[Federal Register Volume 71, Number 187 (Wednesday, September 27, 2006)]
[Rules and Regulations]
[Pages 56708-56741]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 06-7875]



[[Page 56707]]

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Part IV





 Department of Agriculture





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Food and Nutrition Service



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7 CFR Part 246



 Special Supplemental Nutrition Program for Women, Infants and Children 
(WIC): Miscellaneous Provisions; Final Rule

Federal Register / Vol. 71, No. 187 / Wednesday, September 27, 2006 / 
Rules and Regulations

[[Page 56708]]


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DEPARTMENT OF AGRICULTURE

Food and Nutrition Service

7 CFR Part 246

RIN 0584-AB10


Special Supplemental Nutrition Program for Women, Infants and 
Children (WIC): Miscellaneous Provisions

AGENCY: Food and Nutrition Service (FNS), USDA.

ACTION: Final rule.

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SUMMARY: This final rule amends a number of existing provisions in the 
WIC Program regulations to address issues raised by WIC State agencies, 
other members of the WIC community, and the United States Government 
Accountability Office (GAO). This final rule also incorporates recent 
legislation and certain longstanding program policies and State agency 
practices into the regulations. Further, the final rule also 
streamlines certain requirements in the regulations.
    In particular, this rulemaking streamlines the Federal requirements 
for financial and participation reporting by State agencies, and 
clarifies the requirements pertaining to the confidentiality of WIC 
information in order to strengthen coordination with public 
organizations and private physicians. It also incorporates recent 
legislation which provided the WIC State agencies with the option to 
extend the certification period for breastfeeding women. Further, it 
incorporates longstanding program policies and State agency practices 
into the regulations regarding State agency responses to subpoenas and 
other court-ordered requests for confidential information. Other 
provisions in this final rule are designed to improve eligibility 
determinations, incorporating program policies and State agency 
practices that have been in effect for some time.
    These changes are intended to reinforce program policies and State 
agency practices that strengthen services to WIC participants, improve 
Program administration, and increase State agency flexibility in 
managing the Program. Many of these provisions are options the State 
agency may choose to implement in operating the program.

DATES: Effective Date: This rule is effective November 27, 2006.
    Implementation Date: State agencies must implement the provisions 
of this rule no later than March 27, 2007.

FOR FURTHER INFORMATION CONTACT: Debra R. Whitford, Chief, Policy and 
Program Development Branch, Supplemental Food Programs Division, Food 
and Nutrition Service, 3101 Park Center Drive, Room 522, Alexandria, 
Virginia 22302, (703) 305-2746.

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.

Regulatory Impact Analysis

    As required for all rules that have been designated as Significant 
by the Office of Management and Budget, a Regulatory Economic Impact 
Analysis was developed for this final rule. A complete copy of the 
Impact Analysis appears in the appendix to this rule. The conclusions 
of this analysis are summarized below.

Need for Action

    This action is needed to address issues raised by WIC State 
agencies and other members of the WIC community; address issues raised 
by the GAO; incorporate recent legislation; incorporate certain 
longstanding program policies and State agency practices into the 
regulations; and, streamline certain requirements in the regulations.
    Two provisions in this final rule may have a notable financial 
impact. One of these provisions prohibits the use of possibility of 
regression to a previous nutrition risk as the basis for determining 
nutrition risk eligibility in consecutive certifications when this 
nutrition risk is not actually present.
    The second provision which may have a notable financial impact 
provides WIC States agencies with the option to extend the 
certification period for all participant categories until the end of 
the last month of the certification period, and also provides the 
option to extend a breastfeeding woman's certification period up to her 
infant's first birthday or until the woman ceases to breastfeed. This 
provision incorporates recent legislation. Section 203(b)(1) of the 
Child Nutrition and WIC Reauthorization Act of 2004, Public Law 108-
265, amended section 17(d)(3) of the Child Nutrition Act of 1966, 42 
U.S.C. 1786, to allow WIC State agencies the option to certify a 
breastfeeding woman for up to one year postpartum, or until the woman 
stops breastfeeding, whichever occurs first. This option became 
effective on October 1, 2004, pursuant to Section 502(b)(2) of Public 
Law 108-265.

Benefits

    This rule serves to streamline program administration and clarify 
program requirements, while minimizing economic and administrative 
burdens. As previously noted, one of this rule's provisions which may 
have a notable financial impact prohibits the use of the possibility of 
regression to a previous nutrition risk as the basis for determining 
nutrition risk eligibility in consecutive certifications when this 
nutrition risk is not actually present.
    For example, this provision would permit use of the possibility of 
regression to anemia as the nutrition risk for a certification 
following a certification when anemia was actually present, but not for 
any subsequent certification. If all of the participants certified 
based on the possibility of regression as a nutrition risk criterion in 
2004 were subsequently certified on this basis for one six-month 
certification period, then prohibiting use of this nutrition risk for 
consecutive certifications could save over $20 million and reduce 
participation by over 70,000 in that six-month period. However, given 
that possibility of regression is rarely used as the sole basis for 
determining nutrition risk, and that participants who had actually 
regressed to the previous nutrition risk would presumably be certified 
again, significant savings are unlikely.

Costs

    Most of the provisions in this final rule are generally 
economically insignificant to the costs and overall operations of the 
WIC Program. Some of the provisions reflect the current practice of 
many WIC State agencies, while others are optional at the discretion of 
WIC State agencies.
    As previously noted, one of this rule's provisions which may have a 
notable financial impact provides WIC State agencies with the option to 
extend the certification period for all participant categories until 
the end of the last month of the certification period, and also 
provides the option to extend a breastfeeding woman's certification 
period up to her infant's first birthday or until the woman ceases to 
breastfeed.
    Since this provision is optional, the number of WIC State agencies 
which may choose to extend these certification periods is unknown. 
Also, most women who continue to breastfeed longer than six months are 
presumably certified for a second six-month period. Therefore, 
implementation of the option to extend the certification period of 
breastfeeding women is not likely to have a major impact on either 
program participation

[[Page 56709]]

among breastfeeding women or on program costs.

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). Kate Coler, 
Deputy Under Secretary, Food, Nutrition, and Consumer Services, has 
certified that this rule will not have a significant impact on a 
substantial number of small entities. State and local WIC agencies 
would be most affected because there are several additional program 
administration requirements. However, this rule also reduces 
considerably more program administration requirements. The net effect 
on State and local agencies is expected to result in reduced and 
streamlined administrative procedures. Participants and applicants 
would also be affected by changes in application processing, 
certification, and the disclosure of information.

Unfunded Mandates Reform Act

    Title II of the 1995 (UMRA), Public Law 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 Department generally 
must prepare a written statement, including a cost/benefit 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 Department 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) that impose costs on State, local, 
or tribal governments or to the private sector of $100 million or more 
in any one year. This rule is, therefore, not subject to the 
requirements of sections 202 and 205 of the UMRA.

Executive Order 12372

    The Special Supplemental Nutrition Program for Women, Infants and 
Children (WIC) is listed in the Catalog of Federal Domestic Assistance 
Programs under No. 10.557. For reasons set forth in the final rule in 7 
CFR Part 3015, Subpart V, and related Notice (48 FR 29115, June 24, 
1983), this program is included in the scope of Executive Order 12372 
that requires intergovernmental consultation with State and local 
officials.

Federalism Summary Impact Statement

    Executive Order 13132 requires Federal agencies to consider the 
impact of their regulatory actions on State and local governments. 
Where such actions have federalism implications, agencies are directed 
to provide a statement for inclusion in the preamble to the regulations 
describing the agency's considerations in terms of the three categories 
called for under section (6)(b)(2)(B) of Executive Order 13121. The 
Food and Nutrition Service (FNS) has considered the impact of this rule 
on State and local governments and has determined that this rule does 
not impose substantial or direct compliance costs on State and local 
governments, but that it does have Federalism implications because this 
rule preempts State law. Therefore, under section 6(b) of the Executive 
Order, a federalism summary impact statement is required.

Prior Consultation With State Officials

    Prior to drafting the final rule, a comment period was provided to 
permit State and local agencies and the general public the opportunity 
to comment on the proposed changes. In addition, some of the proposed 
changes were as a result of input from State and local agencies such as 
changing certification periods and greater flexibility in sharing 
confidential WIC information. Further, because the WIC Program is a 
State-administered, Federally funded program, FNS regional offices have 
formal and informal discussions with State and local officials on an 
ongoing basis regarding program and policy issues. This arrangement 
allows State and local agencies to provide comments that form the basis 
for many discretionary decisions in this and other WIC Program rules. 
Comments on the proposed rule and other comments, concerns and 
recommendations by State and local agencies through other forums have 
been beneficial in ensuring this final rule reflects concerns raised by 
these entities.

Nature of Concerns and the Need To Issue This Rule

    State agencies generally want greater flexibility in their 
implementation of program policy. As stated previously, this final rule 
provides State and local agencies greater flexibility in some areas 
such as certification periods and sharing WIC information. However, it 
was necessary in some areas to strengthen program accountability and 
integrity. Comments made by State and local agencies through the 
proposed rule process and through other forums assisted us in 
identifying areas of the regulations where greater flexibility can be 
afforded State and local agencies.

Extent to Which We Meet Those Concerns

    FNS has considered the impact of the final rule on State and local 
agencies. This rule makes changes to improve the accountability and 
effectiveness of the WIC Program, and to provide State and local 
agencies with greater flexibility in how they operate the program. The 
effects on State agencies are minimal since some requirements such as 
obtaining proof of pregnancy are optional requirements, and other 
requirements are codifying existing policy that the majority of State 
agencies have already implemented.

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. 
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 Special Supplemental Nutrition Program for Women, Infants 
and Children (WIC), the administrative procedures which must be 
exhausted are as follows. First, State agency hearing procedures 
pursuant to 7 CFR 246.9 must be exhausted for participants concerning 
denial of participation, disqualification, and claims. Second, State 
agency hearing procedures pursuant to 7 CFR 246.18(a)(1) must be 
exhausted for vendors concerning denial of authorization, termination 
of agreement, disqualification, civil money penalty or fine. Third, the 
State agency process for providing the vendor an opportunity to justify 
or correct the food instrument pursuant to 7 CFR 246.12(k)(3) must be 
exhausted for vendors concerning delaying payment for a food instrument 
or a claim. Fourth, State agency hearing procedures pursuant to 7 CFR 
246.18(a)(3) must be exhausted for local agencies concerning denial of 
application, disqualification, or any other adverse action affecting 
participation. Fifth, FNS hearing procedures pursuant to 7 CFR 246.22 
must be exhausted for State agencies concerning sanctions imposed by 
FNS. Sixth, administrative appeal to the

[[Page 56710]]

extent required by 7 CFR 3016.36 must be exhausted for vendors and 
local agencies concerning procurement decisions of State agencies.

Civil Rights Impact Analysis

    FNS has reviewed this final rule in accordance with the Department 
Regulation 4300-4, ``Civil Rights Impact Analysis,'' to identify and 
address any major civil rights impacts the rule might have on 
minorities, women, and persons with disabilities. After a careful 
review of the rule's intent and provisions, and the characteristics of 
WIC Program applicants and participants, FNS has determined that there 
is no way to soften their effect on any of the protected classes. All 
data available to FNS indicate that protected individuals have the same 
opportunity to participate in the WIC Program as non-protected 
individuals. FNS specifically prohibits State and local agencies 
operating the WIC Program from engaging in actions that discriminate 
against any individual in any of the protected classes; see 7 CFR 
246.8(a) for the non-discrimination policy of the WIC Program. Where 
State agencies have options, and they choose to implement a certain 
provision, they must implement it in such a way that it complies with 
the regulations at 7 CFR 246.8.

Paperwork Reduction Act

    The Paperwork Reduction Act of 1995 (44 U.S.C. Chap. 35; see 5 CFR 
part 1320) requires that the Office of Management and Budget (OMB) 
approve all collections of information by a Federal agency from the 
public before they can be implemented. Respondents are not required to 
respond to any collection of information unless it displays a current 
valid OMB control number. Information collections in this final rule 
have been previously approved under OMB <greek-i>0584-0043, and no 
changes are needed as a result of this final rule.

E-Government Act Compliance

    FNS is committed to compliance with the E-Government Act, to 
promote the use of the Internet and other information technologies to 
provide increased opportunities for citizen access to Government 
information and services, and for other purposes. The new definitions 
of ``electronic signature'' and ``sign or signature'' are intended to 
facilitate paperless systems in all administrative activities of the 
program. The new State Plan requirements, as is the case with the 
entire State Plan, may be transmitted electronically by the State 
agency to FNS. Also, State agencies may share participant information 
electronically pursuant to a written agreement and consistent with 
Federal policy, including such information sharing based on the new 
non-WIC purposes provided in this final rule as well as the previously 
allowed non-WIC purposes.

Background

    On December 2, 2002, the Department published a proposed rule at 67 
FR 71774 concerning revisions of miscellaneous provisions of the WIC 
regulations. The comment period ended on April 1, 2003. Thirty-five 
letters were submitted to the Department to provide comments on the 
proposed revisions. We greatly appreciate these comments, all of which 
were carefully considered in the development of this final rule. 
Following is a discussion of each provision as proposed, the comments 
received, and an explanation of the provisions set forth in this final 
rule.

1. Definitions (Sec.  246.2)

    The proposed rule included new definitions for ``sign or 
signature'' and ``electronic signature,'' to provide State agencies the 
option of using electronic signatures in their administration of the 
WIC Program. This definition of ``electronic signature'' was derived 
from the Electronic Signatures in Global and National Commerce Act 
(Pub. L. 106-229, signed June 30, 2000), also known as ESIGN. The 
Department sought to introduce these definitions to clarify that use of 
the terms ``sign'' or ``signature'' throughout 7 CFR Part 246 is not 
intended to exclude the use of electronic signatures. At the same time, 
we also wanted to make clear that electronic signatures may be used 
only if the State agency ensures the reliability and integrity of the 
technology used and the security and confidentiality of electronic 
signatures collected in accordance with sound management practices, WIC 
Program regulations, and applicable Office of Management and Budget 
Circulars, including A-130, concerning confidentiality.
    All of the commenters supported the new definitions. However, 
several commenters sought clarifications. One commenter questioned 
whether the new definitions constituted an endorsement of the 
``paperless office'' concept, e.g., electronic certification forms. 
Similarly, another commenter asked whether the new definitions applied 
to vendor agreements. Finally, one commenter pointed to the need for 
protecting access to benefits in the event of a technology failure.
    The Department did not intend to confine the use of electronic 
signatures to one part of WIC Program administration, such as 
certification, so that electronic signatures could not be used in other 
administrative activities of the program, such as vendor management. 
Indeed, as indicated in the preamble of the proposed rule, the new 
definitions were intended to facilitate paperless systems. We recognize 
the efficiencies and advantages of paperless systems, and encourage 
State agencies to implement such systems in all administrative 
activities of the program. Of course, as previously noted, the 
reliability and integrity of such systems is paramount; this would 
include safeguarding benefits in the event of a technology failure or 
disaster.
    In addition, even though the Department supports the paperless 
office concept, this concept would not be mandated. This would be a 
State option, including the specific kind of technology adopted, as 
discussed in the preamble of the proposed rule. State agencies need to 
consider the costs, the views of participants, and the legal aspects of 
implementing this option. In this latter regard, State agencies should 
consult legal counsel on whether State law permits electronic 
signatures for certain kinds of documents, such as vendor agreements or 
contracts with local agencies. Accordingly, as set forth in the 
proposed rule, the definitions of ``sign or signature'' and 
``electronic signature,'' as proposed, are retained in this final rule.
    Recently, the Governmentwide Requirements for Drug-Free Workplace 
have been moved from 7 CFR part 3017 to 7 CFR part 3021 of the 
Departmental regulations. Therefore, this final rule includes a new 
definition of 7 CFR part 3021 to reference these requirements, and 
removes the reference to the drug-free requirements in the definition 
of 7 CFR part 3017. In addition, all other references to the drug-free 
workplace requirements in 7 CFR part 246 have been changed to reference 
Departmental regulations at 7 CFR part 3021. Further, unlike 7 CFR part 
3017, 7 CFR part 3021 does not require a certification regarding a 
drug-free workplace; accordingly, this certification requirement has 
been deleted from Sec.  246.3(c)(2). These changes are 
nondiscretionary, and do not require that the public be given an 
opportunity to comment.
    In addition, in this final rule, the definition of ``State'' has 
been revised to reflect a change in the definition of ``State'' in 
section 15 of the Child Nutrition Act of 1966 (CNA), 42 U.S.C. 1786, 
which applies to all programs under the CNA, including the WIC Program. 
The CNA no longer refers to the Trust Territory of the Pacific Islands

[[Page 56711]]

since the Trust Territory no longer exists.
    Therefore, the revision to the definition of ``State'' is included 
in this final rule.
    Finally, we have added a definition of ``Employee fraud and 
abuse,'' as discussed in section 4 of this preamble.

2. State Plan Requirements (Sec.  246.4(a))

    We proposed a number of new State Plan provisions which would be 
required under Sec.  246.4(a) of the WIC regulations. The comments on 
some of these State Plan provisions require more discussion than the 
comments on other proposed State Plan provisions. Therefore, these 
provisions are addressed in other sections of the preamble. Section 2 
of this preamble addresses provisions and comments which do not require 
extensive discussion.
    First, one commenter pointed out that we had not included a State 
Plan provision to provide State agencies the option to require 
applicants to provide proof of pregnancy in Sec.  246.4(a) of the 
proposed rule. As indicated elsewhere in the proposed rule and its 
preamble, we had intended that a new State Plan provision would be 
added to Sec.  246.4(a). However, this new provision was inadvertently 
omitted from the Proposed Rule. Accordingly, we have added it to this 
final rule.
    Second, several commenters objected to the proposed State Plan 
requirement for listing all of the organizations with which the State 
agency or its local agencies had written agreements on the sharing of 
confidential participant information. One of these commenters pointed 
out that this provision could delay implementation of an information-
sharing agreement if this agreement was executed after the annual 
submission of the State Plan. Another commenter stated that such a list 
in the State Plan would not constitute adequate notice to the 
applicant.
    As noted under section 22-C of this preamble, the proposed State 
Plan provision for listing all programs that have information-sharing 
agreements with the State agency and its local agencies, and the uses 
of such information, are only intended for informational purposes. As 
proposed, FNS did not intend to approve State agencies' decisions in 
this matter as long as the reasons for sharing information were 
consistent with the authorized uses in the proposed rule. Therefore, 
State and local agencies can execute such agreements prior to 
submission in State Plans. The process of providing a list to FNS is 
not intended to create a barrier to entering into information sharing 
agreements. Further, such lists are not intended to serve as notice to 
WIC applicants and participants. As proposed, and as required in this 
final rule, State agencies are required to provide applicants and 
participants with notification at certification of public organizations 
that WIC intends to share confidential WIC information and the purposes 
for sharing such information.
    Third, we have not included a revision to Sec.  246.4(a)(11)(ii) in 
this final rule. The proposed revision in this paragraph referred to 
describing the criteria for deciding who will be offered individual 
care plans. This proposed change has not been included in this final 
rule since it was an inadvertent error; we did not intend to propose a 
change in this paragraph.
    Finally, we have added a new sentence to Sec.  246.4(a) to require 
the use of a Universal Identifier as part of State Plans. The Office of 
Management and Budget (OMB) requires entities applying for Federal 
grants to provide government agencies with a Universal Identifier. This 
requirement is set forth in an OMB Policy Directive, ``Use of a 
Universal Identifier by Grant Applicants,'' which was published in the 
Federal Register on June 27, 2003, at 68 FR 38402. The annual WIC 
Program State Plan submission is considered an application for a 
federal grant, and thus covered by this requirement. Currently, the 
Universal Identifier system in use is the Data Universal Numbering 
System (DUNS) identification number. FNS has issued guidance on how to 
obtain a DUNS number. FNS will address the submission of DUNS numbers 
as part of the WIC State Plan Guidance. It is not necessary for FNS to 
issue a proposed rule on this revision to the WIC Program regulations 
since the OMB Policy Directive is nondiscretionary and is already in 
effect. Also, as explained in the preamble of the OMB Policy Directive, 
OMB has determined that use of a DUNS number is not a significant 
burden under the Paperwork Reduction Act.

3. Conflict of Interest (Sec.  246.4(a))

    The Department proposed a new State Plan requirement for addressing 
employee conflicts of interest at the local agency level, as 
recommended by an August 1999 Report by the Government Accountability 
Office (GAO), FOOD ASSISTANCE: Efforts to Control Fraud and Abuse in 
the WIC Program Can Be Strengthened. We proposed a new paragraph in 
Sec.  246.4(a) to require that State agencies develop and implement 
policies and procedures to prevent conflicts of interest within the 
local agency staffs. Specifically, we wanted State agencies to develop 
policies and procedures concerning local agency employees certifying 
themselves, relatives or friends, and also concerning an employee both 
certifying and issuing food benefits to a participant, i.e., lack of 
separation of duties.
    At the same time, we recognized in the preamble of the proposed 
rule that there may be practical circumstances, such as the 
availability of only one employee to conduct a clinic, which would 
preclude a strict prohibition on some practices. For such situations, 
we pointed out, an effective alternative policy or procedure would be 
needed, such as supervisory review of the records of the certifications 
and benefits issuance performed by such employees. As noted below in 
this section, we have added language to the proposed paragraph to 
recognize that effective alternative policies and procedures will be 
needed when strict prohibition is not possible.
    Most of the commenters supported the proposed provision. (The 1999 
GAO study found that most of the WIC State agencies had policies on 
conflicts of interest and separation of duties.) Commenters opposing 
the proposed provision based their position on the practical 
difficulties precluding a strict prohibition on conflicts of interest, 
arguing that sometimes no effective alternative policy or procedure 
would be possible. In this regard, one of the supporting commenters 
requested that the proposed provision itself require reasonable 
policies and procedures when actual separation of duties is not 
possible, instead of stating this only in the preamble. Also, one of 
the commenters opposing the provision stated that separation of duties 
is not violated when one staff member conducts part of the 
certification and also issues food instruments; for example, if one 
staff member determines income eligibility and issues food instruments, 
this should be deemed acceptable if another staff member determines 
nutrition risk.
    As previously noted, we have added language to the proposed 
paragraph to permit effective alternative policies and procedures when 
strict prohibition is not possible. This additional language provides 
more explicit guidance than merely inserting the term ``reasonable.'' 
Also, we do not support the comment that there may be circumstances 
where no effective alternative policy or procedure is possible. State 
agencies should consult with the appropriate FNS Regional office and 
with legal

[[Page 56712]]

counsel for advice on alternative approaches to deal with difficult 
circumstances complicating strict compliance with the requirements 
regarding conflicts of interest and separation of duties.
    We agree with the comment indicating that separation of duties is 
not violated if at least two WIC personnel are integral to the 
certification of a participant. The reason for the separation of duties 
concept is to ensure that one employee cannot both certify and issue 
benefits. The commenter opposing the provision correctly pointed out 
that this requirement is satisfied if two WIC employees are required to 
perform certification determinations even though one of them also 
issues food instruments, since the person issuing food instruments 
could not complete the certification process alone. Therefore, we have 
revised the proposed paragraph to require the State agency to prohibit 
one employee from being solely responsible for determining the 
eligibility of an applicant for all certification requirements and for 
issuing food instruments to that participant, or to provide effective 
alternative policies and procedures for situations when such 
prohibition is not possible. Moreover, this revision also applies to 
circumstances when an employee might be certifying herself or friends 
and relatives because no other staff is available.
    Accordingly, in this final rule, the proposed paragraph has been 
added to Sec.  246.4(a), revised as noted above.

4. Participant and Employee Fraud and Abuse (Sec.  246.4(a))

    Also in response to the GAO study on WIC fraud and abuse, the 
Department proposed to require a description in the State Plan of the 
State agency's plans for collecting and maintaining information on 
cases of participant and employee fraud and abuse, including the nature 
of the fraud detected and the associated dollar losses. As proposed, 
this requirement would be added to Sec.  246.4(a).
    Most of the commenters supported the proposed provision. In fact, 
the GAO study reflected that 30 of the 51 WIC State agencies responding 
to the GAO survey collected information on the number and 
characteristics of participants who engage in fraud and abuse. 
Commenters opposing the proposed provision stated that it was 
unnecessary because participant and employee fraud is minimal; one 
commenter stated that participant fraud and abuse should have declined 
as a result of the WIC Certification Integrity Rule (65 FR 77245, 
December 11, 2000), which requires applicants to provide proof of 
income, residency and identity.
    We do not support these positions. It is not possible to determine 
the extent of potential fraud and abuse in the program when some State 
agencies may not be collecting data on this matter. Moreover, the 
documentation requirements of the Certification Integrity Rule are only 
one part of our efforts to detect and prevent fraud and abuse. Such 
requirements cannot be relied upon to prevent all fraud and abuse. 
Further, the Certification Integrity Rule did not address employee 
fraud and abuse.
    Some commenters opposing the proposed provision also stated that 
collecting information on participant and employee fraud and abuse 
would be administratively burdensome. We recognize that such activity 
will involve some administrative burden, but we do not believe that 
collecting information on the nature and costs of participant and 
employee fraud and abuse is unduly burdensome. As previously noted, a 
majority of WIC State agencies are already collecting this data. 
Moreover, as indicated by GAO, failure to collect such information may 
send an unintentional message to agency officials and other 
stakeholders that preventing and detecting participant/employee fraud 
and abuse is a low priority, thus damaging the public's trust in the 
WIC Program.
    Some of the supportive commenters requested clarification on the 
meaning of several terms, including ``participant fraud and abuse,'' 
``employee fraud and abuse,'' and ``dollar losses.'' Two of these terms 
have already been defined in the regulations and further clarified in a 
policy memorandum. Section 246.2 sets forth the definition of 
``participant violation,'' which is the equivalent of ``participant 
fraud and abuse.'' Regarding dollar losses, Sec.  246.23(c)(1)(i) 
requires a claim for the full value of benefits that have been obtained 
or disposed of improperly as the result of a participant violation. The 
full value of such benefits would be either the total purchase price of 
the food instruments involved or the total post-rebate food cost of the 
benefits involved, and would not include the nutrition services and 
administration (NSA) costs expended for the participant; see WIC Policy 
Memorandum <greek-i>2002-1, Revision 1, Clarification of WIC Food 
Delivery Systems Final Rule Questions and Answers, June 10, 2003, page 
M-1, Question 1. Finally, we agree that ``employee fraud and abuse'' 
should be defined in the regulations. Accordingly, in this final rule, 
in Sec.  246.2, we have added a definition of this term, based on the 
definition used in the GAO study.
    Several supportive commenters raised other issues. Several 
commenters indicated that the State agency should collect the 
information on participant and employee fraud and abuse, instead of 
making local agencies responsible for collecting and maintaining the 
information. The preamble of the proposed rule indicated that this 
provision would require only a description of the State agency's plans 
for collecting this information.
    Therefore, as set forth in the proposed rule, State agencies should 
track this information in order to detect trends and to allocate its 
investigative, audit, and technical assistance resources accordingly. 
Also, such information does not always originate at the local agency 
level, as when a State agency initiates an investigation based on an 
anonymous tip provided to the State agency indicating fraudulent 
activity involving a local agency. Therefore, a revision to the 
provision, as suggested, is not necessary.
    Finally, we note that several comments expressed concern that the 
requirement for collecting information on participant and employee 
fraud and abuse would ultimately become a requirement for State 
agencies to report this information to FNS. The proposed rule did not 
include a requirement to report such information to FNS, and neither 
does this final rule. However, the aforementioned GAO study clearly 
pointed towards such a reporting requirement, finding that the absence 
of this data adversely impacts FNS' and State agencies' ability to 
manage the program. As explained in the study, GAO decided not to 
recommend such a reporting requirement because FNS had indicated that 
it would work with State agencies and the National WIC Association 
(NWA) to develop cost-effective strategies for reporting the data to 
FNS. FNS and NWA are currently working to identify such a strategy.

5. Selection of Local Agencies (Sec.  246.5)

    The Department proposed to remove the requirement in the current 
Sec.  246.5(c)(1) and (d)(2) of the regulations for WIC State agencies 
to fund new local agencies in areas based on the sequential order of 
neediest areas listed in the Affirmative Action Plans that are part of 
each State agency's Plan of Operation. This change was intended to 
provide State agencies with the flexibility to select a local agency in 
the neediest unserved area where practical circumstances permit, so 
that, for example, a local agency may be selected in an unserved needy 
area where a

[[Page 56713]]

health care infrastructure exists instead of a local agency in an area 
with greater need but without a health care infrastructure.
    The majority of the commenters supported the proposed provision. 
However, a few commenters either opposed the proposed revision or 
expressed reservations. The opposing commenters stated that areas with 
the greatest need should continue to be the highest priority for 
selection of new local agencies. One of the commenters recommended that 
the provision specify that the selection of local agencies is 
contingent on the availability of funds, and another commenter 
recommended that the Affirmative Action Plan should be required until 
WIC services have been made available equally throughout all areas of 
the State.
    It was not the intent of the proposed provision that State agencies 
ignore the Affirmative Action Plan. The proposed rule would have 
required the State agency to consider the Affirmative Action Plan, but 
not be bound by it. The Department believes that the State agency is in 
the best position to judge whether the practical circumstances should 
supersede the Affirmative Action Plan when selecting a new local 
agency. Also, it is not necessary to state in the regulations that 
selection of a new local agency is subject to the availability of 
funds. It is understood that the State agency is responsible for 
ensuring the availability of funds and applying this factor in the 
selection of local agencies.
    Accordingly, as proposed, this final rule removes the requirement 
in Sec.  246.5(c)(1) and (d)(2) of the regulations for WIC State 
agencies to fund new local agencies in areas based on the sequential 
order of neediest areas listed in the Affirmative Action Plans that are 
part of each State agency's Plan of Operation.

6. Requesting Proof of Pregnancy, Checking Identification and Other 
Basic Certification Procedures (Sec.  246.7(c))

    The Department proposed to expand Sec.  246.7(c) to address several 
basic certification procedures, along with the delineation of 
eligibility criteria, in an effort to highlight the importance of 
certain procedures, such as providing proof of residency and proof of 
identity, and ensuring that applicants are not charged for 
certification. To accomplish this, we proposed to move several 
provisions and to add a provision. We proposed to move the provision 
addressing proof of residency/proof of identity from Sec.  246.7(l)(2) 
to Sec.  246.7(c)(2)(i), and to move the provision requiring program 
certification without charge to the applicant from Sec.  246.7(m) to 
Sec.  246.7(c)(4). We also proposed a new provision addressing 
pregnancy tests.
Proof of Pregnancy
    The Department proposed basic guidelines that State and local 
agencies must observe if the State agency chose to require 
documentation of pregnancy as part of the certification process. For 
these reasons, we proposed to add a new paragraph (c)(2)(ii) stating 
that State agencies may issue benefits to applicants who claim to be 
pregnant (assuming that all other eligibility criteria are met) but 
whose conditions (as pregnant) are not visibly noticeable and do not 
have documented proof of pregnancy at the time of the certification 
interview and determination. The State agency would then be allowed a 
reasonable period of time, not to exceed 60 days, for the applicant to 
provide the requested documentation. If such documentation was not 
provided as requested, the local agency would then be justified in 
terminating the woman's WIC participation during the certification 
period.
    The majority of commenters supported the proposed provision, 
although some of these comments sought clarification on whether this 
provision would be optional. Some of the supportive commenters also 
recommended the provision apply only when fraud was suspected. Other 
supportive commenters recommended visual observation by a professional 
to confirm pregnancy instead of self-testing or testing by WIC. Also, 
one commenter recommended 90 days for the participant to provide proof, 
consistent with current WIC policy. Commenters opposing the proposed 
provisions stated that requiring proof of pregnancy would be a barrier 
to participation, potentially eroding prenatal care and leading to 
lower birth weights.
    As indicated in the preamble of the proposed rule, the Department 
intends for proof of pregnancy to be a State option. Therefore, in 
response to commenters' concerns, we have revised the proposed 
paragraph to clarify this issue. State agencies concerned about proof 
of pregnancy becoming a barrier to participation could choose not to 
implement this option. Further, a State agency could choose to continue 
to use visual observation of pregnancy, and require proof only when the 
information is questionable and/or fraud is suspected.
    The Department agrees with commenters who expressed concern about 
the cost of pregnancy tests. Proof of pregnancy is not a mandatory 
condition of eligibility for the WIC Program. As a result, the costs 
associated with obtaining such documentation are not allowable WIC 
nutrition services and administrative expenditures. Also, such costs 
cannot be borne by the participant since Sec.  246.7(m) requires that 
the certification procedure shall be performed at no cost to the 
participant.
    As noted above, some commenters recommended a 90-day timeframe for 
the participant to provide documentation of pregnancy, consistent with 
current WIC policy. This policy was issued in 1992. However, this 
policy was superseded by legislation. Section 17(d)(3)(B) of the CNA 
was added in 1994. The legislation specifies that an income-eligible 
pregnant woman may be considered presumptively eligible to participate 
in the WIC Program and may be certified immediately without an 
evaluation of nutritional risk for a period up to 60 days. Since the 
determination of nutrition risk requires knowledge of the participant's 
categorical status, i.e., her pregnancy, proof of pregnancy must be 
provided within 60 days after certification, assuming that the State 
agency has opted to require such proof.
    Therefore, the provisions as proposed pertaining to proof of 
pregnancy remain unchanged in this final rule.

7. Determining Income Eligibility (Sec.  246.7(d))

    The Department proposed several changes to this section of the 
regulations, as discussed below.
A. Use of State or Local Income Health Care Guidelines to Determine 
Income Eligibility for WIC
    The first proposed revision, at paragraph (d)(2)(iii), would 
require State agencies using State or local income guidelines for free 
or reduced-price health care to base the income eligibility 
determinations of WIC applicants on the income and family definition 
and exclusions set forth in Sec. Sec.  246.7(d)(2)(ii), 246.2, and 
246.7(d)(2)(iv), respectively. This change would continue to allow 
variation among the State agencies only with regard to the actual 
income guidelines used (i.e., the percent of gross income above the 
Federal poverty income guidelines, up to a maximum of 185 percent), but 
not with the definition of income, family, or exclusions from income. 
This proposed revision would continue the WIC Program's current policy 
of excluding from these requirements persons who are determined 
adjunctively or automatically income eligible.

[[Page 56714]]

    We proposed this change for two reasons. First, although Sec.  
246.7(d)(1) permits use of State or local free or reduced-price health 
care income guidelines, these guidelines cannot exceed 185 percent of 
the Federal poverty income guidelines; in fact, all WIC State agencies 
currently use 185 percent of the Federal poverty income guidelines. 
Second, procedurally it would be simpler for local agencies to apply 
the WIC income definition and exclusions outlined in the regulations to 
all applicants rather than apply two sets of income guidelines and 
family definitions and exclusions to ensure WIC eligibility 
requirements are met.
    The majority of commenters supported this revision, although one 
supportive commenter suggested that the Department consider adopting 
the definition of ``family'' used by the Federal Department of Health 
and Human Services (HHS) to promote one-stop shopping. Similarly, one 
of the few opposing commenters stated that the revision would force the 
cessation of integrated applications for multiple programs because WIC 
income determinations would no longer be able to use the income 
definitions of other programs.
    Use of the HHS definition of ``family'' could result in the 
exclusion of income potentially being shared by household members such 
as unrelated individuals who are living together. Such action would not 
represent actual household circumstances with regard to income 
eligibility. Further, by law, WIC income eligibility guidelines (185 
percent of poverty) are those guidelines used for the National School 
Lunch Program (NSLP). Therefore, the rules and policies used for the 
NSLP are used for the WIC Program with regard to normal income 
screening procedures, including definition of family. As a result, the 
Department does not support this commenter's recommendation.
    Accordingly, this final rule, in Sec.  246.7(d)(2)(iii) retains the 
provisions as proposed.
B. Consideration of Loans as Income
    The Department proposed to exclude short-term, unsecured loans from 
the WIC income determination process. Program regulations have not 
specifically addressed this issue; however, FNS Instruction 803-3, Rev. 
1, WIC Program--Certification: Income Eligibility, dated April 1, 1988, 
clarifies that funds from loans are not to be counted as income because 
they are only temporarily available and must be repaid.
    All of the commenters supported the revision. However, several 
commenters requested guidance on the meaning of the term ``short-term, 
unsecured,'' and guidance on the types of loans that would be excluded.
    Accordingly, in Sec.  246.7(d)(2)(iv)(C) of this final rule, the 
Department has decided to delete the term ``short-term, unsecured,'' 
and to delete the reference to the expectation that the loan will be 
repaid in a reasonably short period of time since these phrases are 
unnecessary. By definition, loans are only temporarily available and 
must be repaid, so that inclusion of loans as income would be 
inappropriate in the WIC income determination process. We have retained 
the term ``constant and unlimited access,'' since this explains why a 
loan would not constitute income. This is consistent with the term 
``other cash income'' at Sec.  246.7(d)(2)(ii)(L), which refers to 
resources which are easily accessible to the family.

8. Limitation on the Use of Possibility of Regression as a Nutrition 
Risk Criterion (Sec.  246.7(e)(1)(vi))

    As explained in the proposed rule, historically, program 
regulations have permitted WIC participants to remain on the program 
due to the possibility of regression, i.e., previously certified 
participants who might regress in nutritional status if they are not 
allowed to continue to receive WIC benefits. This has been allowed as a 
nutrition risk criterion in order to prevent the revolving door 
situation whereby the nutrition risk status of individuals improves as 
a result of participation in the WIC Program and they are removed at 
the conclusion of a certification period, only to deteriorate in 
nutrition status at a later date, necessitating re-entry into the 
program.
    It has always been the Department's position that the possibility 
of regression as a nutrition risk criterion should not be used 
excessively because it could result in situations where individuals 
with no current nutrition risk condition are served while eligible 
applicants who have current, documented risks go unserved. Therefore, 
in regulations, the Department confirmed the State agency's authority 
to limit the number of times and circumstances under which a 
participant may be certified for possible regression. Many State 
agencies have adopted limitations.
    In an effort to ensure that all State agencies target benefits to 
those at greatest nutrition risk, the Department proposed to limit the 
use of regression as a nutrition risk criterion to only one time 
following a certification period. In other words, consecutive 
certification periods based on regression would not be allowable. In 
addition, as proposed, individuals who are certified based on the 
possibility of regression would be placed in either the same priority 
for which they were initially certified, or in Priority VII (for all 
participants certified based on regression), if the State agency is 
using that priority level.
    The majority of commenters supported the proposed provisions. Those 
commenters opposing the limitation on the use of regression stated that 
WIC serves a vulnerable population that is food insecure, often 
spending scarce dollars on food last, after other expenses. Therefore, 
applicants denied certification due to lack of a nutrition risk would 
be certified shortly thereafter with a nutrition risk that may not have 
occurred had they remained on the program. Such commenters stated that 
this result would conflict with WIC's preventive role. However, the 
Department continues to believe that the repeated use of regression in 
consecutive certification periods undermines the Department's efforts 
to target benefits to those persons in greatest need and at greatest 
nutrition risk.
    Further, some commenters cited the Institute of Medicine (IOM) 
report ``Dietary Risk Assessment in the WIC Program,'' March 2002, as 
supporting their position that the proposed provision would conflict 
with WIC's preventive role since some nutrition risks may require more 
than one regression certification period to be resolved. One commenter 
stated that the use of regression should not be limited since the IOM 
findings indicate that the tools to assess dietary adequacy are not 
valid.
    The IOM report found that 96 percent of all individuals in the 
United States and a higher percentage of low-income individuals fail to 
consume the recommended number of daily servings specified by the 
Dietary Guidelines for Americans, and that there is no scientifically 
valid method to assess an individual's usual dietary intake. Concerning 
WIC eligibility, the report recommended a presumption of nutrition risk 
for all otherwise eligible women, and children 2 to 5 years old, based 
on failure to meet dietary guidelines. The IOM report did not include 
findings or recommendations specific to regression. The Department 
believes that prohibiting consecutive certification periods based on 
regression will not result in denying benefits to WIC applicants who 
are at nutrition risk based on dietary inadequacy.
    Several supporting commenters recommended certain revisions to the

[[Page 56715]]

proposal. One commenter stated that the provision should allow an 
applicant to be certified for regression to a different priority, such 
as children to Priority V who had previously been certified at Priority 
III, consistent with Sec.  246.7(e)(4). Another commenter sought 
clarification of the rule so that regression only applies to children 
and breastfeeding women. Finally, one commenter requested that the 
final rule clarify whether the provision to certify only once based on 
regression can actually be used more than once for the same participant 
as long as the occurrences are not consecutive.
    The Department agrees with the suggestion that WIC agencies should 
be permitted to assign an applicant to a different priority level for 
regression other than the one used in the previous certification, or 
Priority VII, as long as it is a lower priority than the priority level 
assigned at the previous certification, consistent with Sec.  
246.7(e)(4). It is important to recognize that a participant certified 
for regression, without any currently-existing nutrition risk 
condition, could be placed in a higher priority level than a 
participant who has, for example, a dietary condition. In the event of 
funding limitations, this could result in the certification of one 
applicant based on regression while another applicant with an existing 
nutrition risk condition is denied benefits. To avoid this consequence, 
as we pointed out in the preamble of the proposed rule, the State 
agency should consider assigning a lower priority level for 
participants certified based on regression.
    Accordingly, in Sec.  246.7(e)(1)(vi) of this final rule, in 
addition to placing applicants certified based on regression in the 
same priority category used at initial certification, or in Priority 
VII, State agencies may also use another priority level lower than the 
priority level for which they were assigned at the previous 
certification, consistent with Sec.  246.7(e)(4).
    We have also clarified in this final rule that applicants shall not 
be certified for regression for consecutive certification periods. 
Therefore, participants could be certified for regression more than 
once during the time they actually participate in the program, as long 
as they are not certified based on regression for consecutive 
certification periods.
    Based on commenters' concerns, the final rule also clarifies that 
when certifying participants for regression and assigning a priority 
category, the nutrition risk criterion of the participant during the 
previous certification period must be appropriate for the category of 
the participant for the subsequent certification. For instance, as 
pointed out in the preamble of the proposed rule, a postpartum woman 
should not be certified based on the possibility of regression to 
hyperemesis gravidum (morning sickness), since this condition is unique 
to pregnancy and cannot occur postpartum. As previously noted, a 
supporting commenter requested a prohibition on the use of regression 
as a nutrition risk criterion for pregnant women, infants and 
postpartum non-breastfeeding women since only one certification period 
is permitted for these categories. Actually, under the current Sec.  
246.7(g), a State agency may provide a six-month certification period 
for infants, but the commenter correctly indicates that certain 
nutrition risk conditions cannot cross over from one category to 
another.

9. Certification Periods (Sec.  246.7(g)(1))

    In response to concerns cited by Congress, State agencies, and the 
NWA, the Department proposed to modify the timeframes for certification 
periods in order to make them more consistent across participant 
categories. Section 246.7(g)(1) of the current regulations establishes 
the following timeframes for certification:

------------------------------------------------------------------------
               A/an:                       Is currently certified:
------------------------------------------------------------------------
Pregnant woman....................  For the duration of her pregnancy,
                                     and up to six weeks after the
                                     infant is born or the pregnancy is
                                     ended.
Postpartum woman..................  Up to 6 months after the baby is
                                     born or the pregnancy is ended
                                     (postpartum).
Breastfeeding woman...............  Every six months ending with the
                                     infant's first birthday.
Infant............................  Approximately every six months. The
                                     State agency may permit its local
                                     agencies to certify infants under
                                     six months of age for a period
                                     extending up to the first birthday,
                                     provided the quality and
                                     accessibility of health care
                                     services are not diminished.
Child.............................  Approximately every six months
                                     ending with the last day of the
                                     month in which a child reaches his/
                                     her fifth birthday.
------------------------------------------------------------------------

    Some State agencies expressed concern that the current timeframes 
for establishing certification periods are complicated and 
administratively burdensome, requiring the frequent proration of 
monthly food benefits and special data processing capabilities to 
accommodate specific cut-off dates. Also, NWA expressed concern about 
the lack of consistency in current certification period timeframes. In 
response, the Department proposed to allow certification periods for 
all participant categories to be extended to the end of the month. 
Specifically, the following maximum certification periods were proposed 
in Sec.  246.7(g)(1):

------------------------------------------------------------------------
               A/an:                         Will be certified:
------------------------------------------------------------------------
Pregnant woman....................  For the duration of her pregnancy,
                                     and up to the last day of the month
                                     in which the infant becomes six
                                     weeks old. (For example, if the
                                     infant is born June 4, six weeks
                                     after birth would be July 16, and
                                     certification would end July 31).
Postpartum woman..................  Up to the last day of the sixth
                                     month after the baby is born or the
                                     pregnancy ends (postpartum).
Breastfeeding woman...............  Approximately every six months
                                     ending with the last day of the
                                     month in which the infant turns 1
                                     year old.
Infant............................  Approximately every six months. The
                                     State agency may permit its local
                                     agencies to certify infants under
                                     six months of age up to the last
                                     day of the month in which the
                                     infant turns 1 year old, provided
                                     the quality and accessibility of
                                     health care services are not
                                     diminished.
Child.............................  Approximately every six months
                                     ending with the last day of the
                                     month in which a child reaches his/
                                     her fifth birthday. (No change from
                                     current regulations).
------------------------------------------------------------------------


[[Page 56716]]

    Commenters overwhelmingly supported the proposed changes to the 
certification period. However, many of the supporters requested further 
revision of the certification period requirements to extend the current 
six-month certification periods for breastfeeding women to coincide 
with the option to certify breastfed infants up to the infant's 1st 
birthday, or until the women cease breastfeeding, whichever occurs 
first, and to establish 12-month certification periods for children.
    Subsequent to publication of the proposed rule and receipt of 
comments, the certification period for breastfeeding women was 
addressed in Congress in Public Law 108-265, the Child Nutrition and 
WIC Reauthorization Act of 2004, enacted on June 30, 2004. Section 
203(b)(1) of that Act amended section 17(d)(3) of the CNA to allow 
State agencies the option to certify a breastfeeding woman for up to 
one year postpartum, or until the woman stops breastfeeding, whichever 
occurs first. This provision became effective on October 1, 2004. FNS 
notified State agencies of the effective date of this provision on 
August 5, 2004. Consequently, there is no need to address the comments 
on the proposed rule concerning the certification period for 
breastfeeding women. Instead, we are using this final rule to revise 
Sec.  246.7(g)(1)(iii) to codify the option set forth in legislation on 
the certification period for breastfeeding women.
    However, we do not support the recommendation of some commenters to 
change the certification period for children from every 6 months to 
every 12 months. The current six-month certification period increases 
the likelihood that the child will receive a health assessment and that 
nutrition education or other nutrition intervention will be provided to 
the parent/caretaker. Assessing a child's nutritional and health status 
at six-month intervals is also consistent with the WIC Program's 
emphasis on preventing childhood obesity.
    One commenter who opposed the proposed changes to the certification 
periods indicated that costly changes would be needed to an automated 
system that defaults to the 30th day even if a month ends on the 31st 
day. Another commenter who opposed the changes expressed concern about 
the need for partial food packages if the proposed rule would require 
that food packages could only be issued to the end of the month. 
Likewise, one commenter who supported the changes requested 
clarification on the implications of the proposed rule if the 
certification period ends on the first day of a month.
    As noted in the preamble of the proposed rule and intended by this 
final rule, these new provisions would not remove the authority of 
State agencies to maintain current certification period lengths or to 
permit local agencies to shorten certification periods on a case-by-
case basis. For example, some State agencies that certify all infants 
every six months, may choose to continue certifying breastfeeding women 
every six months and not implement the option to extend certification 
periods up to the end of the month in which infants turn one year old. 
Further, proration of program benefits continues to be an effective 
means of targeting benefits and managing program costs. Also, the final 
rule does not abridge the discretion of State agencies to maintain 
current certification periods or to prorate benefits in order to 
accommodate automated systems, although enhancement of such systems may 
be a more effective strategy to address certification periods. As 
indicated previously, State agencies are encouraged to contact the 
appropriate FNS regional office to identify potential sources of funds 
for this purpose in addition to the administrative funds provided as 
part of the WIC grant.
    Accordingly, this final rule provides for the following 
certification periods in Sec.  246.7(g)(1):

------------------------------------------------------------------------
               A/an:                         Will be certified:
------------------------------------------------------------------------
Pregnant woman....................  For the duration of her pregnancy,
                                     and up to the last day of the month
                                     in which the infant becomes six
                                     weeks old. (For example, if the
                                     infant is born June 4, six weeks
                                     after birth would be July 16, and
                                     certification would end July 31).
Postpartum woman..................  Up to the last day of the sixth
                                     month after the baby is born or the
                                     pregnancy ends (postpartum).
Breastfeeding woman...............  Approximately every six months. The
                                     State agency may permit its local
                                     agencies to certify a breastfeeding
                                     woman up to the last day of the
                                     month in which her infant turns 1
                                     year old, or until the woman ceases
                                     breastfeeding, whichever occurs
                                     first.
Infant............................  Approximately every six months. The
                                     State agency may permit its local
                                     agencies to certify an infant under
                                     six months of age up to the last
                                     day of the month in which the
                                     infant turns 1 year old, provided
                                     the quality and accessibility of
                                     health care services are not
                                     diminished.
Child.............................  Approximately every six months,
                                     ending with the last day of the
                                     month in which a child reaches his/
                                     her fifth birthday. (No change from
                                     current regulations.)
------------------------------------------------------------------------

10. Mid-Certification Actions (Sec.  246.7(h))

    The Department proposed several revisions to this section, the most 
significant of which would require local agencies to reassess a 
participant's income eligibility (including household composition) 
during the certification period when information is received about a 
change in circumstances, indicating possible income ineligibility. Many 
State agencies require reassessment of income eligibility based on 
receipt of information indicating a change in circumstances. However, 
current regulations do not mandate such assessments.
    The Department proposed that reassessment of Program eligibility 
would apply only to income eligibility, not to the participant's 
nutrition risk status. In addition, the Department specified mandatory 
versus optional mid-certification actions. As proposed, mandatory mid-
certification actions included reassessment of income eligibility based 
on information received and disqualification of participants, including 
family members, if found to be over-income. Optional mid-certification 
disqualification actions included those necessitated by funding 
shortages or the failure of a participant to pick up food instruments 
or supplemental foods for a number of consecutive months as established 
by the State agency.
    The proposed change would require local agencies to reassess income 
eligibility when information is received indicating that a change in 
income eligibility has occurred. Local agencies would not be required 
to seek out information. However, if information comes to their 
attention, either from the participant or from other sources, which 
suggests ineligibility, this would trigger

[[Page 56717]]

the regulatory requirement to reassess WIC income eligibility. For an 
adjunctively or automatically income-eligible participant, an income 
reassessment would be generated within a certification period if the 
local agency obtained/received confirmation that the individual or 
other eligible family member is no longer participating in any of the 
programs which are authorized/permitted to be used to deem an 
individual as income eligible for the WIC Program. Further, the 
Department proposed to require that the reassessment of income 
ineligibility also applies to other household members currently 
receiving WIC benefits. When one household member is reassessed for 
income eligibility and determined ineligible based on household size 
and income, in effect all participating household members have been 
reassessed and are ineligible.
    The majority of commenters generally supported the proposed mid-
certification income reassessment process. Several State agencies 
indicated that they already require such assessments. However, some 
commenters opposed the proposed requirement. One commenter indicated 
that enrollment entails a commitment to a full certification period. 
Another commenter stated that the core purpose of the WIC Program is to 
provide supplemental foods and nutrition education over a period of 
time. Further, as noted in the preamble to the proposed rule, a 
commitment to an entire certification period is implied because the 
entire certification period may be needed to improve the nutrition 
status of participants.
    In the preamble of the proposed rule, the Department emphasized 
that the CNA does not permit WIC benefits for persons who no longer 
meet the basic income eligibility requirements set forth in the CNA. If 
information comes to the attention of the local agency suggesting that 
a participant may be income ineligible, an income reassessment is the 
only way to determine whether the participant meets the income 
eligibility requirements of the CNA. Moreover, in response to one 
commenter, there is no provision in the CNA permitting the continued 
receipt of WIC benefits for someone who is income ineligible on the 
basis that this continued receipt of benefits would be viewed as 
transitional assistance.
    As previously noted, the proposed revision of Sec.  246.7(h) would 
distinguish between mandatory mid-certification disqualifications of 
participants and those that are optional. At the same time, we also 
proposed to remove the reference to disqualification based on 
participant violations from Sec.  246.7(h) because the process for 
sanctions and claims based on participant violations was set forth in 
Sec.  246.12(u). However, in this final rule, we are retaining the 
reference to sanctions for participant violations in Sec.  246.7(h) to 
ensure that such sanctions for participant violations are clearly 
understood to be mandatory, except as otherwise provided in Sec.  
246.12(u).
    Several commenters indicated that disqualifying a participant based 
on unsolicited information is unfair since other potential income 
ineligible participants may not be disqualified because changes in 
income are not known or reported to the local agency. The Department 
recognizes the commenter's concern. However, all participants are 
potentially subject to reassessment of income during their 
certification periods, based on new information that may come from any 
source. Therefore, as noted in the preamble of the proposed rule, the 
proposed provision is a reasonable balance between responsible action 
and unnecessary paperwork.
    Several commenters felt that the proposed mid-certification income 
reassessment would be unfair because the information triggering the 
reassessment would often originate from an unreliable or biased source. 
The Department recognizes that information may come from persons who 
are not aware of all of the facts, and that such persons may be 
providing the information because of personal animosity towards the 
participant. However, this does not necessarily mean that the 
information is false or without consequence. The only way to determine 
the validity of the information is to conduct an income reassessment.
    Several commenters indicated that the proposed provision would 
conflict with other requirements, including the Verification of 
Certification (VOC) process and the State option to determine income 
eligibility based on assessing annual income as opposed to current 
income. The Department does not agree with this position. The VOC 
process at Sec.  246.7(k) provides continuation of certification and 
benefits for a participant transferring from one local agency to 
another, without requiring reapplication at the new local agency; the 
VOC process does not prevent a reassessment of income if new 
information is made known to the new local agency after the transfer. 
Also, the State agency option to calculate income based on the past 12 
months, at Sec.  246.7(d), instead of using current income, applies at 
any time an income determination is made, including mid-certification; 
this provision does not conflict with reassessment of income mid-
certification.
    Several commenters asserted that reassessment of income mid-
certification would result in frequent disqualifications followed by 
subsequent certifications, due to income fluctuations, as well as other 
administrative burdens such as an increased number of disqualification 
letters and appeals. Several commenters also asserted that information 
technology systems would need costly modifications, e.g., to be able to 
change income information in the system mid-certification.
    The Department does not anticipate a significant increase in 
administrative activities as a result of mid-certification income 
reassessments. Over 56 percent of WIC participants are adjunctively 
income eligible for WIC based on their eligibility to receive Food 
Stamps, Medicaid, or Temporary Assistance for Needy Families (TANF). 
(See WIC Participant and Program Characteristics 2002, USDA Food and 
Nutrition Service, Report No. WIC-03-PC, September 2003.) Under Sec.  
246.7(d), adjunct or automatic WIC income eligibility is determined 
based on documentation of an individual's, or certain family members', 
eligibility to receive benefits in other programs such as Food Stamps, 
Medicaid and TANF. These programs screen for income eligibility and use 
maximum income limits at or below WIC income guidelines (185 percent of 
poverty). Therefore, the normal WIC income eligibility screening 
process is not used for a large majority of participants. Further, 
Sec.  246.7(d) permits State agencies to designate other programs as 
establishing automatic income eligibility for WIC in a manner similar 
to adjunctive income eligibility. Thus, most mid-certification income 
reassessments may likely involve little more than reconfirming 
adjunctive or automatic WIC income eligibility.
    In this regard, one commenter expressed concern about the 
administrative burden imposed on local agency staff and participants by 
income reassessments for postpartum WIC participants whose Medicaid 
eligibility ceases 60 days following birth. However, under Sec.  
246.7(d), adjunctive income eligibility extends not only to the WIC 
applicant who is certified for Medicaid, but also to a WIC applicant 
who is a member of a family in which a pregnant woman or infant is 
certified for Medicaid (or is a member of a family certified for TANF). 
Thus, assuming that the reassessment of the postpartum

[[Page 56718]]

woman is triggered only by her loss of Medicaid eligibility and that 
her infant is also a WIC participant, her reassessment would likely 
involve no more than confirming the infant's Medicaid eligibility, 
which would have already been done when the infant was determined 
eligible for the WIC Program. In fact, the reassessment of WIC income 
eligibility could be eliminated if the postpartum woman is determined 
to be income eligible at certification based on the eligibility of her 
infant for the Medicaid Program.
    We recognize that some State agencies' management information 
systems may need enhancements in order for income reassessments to be 
processed mid-certification. Therefore, for this reason and others, we 
are providing an extended implementation period to accommodate, for 
example, any system revisions or enhancements that may be necessary. 
WIC State agencies that need to enhance their information systems to 
accommodate mid-certification income reassessments, or for other 
reasons, are encouraged to contact the appropriate FNS regional office 
to identify potential sources of funds for this purpose in addition to 
the administrative funds provided as part of the WIC grant.
    Finally, the Department finds considerable merit in two other 
comments received regarding reassessment of income mid-certification. 
One of these comments pointed out that a participant, parent or 
guardian would have no incentive to cooperate with the reassessment 
process after receiving the last set of food instruments for the 
certification period. The other comment asserted that the participant, 
parent or guardian would need a reasonable amount of time to provide 
income documentation to the local agency.
    The Department agrees that, if the food instruments for the last 
month of certification have already been provided to the participant, 
action to reassess income eligibility and all necessary follow-up 
action may be pointless. In addition, a sufficient period of time would 
be needed to contact the participant, reassess income eligibility, 
process any necessary disqualification action and allow sufficient time 
for potential appeal of the action by the participant, parent or 
guardian, as set forth in Sec.  246.9(e), and to provide for 
continuation of benefits if an appeal is submitted within the 15-day 
advance notice period required by Sec.  246.7(j). In addition, in some 
State agencies, two or three months of benefits are issued at one time 
(i.e., bi-monthly or tri-monthly issuance).
    Therefore, Sec.  246.7(h)(1) in this final rule remains as 
proposed, except as follows, based on commenters' concerns. The 
Department has provided an exception in this final rule to the 
requirement that local agencies reassess a participant's income 
eligibility during the certification period if new information 
indicates that the participant's household income may have changed. In 
this final rule, reassessment of income eligibility is not required in 
cases where sufficient time does not exist to effect the change. 
Recognizing the necessary action required ultimately to disqualify an 
individual, if necessary, ``sufficient time'' means 90 days or less 
before the expiration of the certification period.

11. Certification Forms (Sec. Sec.  246.4(a) and 246.7(i))

    The Department proposed to allow State agencies the option of 
substituting simpler language for the statements on rights and 
responsibilities required by Sec.  246.7(i)(10) and Sec.  
246.7(j)(2)(i) through (j)(2)(iii), which must be provided in writing 
or read to the applicant (or parent/caregiver of a participating infant 
or child) at the time of certification. As proposed, such modified 
language would be subject to FNS approval during the State Plan 
approval process, contingent upon whether the language substitutions 
convey the same meaning and intent as the existing regulatory text. A 
new State Plan provision was proposed for this purpose.
    All of the commenters supported the proposed revisions, although 
one commenter sought assurance that FNS would use its approval 
authority to ensure consistent language substitutions throughout the 
States. We will not. The purpose of this proposed provision is to 
provide each State agency with the flexibility to use language 
appropriate to its needs in order to convey the meaning of the 
statements required by the regulations.
    Also, one commenter requested clarification on whether this 
language substitution process would also apply to joint application 
forms involving WIC and other programs. The same process would apply to 
joint application forms, if the regulatory language is not used. 
However, the State agency would be responsible for ensuring the 
language used also has the approval of other programs involved in the 
joint application form. The provision in the final rule is optional, so 
that a State agency could decide not to develop and submit substitute 
language.
    Accordingly, the final rule remains as proposed. One technical 
amendment has been made, however, to paragraph (i)(11) of this section. 
In the first sentence, the reference to paragraph (i)(8) of this 
section has been changed to the correct reference, paragraph (i)(10) of 
this section.

12. Continuation of Benefits During Fair Hearings (Sec.  246.9(g))

    The Department proposed to revise Sec.  246.9(g) to prevent the 
continuation of benefits for a participant who has become categorically 
ineligible while awaiting a hearing decision on an appeal of an adverse 
action, such as a breastfeeding participant who continues to receive 
WIC benefits while awaiting the decision even though she had 
discontinued breastfeeding and was more than six months postpartum. The 
current language of paragraph (g) of this section technically permits 
the continuation of benefits in such cases.
    Commenters overwhelmingly supported the proposed provision. 
However, one commenter recommended that benefits should be reinstated 
if the participant prevails on appeal. We do not support the 
commenter's recommendation. The reinstatement of benefits for a 
categorically ineligible person would mean that retroactive benefits 
would be provided. Historically, we have not permitted retroactive 
benefits in the WIC Program, as discussed below in section 16 of this 
preamble.
    Another commenter stated that a participant should be immediately 
terminated based on documented fraud, subject to resumption should the 
participant prevail on appeal, but not retroactively. We do not support 
the commenter's recommendation. Although the participant may prevail on 
appeal, the individual would not be eligible for benefits based on a 
different categorical status, without reapplication, nor for 
retroactive benefits. Such benefits have historically not been 
permitted in the WIC Program, as discussed below in section 16 of this 
preamble. Further, prior to disqualifying any participant, the 
individual has the right to due process and a right to a fair hearing, 
as required by WIC regulations. We believe that the proper balance is 
to permit the continuation of benefits until a hearing decision is 
rendered, until the current certification period expires, or until 
categorical eligibility expires, whichever occurs first. Should the 
appeal be denied, a participant would be subject to a disqualification 
for up to one year, as well as a claim for the value of all benefits 
based on fraud, consistent with Sec.  246.12(u). Therefore, the 
continuation of benefits prior to the appeal decision would not protect 
the

[[Page 56719]]

participant from the consequences of the fraudulent conduct.
    Therefore, in Sec.  246.9(g) in this final rule, the provision 
remains as proposed.

13. Technical Amendment (Sec.  246.11(c)(5))

    This final rule makes a technical amendment to Sec.  246.11(c)(5). 
In Sec.  246.11(c)(5), we have changed the cross references to several 
paragraphs. References to paragraphs (c)(8), (d), and (e) have been 
changed to paragraphs (c)(7), (d), and (e).

14. Closeout Procedures (Sec. Sec.  246.12(f)(2)(iv), 246.12(q), and 
246.17(b)(2))

    In response to a Congressional directive contained in a report 
accompanying the Fiscal Year 1999 appropriations, (H. Rept. 825, 105th 
Cong., 2nd sess. (1998)), the Department proposed to reduce the 
timeframe for reporting closeout data for each reporting month from 150 
to 120 days. The Department proposed to achieve the 120-day closeout 
cycle by reducing the time allowed for vendors to bill State agencies 
from 90 to 60 days from the first valid date of the food instrument. 
Efforts to get State agencies to voluntarily reduce the time used to 
report closeout data to 120 days have been underway for more than a 
decade. Currently, about 55 percent of State agencies voluntarily 
report closeout data at 120 days or less.
    Of the 20 comments received, 12 supported and 8 opposed the 
proposed reduction to a 120-day closeout cycle. Concerns raised by two 
supporters as well as those opposing were that State agencies not 
already reporting closeout data within 120 days would need to reduce 
the time allowed for vendors to redeem food instruments, reprogram 
automated systems, and renegotiate the terms and cycles of support from 
centralized State and local accounting departments.
    About 84 percent of State agencies have already reduced the 
redemption period for vendors from 90 to 60 days. Therefore, a 
provision requiring this reduction would impose a burden on vendors or 
State agencies. Over 65 percent of State agencies that require their 
vendors to redeem food instruments in 60 days have, in turn, used the 
reduced redemption period to achieve a 120-day closeout cycle. A 60-day 
redemption period benefits vendors with timely payments as well as 
provides State agencies with the opportunity to achieve a timely 
closeout.
    Regarding the other issues raised, voluntary compliance with a 120-
day closeout cycle by approximately 55 percent of State agencies 
demonstrates that all State agencies should be able to close out within 
120 days without great difficulty. The Department maintains that 
advances in automated systems technology should readily provide timely 
data needed to improve the budgeting and funding process.
    However, the Department agrees State agencies will need time to 
take the necessary actions. The proposed reduction to a 120-day 
closeout cycle remains, but with an implementation date of October 1, 
2006 (Federal Fiscal Year 2007).

15. Penalties for Misuse or Illegal Use of Program Funds, Assets, or 
Property (Sec. Sec.  246.12(h)(3)(xx) and 246.23(d))

    Section 104(b) of Public Law 105-336, the William F. Goodling Child 
Nutrition Reauthorization Act of 1998, enacted October 31, 1998, 
amended section 12(g) of the Richard B. Russell National School Lunch 
Act (NSLA), 42 U.S.C. 1760(g), by increasing the maximum penalty for 
misuse or illegal use of funds, assets or property of a grant or other 
assistance under the NSLA, with a value of $100 or more, from $10,000 
to $25,000. As set forth in section 12(g) of the NSLA, the maximum 
penalty also applies to programs under the CNA.
    This change is nondiscretionary, and does not require that the 
public have an opportunity to comment. Therefore, in accordance with 
section 12(g) of the NSLA, the Department is amending Sec. Sec.  
246.12(h)(3)(xx) and 246.23(d) of the WIC regulations to reflect the 
increase in the maximum fine from $10,000 to $25,000, for misuse or 
illegal use of funds, assets or property of a grant or other assistance 
under the CNA, with a value of $100 or more.

16. Prohibition Against the Use of Program Funds To Provide Retroactive 
Benefits (Sec.  246.14(a))

    The Department proposed to specify in regulations that WIC Program 
funds may not be used to provide retroactive benefits to participants. 
This has been long-standing policy in the WIC Program, but the 
regulations have not previously addressed this policy. The WIC food 
package is designed to be consumed during specified periods when 
participants are undergoing critical growth and development. Providing 
retroactive benefits is not an effective use of program benefits.
    Commenters overwhelmingly supported this provision. The few 
commenters opposing the provision stated that providing retroactive 
benefits is the only fair way to remedy wrongful denial of benefits. We 
do not support this position. As noted previously, a participant may 
protect current benefits by requesting a hearing within 15 days of the 
advance notice of disqualification, which will guarantee the 
continuation of benefits until a hearing decision is rendered, 
expiration of the current certification period, or loss of categorical 
eligibility, whichever occurs first. Further, WIC benefits are intended 
to improve health status based on existing nutrition risk conditions at 
the time of application. Providing WIC foods to persons after they have 
passed through such periods is not consistent with the nutritional 
goals of the WIC Program, nor is it appropriate to give participants 
more food than they can reasonable consume within a given period of 
time.
    If a hearing decision is rendered which supports the participant, 
then he/she will be provided benefits prospectively, assuming the 
certification period has not expired or the individual is no longer 
categorically eligible. We recognize that this process may occasionally 
result in a successful appellant having gone without benefits during 
the appeal process. However, the WIC Program is a supplemental 
nutrition program. Providing retroactive benefits in such cases is not 
an effective use of program benefits.
    Another commenter indicated support for the proposed provision only 
if it would not prohibit providing a full month's benefits, instead of 
pro-rating benefits, for a participant who misses an appointment but 
subsequently visits the local agency before the expiration of the 30-
day period. The commenter expressed concern about the cost of enhancing 
an automated system, which does not currently provide for pro-rating 
benefits. FNS encourages the pro-ration of benefits for participants 
whose eligibility is effective late in the monthly issuance cycle or 
who are late picking up food instruments. Also, as with similar 
concerns discussed in previous sections of this preamble, we believe 
that enhancements to automated systems are an effective solution for 
such issues. However, we do not intend to mandate pro-ration of the 
current month's benefits. We do not view the provision of WIC benefits 
late in the same month as constituting retroactive benefits. However, 
providing WIC benefits in a subsequent month, which are intended for a 
previous month, constitutes retroactive benefits.
    Accordingly, in this final rule, the provision remains as proposed.

[[Page 56720]]

17. Transportation as Allowable Costs (Sec.  246.14(c)(7))

    The Department proposed to amend Sec.  246.14(c)(7) by removing the 
limiting term ``rural'' from the allowability of costs in transporting 
applicants and participants to clinics, so that the existing State 
agency option for funding transportation in rural areas could also be 
applied to urban and suburban areas. Also, the Department proposed 
revising Sec.  246.4(a)(21) to require that a State agency which elects 
to allow the provision of transportation to participants must include 
its policy for approving such costs in the portion of the State Plan 
that describes the State agency's plans to provide program benefits to 
eligible persons most in need of such benefits.
    Most of the commenters supported these proposed provisions. Some 
commenters stated that the proposed revisions would drain WIC nutrition 
services and administration funds (NSA), making WIC the source of funds 
for transportation of participants instead of Medicaid; create a 
welfare image for WIC; burden WIC with safety and liability issues; 
and, result in the transportation of non-WIC participants.
    The Department proposed the aforementioned revisions because State 
agencies had been seeking approval to purchase vans for transporting 
participants to and from inner city and suburban clinics. Because State 
agencies could purchase vans with WIC NSA funds to bring WIC services 
to rural participants, it is reasonable to allow the use of WIC NSA 
funds for transportation of WIC participants to WIC clinic sites in any 
situation, rural or non-rural, where access is a barrier. At the same 
time, as noted in the preamble of the proposed rule, we were concerned 
with some of the same issues raised by commenters. As a result, we 
wanted to ensure that State agencies developed carefully structured 
rationales for use of NSA funds to transport participants. For this 
reason, we proposed revising the State Plan requirements of the 
regulations; a State agency would need to gain FNS approval for a State 
Plan amendment setting forth this rationale in order to use NSA funds 
for transporting participants. These safeguards are sufficient. 
Further, State agencies are not required to use NSA funds for 
transporting participants, urban or rural. Therefore, in this final 
rule, the provision remains as proposed.

18. Capital Expenditures Which Require Agency Approval (Sec.  
246.14(d))

    The Department proposed revisions to this section to reflect 
current rather than dated prior approval requirements for capital 
expenditures. In advance of the proposed rulemaking, changes in OMB 
Circular A-87 allowed FNS to establish and implement policy and 
guidance reducing the paperwork burden associated with obtaining prior 
approval of capital expenditures. FNS policy and guidance is the 
current source for specific dollar thresholds above which State 
agencies must obtain prior approval from FNS for capital expenditures, 
including automated information systems, and was referenced as such. 
FNS policy that deleted the requirement to obtain prior approval of 
management studies was also reflected in the proposal.
    All but one commenter supported the proposed revisions. Considering 
the reference to FNS policy and guidance vague, the opponent 
recommended setting a dollar threshold of $10,000. An across-the-board 
threshold of $10,000 is more restrictive than that found in current FNS 
policy and guidance for all capital expenditures but those for 
automation, would increase the current paperwork burden, and may become 
dated by future revisions in government-wide rules. For these reasons, 
we did not accept the commenter's suggestion. The revisions remain as 
proposed.

19. Other Program Income (Sec.  246.15(b))

    All comments supported using the addition method of applying 
program income, as proposed. The provision remains unchanged from the 
proposed rule.

20. State Audit Responsibilities (or Monetary Amount of the Food Not 
Received (Sec.  246.20(b)(1) and (b)(2))

    The majority of comments fully supported the proposed revisions to 
this section. None opposed. However, a few supporters either did not 
fully understand the proposed revisions or expressed concern that the 
proposed revisions would result in changes to local agency audit 
requirements. Existing audit requirements remain unchanged by the 
proposed revisions. The revisions simply update this section to refer 
to government-wide audit requirements to which State and local agencies 
are already subject. State and local agencies are simply informed of 
their responsibility to obtain audits in accordance with Departmental 
regulations at 7 CFR 3052, which codifies the Office of Management and 
Budget (OMB) Circular A-133, Audits of States, Local Governments and 
Non-Profit Organizations.
    A few comments expressed concern that local agencies might obtain 
program-specific audits. OMB Circular A-133 provides that a non-Federal 
entity, such as a local agency, operating only one Federal program may 
elect a program-specific instead of an organization-wide audit. 
However, most local agencies operate more than one Federal program and 
will, therefore, be required by OMB Circular A-133 to satisfy their 
audit requirement with an organization-wide audit. The revisions remain 
as proposed.

21. State Agency Reporting Requirements (Sec.  246.25(b) and (c))

Participation Reporting
    The Department proposed revisions to this section to reflect data 
collections currently approved by OMB. Revisions to this section will 
not change current State agency reporting requirements.
    The majority of commenters supported the proposed revisions. Seven 
commenters opposed the revisions in whole or part. All but one of the 
seven expressed concern that the proposed revision would require State 
agencies to report State appropriated funds. The proposed revision does 
not require reporting of State appropriated funds. There is no data 
element for State funds on Program reports and the data element for 
participation supported by State appropriated funds was removed 
beginning with fiscal year 2001. However, we believe that State 
agencies should voluntarily continue to inform FNS each year of their 
appropriations, i.e., provide the amount, period of availability, and 
purpose (food or nutrition services and administration (NSA)). The 
availability of State appropriated funds impacts and helps to explain 
Federal funding spending patterns.
    Other items causing concern or opposed by at least one of the 
commenters included reporting and defining cash allowances and excess 
balances; whether monthly NSA expenditures include unliquidated NSA 
obligations; the meaning of itemized annual NSA expenditure reports; 
reporting a food cost/outreach NSA funds ratio; reporting available 
food and NSA by source year; and, suggesting the reporting of migrants 
each year rather than every other year.
    Only two modifications were made to the proposed revisions. The 
remainder of the revisions remain as proposed. First, the reference to 
a requirement to report cash allowances and excess balances was 
deleted. An old requirement to report cash allowances and excess 
balances has long since been eliminated. Second, unliquidated 
obligations were added to the monthly

[[Page 56721]]

reporting of NSA expenditures. Data collections currently approved by 
OMB require State agencies to report NSA unliquidated obligations as 
well as expenditures.
    Clarification is provided regarding the following reporting 
requirements. Annual reporting of itemized NSA expenditures refers to 
an existing requirement to report NSA expenditures by functional 
category on the FNS-798A. There is no requirement to report a food 
cost/outreach funds ratio and no such requirement was proposed.
    Federal funds are currently reported by source year on line 29 
(report year formula grant) and on lines 30a and 38b (funds spent 
forward from prior year or back spent from following year) and 30b and 
38a (funds back spent to prior year and funds spent forward to 
following year) of the FNS-798. Such data is readily available.
    The annual reporting of migrant data is required to meet the 
requirement of section 17(g)(4) of the Child Nutrition Act of 1966, 42 
U.S.C. 1786(g)(4), to make at least \9/10\ of 1 percent available first 
for eligible members of migrant populations each year. Therefore, the 
existing annual migrant reporting requirement cannot be reduced to a 
biennial reporting requirement as it would be insufficient for 
monitoring compliance with the Act.
Racial/Ethnic Group and Local Agency Reporting
    Most commenters supported the proposed revisions. Several 
commenters opposed reporting local agency changes as they occur. 
However, the current data collection for the local agency directory 
(FNS-648), which was initially approved by OMB in 1992, requires local 
agency address changes to be reported as they occur.
    Current technology only provides for an annual publication of the 
directory. However, future automated systems upgrades will make it 
possible for State agencies to directly enter and access local agency 
address changes via an on-line Web-based local agency directory. The 
new technology will be very user-friendly, making updates easy.
    Currently, many State agencies are not providing local agency 
updates until FNS pursues them as part of the annual local agency 
directory publication activities. However, the final rule should 
reflect the terms of the OMB approved data collection and the 
capabilities of future technology upgrades.

22. Confidentiality of Participant Information (Sec.  246.26(d) 
Through(i))

    The Department proposed to revise Sec.  246.26(d) and (g) of the 
current WIC regulations, and to add paragraphs (h) and (i) to Sec.  
246.26, to address the use and disclosure of confidential information. 
The Department proposed these changes in order to remove barriers to 
coordination among programs caused by restrictions on sharing 
participant information, and to provide regulatory clarification and 
guidance on legal issues pertaining to the release of confidential 
applicant and participant information in connection with court 
proceedings, criminal investigations, or instances of known or 
suspected child abuse or neglect. WIC agencies continue to be 
accountable to all applicable requirements pertaining to the 
confidentiality of information.
    As clarified in the preamble to the proposed rule, confidential 
applicant and participant information could only be used or disclosed 
to the extent permitted by these proposed provisions. Any other use or 
disclosure would not be permitted. Additionally, information obtained 
from WIC applicants or participants would be protected, in accordance 
with WIC regulations, regardless of the manner in which the information 
is recorded or stored, with access limited to those that have a need to 
know and shared only as permitted under these regulations.
    The additional flexibility in the proposed rule was intended to 
maintain a balance between sharing information in the interest of 
enhanced services and safeguarding information so that barriers to 
Program participation are not created. We are fully committed to the 
principle that the integration of health care and social service 
programs must proceed with careful regard for an individual's right to 
privacy.
A. Treatment of Confidential Applicant and Participant Information
    The Department proposed in 246.26(d)(1) to expand the concept of 
confidential applicant and participant information to include all 
information about applicants and participants, including information 
obtained from other sources, as well as information generated as a 
result of WIC application, certification, or participation. The 
majority of commenters overwhelmingly supported this proposed 
clarification.
    One supporting commenter, however, recommended that in order to 
avoid confusion, the regulations should specify that in protecting the 
confidentiality of applicant and participant information in WIC files, 
WIC local agencies must comply with WIC regulations and applicable 
federal statutes, not the U.S. Department of Health and Human Services' 
(HHS) regulations implementing the Health Insurance Portability and 
Accountability Act (HIPAA). We agree with the commenter and have 
clarified this point in the final regulatory provision 246.26(d)(1).
    As set forth in WIC regulations, WIC State and local agencies are 
required to comply with the regulations, instructions and other 
guidelines issued by the Department, including those focused on the 
protection of applicant and participant confidentiality. Applicant or 
participant information contained in WIC files may include information 
that originated in other federal, state or local program's files, which 
was subject to those respective programs' confidentiality provisions. 
However, once information is included in WIC's files, WIC 
confidentiality protections attach to the information, regardless of 
the original source and exclusive of previously applicable 
confidentiality provisions. Thus, WIC confidentiality protections, 
rather than HIPAA requirements or any other Federal, State or local 
programs' confidentiality provisions, attach to and take precedence in 
protecting applicant and participant information.\1\
---------------------------------------------------------------------------

    \1\ HHS' HIPAA regulations establish standards to protect the 
privacy of individually identifiable health information and those 
standards apply to information maintained by health plans, health 
care clearinghouses and certain health care providers. In the 
preamble to the initial final rule published in the Federal Register 
by HHS on December 28, 2000, at 65 FR 82462, and in subsequent 
questions and answers issued by HHS on the HIPAA rules, 
respectively, HHS clarified that WIC agencies are not considered 
``health plans'' for HIPAA purposes and that the HIPAA standards do 
not extend to WIC agencies.
---------------------------------------------------------------------------

    Health departments, which operate many WIC local agencies, are 
affected by HIPAA requirements. In those instances and pursuant to 
HIPAA regulations, health departments may declare themselves ``hybrid 
entities''. Covered entities within a health department would then 
comply with HIPAA regulations, while the WIC local agency, as a non-
covered entity, would continue to follow existing, applicable 
confidentiality requirements. Coordination of programs and services can 
continue, even when program confidentiality requirements differ.
    We encourage State and local agencies to consult first with their 
legal counsel on issues regarding confidentiality, including issues 
pertaining to HIPAA. State agencies are encouraged to contact 
appropriate FNS Regional offices for

[[Page 56722]]

assistance should unresolved issues remain after consultation.
    Therefore, the final rule remains as proposed, with the addition of 
clarification that WIC confidentiality protections in relevant Federal 
and State authorities attach to applicant and participant information, 
regardless of the original source of that information and exclusive of 
previously applicable Federal, State or local confidentiality 
provisions.
B. Use in the Administration and Enforcement of the WIC Program
    The proposed provision sought to clarify in regulations those 
entities involved in the administration and enforcement of the WIC 
Program, by identifying the persons to whom confidential applicant/
participant information may be disclosed based on their direct 
connection with the administration and enforcement of the WIC Program. 
The proposed provision clarified that such persons must have a need to 
know the confidential information for WIC Program purposes as 
determined by the State agency. Also, the provision clarified that such 
persons may include the staff of the State agency's local agencies, the 
staff of other State agencies and their local agencies, persons under 
contract with the State agency to conduct research concerning WIC, and 
persons investigating and prosecuting WIC Program violations under 
Federal, State, or local law.
    All of the commenters were supportive of this proposed provision, 
although additional clarification was requested concerning the types of 
staff encompassed by the provision, and also concerning the meaning of 
the term ``need to know.''
    The preamble of the proposed rule pointed out that all employees of 
a State or local agency do not need access to confidential participant 
information. In using the term ``need to know,'' we did not intend to 
introduce a new requirement, but rather to reinforce the requirement in 
the current regulations restricting access to staff directly connected 
with the administration or enforcement of the WIC program. Moreover, 
the listing in the provision of functions demonstrating a need to know 
was not intended to be all-inclusive, but rather to be illustrative. It 
is not possible to anticipate and list all of the staff positions or 
functions involved with administration and enforcement of the WIC 
Program. We agree, however, that the regulations should clearly 
indicate that the list of persons that have a need to know is not 
limited to those referenced in the regulations.
    This specific listing is not necessary in the regulations. Instead, 
State agencies must apply the general principles provided by the 
regulatory language, in consultation with legal counsel. For instance, 
one commenter sought the specific inclusion of information technology 
staff. We recognize that such staff may be directly involved in the 
administration and enforcement of the program and have a need to know 
confidential participant information, but not necessarily all such 
staff. For example, it might be necessary for some technology staff to 
see confidential information when they are conducting data runs on WIC 
information or to assist WIC staff with computer equipment problems. 
However, it is unlikely that technology staff assigned to provide 
support and assistance only to other specified programs, and not WIC, 
would need such access. As indicated above, each State agency must 
define who is authorized access in accordance with general principles 
set forth in WIC regulations, in consultation with legal counsel.
    We also did not intend to exclude State contract staff who are 
conducting audits of the WIC Program pursuant to 7 CFR part 3052, the 
Department's regulations implementing the Single Audit Act. Such staff 
would be considered as involved in the administration or enforcement of 
the program, and would need access to confidential information if, for 
instance, they want to sample certification records to ensure that 
income eligibility determinations have been correctly calculated during 
certifications. Likewise, staff of a bank under contract with a WIC 
State agency for food instrument processing will see the names of 
participants on WIC checks, and have a justifiable need to know. 
Contract terms and conditions should address the confidentiality of WIC 
information and the penalties for unauthorized sharing or access. Such 
contract entities perform programmatic functions on behalf of the WIC 
agencies and have a need to access confidential WIC information under 
the terms and conditions of the contract.
    Another commenter suggested that the provision specifically allow 
for the disclosure of confidential participant information, without 
consent, to prevent multiple enrollments. Such a general statement is 
not needed since the term ``administration and enforcement of the WIC 
Program'' clearly encompasses the prevention of dual participation or 
multiple enrollments. The proposed rule clarified that individuals who 
have a need to know include personnel from local agencies and other WIC 
State or local agencies. As pointed out in the preamble of the proposed 
rule, this clarification was needed to facilitate the transfer of 
participants from one State agency or local agency to another and for 
program oversight; clearly, the term ``program oversight'' includes the 
prevention of dual participation. Thus applicant or participant consent 
is not needed for sharing confidential applicant or participant 
information between State or local agencies regarding the prevention or 
detection of multiple WIC enrollments as well as regarding the transfer 
of participants between State or local agencies. Such consent is not 
needed for sharing confidential information for any purpose properly 
within the meaning of the term ``administration and enforcement of the 
WIC Program,'' when the information is provided to staff with a need to 
know. With regard to sharing information with the Commodity 
Supplemental Food Program (CSFP) to detect or prevent dual 
participation, and/or for other coordination reasons, WIC and CSFP are 
required to enter into a written agreement.
    Finally, as set forth in Sec. Sec.  246.25(a)(4) and 246.26(g), the 
State agency must provide the Department and the Comptroller General 
with access to all records. The use of the term ``Department'' includes 
the Department's Office of Inspector General (OIG) and other USDA 
agencies or offices involved in the program such as FNS, and the 
Economic Research Service which is involved in conducting studies of 
the WIC Program. The Comptroller General is the head of the Government 
Accountability Office (GAO), which is an arm of Congress. The reference 
to the Comptroller General also includes other GAO staff such as those 
who conducted the previously mentioned survey on participant and 
employee fraud and abuse.
    In general, confidential participant information may be used in 
connection with the appeal of adverse action taken against State or 
local WIC personnel. However, prior to such release, legal counsel 
should be consulted to provide advice on ways to share information with 
those that have a need to know while also protecting the 
confidentiality of information to those who do not have a need to know, 
e.g., the judge could see the information but not the general public 
attending the hearing.
    Accordingly, these provisions remain as proposed, except we have 
clarified in the final rule that the list of persons that have a need 
to know is not limited to those referenced.

[[Page 56723]]

C. Use and Disclosure for Non-WIC Purposes
    The Department proposed to allow State agencies greater flexibility 
in determining organizations to which they may disclose confidential 
applicant/participant information pursuant to written agreements as 
well as the permissible uses of such information. Specifically, the 
Department proposed in Sec.  246.26(d)(2) to remove the reference to 
sharing confidential WIC information only with public organizations 
that administer ``health or welfare'' programs that serve WIC 
participants. As proposed, this change would provide State agencies 
with greater latitude in choosing appropriate programs with which to 
coordinate and share information. Additionally, proposed Sec.  
246.26(h)(3)(i) would expand the permitted uses of confidential 
applicant/participant information to add three new categories. As 
proposed, the three new categories of permissible uses were:
    <bullet> Enhancing the health, education, or well-being of WIC 
applicants or participants;
    <bullet> Streamlining administrative procedures in order to 
minimize burdens on staff and applicants or participants; and
    <bullet> Assessing and evaluating a State's health system in terms 
of responsiveness to participants' health care needs and health care 
outcomes.
    Currently, State agencies choosing to disclose applicant/
participant information to public organizations designated by the chief 
State health officer must execute a written agreement with each agency. 
The agreement must limit the use of the information by the receiving 
agency to establishing eligibility for their own programs and 
conducting outreach for such programs. Further, the organizations must 
assure that WIC applicant/participant information will not be disclosed 
to a third party. Also, Sec.  246.7(i)(9) in current regulations 
requires State agencies to inform WIC applicants on the WIC 
certification form that information they provide may be disclosed to 
public organizations that administer other health or welfare programs 
for purposes of determining eligibility and conducting outreach.
    However, as a balance to the proposed expansion, the Department 
also proposed a new Sec.  246.4(a)(24) that would require State 
agencies to include in their State Plan a list of the programs with 
which the State agency or its local agency has or intends to execute 
written agreements for the disclosure and use of confidential 
applicant/participant information and planned use of the information, 
consistent with the uses authorized in proposed Sec.  246.26(d). In 
addition, the proposed rule included a cross-reference to the State 
plan requirement in proposed Sec.  246.26(h)(3).
    These changes were proposed as a result of State agency comments 
and concerns that they needed greater flexibility to share confidential 
information for administrative purposes and to benefit applicants and 
participants. Additional flexibility would eliminate, for example, 
barriers to coordination, enhance one-stop shopping by applicants who 
could apply for multiple programs, and improve access to other programs 
and services available to the population served by the WIC Program.
    The proposed rule also clarified in Sec.  246.26(d)(2) and (h)(3) 
that the conditions for disclosing confidential applicant/participant 
information would extend to non-WIC uses of the information by the 
State agency and its local agencies. In these cases, the written 
agreement would be between the WIC State agency or local agency and the 
unit of the WIC State agency or local agency that would be using the 
information for non-WIC purposes. Further, the rule proposed to require 
a written agreement in these instances because the State or local 
agency personnel who would be using the information for non-WIC 
purposes might be unfamiliar with the limits on the use of the 
information. Requiring a written agreement in these cases would provide 
an additional safeguard for sensitive information.
    As noted above, the proposed regulations continued the existing 
requirement that State agencies notify applicants and participants at 
the time of application or through a subsequent notice that information 
about their participation in the WIC Program may be used by State and 
local WIC agencies and public organizations in the administration of 
their programs that serve persons eligible for the WIC Program. Such 
notification would also be required when information is shared through 
written agreements for non-WIC purposes under Sec. Sec.  246.7(i)(11) 
and 246.26(h)(2) of the proposed rule.
    The majority of commenters supported the proposed provisions. Many 
commenters that supported the proposed provisions requested 
clarification or changes to certain portions of the proposal. Several 
commenters suggested a requirement for State agency oversight of local 
agency agreements. However, such a provision is unnecessary. Current 
regulations at Sec.  246.26(h)(1) specify that the chief State health 
officer (or in the case of an Indian State agency, the governing 
authority) is required to designate the public organizations with which 
WIC agencies can enter into written agreements. The proposed rule 
reflects our intent to continue this requirement by further refining 
the provision. It would require the chief State health officer to 
designate in writing the permitted non-WIC uses of confidential WIC 
information and the names of the organizations with which such 
information will be shared. Therefore, State agency oversight of local 
agency agreements currently exists and is intended in the proposed 
rule.
    Several commenters that supported the rule suggested that the term 
``public organizations'' be defined to include Federal, State and local 
agencies and other government/tribal authorities. In general, this is 
the intended meaning of the term. It has never been the intent of the 
Department for State agencies to interpret this term so narrowly as to 
consider only State agency entities. However, as discussed below, this 
term is not intended to be interpreted broadly, for example, to include 
State or local law enforcement agencies. We do not believe, however, 
that the regulations should specifically define the term. Such action 
could potentially exclude or restrict State agency flexibility for the 
chief State health officer to identify and designate public 
organizations that may be appropriate to share WIC information. State 
agencies are encouraged to consult with legal counsel as they attempt 
to identify public organizations that they consider sharing 
confidential WIC information.
    Several commenters that supported the provisions, as proposed, 
requested clarification on the extent to which independent researchers 
conducting general scientific research would be authorized to have 
access to confidentiality WIC information. This rule maintains the 
Department's longstanding position that independent researchers would 
not be considered public organizations. Therefore, confidential WIC 
information could not be shared with such entities through information-
sharing agreements. The options for sharing WIC information with such 
researchers would be either through signed release forms from 
applicants and participants, or providing aggregate data, with no 
confidential identifiers.
    A number of supportive commenters requested clarification on the 
permissibility of a public organization that receives WIC information 
through an information-sharing agreement to re-disclose such 
information to its

[[Page 56724]]

outreach contractors. We do not view such action as a re-disclosure of 
WIC information, but rather using the information in the administration 
and operation of its program, via the use of contractors, to identify 
potential individuals eligible for services provided by the 
organization. Therefore, such uses of WIC information would be 
permissible and not viewed as disclosing the information to a third 
party.
    Other clarifications and suggestions by commenters supporting the 
proposed provisions covered a broad array of issues. Therefore, the 
following statements are intended to respond to most of these issues 
with respect to this final rule. WIC agencies are not required to enter 
into information-sharing agreements with public organizations and take 
on any added burden by this process. This is only one of several 
options for possible sharing of confidential WIC information. However, 
there are ways to limit the amount of paperwork involved in written 
agreements in some situations. For example, FNS Instruction 800-1 
states that separate agreements do not have to be executed for each 
program. Instead, the chief State health officer (or his equivalent) 
may list in one agreement all of the programs with which information is 
to be disclosed. Responsible officials for each of the programs listed 
would then sign the written agreement.
    Another option for sharing confidential WIC information is 
obtaining signed release forms from applicants and participants, or 
sharing information in aggregate, with no identifiers. If signed 
release forms are used, applicants and participants must be given the 
right to refuse to the sharing of information. FNS Instruction 800-1 
provides guidance on this issue.
    WIC agencies are in the best position to determine which option(s) 
are best suited to their needs. Therefore, it would be inappropriate to 
mandate only one approach to sharing WIC information with other 
entities. Further, State agencies have the authority to decide what WIC 
information will be shared with other public organizations. It is not 
our intent for State/local agencies to share all WIC information about 
applicants and participants with other organizations, but rather only 
those data elements necessary for the receiving organization to, for 
example, contact the individual regarding potential services. 
Therefore, WIC agencies already have the authority to protect and not 
disclose highly sensitive WIC information such as that relative to 
AIDS/HIV and substance abuse.
    The provisions pertaining to information-sharing agreements were 
not designed to permit an applicant or participant to refuse such 
sharing. It was designed to be a part of the WIC application process. 
By signing the rights and responsibilities statement and agreeing to 
participate in WIC, the individual agrees to the sharing of information 
with other public organizations that may provide needed services. 
Therefore, no additional applicant or participant consent is necessary 
for such information sharing.
    The proposed State Plan provision for listing all programs that 
have information-sharing agreements with the State agency and its local 
agencies, and the uses of such information, are only intended for 
informational purposes. As proposed, FNS did not intend to approve 
State agencies' decisions in this matter as long as the reasons for 
sharing information were consistent with the authorized uses in the 
proposed rule. Therefore, State and local agencies can execute such 
agreements prior to submission of the information in State Plans. Any 
questions or issues about the appropriateness of sharing information 
should be directed to the respective FNS Regional office prior to 
execution of the agreement.
    The process of providing a list to FNS is not intended to create a 
barrier to entering into information-sharing agreements. Further, such 
lists are not intended to serve as notice to WIC applicants and 
participants. State agencies are required to provide applicants and 
participants with notification at certification of public organizations 
that WIC intends to share confidential WIC information.
    Several supportive commenters also requested clarification on the 
proposed provision that permits WIC agencies to enter into information-
sharing agreements with Child Protective Services (CPS) to report known 
or suspected child abuse or neglect not otherwise required by State 
law. One commenter questioned whether WIC agencies can also share 
information based on inquiries from CPS to follow up on information 
received from other sources. Under this final rule, an information-
sharing agreement between WIC and CPS, if a WIC agency is contacted by 
CPS to check its records for possible abuse and neglect, it may respond 
to CPS' inquiry.
    A few commenters opposed the proposed provisions. One reason for 
opposition included an objection to the prohibition on the public 
organization receiving confidential WIC information to disclose it to a 
third party. The commenter stated that this precludes sharing with 
immunization registries, and recommended such sharing be permitted. 
However, we are committed to maintaining the confidentiality of 
applicant/participant information as programs coordinate services and 
share information, although the task becomes more challenging. One way 
to control the access of confidential information while promoting 
coordination is through the use of a written agreement between 
programs, specifying what data will be shared, how it will be shared, 
whether data may be subsequently disclosed, and the proposed use(s) of 
such information. With regard to most immunization registries, WIC 
agencies currently have the authority to share information with 
organizations administering immunization registries. WIC agencies may 
share confidential WIC information by obtaining written release forms 
from applicants and participants, and individuals can be informed about 
potential subsequent release of their information.
    One commenter recommended deleting the proposed reference to 
executing written agreements for the purpose of streamlining 
administrative procedures in either the receiving program or WIC. 
Coordination among programs and ``one-stop shopping'' for applicants to 
access multiple programs' benefits has increased. This provision is 
intended to facilitate coordination of services among programs and 
minimize or eliminate duplication of efforts; thus, the reference to 
streamlining administrative procedures.
    One commenter opposed the permissible use of sharing information to 
enhance the health, education or well-being of WIC applicants or 
participants, as set forth in the proposed rule. The commenter felt 
this provision was too broad. However, the intent of this provision was 
to provide State agencies with the flexibility to identify and 
designate programs with which to share information in order to truly 
benefit the WIC population. For example, State or local agencies could 
elect to enter into one written agreement with programs in the health 
department, including their Communicable Disease Program, to share 
confidential WIC information. In consultation with its legal counsel, 
we believe State agencies are in the best position to make these 
determinations. The purposes for sharing were expanded to accommodate 
State agencies' concerns that current purposes were too restrictive.
    As indicated in the proposed rule, the Department is committed to 
maintaining the confidentiality of the financial and health information 
of WIC applicants

[[Page 56725]]

and participants. The Department understands that individuals may 
refuse to apply or participate in the WIC Program if they fear that 
their privacy will not be safeguarded.
    Therefore, the provisions set forth in Sec.  246.26(h) of the 
proposed rule pertaining to sharing of WIC information for non-WIC 
purposes and entering into information-sharing agreements remain as 
proposed.
D. Child Abuse and Neglect Reporting
    Encouraged by the Child Abuse Prevention and Treatment Act (42 
U.S.C. 5106a), many States have enacted statutes requiring the 
reporting of known or suspected child abuse or neglect. Under current 
WIC policy, if a State statute requires known or suspected child abuse 
or neglect to be reported, then WIC staff must report or release 
applicant/participant information to State or local officials, as 
required by State law. In the proposed rule, we sought to codify 
current policy, as set forth in FNS Instruction 800-1. Currently, if 
State law does not require the reporting of known or suspected child 
abuse and neglect by public programs, such as WIC, the guidance in FNS 
Instruction 800-1 encourages WIC State agencies to consult with State 
legal counsel to determine the appropriateness of reporting such 
information. In the proposed rule at Sec.  246.26(h)(3)(i)(C), State 
agencies are provided the option to report known or suspected child 
abuse or neglect when not mandated by State statute if a written 
agreement has been executed between the WIC State or local agency and 
the appropriate child protective service organization.
    All of the comments supported these proposed provisions, although 
some revisions or clarifications were requested. Several commenters 
requested that we clarify in the regulatory language that the 
participant's consent is not needed by the local agency in order to 
provide such information to the appropriate child protective authority. 
We agree that a participant's written consent to share such information 
is not required. WIC agencies are reminded that FNS Instruction 800-1 
provides specific guidance on the use of information-sharing agreements 
and addresses this issue.
    One commenter requested that we address the impact of the Indian 
Child Welfare Act (25 U.S.C. 1902), stating that it addresses abuse and 
neglect and takes precedence over State law. Based on consultation with 
HHS, the Indian Child Welfare Act does not include requirements for 
reporting child abuse and neglect. This law deals with custody 
proceedings and the placement of Indian children in foster care.
    One other commenter suggested that the term ``best interests of the 
program,'' introduced in the proposed rule regarding subpoenas and 
search warrants, may be applicable to the disclosure of confidential 
participant information for substantiating child abuse allegations made 
by a third party. We do not support this position. As indicated in the 
proposed rule, State law governs such disclosures.
    Accordingly, in this final rule, the provisions pertaining to 
reporting known or suspected child abuse and neglect in Sec.  
246.26(d)(3) and (h)(3)(C) remain as proposed.
E. Release Forms
    State agencies have requested latitude to allow medical information 
to be disclosed to private physicians and other health care providers 
treating WIC applicants and participants. The Department recognizes 
that increased flexibility by WIC agencies to share such information 
can be beneficial to the applicant or participant, as well as the 
requesting health care providers. As a result, the Department proposed 
in Sec.  246.26(d)(4) to permit the use of release forms authorizing 
disclosure to the applicant or participant's physician(s) or other 
health care provider(s) at the time of application or certification for 
the WIC Program. However, as proposed, to underscore the voluntary 
nature of the release form, all other requests of the applicant to sign 
release forms to share WIC information would continue to be required to 
take place after the application and certification process is 
completed. In using release forms, WIC agencies should be aware that 
such policies must include the right of the applicant/participant to 
refuse to sign the consent without affecting eligibility for Program 
participation. Current policy and guidance on the use of release forms 
is in FNS Instruction 800-1.
    Most of the commenters supported the proposed provision. Several 
commenters asserted that releases to parties other than health care 
providers should also be allowed at certification. One of these 
commenters recommended such release forms be a part of the 
certification form to eliminate the need for a second form; the 
commenter stated that the participant's use of the release form would 
in fact be voluntary. We do not support this recommendation. The 
presentation and execution of such releases are required after the WIC 
certification process is complete, i.e., the applicant is determined 
eligible for WIC benefits, because to do otherwise may create a barrier 
to WIC participation. The participant may perceive that signing the 
release is a condition of WIC program participation. Presenting a 
release form to WIC applicants for signature for all purposes, except 
to share information with physicians or other health care providers, 
can occur during the certification visit but must occur after the 
determination of WIC eligibility. The release form to share information 
with physicians or other health care providers may be a part of or 
attached to the WIC certification form. However, release forms for all 
other purposes must be separate from the WIC certification form.
    Therefore, the provisions pertaining to participant release forms 
in Sec.  246.26(d)(4) in this final rule remain as proposed.
F. Access by Applicants and Participants
    The proposed rule sought to codify in Sec.  246.26(d)(5) the 
current policy requiring State and local agencies to provide applicants 
and participants access to the information they provide. In the case of 
an applicant or participant who is an infant or child, the State or 
local agency would be required to provide access to the parent or 
guardian of the infant or child, assuming that any issues regarding 
custody or guardianship are resolved. Further, as proposed, State and 
local agencies would not be required to provide access to any other 
information concerning an applicant or participant, such as 
documentation of income provided by third parties and staff assessments 
of the participant's condition or behavior, unless required by Federal, 
State, or local law or policy or unless the information supports a 
State or local agency decision that is being appealed by the applicant 
or participant pursuant to Sec.  246.9.
    All commenters supported the provisions as proposed. However, 
several of these commenters requested clarification such as the 
provision of guidelines for proof of custody, the provision of access 
by the parent or guardian of an infant or child who signed at 
certification, or whose signature is on file. All issues regarding 
custody and policy developed in this area must involve legal counsel 
since State law must be followed in handling such issues. Therefore, 
the provisions pertaining to applicant and participant access to WIC 
information at Sec.  246.26(d)(5) in this final rule remain as 
proposed.

[[Page 56726]]

G. Access by the USDA and the Comptroller General of the United States
    The proposed rule would have revised Sec. Sec.  246.25(a)(4) and 
246.26(g) to clarify that access to Program records by the Department 
and Comptroller General of the United States includes confidential 
applicant and participant information. However, the proposed rule 
prohibited any reports or other documents resulting from the 
examination of such records that are publicly released from including 
confidential applicant or participant information.
    All of the commenters supported these proposed provisions, although 
one commenter requested that GAO and the Department's OIG be 
specifically referenced in the provision because both of these offices 
have become increasingly active in reviewing the program. This change 
is unnecessary since OIG is part of USDA and GAO is under the authority 
of the Comptroller General. Therefore, Sec. Sec.  246.25(a)(4) and 
246.26(g) in this final rule remain as proposed.
H. Subpoenas and Search Warrants
    The Department proposed to add a new paragraph (i) to Sec.  246.26 
that would specify the procedures State and local agencies must follow 
in responding to requests from courts for confidential information 
pertaining to WIC applicants, participants, and vendors. The Department 
proposed to add these procedures to the WIC regulations in response to 
an increase in instances in which State and local agencies are 
presented with subpoenas or search warrants seeking confidential 
applicant and participant information. The Department proposed step-by-
step procedures that State and local agencies, in consultation with 
legal counsel, would be required to follow in handling these requests. 
The proposed procedures were intended to create a basic, standard 
approach that emphasizes the importance of preserving confidentiality 
within the scope of the Federal regulations governing the WIC Program. 
At the same time, these procedures would protect WIC staff from adverse 
legal action for refusals to release confidential information.
    Further, in Sec.  246.6(i), the Department proposed to identify the 
situations in which State or local agencies must release information, 
for example, when served with a search warrant. As explained in the 
preamble to the proposed rule, if the State or local agency fails to 
comply in these situations, WIC staff may face adverse legal action, 
including imprisonment.
    The proposed rule set forth different procedures for responding to 
subpoenas as opposed to search warrants in recognition of the 
differences between these legal documents. A subpoena is a written 
directive for information to be provided by an individual or entity. 
Generally, a subpoena directs an individual or entity to appear at a 
stated time and place and give information on a topic about which the 
individual or entity is knowledgeable. One type of subpoena is a 
subpoena duces tecum. A subpoena duces tecum is a written directive 
that orders the production and delivery of documents. Documents may be 
requested by type, e.g. all records for participants of a certain age 
and gender, or by topic, e.g., all documents which deal with 
immunization. The deadline for delivery, as well as the site for 
delivery, is generally specified. Search warrants are issued by the 
courts and are used by law enforcement officers to obtain information, 
and sometimes objects, from specific premises. Compliance with a search 
warrant is required at the time the search warrant is served.
    The majority of commenters supported the provisions as proposed. 
However, some of these commenters also requested various clarifications 
or changes to some of the provisions. Some commenters felt that the 
provision was not clear that WIC agencies should protect participant 
confidentiality when served with a subpoena. The intent of the process 
set forth in the proposed rule is in fact to protect confidential WIC 
information. Therefore, consulting with legal counsel is set forth as 
one of the first steps. In general, subpoenas are merely requests for 
information and do not require the immediate surrender of information. 
On the other hand, failing to immediately comply with a search warrant 
could result in imprisonment of WIC State and local agency staff. 
Therefore, no change to the proposed process is necessary.
    Several commenters requested clarification on whether State 
agencies would have sole or concurrent jurisdiction with local agencies 
to comply with subpoenas and search warrants. We believe that 
concurrent jurisdiction is warranted given that WIC State agencies are 
ultimately responsible for the administration and operation of the 
program within the State agency, including by its local agencies. Local 
agencies are under contract with the State agency to operate the 
program in accordance with Federal regulations. Therefore, State 
agencies should provide oversight authority for its local agencies in 
responding to subpoenas, search warrants and court orders.
    As required in the proposed rule and this final rule, a local 
agency is required to notify its State agency when it is served with 
subpoenas and search warrants. This same policy should apply to court 
orders received by local agencies. In addition, copies of subpoenas, 
search warrants and court orders are considered records pertaining to 
WIC operations, and as such, must be retained on file by WIC agencies 
for a minimum of three years, as required by Sec.  246.25(a)(2) of the 
regulations. In addition, such information provides documentation of 
action taken and supports the action to release confidential WIC 
information, if subsequent legal issues arise.
    Several commenters requested that the regulations clarify access to 
WIC information by law enforcement officials. It would not be 
appropriate or necessary to include in the regulations an exhaustive 
list of all individuals that can or cannot access confidential WIC 
information. We can provide guidance in this preamble and through 
further guidance that FNS will issue to address a number of 
confidentiality issues raised by commenters on the proposed rule.
    As set forth in current and proposed regulations, confidential WIC 
information can only be shared with individuals involved in the 
administration and enforcement of the WIC Program; through written 
agreement with public health organizations, and, as stated previously 
in this preamble, State agencies should not interpret this category to 
include law enforcement officials; through written consent from 
applicants/participants; and, in aggregate form. None of these options 
permit the sharing of confidential WIC information with law enforcement 
officials, except those involved in enforcing the WIC Program. 
Therefore, the avenue set forth in the proposed rule, which reflects 
current policy, is that such law enforcement officials must seek a 
court's decision to issue a subpoena or search warrant in order to 
access/attempt to access confidentiality WIC information. We believe 
the courts are in a better position to make determinations on whether 
such requests for information have merit and are warranted. As 
reflected in the proposed rule, even if a subpoena is issued by a court 
for WIC information, WIC agencies, or their representatives, have the 
right to argue their case before the courts and to clarify that WIC 
information must be kept confidential pursuant to Federal regulations. 
Ultimately, it is up to the courts to determine whether a specific

[[Page 56727]]

enunciated need to access such information overrides Federal 
requirements.
    A number of commenters expressed concerns regarding quashing 
subpoenas, that is, appearing before a court to argue why confidential 
WIC information requested in a subpoena should not be released. Several 
commenters indicated that WIC agencies do not need to move to quash a 
subpoena if they informally convince the requesting party to withdraw 
the subpoena. We agree with commenters that in such a situation, moving 
to quash the subpoena would be mooted by its withdrawal. It would still 
be necessary for the State or local agency, in consultation with legal 
counsel for State or local agency counsel, to provide an appropriate 
response to the respective court in the matter. The language of the 
final rule is unchanged.
    Other commenters were concerned with disclosing confidential 
information based on the best interest of the program. One commenter 
felt that this provision was too broad. Other commenters recommended 
that this standard be replaced to explicitly allow the disclosure of 
confidential information when participants verbally or physically abuse 
WIC staff or undertake any criminal activity on WIC premises. Again, 
when a subpoena is issued, we believe that WIC State agencies, in 
consultation with legal counsel, should have the flexibility to decide 
on a case-by-case basis whether the circumstances warrant release of 
the information, given the circumstances; that it is in the best 
interest of the program. As indicated in the preamble of the proposed 
rule, there may be rare instances in which a State or local agency in 
consultation with legal counsel could decide that disclosing 
confidential applicant or participant information would be in the best 
interest of the Program. Because requests arising from investigations 
of this caliber and seriousness are rare, we expect State and local 
agencies to conclude only infrequently that such disclosure is 
necessary. Therefore, this regulation cannot attempt to address all 
cases in which State agencies, or their representatives, should move to 
quash subpoenas or decide to disclose confidential information. State 
agencies and legal counsel should ultimately make these decisions on a 
case-by-case basis in conformance with State and Federal privacy 
requirements.
    Beyond responding to subpoenas, WIC confidentiality rules do not 
prohibit WIC agencies from contacting law enforcement if applicants or 
participants become verbally or physically abusive to WIC staff or are 
suspected of stealing either WIC Program property or personal items 
from employees or other individuals. Legal counsel can assist State 
agencies in developing policies to follow in handling such cases, 
without breaching confidentiality. For example, a WIC employee could 
report to law enforcement what she/he knows about who may have taken a 
purse or WIC Program property, without providing information from the 
WIC record.
    Several commenters requested that the regulations address the 
procedures to follow for responding to court orders to which they are 
not parties, and that along with subpoenas and search warrants, the 
same or similar steps should be followed. We agree with the commenter 
that the proposed procedures for responding to subpoenas and search 
warrants apply to those in which WIC is a direct or indirect party. As 
proposed, the regulations are general in their direction and intent on 
how to respond to subpoenas and search warrants, and do not specify 
that the procedures apply only when WIC is a direct party. Further, 
with regard to responding to court orders, State and local agencies 
should consult with its legal counsel on such matters. We anticipate 
that in most cases, State agencies will need to respond to court orders 
in a manner similar to the procedures for responding to search 
warrants.
    The requirements in proposed Program regulations pertaining to 
subpoenas and search warrants are intended to clarify the primacy of 
Federal authority to limit disclosure of information in the interest of 
preserving the confidentiality of WIC applicant/participant 
information. In addition, the Department sought to communicate a 
national, uniform approach to disclosure of WIC records that will 
assist the courts in handling matters related to the confidentiality of 
Program information. Again, because of variation in State law, the 
Department sought to enunciate a regulatory framework that is 
sufficiently flexible to accommodate State laws in this area.
    Accordingly, Sec.  246.26(i) in this final rule remains as 
proposed, except that the entire section has been renumbered for 
clarity to include an introductory statement and two paragraphs.

23. Corrections to Program Information (Sec.  246.27)

    This final rule makes technical revisions to Sec.  246.27 to 
reflect address changes or corrections for the Southeast Regional 
Office and the Western Regional Office of the Food and Nutrition 
Service.

List of Subjects in 7 CFR Part 246

    Food assistance programs, Food donations, Grant programs-social 
programs, Indians, Infants and children, Maternal and child health, 
Nutrition, Nutrition education, Public assistance programs, WIC, 
Women.Q P='04'>

0
For the reasons set forth in the preamble, 7 CFR part 246 is amended as 
follows:

PART 246--SPECIAL SUPPLEMENTAL NUTRITION PROGRAM FOR WOMEN, INFANTS 
AND CHILDREN

0
1. The authority citation for part 246 continues to read as follows:

    Authority: 42 U.S.C. 1786.


0
2. In Sec.  246.2:
0
a. Add new definitions of ``Electronic signature'', ``Employee fraud 
and abuse'', ``7 CFR part 3021'' and ``Sign or signature'', in 
alphabetical order;
0
b. Revise the definition of ``7 CFR part 3017''; and
0
c. Revise the definition of ``State''.
    The revisions and additions read as follows:


Sec.  246.2  Definitions.

* * * * *
    Electronic signature means an electronic sound, symbol, or process, 
attached to or associated with an application or other record and 
executed and or adopted by a person with the intent to sign the record.
    Employee fraud and abuse means the intentional conduct of a State, 
local agency or clinic employee which violates program regulations, 
policies, or procedures, including, but not limited to, 
misappropriating or altering food instruments, entering false or 
misleading information in case records, or creating case records for 
fictitious participants.
* * * * *
    7 CFR part 3017 means the Department's Common Rule regarding 
Governmentwide Debarment and Suspension (Non-procurement). Part 3017 
implements the requirements established by Executive Order 12549 
(February 18, 1986).
* * * * *
    7 CFR part 3021 means the Department's Common Rule regarding 
Governmentwide Requirements for Drug-Free Workplace. Part 3021 
implements the requirements established in section 5151-5160 of the 
Drug-Free Workplace Act of 1988 (Pub. L. 100-690).

[[Page 56728]]

    Sign or signature means a handwritten signature on paper or an 
electronic signature. If the State agency chooses to use electronic 
signatures, the State agency must ensure the reliability and integrity 
of the technology used and the security and confidentiality of 
electronic signatures collected in accordance with sound management 
practices, and applicable Federal law and policy, and the 
confidentiality requirements in Sec.  246.26.
    State means any of the fifty States, the District of Columbia, the 
Commonwealth of Puerto Rico, the Virgin Islands, Guam, American Samoa, 
or the Commonwealth of the Northern Mariana Islands.
* * * * *

0
3. In Sec.  246.3, revise paragraphs (b) and (c)(2) to read as follows:


Sec.  246.3  Administration.

* * * * *
    (b) Delegation to the State agency. The State agency is responsible 
for the effective and efficient administration of the Program in 
accordance with the requirements of this part; the Department's 
regulations governing nondiscrimination (7 CFR parts 15, 15a, and 15b); 
governing administration of grants (7 CFR part 3016); governing 
nonprocurement debarment/suspension (7 CFR part 3017); governing 
restrictions on lobbying (7 CFR part 3018); and governing the drug-free 
workplace requirements (7 CFR 3021); FNS guidelines; and, instructions 
issued under the FNS Directives Management System. The State agency 
shall provide guidance to local agencies on all aspects of Program 
operations.
    (c) * * *
    (2) The written agreement shall include a certification regarding 
lobbying and, if applicable, a disclosure of lobbying activities, as 
required by 7 CFR part 3018.
* * * * *

0
4. In Sec.  246.4:
0
a. Revise paragraphs (a)(11)(i) and (a)(11)(ii);
0
b. Add a sentence to the end of paragraph (a)(21);
0
c. Amend paragraph (a)(23) by adding the words ``in compliance with 
requirements in 7 CFR part 3021'' at the end of the sentence; and
0
d. Add new paragraphs (a)(24) through (a)(27).
    The revisions and additions read as follows:


Sec.  246.4  State plan.

    (a) * * *
    (11) * * *
    (i) Certification procedures, including:
    (A) A list of the specific nutritional risk criteria by priority 
level which explains how a person's nutritional risk is determined;
    (B) Hematological data requirements including timeframes for the 
collection of such data;
    (C) The procedures for requiring proof of pregnancy, consistent 
with Sec.  246.7(c)(2)(ii), if the State agency chooses to require such 
proof;
    (D) The State agency's income guidelines for Program eligibility;
    (E) Adjustments to the participant priority system (see Sec.  
246.7(e)(4)) to accommodate high-risk postpartum women or the addition 
of Priority VII; and,
    (F) Alternate language for the statement of rights and 
responsibilities which is provided to applicants, parents, or 
caretakers when applying for benefits as outlined in Sec.  246.7(i)(10) 
and (j)(2)(i) through (j)(2)(iii). This alternate language must be 
approved by FNS before it can be used in the required statement.
    (ii) Methods for providing nutrition education to participants. 
Nutrition education will include information on drug abuse and other 
harmful substances. Participants will include homeless individuals.
* * * * *
    (21) * * * The State agency will also describe its policy for 
approving transportation of participants to and from WIC clinics.
* * * * *
    (24) A list of all organizations with which the State agency or its 
local agencies has executed or intends to execute a written agreement 
pursuant to Sec.  246.26(h) authorizing the use and disclosure of 
confidential applicant and participant information for non-WIC 
purposes.
    (25) The State agency's policies and procedures for preventing 
conflicts of interest at the local agency or clinic level in a 
reasonable manner. At a minimum, this plan must prohibit the following 
WIC certification practices by local agency or clinic employees, or 
provide effective alternative policies and procedures when such 
prohibition is not possible:
    (i) Certifying oneself;
    (ii) Certifying relatives or close friends; or,
    (iii) One employee determining eligibility for all certification 
criteria and issuing food instruments or supplemental food for the same 
participant.
    (26) The State agency's plan for collecting and maintaining 
information on cases of participant and employee fraud and abuse. Such 
information should include the nature of the fraud detected and the 
associated dollar losses.
    (27) The State agency's Universal Identifier number.
* * * * *

0
4. In Sec.  246.5:
0
a. Revise the first sentence of paragraph (c)(1) and remove the last 
sentence; and
0
b. Revise paragraph (d)(2).
    The revisions read as follows:


Sec.  246.5  Selection of local agencies.

* * * * *
    (c) * * *
    (1) The State agency will consider the Affirmative Action Plan (see 
Sec.  246.4(a)(5)) when funding local agencies and expanding existing 
operations, and may consider how much of the current need is being met 
at each priority level. * * *
* * * * *
    (d) * * *
    (2) The State agency must, when seeking new local agencies, publish 
a notice in the local media (unless it has received an application from 
a local public or nonprofit private health agency that can provide 
adequate services). The notice will include a brief explanation of the 
Program, a description of the local agency priority system (outlined in 
this paragraph (d)), and a request that potential local agencies notify 
the State agency of their interest. In addition, the State agency will 
contact all potential local agencies to make sure they are aware of the 
opportunity to apply. If an application is not submitted within 30 
days, the State agency may then select a local agency in another area. 
If sufficient funds are available, a State agency will give notice and 
consider applications outside the local area at the same time.
* * * * *

0
5. In Sec.  246.7:
0
a. Revise the heading of paragraph (c) and revise paragraph (c)(1);
0
b. Redesignate paragraph (c)(2) as paragraph (c)(3) and add new 
paragraphs (c)(2) and (c)(4);
0
c. Revise paragraph (d)(2)(iii);
0
d. Redesignate paragraph (d)(2)(iv)(C) as paragraph (d)(2)(iv)(D) and 
add a new paragraph (d)(2)(iv)(C);
0
e. Revise paragraph (e)(1)(vi);
0
f. In paragraph (e)(4)(vii), remove the second ``and,'' and remove the 
reference to ``paragraph (e)(1)(iii)'' and add in its place ``paragraph 
(e)(1)(vi).''
0
g. Revise paragraph (g)(1);
0
h. Revise paragraph (h);
0
i. Revise paragraph (i)(10) introductory text;

[[Page 56729]]

0
j. Revise paragraph (i)(11);
0
k. Revise paragraph (j)(2) introductory text;
0
l. Revise paragraph (l); and,
0
m. Remove paragraph (m), and redesignate paragraphs (n), (o), (p), and 
(q) as paragraphs (m), (n), (o), and (p), respectively.
    The revisions and additions read as follows:


Sec.  246.7  Certification of participants.

* * * * *
    (c) Eligibility criteria and basic certification procedures.
    (1) To qualify for the Program, infants, children, and pregnant, 
postpartum, and breastfeeding women must:
    (i) Reside within the jurisdiction of the State (except for Indian 
State agencies). Indian State agencies may establish a similar 
requirement. All State agencies may determine a service area for any 
local agency, and may require that an applicant reside within the 
service area. However, the State agency may not use length of residency 
as an eligibility requirement.
    (ii) Meet the income criteria specified in paragraph (d) of this 
section.
    (iii) Meet the nutritional risk criteria specified in paragraph (e) 
of this section.
    (2)(i) At certification, the State or local agency must require 
each applicant to present proof of residency (i.e., location or address 
where the applicant routinely lives or spends the night) and proof of 
identity. The State or local agency must also check the identity of 
participants, or in the case of infants or children, the identity of 
the parent or guardian, or proxies when issuing food or food 
instruments. The State agency may authorize the certification of 
applicants when no proof of residency or identity exists (such as when 
an applicant or an applicant's parent is a victim of theft, loss, or 
disaster; a homeless individual; or a migrant farmworker). In these 
cases, the State or local agency must require the applicant to confirm 
in writing his/her residency or identity. Further, an individual 
residing in a remote Indian or Native village or an individual served 
by an Indian tribal organization and residing on a reservation or 
pueblo may establish proof of residency by providing the State agency 
their mailing address and the name of the remote Indian or Native 
village.
    (ii) For a State agency opting to require proof of pregnancy, the 
State agency may issue benefits to applicants who claim to be pregnant 
(assuming that all other eligibility criteria are met) but whose 
conditions (as pregnant) are not visibly noticeable and do not have 
documented proof of pregnancy at the time of the certification 
interview and determination. The State agency should then allow a 
reasonable period of time, not to exceed 60 days, for the applicant to 
provide the requested documentation. If such documentation is not 
provided as requested, the woman can no longer be considered 
categorically eligible, and the local agency would then be justified in 
terminating the woman's WIC participation in the middle of a 
certification period.
* * * * *
    (4) The certification procedure shall be performed at no cost to 
the applicant.
    (d) * * *
    (2) * * *
    (iii) Use of a State or local health care definition of ``Income''. 
If the State agency uses State or local free or reduced-price health 
care income guidelines, it will ensure that the definitions of income 
(see paragraph (d)(2)(ii) of this section), family (see Sec.  246.2) 
and allowable exclusions from income (see paragraph (d)(2)(iv) of this 
section) are used uniformly to determine an applicant's income 
eligibility. This ensures that households with a gross income in excess 
of 185 percent of the Federal income guidelines (see paragraph (d)(1) 
of this section) are not eligible for Program benefits. The exception 
to this requirement is persons who are also income eligible under other 
programs (see paragraph (d)(2)(vi) of this section).
    (iv) * * *
    (C) Loans, not including amounts to which the applicant has 
constant or unlimited access.
* * * * *
    (e) * * *
    (1) * * *
    (vi) Regression. A WIC participant who is reapplying for WIC 
benefits may be considered to be at nutritional risk in the next 
certification period if the competent professional authority determines 
that the applicant's nutritional status may regress to the nutritional 
risk condition(s) certified for in the previous certification period 
without supplemental foods and/or WIC nutrition services, and if the 
nutritional risk condition(s) certified for in the previous 
certification period is/are appropriate to the category of the 
participant in the subsequent certification based on regression. 
However, such applicants shall not be considered at nutritional risk 
based on the possibility of regression for consecutive certification 
periods. Applicants who are certified based on the possibility of 
regression should be placed either in the same priority for which they 
were certified in the previous certification period; a priority level 
lower than the priority level assigned in the previous certification 
period, consistent with Sec.  246.7(e)(4); or in Priority VII, if the 
State agency is using that priority level.
* * * * *
    (g) * * *
    (1) Program benefits will be based upon certifications established 
in accordance with the following timeframes:

------------------------------------------------------------------------
               A/an:                         Will be certified:
------------------------------------------------------------------------
(i) Pregnant woman................  For the duration of her pregnancy,
                                     and up to the last day of the month
                                     in which the infant becomes six
                                     weeks old or the pregnancy ends
                                     (for example, if the infant is born
                                     June 4, six weeks after birth would
                                     be July 16, and certification would
                                     end July 31).
(ii) Postpartum woman.............  Up to the last day of the sixth
                                     month after the baby is born or the
                                     pregnancy ends (postpartum).
(iii) Breastfeeding woman.........  Approximately every six months. The
                                     State agency may permit its local
                                     agencies to certify a breastfeeding
                                     woman up to the last day of the
                                     month in which her infant turns 1
                                     year old, or until the woman ceases
                                     breastfeeding, whichever occurs
                                     first.
(iv) Infant.......................  Approximately every six months. The
                                     State agency may permit its local
                                     agencies to certify an infant under
                                     six months of age up to the last
                                     day of the month in which the
                                     infant turns 1 year old, provided
                                     the quality and accessibility of
                                     health care services are not
                                     diminished.
(v) Child.........................  Approximately every six months
                                     ending with the last day of the
                                     month in which a child reaches his/
                                     her fifth birthday.
------------------------------------------------------------------------


[[Page 56730]]

* * * * *
    (h) Mandatory and optional mid-certification actions. Mid-
certification actions are either mandatory or optional as follows:
    (1) Mandatory reassessment of income eligibility mid-certification. 
(i) The local agency must reassess a participant's income eligibility 
during the current certification period if the local agency receives 
information indicating that the participant's household income has 
changed. However, such assessments are not required in cases where 
sufficient time does not exist to effect the change. Sufficient time 
means 90 days or less before the expiration of the certification 
period.
    (ii) Mandatory disqualification mid-certification for income 
ineligibility. The local agency must disqualify a participant and any 
other household members currently receiving WIC benefits who are 
determined ineligible based on the mid-certification income 
reassessment. However, adjunctively-eligible WIC participants (as 
defined in paragraphs (d)(2)(vi)(A) or (d)(2)(vi)(B) of this section) 
may not be disqualified from the WIC Program solely because they, or 
certain family members, no longer participate in one of the other 
specified programs. The State agency will ensure that such participants 
and other household members currently receiving WIC benefits are 
disqualified during a certification period only after their income 
eligibility has been reassessed based on the income screening 
procedures used for applicants who are not adjunctively eligible.
    (2) Mandatory sanctions or other actions for participant 
violations. The local agency must impose disqualifications, or take 
other actions in accordance with the procedures set forth in Sec.  
246.12(u), in response to participant violations including, but not 
limited to, the violations listed in the definition of Participant 
violation in Sec.  246.2.
    (3) Optional mid-certification actions. A participant may be 
disqualified during a certification period for the following reasons:
    (i) A State agency may allow local agencies to disqualify a 
participant for failure to obtain food instruments or supplemental 
foods for several consecutive months. As specified by the State agency, 
proof of such failure includes failure to pick up supplemental foods or 
food instruments, nonreceipt of food instruments (when mailed 
instruments are returned), or failure to have an electronic benefit 
transfer card revalidated for purchase of supplemental foods; or
    (ii) If a State agency experiences funding shortages, it may be 
necessary to discontinue Program benefits to some certified 
participants. The State agency must explore alternatives (such as 
elimination of new certifications) before taking such action. In 
discontinuing benefits, the State agency will affect the least possible 
number of participants and those whose nutritional and health status 
would be least impaired by the action. When a State agency elects to 
discontinue benefits due to insufficient funds, it will not enroll new 
participants during that period. The State may discontinue benefits by:
    (A) Disqualifying a group of participants; and/or,
    (B) Withholding benefits from a group with the expectation of 
providing benefits again when funds are available.
    (i) * * *
    (10) A statement of the rights and obligations under the Program. 
The statement must contain a signature space, and must be read by or to 
the applicant, parent, or caretaker. It must contain the following 
language or alternate language as approved by FNS (see Sec.  
246.4(a)(11)(i)), and be signed by the applicant, parent, or caretaker 
after the statement is read:
* * * * *
    (11) If the State agency exercises the authority to use and 
disclose confidential applicant and participant information for non-WIC 
purposes pursuant to Sec.  246.26(d)(2), a statement that:
    (i) Notifies applicants that the chief State health officer (or the 
governing authority, in the case of an Indian State agency) may 
authorize the use and disclosure of information about their 
participation in the WIC Program for non-WIC purposes;
    (ii) Must indicate that such information will be used by State and 
local WIC agencies and public organizations only in the administration 
of their programs that serve persons eligible for the WIC Program; and,
    (iii) Will be added to the statement required under paragraph 
(i)(10) of this section. This statement must also indicate that such 
information can be used by the recipient organizations only for the 
following:
    (A) To determine the eligibility of WIC applicants and participants 
for programs administered by such organizations;
    (B) To conduct outreach for such programs;
    (C) To enhance the health, education, or well-being of WIC 
applicants and participants currently enrolled in those programs;
    (D) To streamline administrative procedures in order to minimize 
burdens on participants and staff; and,
    (E) To assess and evaluate a State's health system in terms of 
responsiveness to participants' health care needs and health care 
outcomes.
    (j) * * *
    (2) At the time of certification, each Program participant, parent 
or caretaker must read, or have read to him or her, the statement 
provided in paragraph (i)(10) of this section (or an alternate 
statement as approved by FNS). In addition, the following sentences (or 
alternate sentences as approved by FNS) must be read:
* * * * *
    (l) Dual participation. The State agency is responsible for the 
following:
    (1) In conjunction with WIC local agencies, the prevention and 
identification of dual participation within each local agency and 
between local agencies under the State agency's jurisdiction, including 
actions to identify suspected instances of dual participation at least 
semiannually. The State or local agency must take follow-up action 
within 120 days of detecting instances of suspected dual participation;
    (2) In areas where a local agency serves the same population as an 
Indian State agency or a CSFP agency, and in areas where geographical 
or other factors make it likely that participants travel regularly 
between contiguous local service areas located across State agency 
borders, entering into an agreement with the other agency for the 
detection and prevention of dual participation. The agreement must be 
made in writing and included in the State Plan;
    (3) Immediate termination from participation in one of the programs 
or clinics for participants found in violation due to dual 
participation; and
    (4) In cases of dual participation resulting from intentional 
misrepresentation, the collection of improperly issued benefits in 
accordance with Sec.  246.23(c)(1) and disqualification from both 
programs in accordance with Sec.  246.12(u)(2).
* * * * *

0
6. In Sec.  246.9, revise paragraph (g) to read as follows:


Sec.  246.9  Fair hearing procedures for participants.

* * * * *
    (g) Continuation of benefits. Participants who appeal the 
termination of benefits within the period of time provided under 
paragraph (e) of this section must continue to receive

[[Page 56731]]

Program benefits until the hearing official reaches a decision or the 
certification period expires, whichever occurs first. This does not 
apply to applicants denied benefits at initial certification, 
participants whose certification period has expired or participants who 
become categorically ineligible for benefits. Applicants who are denied 
benefits at initial certification, or participants who become 
categorically ineligible during a certification period (or whose 
certification period expires), may appeal the denial or termination, 
but must not receive benefits while awaiting the hearing.
* * * * *


Sec.  246.11  [Amended]

0
7. In Sec.  246.11(c)(5), remove the words ``paragraphs (c)(8), (d), 
and (e)'', and add in their place the words ``(c)(7), (d), and (e)''.


Sec.  246.12  [Amended]

0
8. In Sec.  246.12:
0
a. Amend paragraph (f)(2)(iv) by removing the words ``90 days'' 
wherever they appear and by adding in their place the words ``60 
days'';
0
b. Amend paragraph (h)(3)(xx) by removing the reference to ``$10,000'' 
and by adding in its place a reference to ``$25,000''; and
0
c. Amend paragraph (q) by removing the words ``150 days'' and by adding 
in their place the words ``120 days''.

0
9. In Sec.  246.14:
0
a. Add a new sentence at the beginning of paragraph (a)(2);
0
b. Amend the first sentence of paragraph (c)(7) by removing the word 
``rural''; and,
0
c. Revise paragraph (d).
    The addition and revision read as follows:


Sec.  246.14  Program costs.

    (a) * * *
    (2) Program funds may not be used to pay for retroactive benefits. 
* * *
* * * * *
    (d) Costs allowable with approval. The costs of capital 
expenditures exceeding the dollar threshold established in Agency 
policy and guidance are allowable only with the approval of FNS prior 
to the capital investment. These expenditures include the costs of 
facilities, equipment (including medical equipment), automated data 
processing (ADP) projects, other capital assets, and any repairs that 
materially increase the value or useful life of such assets.
* * * * *

0
10. In Sec.  246.15, revise the first sentence of paragraph (b) to read 
as follows:


Sec.  246.15  Program income other than grants.

* * * * *
    (b) * * * The State agency may use current program income (applied 
in accordance with the addition method described in Sec.  3016.25(g)(2) 
of this title) for costs incurred in the current fiscal year and, with 
the approval of FNS, for costs incurred in previous years or subsequent 
fiscal years. * * *


Sec.  246.17  [Amended]

0
11. In Sec.  246.17, remove the words ``150 days'' in paragraph (b)(2), 
and add in their place the words ``120 days''.

0
12. In Sec.  246.20:
0
a. Revise paragraph (b)(1); and,
0
b. Remove paragraph (b)(2), and redesignate paragraph (b)(3) as 
paragraph (b)(2).
    The revision reads as follows:


Sec.  246.20  Audits.

* * * * *
    (b) * * *
    (1) State agencies must obtain annual audits in accordance with 
part 3052 of this title. In addition, States must require local 
agencies under their jurisdiction to obtain audits in accordance with 
part 3052 of this title.
* * * * *


Sec.  246.23  [Amended]

0
13. In Sec.  246.23, amend paragraph (d) by removing the reference to 
``$10,000,'' and by adding in its place a reference to ``$25,000.''

0
14. In Sec.  246.25, revise paragraphs (a)(4), (b) and (c) to read as 
follows:


Sec.  246.25  Records and reports.

    (a) * * *
    (4) All records shall be available during normal business hours for 
representatives of the Department and the Comptroller General of the 
United States to inspect, audit, and copy. Any reports or other 
documents resulting from the examination of such records that are 
publicly released may not include confidential applicant or participant 
information.
    (b) Financial and participation reports.
    (1) Monthly reports. (i) State agencies must submit financial and 
program performance data on a monthly basis, as specified by FNS, to 
support program management and funding decisions. Such information must 
include, but may not be limited to:
    (A) Actual and projected participation;
    (B) Actual and projected food funds expenditures;
    (C) A listing by source year of food and NSA funds available for 
expenditure; and,
    (D) NSA expenditures and unliquidated obligations.
    (ii) State agencies must require local agencies to report such 
financial and participation information as is necessary for the 
efficient management of food and NSA funds expenditures.
    (2) Annual reports. (i) Every year, State agencies must report to 
FNS the average number of migrant farmworker household members 
participating in the Program during a 12-month period of time specified 
by FNS.
    (ii) State agencies must submit itemized NSA expenditure reports 
annually as an addendum to their WIC Program closeout reports, as 
required by Sec.  246.17(b)(2).
    (3) Biennial reports. (i) Participant characteristics report. State 
and local agencies must provide such information as may be required by 
FNS to provide a biennial participant characteristics report. This 
includes, at a minimum, information on income and nutritional risk 
characteristics of participants, information on breastfeeding incidence 
and duration, and participation in the Program by category (i.e., 
pregnant, breastfeeding and postpartum women, infants and children) 
within each priority level (as established in Sec.  246.7(e)(4)) and by 
migrant farmworker households.
    (ii) Civil rights report. Racial and ethnic participation data 
contained in the biennial participant characteristics report will also 
be used to fulfill civil rights reporting requirements.
    (c) Other reports. State agencies must submit reports to reflect 
additions and deletions of local agencies administering the WIC Program 
and local agency address changes as these events occur.
* * * * *

0
15. In Sec.  246.26, revise paragraphs (d) and (g) and add new 
paragraphs (h) and (i) to read as follows:


Sec.  246.26  Other provisions.

* * * * *
    (d) Confidentiality of applicant and participant information.
    (1) WIC purposes.
    (i) Confidential applicant and participant information is any 
information about an applicant or participant, whether it is obtained 
from the applicant or participant, another source, or generated as a 
result of WIC application, certification, or participation, that 
individually

[[Page 56732]]

identifies an applicant or participant and/or family member(s). 
Applicant or participant information is confidential, regardless of the 
original source and exclusive of previously applicable confidentiality 
provided in accordance with other Federal, State or local law.
    (ii) Except as otherwise permitted by this section, the State 
agency must restrict the use and disclosure of confidential applicant 
and participant information to persons directly connected with the 
administration or enforcement of the WIC Program whom the State agency 
determine have a need to know the information for WIC Program purposes. 
These persons may include, but are not limited to: personnel from its 
local agencies and other WIC State or local agencies; persons under 
contract with the State agency to perform research regarding the WIC 
Program, and persons investigating or prosecuting WIC Program 
violations under Federal, State or local law.
    (2) Non-WIC purposes. (i) Use by WIC State and local agencies. Any 
WIC State or local agency may use confidential applicant and 
participant information in the administration of its other programs 
that serve persons eligible for the WIC Program in accordance with 
paragraph (h) of this section.
    (ii) Disclosure to public organizations. The State agency and its 
local agencies may disclose confidential applicant and participant 
information to public organizations for use in the administration of 
their programs that serve persons eligible for the WIC Program in 
accordance with paragraph (h) of this section.
    (3) Child abuse and neglect reporting. Staff of the State agency 
and its local agencies who are required by State law to report known or 
suspected child abuse or neglect may disclose confidential applicant 
and participant information without the consent of the participant or 
applicant to the extent necessary to comply with such law.
    (4) Release forms. Except in the case of subpoenas or search 
warrants (see paragraph (i) of this section), the State agency and its 
local agencies may disclose confidential applicant and participant 
information to individuals or entities not listed in this section only 
if the affected applicant or participant signs a release form 
authorizing the disclosure and specifying the parties to which the 
information may be disclosed. The State or local agency must permit 
applicants and participants to refuse to sign the release form and must 
notify the applicants and participants that signing the form is not a 
condition of eligibility and refusing to sign the form will not affect 
the applicant's or participant's application or participation in the 
WIC Program. Release forms authorizing disclosure to private physicians 
or other health care providers may be included as part of the WIC 
application or certification process. All other requests for applicants 
or participants to sign voluntary release forms must occur after the 
application and certification process is completed.
    (5) Access to information by applicants and participants. The State 
or local agency must provide applicants and participants access to all 
information they have provided to the WIC Program. In the case of an 
applicant or participant who is an infant or child, the access may be 
provided to the parent or guardian of the infant or child, assuming 
that any issues regarding custody or guardianship have been settled. 
However, the State or local agency need not provide the applicant or 
participant (or the parent or guardian of an infant or child) access to 
any other information in the file or record such as documentation of 
income provided by third parties and staff assessments of the 
participant's condition or behavior, unless required by Federal, State, 
or local law or policy or unless the information supports a State or 
local agency decision being appealed pursuant to Sec.  246.9.
* * * * *
    (g) USDA and the Comptroller General. The State agency must provide 
the Department and the Comptroller General of the United States access 
to all WIC Program records, including confidential vendor, applicant 
and participant information, pursuant to Sec.  246.25(a)(4).
    (h) Requirements for use and disclosure of confidential applicant 
and participant information for non-WIC purposes. The State or local 
agency must take the following steps before using or disclosing 
confidential applicant or participant information for non-WIC purposes 
pursuant to paragraph (d)(2) of this section.
    (1) Designation by chief State health officer. The chief State 
health officer (or, in the case of an Indian State agency, the 
governing authority) must designate in writing the permitted non-WIC 
uses of the information and the names of the organizations to which 
such information may be disclosed.
    (2) Notice to applicants and participants. The applicant or 
participant must be notified either at the time of application (in 
accordance with Sec.  246.7(i)(11)) or through a subsequent notice that 
the chief State health officer (or, in the case of an Indian State 
agency, the governing authority) may authorize the use and disclosure 
of information about their participation in the WIC Program for non-WIC 
purposes. This statement must also indicate that such information will 
be used by State and local WIC agencies and public organizations only 
in the administration of their programs that serve persons eligible for 
the WIC Program.
    (3) Written agreement and State plan. The State or local agency 
disclosing the information must enter into a written agreement with the 
other public organization or, in the case of a non-WIC use by a State 
or local WIC agency, the unit of the State or local agency that will be 
using the information. The State agency must also include in its State 
plan, as specified in Sec.  246.4(a)(24), a list of all organizations 
(including units of the State agency or local agencies) with which the 
State agency or its local agencies has executed or intends to execute a 
written agreement. The written agreement must:
    (i) Specify that the receiving organization may use the 
confidential applicant and participant information only for:
    (A) Establishing the eligibility of WIC applicants or participants 
for the programs that the organization administers;
    (B) Conducting outreach to WIC applicants and participants for such 
programs;
    (C) Enhancing the health, education, or well-being of WIC 
applicants or participants who are currently enrolled in such programs, 
including the reporting of known or suspected child abuse or neglect 
that is not otherwise required by State law;
    (D) Streamlining administrative procedures in order to minimize 
burdens on staff, applicants, or participants in either the receiving 
program or the WIC Program; and/or
    (E) Assessing and evaluating the responsiveness of a State's health 
system to participants' health care needs and health care outcomes; and
    (ii) Contain the receiving organization's assurance that it will 
not use the information for any other purpose or disclose the 
information to a third party.
    (i) Subpoenas and search warrants. The State agency may disclose 
confidential applicant, participant, or vendor information pursuant to 
a valid subpoena or search warrant in accordance with the following 
procedures:
    (1) Subpoena procedures. In determining how to respond to a 
subpoena duces tecum (i.e., a subpoena for documents) or other subpoena 
for

[[Page 56733]]

confidential information, the State or local agency must use the 
following procedures:
    (i) Upon receiving the subpoena, immediately notify its State 
agency;
    (ii) Consult with legal counsel for the State or local agency and 
determine whether the information requested is in fact confidential and 
prohibited by this section from being used or disclosed as stated in 
the subpoena;
    (iii) If the State or local agency determines that the information 
is confidential and prohibited from being used or disclosed as stated 
in the subpoena, attempt to quash the subpoena unless the State or 
local agency determines that disclosing the confidential information is 
in the best interest of the Program. The determination to disclose 
confidential information without attempting to quash the subpoena 
should be made only infrequently; and,
    (iv) If the State or local agency seeks to quash the subpoena or 
decides that disclosing the confidential information is in the best 
interest of the Program, inform the court or the receiving party that 
this information is confidential and seek to limit the disclosure by:
    (A) Providing only the specific information requested in the 
subpoena and no other information; and,
    (B) Limiting to the greatest extent possible the public access to 
the confidential information disclosed.
    (2) Search warrant procedures. In responding to a search warrant 
for confidential information, the State or local agency must use the 
following procedures:
    (i) Upon receiving the search warrant, immediately notify its State 
agency;
    (ii) Immediately notify legal counsel for the State or local 
agency;
    (iii) Comply with the search warrant; and,
    (iv) Inform the individual(s) serving the search warrant that the 
information being sought is confidential and seek to limit the 
disclosure by:
    (A) Providing only the specific information requested in the search 
warrant and no other information; and
    (B) Limiting to the greatest extent possible the public access to 
the confidential information disclosed.

0
16. In Sec.  246.27, revise paragraphs (c) and (g) to read as follows:


Sec.  246.27  Program information.

* * * * *
    (c) Alabama, Florida, Georgia, Kentucky, Mississippi, North 
Carolina, South Carolina, Tennessee: U.S. Department of Agriculture, 
FNS, Southeast Region, 61 Forsyth Street, SW., room 8T36, Atlanta, 
Georgia 30303.
* * * * *
    (g) Alaska, American Samoa, Arizona, California, the Commonwealth 
of the Northern Mariana Islands, Guam, Hawaii, Idaho, Nevada, Oregon, 
Washington: U.S. Department of Agriculture, FNS, Western Region, 550 
Kearny Street, room 400, San Francisco, California 94108.

    Dated: August 30, 2006.
Kate Coler,
Deputy Under Secretary, Food, Nutrition, and Consumer Services.

    Note: This appendix will not be published in the Code of Federal 
Regulations.

Appendix:

    Regulatory Impact Analysis
    Title: 7 CFR 246: Special Supplemental Nutrition Program for 
Women, Infants and Children (WIC): Miscellaneous Provisions
    a. Nature: Final Rule.
    b. Need: This final rule amends a number of existing provisions 
in the WIC program regulations to (1) address issues raised by WIC 
State agencies and other members of the WIC community; (2) address 
recommendations made by the United States Government Accountability 
Office (GAO); (3) incorporate certain longstanding program policies 
and State agency practices into the regulations; and (4) streamline 
certain requirements in the regulations.
    In particular, this rulemaking streamlines the Federal 
requirements for financial and participation reporting by State 
agencies, and clarifies the requirements pertaining to the 
confidentiality of WIC information in order to strengthen 
coordination with public organizations and private physicians. It 
also incorporates longstanding program policies and State agency 
practices into the regulations regarding State agency responses to 
subpoenas and other court-ordered requests for confidential 
information. Other provisions in this final rule are designed to 
improve eligibility determinations, incorporating program policies 
and State agency practices that have been in effect for some time.
    These changes are intended to reinforce program policies and 
State agency practices that strengthen services to WIC participants, 
improve program administration, and increase State agency 
flexibility in managing the program. Many of these provisions are 
options the State agency may choose to implement in operating the 
program.
    c. Affected Parties: The parties affected by this regulation are 
the USDA-FNS, State and local WIC agencies, WIC participants, and 
potentially eligible applicants.
    Cost-Benefit Assessment: Most of the provisions in this rule are 
generally economically insignificant to the costs or overall 
operations of the WIC program. Some of the provisions are already 
current practice in many states, while others are presented as 
optional changes at the State level. The potential effects of these 
provisions are highlighted in the accompanying table. As a whole, 
this rule serves to streamline program administration and clarify 
program requirements while minimizing economic and administrative 
burdens.
    Two provisions in this final rule may have a notable financial 
impact; both are found within Sec.  246.7 Basic Certification 
Procedures:
    (1) Prohibits the use of ``possibility of regression'' for 
consecutive certifications and clarifies priority level requirements 
based on regression:
    Currently, State agencies are not required to limit the number 
of certifications per participant based on regression, although some 
States do have limits in place. According to data from the 2002 WIC 
Program and Participant Characteristics (PC) report, a maximum of 
0.9% of all WIC participants are certified based on regression as 
their sole nutritional risk. Assuming that this is a relatively 
constant proportion of participants over time, approximately 74,000 
WIC participants were certified based on regression in 2004. 
According to PC data, children comprise a majority of the 
participants who are certified with regression as the sole 
nutritional risk. We do not have any data to indicate how many 
participants are recertified on this basis.
    If each of those 74,000 participants was certified with 
regression as the only nutritional risk factor for more than one 
consecutive certification period, the food and administrative costs 
to the WIC program could reach as high as $3.8 million for one 
month. Assuming that all of these participants would be recertified 
for a six-month period, the proposed rule could save over $20 
million and reduce participation by over 70,000 in the six-month 
period. However, given that ``possibility of regression'' is rarely 
used as a sole basis of nutrition risk, and that if they do regress, 
participants would become certified again, significant savings are 
unlikely.
    (2) Provides states with the option to extend certification 
periods for all participant categories until the end of the last 
month; also provides option to extend breastfeeding woman's 
certification period up to the infant's first birthday or until the 
woman ceases to breastfeed:
    Currently, states may extend a child's certification period 
through the last day of the month in which the six-month 
certification ends. Certification periods for all other participant 
categories must end on various dates throughout the month, depending 
on the initial certification date. This provision will give states 
the option to extend certification periods for all participant 
categories through the last day of the month in which the 
certifications end.
    This extension is offered in order to streamline administrative 
procedures and make certification periods for the various 
participant categories more consistent. States may incur an initial 
expense if their MIS systems are not compatible with this change; 
reliable data is not currently available on how many states may 
choose this option and/or how many states may need MIS upgrades as a 
result.
    As certification periods are extended, food costs naturally 
increase. According to 2002

[[Page 56734]]

WIC PC data, this extension would add an average of 15 days worth of 
food benefits for each woman or infant participant. For this 
analysis, the assumption was made that this increased cost would be 
realized only when participants exit the program. The nonchildren 
categories most likely not to recertify (thus exiting the program) 
include: breastfeeding women; postpartum, non-breastfeeding women; 
and about 31% of infants \1\. Therefore, the extra food package 
costs for breastfeeding women, postpartum/non-breastfeeding women, 
and 31% of infants (i.e.) the infants who do not recertify as 
children) were calculated based on PC 2002 participation data and 
current food package cost estimates. The annual cost for the 
additional supplemental food benefits (approximately 15 days per 
participant) to the three categories of participants mentioned above 
totals over $25 million. The actual cost will likely be much lower, 
as this total assumes that all State agencies will adopt this 
optional provision.
---------------------------------------------------------------------------

    \1\ Based on PC data and FNS administrative data from 1996-2002, 
approximately 31% of WIC infants do not recertify as children.
---------------------------------------------------------------------------

    Currently, states may certify breastfeeding women for intervals 
of six months, until the breastfed infant's first birthday. This 
provision would give State agencies the option to extend the 
certification period for one full year. Since this provision is 
entirely optional, the number of states who would change their 
certification procedures is unknown. It is assumed that most women 
who continue to breastfeed longer than six months are already being 
recertified for the second six-month period; therefore this extended 
certification period is not likely to have a major impact on either 
program participation among breastfeeding women or on program costs.

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                          Final rule effects
                                                                                  on:
          Current rule               Proposed rule        Final rule     --------------------   State agencies      Local agencies       Participants
                                                                               USDA-FNS
--------------------------------------------------------------------------------------------------------------------------------------------------------
Sec. 246.2 Definitions..........  Sec. 246.2          Sec. 246.2
                                   Definitions.        Definitions.
No current provision on           Adds new            Adds new            No effect.........  If electronic       If electronic       No effect.
 electronic signatures.            definitions of      definitions of                          signatures are      signatures are
                                   ``sign or           ``sign or                               adopted, may        adopted, may
                                   signature'' and     signature'' and                         assist with         reduce the burden
                                   ``electronic        ``electronic                            streamlining        of paper file
                                   signature'';        signature'' as                          program             storage in Local
                                   State agencies      proposed, but                           operations and      agency offices.
                                   may use             also adds                               ease future
                                   electronic          ``employee fraud                        transition to
                                   signatures if       and abuse'' and                         EBT. Several
                                   reliability and     ``7 CFR part                            State agencies
                                   integrity assured.  3017'' and                              are already
                                                       ``State.''.                             utilizing
                                                                                               electronic
                                                                                               signatures.
Sec. 246.4(a) State Plan          Sec. 246.4(a)       Sec. 246.4(a)
 Requirements.                     State Plan          State Plan
                                   Requirements.       Requirements.
No current provisions requiring   Technical           Same as proposed    No effect.........  This provision      No effect.........  No effect.
 State Plan amendments             requirements        and additional                          will lead to a
 reflecting requirements of the    associated with     provisions on                           minimal increase
 new rule.                         changes described   proof of                                in time necessary
                                   below.              pregnancy and                           to revise the
                                                       universal                               State plan. The
                                                       identifiers; also                       increase will
                                                       added is language                       likely be a one-
                                                       revising the                            time event as
                                                       proposed State                          state officials
                                                       Plan provisions                         add the new
                                                       on conflict of                          provisions to the
                                                       interest and                            current State
                                                       separation of                           plan.
                                                       duties.
Conflict of Interest............  Sec. 246.4(a)(25)   Sec. 246.4(a)(25)
                                   Conflict of         Conflict of
                                   Interest/           Interest/
                                   Separation of       Separation of
                                   Duties.             Duties.
No current provision, but 8/99    Requires State      Same as proposed    No effect.........  This provision may  Compliance with     No effect.
 GAO report recommends policy on   agencies to         and separation of                       lead to an          this provision
 local agency staff conflict of    implement           duties clarified                        initial need for    may require minor
 interest.                         policies and        to permit a local                       State officials     administrative/
                                   procedures to       agency employee                         to ensure that      staffing changes
                                   prevent conflicts   to take part in                         new rules are       at the local
                                   of interest         the certification                       understood and      level. Many lcal
                                   within local        process and issue                       are being           agencies already
                                   agency staffs,      benefits if at                          implemented at      have a plan for
                                   and to implement    least one other                         the local level.    separation of
                                   separation of       employee is                             Many State          duties and will
                                   duties.             involved in the                         agencies already    not be affected.
                                                       process.                                have a similar
                                                                                               provision in
                                                                                               place.

[[Page 56735]]

 
Participant/Employee Fraud/Abuse  Sec. 246.4(a)(26)   Sec. 246.4(a)(26)
                                   Participant or      Participant or
                                   Employee Fraud      Employee Fraud
                                   and Abuse.          and Abuse.
No current provision, but 8/99    Requires the State  Same as proposed;   No effect.........  This provision may  This provision may  No effect.
 GAO report recommends data        agency assurance    also, definition                        lead to a minor     lead to a
 collection on participant and     of a system(s) in   of ``employee                           increase in         negligible
 staff fraud/abuse.                place at the        fraud and abuse''                       administrative      increase in
                                   local level to      added, as noted                         effort on the       administrative
                                   collect             above.                                  State level to      effort at the
                                   information on                                              incorporate the     local agency, due
                                   fraud/abuse by                                              tracking of fraud/  to formal
                                   employees and                                               abuse into          reporting
                                   participants.                                               current data        requirements to
                                                                                               collection          the State. In
                                                                                               mechanisms. This    most cases, local
                                                                                               increased effort    agencies are
                                                                                               may be              already reporting
                                                                                               counterbalanced     cases of fraud/
                                                                                               by more efficient   abuse to the
                                                                                               handling of fraud/  State agency.
                                                                                               abuse cases and
                                                                                               ultimately
                                                                                               streamline
                                                                                               program
                                                                                               administration.
Sec. 246.5 Selection of New       Sec. 246.5          Sec. 246.5
 Local Agency.                     Selection of New    Selection of New
                                   Local Agency.       Local Agency.
Requires States to fund new       Deletes             Same as proposed..  No effect.........  The provision will  This provision may  This provision may
 local agencies only in the        requirement for                                             enhance State       allow new local     expedite the
 order of need.                    states to fund                                              agency              agencies to be      availability of
                                   new local                                                   flexibility in      authorized more     services to
                                   agencies only in                                            funding new         readily.            populations in
                                   the order of need.                                          agencies.                               areas where need
                                                                                                                                       exists, but not
                                                                                                                                       at the highest
                                                                                                                                       level.
Sec. 246.7 Basic Certification    Sec. 246.7 Basic    Sec. 246.7 Basic
 Procedures.                       Certification       Certification
                                   Procedures.         Procedures.
State agencies may use State or   State agencies      Same as proposed..  This provision      This provision may  This provision may  This provision
 local income guidelines instead   must use the WIC                        will assist in      initially           necessitate that    will promote
 of the Federal guidelines.        regulatory income                       streamlining WIC    increase            a few local         equal
                                   and family                              funding paperwork   administrative      agencies adopt/     consideration of
                                   definitions and                         at the Federal      burden in State     learn new           applicant
                                   exclusions.                             level,              agencies that are   standards for       eligibility
                                                                           particularly in     not currently       income              nationwide.
                                                                           USDA-FNS Regional   following these     certification.
                                                                           Offices.            guidelines. Any     Most local
                                                                                               initial burden is   agencies are in
                                                                                               expected to be      states where
                                                                                               short-lived. Many   these guidelines
                                                                                               State agencies      are already in
                                                                                               are already         effect; thus no
                                                                                               following these     effect is
                                                                                               guidelines and      expected in those
                                                                                               will experience     agencies.
                                                                                               no effect.
No current provision in           Short-term, non-    Excludes loans to   No effect.........  No effect.........  No effect.........  This provision may
 regulations on short-term, non-   secured loans are   which the                                                                       allow a minor
 secured loans.                    added to the list   applicant does                                                                  increase in
                                   of income           not have constant                                                               participant
                                   exclusions.         or unlimited                                                                    eligibility for
                                                       access.                                                                         program benefits.

[[Page 56736]]

 
No current provision on proof of  Provides State      Same as proposed    No effect.........  This provision is   Many Local          This provision
 pregnancy.                        agencies the        except that proof                       optional for        agencies will       will require
                                   option to require   may be required                         State agencies;     experience no       pregnant
                                   proof of            when the                                thus some State     effect, since the   applicants to the
                                   pregnancy.          pregnancy is not                        agencies will       provision is        WIC program to
                                                       visibly                                 experience no       optional. If the    provide proof of
                                                       noticeable and no                       effect. For those   provision is        pregnancy, but
                                                       documentation of                        State agencies      adopted at the      only in States
                                                       proof is                                choosing to adopt   state level,        choosing to adopt
                                                       available at                            the provision, a    Local agencies      this optional
                                                       certification.                          minimal increase    may experience a    provision.
                                                                                               in effort may be    minimal increase
                                                                                               necessary in        in time spent
                                                                                               providing           certifying
                                                                                               guidance and        pregnant
                                                                                               monitoring the      applicants.
                                                                                               Local agencies.
State agency not required to      Prohibits the use   Same as proposed    This provision      This provision      This provision      This provision
 limit the number of               of ``possibility    and priority        could result in     will allow State    will allow Local    will limit
 certifications based on           of regression''     levels clarified    an estimated        WIC agency          WIC agency          benefits for WIC
 regression.                       for consecutive     for                 maximum decline     resources           resources           participants who
                                   certifications.     certifications      of 0.9% of          (funding, staff     (funding, staff     do not maintain
                                                       based on            participation,      time) to be         time) to be         any nutrition
                                                       regression.         equaling about      directed toward     directed toward     risk factors
                                                                           74,000 people.      higher-risk         higher-risk         beyond
                                                                           Given the 2004      participants.       participants.       ``possibility of
                                                                           average food and    Many State          Many Local          regression.''
                                                                           administrative      agencies will       agencies will
                                                                           cuts, this          experience no       experience no
                                                                           decline in          effect, since       effect since they
                                                                           participation       they already have   already have this
                                                                           could result in     this provision in   provision in
                                                                           savings of          place. Only about   place. Only about
                                                                           approximately $20   0.9% (max.) of      0.9% (max.) of
                                                                           million per year.   WIC participants    WIC participants
                                                                           Savings of this     are certified on    are certified on
                                                                           magnitude are       regression, so an   regression alone,
                                                                           highly unlikely,    overall impact is   so an overall
                                                                           given the nearly    relatively small.   impact is
                                                                           impossible                              relatively small.
                                                                           circumstances
                                                                           that must be met.
Certification periods for some    Certification       Same as proposed    These provisions    These provisions    If State agencies   This provision
 categories of participants--      periods for all     and certification   will potentially    will assist in      adopt these         relieves
 breastfeeding women and           participant         for breastfeeding   increase annual     streamlining        options, Local      breastfeeding
 children--end at the end of a     categories are      women may be        program costs by    program             agencies will       women of one
 month; the certification          extended to the     extended up to      over $25 million    administration at   experience more     recertification
 periods for all other             end of the last     the infant's        if every state      the state level     streamlined         visit to the
 categories of participants may    month.              first birthday,     chooses to extend   by providing        certification       local WIC clinic.
 end at any time during a month,                       or until the        benefits until      State agencies      procedures, due     In addition, all
 which may result in prorated                          woman ceases to     the last day of     the option to       to the              participants may
 benefits.                                             breastfeed,         the last month.     align               consistency of      receive extra
                                                       whichever occurs    These provisions    certification       certification       benefits,
                                                       first.              are optional at     periods for ease    periods ending on   according to the
                                                                           the state level;    of tracking.        the last day of     proximity of
                                                                           thus the total      States choosing     the month. Local    their
                                                                           financial impact    to extend           agencies will       certification
                                                                           may be limited.     certification       also not have to    dates to the end
                                                                                               periods will        complete the        of the month.
                                                                                               experience          paperwork
                                                                                               increased food      necessary to
                                                                                               and                 recertify
                                                                                               administrative      breastfeeding
                                                                                               costs according     women at six-
                                                                                               to their            month intervals.
                                                                                               caseloads.

[[Page 56737]]

 
Requires disqualification if      Requires            Same as proposed,   This provision has  This provision may  This provision may  This provision
 reassessment of program           reassessment of     except that the     the potential to    assist State        assist Local        will reduce
 eligibility is conducted mid-     income              reassessment is     reduce total        agencies with       agencies with       benefits for
 certification.                    eligibility mid-    not required if     program costs       directing           directing           those
                                   certification       sufficient time     nationally by not   resources toward    resources toward    participants who
                                   based on new        does not exist to   providing           participants with   participants with   become ineligible
                                   information, and    effect the          benefits to         a higher need,      a higher need,      based on an
                                   disqualification    change;             ineligible          rather than         rather than         increased income;
                                   if over-income.     ``sufficient        participants.       providing           providing           however,
                                                       time'' means 90     However, the        benefits to         benefits to         information
                                                       days prior to the   dollar amount       participants who    participants who    regarding changes
                                                       expiration of the   saved is likely     are ineligible.     are ineligible.     in income level
                                                       certification       to be minimal,      This provision                          would have to be
                                                       period.             given the limited   may also lead to                        brought to the
                                                                           number of people    a minimal                               attention of WIC
                                                                           affected.           increase in                             staff.
                                                                                               administrative
                                                                                               burden at the
                                                                                               state level.
State agency may not deviate      State agencies are  Same as proposed..  No effect.........  This provision is   This provision      This provision
 from the mandated Participant     permitted to use                                            optional; many      will enable Local   increases the
 Rights and Responsibilities       simpler language.                                           State agencies      agencies to have    likelihood that
 language.                                                                                     will experience     flexibility in      more participants
                                                                                               no effect. For      communicating       will have a full
                                                                                               those states        Rights and          understanding of
                                                                                               choosing to use     Responsibilities    their Rights and
                                                                                               more simple         to participants.    Responsibilities.
                                                                                               language, a small   Since the
                                                                                               amount of time      provision is
                                                                                               will be necessary   optional, many
                                                                                               initially to        Local agencies
                                                                                               develop, test,      will experience
                                                                                               and disseminate     no effect.
                                                                                               the language.
246.9(g) Continuation of          Sec. 246.9(g)       Sec. 246.9(g)
 Benefits.                         Continuation of     Continuation of
                                   Benefits.           Benefits.
Does not prohibit the             Prohibits           Same as proposed..  This provision may  This provision      This provision      Participants who
 continuation of benefits when a   participants who                        result in very      allows State        allows Local        become ineligible
 participant becomes ineligible    become                                  minimal food cost   agencies to         agencies to         while awaiting a
 while awaiting a hearing          categorically                           savings at the      direct resources    direct resources    hearing decision
 decision on other matters.        ineligible from                         national level.     to eligible         to eligible         will no longer
                                   continuing to                           Reliable            participants,       participants,       receive benefits.
                                   receive program                         estimates of        rather than         rather than
                                   benefits while                          these savings are   participants who    participants who
                                   awaiting a                              not available       may not be          may not be
                                   hearing decision.                       because of          actually be         actually be
                                                                           limited             eligible to         eligible to
                                                                           information on      receive benefits.   receive benefits.
                                                                           the number of
                                                                           participants
                                                                           affected.
Sec. 246.12(h)(3)(xx) &           Sec.                Sec.
 246.23(d) Claims/Penalties.       246.12(h)(3)(xx)    246.12(h)(3)(xx)
                                   & 246.23(d)         & 246.23(d)
                                   Claims/Penalties.   Claims/Penalties.
Maximum fine for criminal fraud   No revision         Maximum fine for    No effect.........  No effect.........  No effect.........  No effect.
 is $10,000.                       proposed.           criminal fraud
                                                       raised to $25,000
                                                       per non-
                                                       discretionary
                                                       requirement of an
                                                       amendment to the
                                                       National School
                                                       Lunch Act.

[[Page 56738]]

 
Sec. 246.14 Use of Program Funds  Sec. 246.14 Use of  Sec. 246.14 Use of
                                   Program Funds.      Program Funds.
No current provision on           Prohibits use of    Same as proposed..  No effect.........  No effect is        No effect.........  No effect.
 retroactive benefits.             program funds to                                            expected since it
                                   provide                                                     is not current
                                   retroactive                                                 practice to
                                   benefits to                                                 provide
                                   participants.                                               retroactive WIC
                                                                                               benefits.
Only allows use of program funds  Allows use of       Same as proposed..  No effect.........  State agencies      This provision      This provision may
 for transportation in rural       program funds to                                            will need to        will give Local     allow greater
 area.                             provide                                                     balance Local       agencies the        access to WIC
                                   transportation to                                           agency requests     flexibility to      benefits for
                                   and from WIC                                                for approval with   provide             eligible persons
                                   offices in non-                                             the need for        transportation to   in urban areas.
                                   rural as well as                                            funds in other      both urban and
                                   rural areas.                                                areas of program    rural WIC
                                                                                               administration.     clients, subject
                                                                                                                   to prior approval
                                                                                                                   of the State
                                                                                                                   agency based on
                                                                                                                   documentation
                                                                                                                   that such service
                                                                                                                   would be
                                                                                                                   essential for
                                                                                                                   program access.
Sec. 246.14, 15, 17 Funding       Sec. 246.14, 15,    Sec. 246.14, 15,
 Issues.                           17 Funding Issues.  17 Funding Issues.
Sec. 246.14(d) requires prior     Sec. 246.14(d)      Same as proposed..  This provision may  This provision may  No effect.........  No effect.
 approval for the costs of ADP     codifies the                            decrease            decrease
 systems and management studies.   actual practice                         administrative      administrative
                                   of deleting prior                       burden by           burden by
                                   approval for                            reducing time/      reducing time/
                                   costs of                                paperwork           paperwork
                                   management                              involved in         involved in
                                   studies.                                granting approval   requesting
                                   Continues the                           for the stated      approval for the
                                   actual practice                         costs.              stated costs.
                                   of requiring
                                   prior approval of
                                   capital
                                   expenditures
                                   exceeding the
                                   dollar threshold
                                   established in
                                   agency policy,
                                   including ADP.
Sec. 246.14(d) requires prior     Dollar threshold    Same as proposed..  No effect, as FNS   No effect, as FNS   No effect.........  No effect.
 approval for capital              for prior                               policy and          policy and
 expenditures over $2,500.         approval of                             guidance is         guidance is
                                   capital                                 current practice.   current practice.
                                   expenditures is
                                   deleted from Sec.
                                   246.14, designing
                                   FNS policy and
                                   guidance as the
                                   new reference for
                                   this, as per
                                   actual practice.
Sec. 246.15(b) is currently       Sec. 246.15(b)      Same as proposed..  No effect, as the   No effect, as the   No effect.........  No effect.
 silent on the addition method     codifies actual                         addition method     addition method
 of applying program income,       practice of using                       is current          is current
 although 7 CFR 3016 allows this   the addition                            practice.           practice.
 if stated in program              method of
 regulations.                      applying program
                                   income.

[[Page 56739]]

 
Sec 246.17 provides for a 150-    Sec. 246.17(b)(2)   Same as proposed..  This provision      This provision      No effect.........  No effect.
 day reporting cycle.              reduces food                            will provide        will provide
                                   instrument                              greater             greater
                                   closeout cycle                          efficiency in       efficiency in
                                   from 150 to 120                         financial           financial
                                   days.                                   administrative at   administration at
                                                                           the regional and    the state level.
                                                                           national level.
Sec. 246.20, 246.25 Audits/       Sec. 246.20,        Sec. 246.20,
 Reporting.                        246.25 Audits/      246.25 Audits/
                                   Reporting.          Reporting.
Sec. 246.20(b)(1) refers to a     Sec. 246.20(b)(1)   Same as proposed..  No effect.........  No effect.........  No effect.........  No effect.
 dated citation.                   refers to the
                                   current citation.
Sec. 246.25(b)(1) requiems        Sec. 246.25(b)(1)   Same as proposed,   This provision may  This provision may  This provision may  No effect.
 monthly reporting of certain      no longer           except deletes      streamline the      reduce              reduce
 information on participation,     requires itemized   proposed            process of          administrative      administrative
 administrative funds, and local   NSA expenditures    requirement for     information         burden by           burden by
 agencies.                         or the number of    reporting on cash   collection at the   reducing the        reducing the
                                   persons on wait     allowances          regional level.     amount of           amount of
                                   lists to be         exceeding three                         information that    information that
                                   reported on a       days.                                   must be formally    must be formally
                                   monthly basis.                                              submitted monthly.  submitted monthly.
Under Sec. 246.25(b)(3) and (c),  Sec. 246.25(b)(2)   Same as proposed..  No effects; the     No effect; the      No effect; the      No effect.
 FNS required certain              codifies annual                         annual of           annual or           annual or
 participation, Civil Rights,      or biennial                             biennial data       biennial data       biennial data
 and local agency data on a        reporting of this                       reporting is        reporting is        reporting is
 quarterly basis.                  data, but                               current practice.   current practice.   current practice.
                                   requires change
                                   of local agency
                                   information
                                   whenever such
                                   change occurs, as
                                   per actual
                                   practice.
Sec. 246.26 Confidentiality.....  Sec. 246.26(d)-(i)  Sec. 246.26(d)-(i)
                                   Confidentiality.    Confidentiality.
Pertains only to information       Clarifies that     Same as proposed..  No effect.........  No effect.........  No effect.........  No effect.
 obtained from participants and    all information
 applicants.                       about a
                                   participant or
                                   applicant is
                                   protected.
Information may be shared with    Clarifies that      Same as proposed;   No effect.........  This provision may  This provision may  This provision may
 persons directly administering    another State or    preamble                                enhance             enhance             allow
 or enforcing WIC, health and      local agency has    clarifies that                          collaboration       collaboration       participants to
 welfare programs, and the         access to           persons                                 between programs    between programs    receive enhanced
 Comptroller General.              confidential        administering or                        at the state        at the local        services through
                                   applicant or        enforcing WIC                           level.              level.              program
                                   participant         includes WIC IT                                                                 collaboration.
                                   information.        staff, contract
                                                       Single Audit
                                                       staff, and WIC
                                                       contractor bank
                                                       staff.

[[Page 56740]]

 
State option for information-     Allows information  Same as proposed;   No effect.........  This provision may  This provision may  This provision may
 sharing agreements with           sharing with        preamble                                enhance             enhance             allow
 ``health or welfare'' programs;   public              clarifies that                          collaboration       collaboration       participants to
 shared information may only be    organizations       MOU may permit                          between programs    between programs    receive enhanced
 used for eligibility and          other than health   information                             as the state        at the local        services through
 outreach.                         and welfare, and    sharing with                            level.              level.              program
                                   for purposes        Child Protective                                                                collaboration,
                                   other than          Services upon                                                                   while remaining
                                   eligibility in      request if WIC                                                                  assured that
                                   other programs      suspects abuse,                                                                 confidential
                                   and outreach; the   and public                                                                      information is
                                   additional          organization                                                                    not being
                                   allowed purposes    includes non-WIC                                                                misused.
                                   include (1)         public agencies,
                                   enhancing the       but not law
                                   health, education   enforcement or
                                   and well-being of   researchers.
                                   participants and
                                   applicants, (2)
                                   streamlining
                                   administrative
                                   procedures, and
                                   (3) evaluating
                                   the State's
                                   health system.
Allows the sharing of WIC          Allows a WIC       Same as proposed..  No effect.........  No effect.........  No effect.........  No effect.
 information through agreements    State/local
 with other programs               agency to share
 administered by the State/local   information
 agency.                           through written
                                   agreements with
                                   its other
                                   programs.
No current provision in           Allows the use of   Same as proposed..  No effect.........  This provision may  This provision may  No effect.
 regulations. FNS Instruction      signed release                                              streamline and      streamline and
 800-1 requires that information   forms from                                                  provide             provide
 to private parties such as        applicants and                                              consistency to      consistency to
 physicians must be through        participants as                                             the consent         the consent
 written consent obtained after    part of the WIC                                             process. This       process.
 certification.                    application and                                             provision is
                                   certification                                               optional at the
                                   process in order                                            state level.
                                   to share
                                   information with
                                   private doctors.
No current provision in           Clarifies that      Same as proposed;   No effect.........  No effect; a        No effect; a        No effect; a
 regulations. FNS Instruction      State and local     additional                              current FNS         current FNS         current FNS
 800-1 permits reporting on        agency staffs are   clarification                           instruction         instruction         instruction
 child abuse.                      permitted to        added regarding                         allows reporting    allows reporting    allows reporting
                                   share information   information-                            of child abuse.     of child abuse.     of child abuse.
                                   to comply with      sharing with
                                   required            Child Protective
                                   reporting of        Authorities as
                                   known or            noted above with
                                   suspected child.    respect to public
                                                       organizations.
Required notification to          Requires            Same as proposed..  No effect.........  No effect.........  No effect.........  No effect.
 participant/applicant at          notification to
 certification on how              participant or
 confidential information will     applicant at
 be shared.                        certification or
                                   later on how
                                   confidential
                                   information will
                                   be shared for non-
                                   WIC purposes.

[[Page 56741]]

 
No current provision in the       Requires State/     Same as proposed    No effect.........  No effect.........  No effect.........  No effect.
 regulations. Policy Memorandum    local agency to     and clarifies in
 94-3 addresses subpoenas and      consult with        the final rule
 search warrants.                  legal counsel on    that no attempt
                                   subpoenas and       is needed to
                                   comply with         quash a subpoena
                                   search warrants.    if it is
                                                       withdrawn through
                                                       the courts.
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[FR Doc. 06-7875 Filed 9-26-06; 8:45 am]
BILLING CODE 3410-30-P