (b)(3)(ix) of this chapter

to eventually transmit data directly to

FCS;

(iii) Be likely to provide more efficient

and effective administration of the

program; and

(iv) Be compatible with such other

systems utilized in the administration of

State agency plans under the program of

Temporary Assistance for Needy

Families (TANF).

(2) State agencies seeking FFP for the

planning, design, development or

installation of automated data

processing and information retrieval

systems shall develop Statewide

systems which are integrated with

TANF. In cases where a State agency

can demonstrate that a local, dedicated,

or single function (issuance or

certification only) system will provide

for more efficient and effective

administration of the program, FNS may

grant an exception to the Statewide

integrated requirement. These

exceptions will be based on an

assessment of the proposed system’s

ability to meet the State agency’s need

for automation. Systems funded as

exceptions to this rule, however, should

be capable to the extent necessary, of an

automated data exchange with the State

agency system used to administer

TANF. In no circumstances will funding

be available for systems which duplicate

other State agency systems, whether

presently operational or planned for

future development.

* * * * *

(p) * * *

(5) Costs. Costs incurred for

complying with the provisions of

paragraphs (p)(1) through (p)(3) of this

section are considered regular

administrative costs which are funded

at the regular FFP level.

§ 277.19 [Removed]

11. Section 277.19 is removed.

12. In part 277, Appendix A, in the

section titled ‘‘Standards for Selected

Items of Cost’’:

a. Paragraphs A.(25) through A.(28)

are redesignated as paragraphs A.(26)

through A.(29) respectively;

b. A new paragraph A.(25) is added;

c. Paragraph B.(1) is amended by

removing from the second sentence the

words ‘‘to be funded at the 63 percent

rate or’’.

The addition reads as follows:

Appendix A to Part 277—Principles for

Determining Costs Applicable to

Administration of the Food Stamp

Program by State Agencies

* * * * *

Standards for Selected Items of Cost

A. * * *

(25) Prosecution activities. The costs

of investigations and prosecutions of

intentional Food Stamp Program

violations are allowable. Costs of

investigation, prosecution, or claims

collection which are performed by

agencies other than the State agency

shall be based on a formal agreement

between the State or local agency and

provider agency. These interagency

agreements shall meet the requirements

of this part in regard to allowable

charges. Funding under these

interagency agreements shall be

provided by the State agency from their

funds and funds made available by FNS.

* * * * *

Dated: May 17, 2000.

Shirley R. Watkins,

Under Secretary, Food, Nutrition, and

Consumer Services.

[FR Doc. 00–13005 Filed 5–23–00; 8:45 am]

BILLING CODE 3410–30–P

DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 39

[Docket No. 98–NM–56–AD; Amendment

39–11725; AD 2000–10–01]

RIN 2120–AA64

Airworthiness Directives; Airbus Model

A300 B2, A300–B2K, A300 B4–2C,

A300 B4–100, and A300 B4–200 Series

Airplanes

AGENCY: Federal Aviation

Administration, DOT.

ACTION: Final rule.

SUMMARY: This amendment supersedes

an existing airworthiness directive (AD),

applicable to all Airbus Model A300 B2,

A300 B2K, A300 B2–200, A300 B4,

A300 B4–100, and A300 B4–200 series

airplanes, that currently requires certain

structural inspections and

modifications. This amendment requires

that those inspections be accomplished

on additional airplanes. This action also

requires new repetitive inspections for

airplanes in certain configurations at

revised thresholds and intervals. This

amendment is prompted by issuance of

mandatory continuing airworthiness

information by a foreign civil

airworthiness authority. The actions

specified by this AD are intended to

detect and correct corrosion and

cracking of the wings and fuselage,

which could result in reduced structural

integrity of the airplane.

DATES: Effective June 28, 2000.

The incorporation by reference of

certain publications listed in the

regulations is approved by the Director

of the Federal Register as of June 28,

2000.

The incorporation by reference of

certain other publications, as listed in

the regulations, was approved

previously by the Director of the Federal

Register as of April 13, 1992 (57 FR

8257, March 3, 1992), and as of May 29,

1996 (61 FR 18661, April 29, 1996).

ADDRESSES: The service information

referenced in this AD may be obtained

from Airbus Industrie, 1 Rond Point

Maurice Bellonte, 31707 Blagnac Cedex,

France. This information may be

examined at the Federal Aviation

Administration (FAA), Transport

Airplane Directorate, Rules Docket,

1601 Lind Avenue, SW., Renton,

Washington; or at the Office of the

Federal Register, 800 North Capitol

Street, NW., suite 700, Washington, DC.

FOR FURTHER INFORMATION CONTACT:

Norman B. Martenson, Manager,

International Branch, ANM–116, FAA,

Transport Airplane Directorate, 1601

Lind Avenue, SW., Renton, Washington

98055–4056; telephone (425) 227–2110;

fax (425) 227–1149.

SUPPLEMENTARY INFORMATION: A

proposal to amend part 39 of the Federal

Aviation Regulations (14 CFR part 39)

by superseding AD 96–08–08,

amendment 39–9574 (61 FR 18661,

April 29, 1996), which is applicable to

all Airbus Model A300 B2, A300 B2K,

A300 B2–200, A300 B4, A300 B4–100,

and A300 B4–200 series airplanes, was

published in the Federal Register on

December 21, 1999 (64 FR 71333). The

action proposed to continue to require

certain structural inspections and

modifications. The action proposed to

require that those inspections be

accomplished on additional airplanes.

The action also proposed to require new

repetitive inspections for airplanes in

certain configurations at revised

thresholds and intervals.

Comments Received

Interested persons have been afforded

an opportunity to participate in the

making of this amendment. Due

consideration has been given to the

comments received.

Additional Affected Airbus Models

One commenter suggests that the

applicability of the proposed AD be