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

41321

Vol. 65, No. 129

Wednesday, July 5, 2000

DEPARTMENT OF AGRICULTURE

Food and Nutrition Service

7 CFR Parts 272, 273 and 274

[Amdt. No. 378]

RIN 0584–AC61

Food Stamp Program; Electronic

Benefit Transfer Benefit Adjustments

AGENCY: Food and Nutrition Service,

USDA.

ACTION: Final rule.

SUMMARY: This action provides final

rulemaking for an interim rule

published on September 9, 1999. The

final rule revises Food Stamp Program

regulations pertaining to a State

agency’s ability to make an adjustment

to a household’s account in an

Electronic Benefit Transfer system. It

enables State agencies to make

adjustments to correct system errors

without sending households advance

notice of the action but does require that

households be notified of any such

actions. The rule also defines the

timeframes and other requirements for

the adjustments. The final rule

incorporates several changes in

response to a number of comments the

Department received on the interim

rule.

As a separate action, this regulation

also adopts as final the requirements for

re-presentation in the interim rule. State

agencies may use re-presentation to

recover funds when the host computer

is inaccessible and there are insufficient

funds to cover a manual transaction.

DATES: This final rule is effective August

4, 2000. State agencies may begin

implementing the rule August 4, 2000

but no later than January 2, 2001.

FOR FURTHER INFORMATION CONTACT:

Jeffrey N. Cohen, Chief, Electronic

Benefit Transfer Branch, Benefit

Redemption Division, Food and

Nutrition Service, USDA, room 718,

3101 Park Center Drive, Alexandria,

Virginia 22302, or telephone (703) 305–

2517.

SUPPLEMENTARY INFORMATION:

Executive Order 12866

This final rule has been determined to

be non-significant for purposes of

Executive Order 12866 and therefore

was not reviewed by the Office of

Management and Budget.

Public Law 104–4

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 Food and Nutrition Service

generally must prepare a written

statement, including a cost-benefit

analysis, for proposed and final rules

with ‘‘Federal mandates’’ that may

result in expenditures by State, local or

tribal governments, in the aggregate, or

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

Food and Nutrition Service 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 final rule contains no Federal

mandates (under the regulatory

provisions of Title II of UMRA) for

State, local and tribal governments or

the private sector of $100 million or

more in any one year. Thus, this rule is

not subject to the requirements of

sections 202 and 205 of the UMRA.

Executive Order 12372

The Food Stamp Program is listed in

the Catalog of Federal Domestic

Assistance under No. 10.551. For the

reasons set forth in the final rule in 7

CFR part 3015, subpart V and related

Notice (48 FR 29115), this Program is

excluded from the scope of Executive

Order 12372 which requires

intergovernmental consultation with

State and local officials.

Regulatory Flexibility Act

This rule has been reviewed with

regard to the requirements of the

Regulatory Flexibility Act of 1980 (5

U.S.C. 601–612). Samuel Chambers, Jr.,

Administrator, Food and Nutrition

Service, has certified that this final rule

will not have a significant economic

impact on a substantial number of small

entities. Food stamp authorized retailers

will be affected minimally. State and

local welfare agencies will be the most

affected to the extent that they

administer the Program.

Paperwork Reduction Act

This rule does not contain reporting

or recordkeeping requirements subject

to approval by the Office of

Management and Budget (OMB) under

the Paperwork Reduction Act of 1980

(44 U.S.C. 3507).

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’’

paragraph 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)(1) 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 nonquality control (QC) liabilities or 7 CFR

Part 283 for rules related to QC

liabilities; and (3) for Program retailers

and wholesalers—administrative

procedures issued pursuant to 7 U.S.C.

2023 set out at 7 CFR 278.8.

Background

In a State where food stamp benefits

are issued using an Electronic Benefit

Transfer System (EBT), Food Stamp

Program (FSP) participants purchase

food by swiping their EBT card through

a point-of-sale (POS) machine at an

authorized retailer. In the transaction,

benefits move from the participants’

accounts to the retailers’ bank accounts.

During normal EBT transaction

processing, settlement of the transaction

41322 Federal Register / Vol. 65, No. 129 / Wednesday, July 5, 2000 / Rules and Regulations

is completed when the transaction

acquirer, typically a retail food store,

has been properly credited for an

amount equal to the amount debited

from the household’s benefit allotment.

System malfunctions can cause an

interruption to this process, resulting in

a settlement condition that does not

reflect the original transaction. Proposed

regulations were published in the

Federal Register on May 19, 1998 at 63

FR 27511 to change the way in which

certain EBT error conditions are

handled. Because of the complex nature

of this issue and the substantive

comments received to the proposed

rule, the Department published an

interim rule rather than a final rule in

order to obtain further comments. The

interim rule, published in the Federal

Register September 9, 1999 at 64 FR

48933, implemented the proposed rule

with some substantive changes as a

result of comments received on the

proposed rule.

The interim rule requires State

agencies to make adjustments to correct

out-of-balance settlement conditions

that do not reflect original EBT

transactions as a result of system

malfunctions. In cases where a store is

not credited for the full transaction

amount, the interim rule requires State

agencies to make an adjustment by

debiting the client household’s account,

provided a concurrent notice is sent to

the household. The interim rule also

requires State agencies to debit a

household’s future month’s benefits to

complete an adjustment.

Apart and separate from system error

adjustments, changes were also

implemented for handling representations when the system host

computer cannot be accessed and there

are insufficient funds in the household’s

account to cover a manual transaction.

Readers should refer to the proposed

and interim regulations for a more

complete understanding of this final

action.

This final rule reflects further

revisions to the regulations, taking into

consideration all comments received on

the interim rule. Comments on the

interim rule were solicited through

November 8, 1999. Seventeen comment

letters were received in response.

Individual comments were received

from twelve State agencies. Of the

remaining letters, 2 were from EBT

processors, 1 was from a retailer

association, 1 was from an alliance of

States, networks, financial institutions

and retailers, and 1 was from a credit

card company.

In general, the commenters supported

the Department’s efforts to streamline

the adjustment process for certain types

of system errors. However, the

commenters still believe that the

Department did not go far enough in

doing so and that the EBT adjustment

policy should be further simplified to

more closely mirror procedures used to

correct system errors in the commercial

environment. The major comments are

discussed below.

General

There is a significant difference

between adjustments in an EBT

environment and adjustments in a

commercial environment. Processors

treat commercial adjustments as routine

corrections which do not require special

notification to customers. However,

commercial debit card customers do

have protections found in Regulation E

at 12 CFR part 205 (hereinafter ‘‘Reg.

E’’), that food stamp clients do not have.

One important protection is the

requirement that commercial debit card

users receive monthly statements

summarizing their account activities.

The monthly statement provides the

account holder notification after the fact

that an adjustment was processed to the

account. However, food stamp EBT

users were explicitly exempted from

Reg. E with the enactment of the

Personal Responsibility and Work

Opportunity Reconciliation Act of 1996,

Pub. L. 104–193 (PRWORA).

Requirements set forth in the Food

Stamp Act of 1977, as amended, 7

U.S.C. 2019(e)(10), (FSA), and in the

FSP regulations, require client

notifications and rights to appeal when

negative actions are taken. Because

debit adjustments against a food stamp

client’s EBT account can be viewed as

a type of adverse action, the same notice

and appeal rights must be applied in

these circumstances. The State agencies

and other stakeholders continue to raise

this as a primary concern due to the

potential costs associated with

notification and the fair hearing process.

However, because of the statutory and

regulatory provisions set up to protect

food stamp households in situations of

adverse action, and the gap left without

the customer protections from Reg. E,

these requirements remain unchanged

in the final regulation.

Several commenters expressed

concern that there needs to be sufficient

training for retailers and third party

processors on how the adjustment rule

will be implemented, especially those

aspects of the rule dealing with

liabilities and timeframes. Although not

addressed in the regulation, the

Department will work with State

agencies to ensure that the appropriate

level of information is made available to

retailers and third party processors. We

will also work with State agencies to

determine how best to disseminate that

information.

Definitions

The interim rule defined business

days as Automated Clearing House

(ACH) days. Two commenters requested

that instead of ACH days, we define

business days as calendar days other

than Saturdays, Sundays or Federal

holidays. We have made this change at

7 CFR 274.12 (f)(4)(ii)(A) to make the

rule language more universal. Another

commenter requested that we clarify all

references to ‘‘days’’ as either

‘‘calendar’’ or ‘‘business’’ days. Where

appropriate, we have done so

throughout the final rule.

Future Month’s Benefits

The interim rule requires a debit

adjustment from a recipient’s account to

be made from a future month’s benefit,

i.e., benefits that are not in the account

at the time the initial adjustment is

attempted, but are issued in subsequent

months. This would apply in situations

where either: (1) No benefits are

available in the client account when the

adjustment is attempted, or (2) only a

portion of the benefits required for the

full adjustment is available at the time

the adjustment is attempted.

Two commenters provided general

support of collection against future

month’s benefits. One commenter,

however, asked for clarification on what

was meant in the interim rule by

requiring State agencies to collect from

future months in which there has been

a break in benefits. In the interim rule,

State agencies are required to complete

an outstanding adjustment that exists

for a household that comes back on to

the FSP after being off the Program for

a period of time. This would require

debiting the household’s account in a

month other than when the error

occurred, i.e., use their future month’s

benefits.

Two commenters suggested limiting

the number of months processors must

attempt adjustments against a client’s

account, e.g., 1 future month, before the

adjustment debt is canceled. Limiting

the number of months an adjustment

must be carried over until it is satisfied

reduces the length of time State agencies

and processors must track and account

for an adjustment. Consequently, State

agencies will also be relieved of tracking

adjustments that cannot be collected

from a household that leaves the FSP,

regardless of whether that household

returns to the FSP at a future date.

The Department is convinced that

limiting the length of time the State

agency may attempt an adjustment to

Federal Register / Vol. 65, No. 129 / Wednesday, July 5, 2000 / Rules and Regulations 41323

one future month greatly reduces costs

and makes this operation much more

manageable. The Department is further

convinced that this change will not

significantly impact the number of

adjustments that can be completed for

the full amount. This is consistent with

data that shows the average EBT

transaction amount is $20, and

therefore, most adjustments will be fully

satisfied after going against no more

than one future month’s issuance. The

final rule reflects this change.

At 7 CFR 274.12(f)(4)(ii), the interim

rule states that, by definition, the

amount of an adjustment cannot differ

from the value of the original

transaction. In response to three

commenters, we are removing this

language from the rule because it does

not account for the possibility of partial

adjustments in the current month, and

again in future months. This language

becomes more problematic now that we

are limiting the State agencies’ access to

one future month’s benefits to make an

adjustment. In some cases, it is possible

that the State agency will not be able to

collect anything from a household, or

only a portion of a total adjustment

because the household has left the FSP,

or they have a minimal benefit issuance

that will not cover the full adjustment

in the next month.

However, the Department is clarifying

that we are not requiring State agencies

to settle partial adjustments to retailer

accounts. We have been informed that

many acquirers’ systems cannot accept

partial adjustment amounts that do not

match the original error transaction and

prefer receiving no credit rather than a

partial credit. In cases where the State

agency chooses not to settle a partial

adjustment to the acquirer, the

adjustment amount must be returned to

the household account.

Another commenter raised the

concern that making a partial

adjustment in the current month, then

another partial adjustment in the next

month is problematic. This is another

example where tracking and settling the

adjustment becomes complicated by the

likelihood of multiple transactions to

complete a full adjustment. The

suggested solution from the commenter

was to place a hold on a partial

adjustment available in the current

month, then move the funds at one time,

as a single adjustment, after the next

month’s benefits are issued. This

reduces the number of transactions

required to make an adjustment when

going against a future month’s benefits.

We can see the merit in this approach

and will allow State agencies to handle

the process in this way, so long as the

notification to households: (1) Is sent at

the time the initial hold is placed on the

current month’s remaining available

funds, if any; (2) clearly states the full

adjustment amount; and (3) advises the

household that any amount still owing

is subject to collection from the

household’s next future month’s

benefits. To reduce the possibility of

creating a hardship on the household,

the processor must place a hold on

whatever portion of the adjustment is

available in the current month rather

than wait to debit the entire adjustment

amount from the household’s next

month’s issuance.

Two commenters suggested dropping

the language at 7 CFR 274.12(f)(4)(ii),

which provides that ‘‘[a] State agency

shall make adjustments to an account

after the availability date * * *,’’

because it implies that adjustments can

never be made before the availability

date. We have re-worded this paragraph

to clarify that State agencies must make

adjustments to correct system errors and

that those adjustments may be made

after the availability date. This

distinguishes system error adjustments

from other types of adjustments to client

EBT accounts which may not be made

after the benefit availability date.

The Department will require State

agencies to amend training materials to

disclose information to households

about adjustments, including the

possibility that an adjustment can be

made against a future month’s benefit.

Training materials must also inform

households of their right to a fair

hearing if they do not feel that the

adjustment is warranted and their right

to receive a credit for the adjustment

amount pending a fair hearing decision.

Although one commenter questioned

the sense of allowing State agencies a

grace period to make changes to training

materials, we have not changed the rule.

State agencies may grandfather

disclosure information on adjustments

into their training materials if they have

EBT systems that have been operational

for one year from the date of this

publication. However, as we discuss

below, whenever a household’s account

is debited to make an adjustment, the

State agency must provide the

household concurrent notification of

their rights to appeal and to provisional

credits, including the possibility of

adjustment from the next month’s

benefits.

Notice and Fair Hearing Requirement

When an adjustment will adversely

affect the household, the interim rule

requires State agencies to send a

concurrent notice at the time the action

is taken rather than an advance notice

which must be sent 10 days before an

action is taken. The concurrent notice

gives households the right to a fair

hearing and the right to be credited for

the adjustment amount pending the

outcome of the fair hearing. The

majority of comments received on this

subject continue to disagree with the

notice requirement. However, as

mentioned above, such notification is

mandated by the FSA. Thus, the final

rule remains unchanged in requiring

concurrent notice to households. These

notices must contain the level of detail

described in current regulations at 7

CFR 273.13, i.e., State agencies are

required to include information about

the circumstances which resulted in the

adverse action. State agencies are

encouraged to include as much detail

about the transaction—date, time and

location—as possible, since such

information could reduce calls to the

help desk as well as requests for fair

hearings and provisional credits.

Several commenters relayed concern

that only one notice be required, even

when partial adjustments are necessary

from future months to recoup the full

adjustment amount. It is the intent of

this rule that only one notice be sent to

a household informing it of the error

and disclosing the full adjustment

amount. The State agency must send the

notice concurrent to taking initial action

on the adjustment. Subsequent

transactions to move the funds or

otherwise complete the adjustment do

not require additional household

notification. It should be noted that all

actions taken to reduce the household’s

allotment are subject to notice,

including the correction of an erroneous

adjustment that first went in the

household’s favor. No notice is

necessary if an adjustment is a credit to

the household account.

The household has 90 days from the

date of the notice to request a fair

hearing. However, if the request is

received within 10 days from the date

of the notice, the household must be

granted a provisional credit pending the

fair hearing decision. Three commenters

believe that merchants and/or

processors need to have input into the

fair hearing process. There is no

prohibition against parties other than

the State agency and the FSP

households having input into the fair

hearing process. We encourage State

agencies to ensure that all parties

involved in resolving an error have

access to the fair hearing process.

Provisional Credits

Several comments were received

relating to provisional credits pending

fair hearing determination. There

continues to be considerable confusion

41324 Federal Register / Vol. 65, No. 129 / Wednesday, July 5, 2000 / Rules and Regulations

about how to handle provisional credits,

specifically how to handle claims of

system errors and how provisional

credits should be funded. Commenters

also continue to have questions

regarding liabilities for provisional

credits in various circumstances.

First, the Department is clarifying that

provisional credits are not required for

denied system error claims initiated by

client households. For example, a

household claims that they are missing

benefits from the EBT account as a

result of a retailer’s system problem, but

the alleged system error cannot be

substantiated with settlement data. In

this case, the State agency may deny the

adjustment. However, in so doing, they

must also inform the household of their

right to a fair hearing. In such a case, if

the household does request a fair

hearing, the State agency is not required

to make a provisional credit to the

household pending the fair hearing

decision.

Several commenters were also

concerned with the complexity of the

provisional credit process when a

retailer requests an adjustment. The

interim rule states that, when a client

responds to a retailer-initiated

adjustment by requesting a fair hearing

and provisional credit, the State agency

must notify the processor to initiate

another adjustment to credit the

recipient’s account—presumably

coming out of the retailer’s account.

This scenario becomes even further

complicated in cases where the client’s

fair hearing is not upheld. At such time,

the amount of the provisional credit

must be debited from the client account

and credited back to the retailer.

Many commenters expressed

concerns about the problems associated

with State agencies and their processors

having to track adjustments back and

forth between the retailer and

household accounts pending a fair

hearing decision. There was also

concern expressed about the likelihood

that a household may spend the

provisional credit and leave the FSP

before it could be determined that the

adjustment was in error. To simplify the

process and reduce the risk involved in

instances of retailer-initiated

adjustments, the Department will

require State agencies to have their

processors place a hold on the

adjustment amount in the client account

pending a timely request for a

provisional credit.

If the household does not request a

provisional credit within the 10-day

timeframe allotted for doing so, the hold

on the funds in the client account is

released and the adjustment is made

into the retailer’s account. As discussed

above, if there are insufficient funds to

cover the full adjustment amount, the

State agency may choose to maintain the

hold until the next month’s benefits are

issued and settle the full adjustment

amount. If the household does request

the provisional credit, the hold is

released and the funds remain in the

client’s account. Should the fair hearing

decision go against the client, the

adjustment amount will then be

credited to the retailer’s account.

Four commenters felt that it was

unfair to make retailers liable for

provisional credits. Three commenters

asked that we specify where provisional

credits are to come from. Three other

commenters suggested that government

sources rather than private sources fund

provisional credits. We are not changing

the source of provisional credits in the

final rule. However, we believe that, by

not requiring provisional credits in

instances of denied client-initiated

adjustments, and by requiring State

agencies to put a hold on an adjustment

until after the time when a household

can request a provisional credit, we

have simplified the adjustment process

and reduced the retailers’ liability for

unwarranted provisional credits.

Four commenters supported the

Department taking on the liability of

funding credit adjustments to clients

when the responsible retailers have left

the FSP or otherwise refuse to fund a

legitimate adjustment. The Department

has determined that because these

adjustments result from the State

agency’s system errors, the State is

ultimately responsible for making the

client whole in these instances. The

number of these situations that are

likely to occur are quite small given that

adjustments occur infrequently and the

majority of food stamp transactions take

place in stores with historically low

turnover in the FSP. Moreover,

adjustment amounts as reported by

retailers and processors are small. If a

client household leaves the FSP before

a credit adjustment has been completed

for a retailer, the adjustment is

discontinued. As was stated in the

interim rule, collections made from

clients that are not credited to retailers

because they have left the FSP must be

returned to the Department.

Timeframes

The interim rule distinguishes

between adjustments generated by

retailers and recipients. It allows the

State agency 10 days from the date of

the error transaction to complete an

adjustment requested by a retailer and 5

days from the date a client household

notifies the State agency or help desk to

complete a client-initiated adjustment.

Three commenters felt the timeframes to

complete adjustments were too short;

three others specified that the 5-day

timeframe to complete a client-initiated

adjustment was too short, given the

actions that must take place and the

number of participants inherent in the

adjustment process. The processes

described by the commenters include

compilation of documentation, research,

exchange of information, and making

the adjustment. The suggestion was to

extend the timeframe for client initiated

adjustments from 5 days to 10 or 15

days.

We believe that most client-initiated

adjustments will result in funds owed to

the household. In these scenarios,

recipients have suffered a loss through

no fault of their own, ostensibly through

a verifiable system error. However, we

have been convinced that 5 days is not

enough time to complete an

investigation of a client-initiated

adjustment request. Therefore, the

Department is extending the timeframe

for client-initiated adjustments from 5

days to 10 days, in order to provide

sufficient time for the State agencies and

the processors to complete error

verification research and handle the

adjustment properly. This timeframe

also applies to circumstances where the

State agency or other entity besides the

household discovers an error which

must be corrected by crediting the

household’s account. Such a correction

must occur within 10 days from the

time the error is discovered.

The Department does not believe that

a case has been made to justify allowing

additional time after the 10-day

deadline to complete retailer-initiated

adjustments. In response to three

comments, we are clarifying the use of

the word ‘‘completed’’ in the context of

retailer-initiated adjustments to mean

that the initial adjustment transaction,

which will be a hold placed on the

funds available in the client account,

must be attempted as soon as possible

within 10 days of the error transaction,

and a concurrent notification must be

sent to the household. The funds will

not move until after the time has passed

for a household to request a provisional

credit. We understand that, in some

cases, all or some portion of the full

adjustment will have to be made from

the next month’s allotment. However,

the household must be notified

concurrent with the initial adjustment

action. The State agency may not take

action on any adjustment to debit a

household’s account if more than 10

days have passed since the error

transaction occurred, except in cases

when the action is initiated within the

10-day timeframe but the funds are not

Federal Register / Vol. 65, No. 129 / Wednesday, July 5, 2000 / Rules and Regulations 41325

available in the current month and must

be taken from the next month’s benefit

issuance.

Another comment was raised

regarding the 180 days a client

household has to notify the State agency

of a system error and request an

adjustment. Indications are that client

households do not request adjustments

this far from the date an alleged error

occurred, primarily because EBT

households do not receive account

statements, and therefore, keep track of

their account balances with their POS

receipts. As such, it is more likely that

they will discover the error soon after

the transaction takes place.

Furthermore, many State agencies

only keep transaction data on-line at the

host computer for 90 days. To research

an alleged error once the data has been

moved off-line greatly increases the

potential cost and administrative

burden of the adjustment process. The

Department is convinced that the 180-

day timeframe is longer than necessary

for households to request an adjustment

and has reduced the timeframe to 90

days.

One commenter requested that the

Department put specific deadlines on

each participant in the adjustment, e.g.,

the retailer has a certain number of days

to request the adjustment, then the

processors have another specified

timeframe to complete the process, and

so on. The Department believes that

such an approach would be difficult to

track and administratively burdensome.

We realize, however, that each of these

participants has a responsibility to the

others to handle their portion

expeditiously if timeframes are to be

met. We would recommend and expect

that this level of detail be addressed in

retailer and third party agreements.

One commenter wanted clarification

on the ramifications of not meeting

timeframes or otherwise complying with

this rule. This rule will not impose

specific penalties for non-compliance.

As with other regulatory requirements,

however, State agencies are required to

ensure the processor’s compliance and

failure to do so may result in

administrative sanctions by the

Department against the State agency.

Re-presentations

The Department received three

comments relaying confusion about how

re-presentation fits into the adjustment

process. In fact, re-presentation

regulations are separate and apart from

adjustment rules, because State agencies

now have access to a household’s future

month’s benefit issuance to make an

adjustment. The only time a State

agency would need to consider representation is in the event of

insufficient funds to cover a manual

transaction when the system host

computer is down. Any references to representation are used in the context of

7 CFR 274.12(e). There are no changes

regarding re-presentations in the final

rule from what was published in the

interim rule.

Implementation

This final rule is effective August 4,

2000. State agencies may begin

implementing the rule August 4, 2000

but no later than January 2, 2001. State

agencies that have already implemented

EBT shall have one year in which to

grandfather adjustment disclosure into

their training materials according to 7

CFR 274.12(f)(10)(viii).

List of Subjects

7 CFR Part 272

Alaska, Civil Rights, Food Stamps,

Grant Programs—social programs,

Reporting and recordkeeping

requirements.

7 CFR Part 273

Administrative practice and

procedures, Aliens, Claims, Food

stamps, Grant programs—social

programs, Penalties, Reporting and

recordkeeping requirements, Social

security, Students.

7 CFR Part 274

Administrative procedures and

practices, Food Stamps, Grant programssocial programs, Reporting and

recordkeeping requirements.

Accordingly, the interim rule

amending 7 CFR Parts 272, 273 and 274,

which was published at 64 FR 48933 on

September 9, 1999, is adopted as a final

rule with the following changes:

1. The authority citation for 7 CFR

Parts 272, 273 and 274 continues to read

as follows:

Authority: 7 U.S.C. 2011–3036.

PART 272—REQUIREMENTS FOR

PARTICIPATING STATE AGENCIES

2. In § 272.1, paragraph (g)(154) is

revised to read as follows:

§ 272.1 General terms and conditions.

* * * * *

(g) Implementation. * * *

(154) Amendment No. 386. The

provisions of Amendment No.386 are

effective August 4, 2000. State agencies

may begin implementing the rule

August 4, 2000 but not later than

January 2, 2001. State agencies that have

already implemented EBT shall have

one year in which to grandfather

adjustment disclosure into their training

materials according to 7 CFR

274.12(f)(10)(viii).

PART 273—CERTIFICATION OF

ELIGIBLE HOUSEHOLDS

3. In § 273.13, paragraph (a)(3)(vii) is

redesignated as (a)(4) and is revised to

read as follows:

§ 273.13 Notice of adverse action.

(a) * * * (4) The State agency shall

notify a household that its benefits will

be reduced if an EBT system-error has

occurred during the redemption process

resulting in an out-of-balance settlement

condition. This notification shall be

made no later than the date the action

is initiated against the household

account. The State agency shall adjust

the benefit in accordance with § 274.12

of this chapter.

* * * * *

4. In § 273.15, the fifth and sixth

sentences of paragraph (k)(1) are revised

to read as follows:

§ 273.15 Fair hearings.

* * * * *

(k) Continuation of benefits.

(1) * * * In the case of an EBT

adjustment, as defined in

§ 274.12(f)(4)(ii) of this chapter, once an

adverse action is upheld, the State

agency shall immediately debit the

household’s account for the total

amount stated in its original notice. If

there are no benefits or insufficient

benefits remaining in the household’s

account at the time the State agency

action is upheld, the State agency may

only make the adjustment from the next

month’s benefits, regardless of whether

this satisfies the full adjustment

amount. * * *

* * * * *

PART 274—ISSUANCE AND USE OF

COUPONS

5. In § 274.12, paragraphs (f)(4) and

(f)(10)(viii) are revised to read as

follows:

§ 274.12 Electronic Benefit Transfer

issuance system approval standards.

* * * * *

(f) Household Participation ***

(4) Issuance of Benefits. State agencies

shall establish an availability date for

household access to their benefits and

inform households of this date.

(i) The State agency may make

adjustments to benefits posted to

household accounts after the posting

process is complete but prior to the

availability date for household access in

the event benefits are erroneously

posted.

41326 Federal Register / Vol. 65, No. 129 / Wednesday, July 5, 2000 / Rules and Regulations

(ii) A State agency shall make

adjustments to an account to correct an

auditable, out-of-balance settlement

condition that occurs during the

redemption process as a result of a

system error. A system error is defined

as an error resulting from a malfunction

at any point in the redemption process:

from the system host computer, to the

switch, to the third party processors, to

a store’s host computer or point of sale

(POS) device. These adjustments may

occur after the availability date and may

result in either a debit or credit to the

household.

(A) Client-initiated adjustments. The

State agency must act on all requests for

adjustments made by client households

within 90 calendar days of the error

transaction. The State agency has 10

business days from the date the

household notifies it of the error to

investigate and reach a decision on an

adjustment and move funds into the

client account. This timeframe also

applies if the State agency or entity

other than the household discovers a

system error that requires a credit

adjustment to the household. Business

days are defined as calendar days other

than Saturdays, Sundays, and Federal

holidays.

(B) Retailer-initiated adjustments. The

State agency must act upon all

adjustments to debit a household’s

account no later than 10 business days

from the date the error occurred, by

placing a hold on the adjustment

balance in the household’s account. If

there are insufficient benefits to cover

the entire adjustment, a hold shall be

placed on any remaining balance that

exists, with the difference being subject

to availability only in the next future

month. The household shall be given, at

a minimum, adequate notice in

accordance with § 273.13 of this

chapter. The notice must be sent at the

time the initial hold is attempted on the

household’s current month’s remaining

balance, clearly state the full adjustment

amount, and advise the household that

any amount still owing is subject to

collection from the household’s next

future month’s benefits.

(1) The household shall have 90 days

from the date of the notice to request a

fair hearing.

(2) Should the household dispute the

adjustment and request a hearing within

10 days of the notice, a provisional

credit must be made to the household’s

account by releasing the hold on the

adjustment balance within 48 hours of

the request by the household, pending

resolution of the fair hearing. If no

request for a hearing is made within 10

days of the notice, the hold is released

on the adjustment balance, and this

amount is credited to the retailer’s

account. If there are insufficient funds

available in the current month to cover

the full adjustment amount, the hold

may be maintained and settled at one

time after the next month’s benefits

become available.

(iii) The appropriate management

controls and procedures for accessing

benefit accounts after the posting shall

be instituted to ensure that no

unauthorized adjustments are made in

accordance with paragraph (f)(7)(iii) of

this section.

* * * * *

(10) * * *

(viii) Disclosure information regarding

adjustments and a household’s rights to

notice, fair hearings, and provisional

credits. The disclosure must also state

where to call to dispute an adjustment

and request a fair hearing. State agencies

that have already implemented EBT

shall have one year in which to

grandfather adjustment disclosure into

their training materials.

* * * * *

Dated: June 28, 2000.

Samuel Chambers, Jr.,

Administrator, Food and Nutrition Service.

[FR Doc. 00–16944 Filed 7–3–00; 8:45 am]

BILLING CODE 3410–30–P

DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 39

[Docket No. 98–SW–74–AD; Amendment

39–11807; AD 2000–13–08]

RIN 2120–AA64

Airworthiness Directives; Eurocopter

Deutschland GmbH Model EC 135

Helicopters

AGENCY: Federal Aviation

Administration, DOT.

ACTION: Final rule.

SUMMARY: This amendment supersedes

an existing airworthiness directive (AD)

that applies to Eurocopter Deutschland

GmbH (ECD) Model EC 135 helicopters.

That AD requires conducting a tail rotor

drive shaft vibration survey (survey),

installing a Fenestron Shaft Retrofit Kit,

inspecting each tail rotor drive shaft

bearing (bearing) attaching lock plate for

bent-open tabs and broken or missing

slippage marks, and visually inspecting

each bearing support for cracks. This

AD requires conducting the survey and

installing the Fenestron Shaft Retrofit

Kit. This AD also requires installing

double bearing supports and struts,

revising the required compliance time

for the repetitive inspections of the

bearing attach hardware and supports,

and removing the requirement to

contact the FAA if a lock plate tab is

bent open or if slippage marks are

broken or missing. This amendment is

prompted by continued reports of

misaligned or cracked bearing supports

and loose bearing attachment bolts. The

actions specified by this AD are

intended to prevent loss of drive to the

tail rotor and subsequent loss of control

of the helicopter.

DATES: Effective August 9, 2000.

The incorporation by reference of

certain publications listed in the

regulations is approved by the Director

of the Federal Register as of August 9,

2000.

ADDRESSES: The service information

referenced in this AD may be obtained

from American Eurocopter Corporation,

2701 Forum Drive, Grand Prairie, Texas

75053–4005, telephone (972) 641–3460,

fax (972) 641–3527. This information

may be examined at the FAA, Office of

the Regional Counsel, Southwest

Region, 2601 Meacham Blvd., Room

663, Fort Worth, Texas; or at the Office

of the Federal Register, 800 North

Capitol Street, NW., suite 700,

Washington, DC.

FOR FURTHER INFORMATION CONTACT:

Uday Garadi, Aviation Safety Engineer,

FAA, Rotorcraft Directorate, Rotorcraft

Standards Staff, Fort Worth, Texas

76193–0110, telephone (817) 222–5123,

fax (817) 222–5961.

SUPPLEMENTARY INFORMATION: A

proposal to amend part 39 of the Federal

Aviation Regulations (14 CFR part 39)

by superseding AD 98–15–25,

Amendment 39–10866 (63 FR 59206,

November 3, 1998), that applies to ECD

Model EC 135 helicopters, was

published in the Federal Register on

April 6, 2000 (65 FR 18010). That action

proposed to require the following:

• Conducting a vibration survey and

installing the Fenestron Shaft Retrofit

Kit L535M3002 882;

• Installing double bearing supports

and struts;

• Inspecting and, if necessary,

replacing bearing attach hardware; and

• Increasing the repetitive inspection

interval for the bearing supports and

attach hardware to 50 hours time-inservice (TIS).

Interested persons have been afforded

an opportunity to participate in the

making of this amendment. No

comments were received on the

proposal or the FAA’s determination of

the cost to the public. The FAA has

determined that air safety and the