70134 Federal Register / Vol. 65, No. 225 / Tuesday, November 21, 2000 / Rules and Regulations

DEPARTMENT OF AGRICULTURE

Food and Nutrition Service

7 CFR Parts 272, 273, 274, and 277

[Amendment No. 388]

RIN 0584–AC40

Food Stamp Program: Noncitizen

Eligibility, and Certification Provisions

of Pub. L. 104–193, as Amended by

Public Laws 104–208, 105–33 and 105–

185

AGENCY: Food and Nutrition Service,

USDA.

ACTION: Final rule.

SUMMARY: This rule finalizes a proposed

rule published February 29, 2000,

amending Food Stamp Program

(Program) regulations to implement

several provisions of the Personal

Responsibility and Work Opportunity

Reconciliation Act of 1996 (PRWORA),

and subsequent amendments to these

provisions made by the Omnibus

Consolidated Appropriations Act of

1996 (OCAA), the Balanced Budget Act

of 1997 (BBA), and the Agricultural

Research, Extension, and Education

Reform Act of 1998 (AREERA). This

action finalizes options related to

matching activities, fair hearings and

recipient services. This action finalizes

provisions which would increase State

agency flexibility in processing

applications for the Program and allow

greater use of standard amounts for

determining deductions and selfemployment expenses. This action also

finalizes revisions to the requirements

for determining alien eligibility and the

eligibility and benefits of sponsored

aliens, and requires certain transitional

housing payments and most State and

local energy assistance to be counted as

income, excludes the earnings of

students under age 18 from income, and

requires proration of benefits following

any break in certification.

Other provisions of this final action

establish ground rules for implementing

the Simplified Food Stamp Program,

allow State agencies options to issue

partial allotments for households in

treatment centers, count all, part, or, in

some cases, none of the income of an

ineligible alien in determining the

benefits of the rest of the household,

issue combined allotments to certain

expedited service households, and

certify elderly or disabled households

up to 24 months and other households

up to 12 months. The action also

finalizes several changes to existing

regulations in response to the

President’s reform initiative to remove

overly prescriptive, outdated, and

unnecessary regulatory provisions.

The rule also makes final the

proposals to add vehicles to the assets

which may be covered under the

inaccessible resources provisions of the

Food Stamp Act of 1977, clarifies the

procedures for shortening or

lengthening a certification period, and

makes a change to exclude from income

on-the-job training payments received

under the Summer Youth Employment

and Training Program as required by

Section 702 of the Workforce

Investment Act (Pub. L. 102–367,

originally known as the Job Training

Reform Amendments of 1992).

DATES: Effective Date: This final rule is

effective January 20, 2001, except for the

amendment to § 273.2(b)(4)(iv) which is

effective August 1, 2001, and the

amendments specified in items 2 and 3

below which are not effective until

Office of Management and Budget

(OMB) approval of an associated

information collection burden. The

Food and Nutrition Service will publish

a document in the Federal Register

announcing the effective date of these

amendments after approval of the

information collection requirements by

OMB.

Implementation Dates: 

1. State agencies may implement the

following amendments at their

discretion at any time on or after the

effective date: § 272.8; § 272.11(a);

§ 273.2(f)(9)(i); § 273.2(f)(10);

§ 273.2(j)(2)(ii); § 273.9(d)(6)(i);

§ 273.9(d)(6)(iii)(E); § 273.11(a)(3)(v);

§ 273.12(a)(1)(vii); § 273.25; and

§ 277.4(b).

2. State agencies may implement the

following amendment at their discretion

at any time on or after the effective date

established by OMB approval of the

associated information collection

burden: § 273.12(f)(4).

3. State agencies must implement the

following amendments no later than 180

days after the effective date established

by OMB approval of the associated

information collection burden for all

households newly applying for Program

benefits. State agencies must convert

current caseloads no later than the next

recertification following the

implementation date: § 273.2(c)(2)(i),

§ 273.2(e)(1), § 273.2(e)(2)(i),

§ 273.2(e)(2)(ii), § 273.2(e)(3),

§ 273.4(c)(3)(iv); and § 273.12(c)(3).

4. State agencies must implement the

amendment to § 273.2(b)(4)(iv) no later

than August 1, 2001, for all households

newly applying for Program benefits.

5. State agencies must implement all

other amendments no later than June 1,

2001, for all households newly applying

for Program benefits. State agencies

must convert current caseloads no later

than the next recertification following

the implementation date.

FOR FURTHER INFORMATION CONTACT:

Patrick Waldron, Program Analyst,

Certification Policy Branch, Program

Development Division, Food and

Nutrition Service, USDA, 3101 Park

Center Drive, Room 800, Alexandria,

Virginia, 22302, (703) 305–2805 or email at Patrick.Waldron@fns.usda.gov.

SUPPLEMENTARY INFORMATION:

Executive Order 12866

This final rule has been determined to

be economically significant and was

reviewed by the Office of Management

and Budget in conformance with

Executive Order 12866.

Executive Order 13132

Federalism Summary Impact Statement

Executive Order 13132 requires

Federal agencies to consider the impact

of their regulatory actions on State and

local governments. FNS has considered

the impact on State agencies. For the

most part, this rule deals with changes

required by law, and implemented by

law in 1996. However, the Department

has made discretionary changes to

preserve client protections that existed

in the regulations prior to the effective

date of this rule and to facilitate the

participation of eligible low-income

households, particularly households

with wage earners. These changes

primarily affect food stamp recipients.

The effects on State agencies are

moderate. In some instances, the

changes relieve State agencies of

administrative burdens. In other

instances, the changes result in modest

increases in administrative burdens.

However, we balanced these increases

in State agency burden against the need

to preserve and enhance Program access

to eligible low-income families and

individuals. This rule is intended to

have preemptive effect on any State law

that conflicts with its provisions or that

would otherwise impede its full

implementation. Generally, PRWORA

and other federal statutes required many

of the changes made in this rule, and

made most of them effective on

enactment and all of them effective

prior to the publication of this rule. FNS

is not aware of any case where the

discretionary provisions of the rule

would preempt State law.

Prior Consultation With State Officials

Before drafting this rule, we received

input from State agencies at various

times. Because the Program is a Stateadministered, federally funded program,

Federal Register / Vol. 65, No. 225 / Tuesday, November 21, 2000 / Rules and Regulations 70135

our regional offices have formal and

informal discussions with State and

local officials on an ongoing basis.

These discussions involve

implementation and policy issues. This

arrangement allows State agencies to

provide feedback that forms the basis for

many discretionary decisions in this

and other Program rules. In addition,

FNS officials attend regional, national,

and professional conferences to discuss

issues and receive feedback from State

officials at all levels. Lastly, the

comments on the proposed rule from

State officials were carefully considered

in drafting this final rule.

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). Shirley R. Watkins,

Under Secretary for Food, Nutrition and

Consumer Services, has certified that

this rule will not have a significant

economic impact on a substantial

number of small entities. State and local

welfare agencies will be the most

affected to the extent that they

administer the Program.

Paperwork Reduction Act

The information collection

requirements affected by the issuance of

this final rule are or will be contained

within the following OMB numbers,

0584–0064, 0584–0083, and 0584–0496.

Some requirements are already

approved. There are others about which

we are seeking comment. Those will not

become effective until approved by

OMB.

Current Information Burden (ICB)

Approval

The information collection

requirements governing State agency

administration and management

described in the final rule at Part 272

have been eliminated, made optional or

significantly modified as a result of

implementation of certain provisions of

the PRWORA amending the Program.

Therefore, current reporting and record

keeping burden associated with Part

272, previously approved by OMB and

assigned control numbers 0584–0064

and 0584–0083, either remains the same

or there is no longer an information

collection burden associated with the

provisions discussed in the preamble to

this rule. OMB 0584–0064 also includes

information collection burden

associated with Part 273.

The information collection

requirements described in § 273.2,

§ 273.12, § 273.14(b), and § 273.21 of

this final rule governing the application,

certification, and ongoing eligibility of

food stamp households have been

approved under OMB No. 0584–0064.

The information collection requirements

described in § 273.9(d) and § 273.11(b)

of this final rule governing

administration of the homeless shelter

deduction, establishing and reviewing

standard utility allowances, and

establishing methodologies for offsetting

the cost of producing self-employment

income have been approved under OMB

No. 0584–0496.

Results From 60 Day Comment Period

FNS has submitted the above-noted

ICB packages to OMB for renewal and

they will remain in effect until further

notice. We received no comments on the

ICB mentioned in the proposed rule. As

discussed below, the final rule contains

additional reporting burden which must

receive OMB approval before the

regulatory amendments become

effective. The associated amendments

are § 273.2(c)(2)(i), § 273.2(e)(1),

§ 273.2(e)(2)(i), § 273.2(e)(2)(ii),

§ 273.2(e)(3), § 273.4(c)(3)(iv);

§ 273.12(c)(3), and § 273.12(f)(4).

Additional Burden

As a result of the numerous public

comments on the proposed rule,

proposals to Part 273 in the rule were

either modified or withdrawn. These

changes affect the ICB approved under

OMB No. 0584–0064 and add new

collection burdens not previously

published. The additional ICB identified

as a result of this final rule includes: (1)

Notice of Missed Interview; (2) the

determination of indigence for eligible

sponsored aliens subject to deeming of

sponsor income; (3) the notification of

households about face-to-face interview

waivers; (4) notifications to households

that apply to both food stamps and

TANF that (A) time limits of other

programs do not apply to the Food

Stamp Program; and (B) households are

encouraged to continue the food stamp

application process even if the

application for TANF benefits is

withdrawn; (5) the State agency’s

responsibility to forward misfiled

applications; (6) the Transition Notice

for use in States electing to provide the

Transitional Benefits Alternative; and

(7) the Request for Contact. The number

of initial food stamp applications and

recertifications received in 1999

according to the FNS National Databank

(8,139,774 and 9,992,025 respectively)

will be used for these estimates. The

combined total of the received

applications is therefore 18,131,799 for

1999.

In accordance with the Paperwork

Reduction Act of 1995, FNS is

submitting for public comment the

change in the ICB that results from the

adoption of the rule associated with the

application, certification, and ongoing

eligibility of food stamp households.

FNS is incorporating the additional data

collection activities governing the

application, certification, and ongoing

eligibility of food stamp households in

OMB No. 0584–0064.

We invite comments on: (a) Whether

the collection of information is

necessary for the proper performance of

the functions of the agency, including

whether the information will have

practical utility; (b) the accuracy of the

agency’s estimate of the burden of the

collection of information including the

validity of the methodology and the

information to be collected; and (c)

ways to minimize the burden of the

collection of information on those who

are to respond, including through the

use of appropriate automated,

electronic, mechanical, or other

technological collection techniques or

other forms of information technology.

Send one copy of comments and/or

request for copies of this information

collection to: Patrick Waldron, Program

Analyst, Certification Policy Branch,

Program Development Division, Food

and Nutrition Service, 3101 Park Center

Drive, Alexandria, VA 22302–1594,

703.305–2805. Comments may also be

faxed to Mr. Waldron at 703.305.2486.

FNS prefers to receive comments in the

electronic medium. Our Internet address

is FSPHQ-WEB@fns.usda.gov. In the

subject box, please indicate ‘‘NCEP ICB

comments’’. Only comments received

prior to 5:00 p.m. EST on January 19,

2001, will be given consideration.

Title: Notice of Missed Interview.

OMB Number: 0584–0064.

Expiration Date: Three (3) years from

date of approval.

Type of request: New data collection.

Abstract: Current rules require State

agencies to reschedule missed

interviews. We are removing the

requirement that the State agency

reschedule a missed interview.

However, we are adding a requirement

to § 273.2(e)(3) that the State agency

must send a notice to a household that

misses its interview appointment

indicating that it missed the scheduled

interview and informing the household

that it is responsible for rescheduling

the interview.

Number of Additional Respondents:

We are asking that States provide

reasonable estimates regarding the

number of missed interviews in any

given time frame. Our initial inclination

was to suggest that 25 percent of all

initial applications and recertifications

miss an interview. Comments and/or

70136 Federal Register / Vol. 65, No. 225 / Tuesday, November 21, 2000 / Rules and Regulations

data regarding this estimated percentage

are encouraged.

Estimated Number of Responses per

Respondent: We are asking that States

provide reasonable estimates regarding

this burden estimate. We also assume

that the same 25 percent receive one

response per respondent per year.

Estimate of Burden: Household

burden—It is difficult to estimate the

burden to the household, since the

manner in which the household

responds to the notice will vary

considerably. The household may call

the local food stamp office to

reschedule, arrive in person at the office

to reschedule, write a reply or send an

e-mail. The amount of burden time on

the household depends on the manner

in which the household responds and

the manner in which the State will

accept responses to the Notice of Missed

Interview (NOMI). Therefore, we

estimated the household burden at

approximately 10 minutes per notice. In

addition, some households will not

respond to the notice of a missed

interview. We estimate that 25 percent

will not respond to the notice. We

request that States provide information

regarding the approximate number of

missed interviews per month or per

year. State burden—due to the

automation of most State agencies, we

assume the estimated burden to issue a

NOMI will be 15 seconds per notice

plus a one-time adjustment of forms,

which is estimated at 20 hours per form.

Estimated Total Annual Burden on

Respondents: Household burden—We

estimate that the total annual burden

will be 75,575 hours (1,813,799 total

applications × 0.25 × 10 min/60 min =

75,575 hours). State burden—Since we

do not know the estimated number of

missed interviews per State, we are

requesting comments from the State

agencies to provide a better picture of

the burden such a notice will cause. To

issue a notice, we are calculating the 10

seconds to equal 0.00277 hours. (10

seconds = 10 sec/60 sec per min =

0.16667 min/60 min per hour = 0.00277

hours). The estimated total annual

burden on the States would be 1,256

hours (1,813,799 total applications ×

0.25 × 0.00277 hours = 1,256 hours).

In addition, we anticipate a one-time

adjustment of forms for the State

agencies. Due to computerized systems,

we anticipate each State agency will

require an additional 20 work hours to

revise the forms. The total burden

would then be 1060 hours (20 hours ×

53 State agencies = 1,060 hours).

The anticipated total burden on the

State agencies would then be 2,316

hours (1,256 + 1,060 = 2,316).

Title: Determination of Indigence.

OMB Number: 0584–0064.

Expiration Date: Three (3) years from

date of approval.

Type of request: New data collection.

Abstract: Under the final rule,

§ 273.4(c)(3)(iv) exempts certain eligible

sponsored aliens from the provisions

requiring deeming of sponsor income

and resources if the sponsored alien is

indigent. Under the final rule, an

eligible sponsored alien is indigent if

the sum of all the sponsored alien’s

household’s income and any assistance

the sponsor or others provide (cash or

in-kind) is less than or equal to 130

percent of the poverty income guideline.

To comply with the statute, and unlike

a normal determination of income for

food stamp eligibility purposes, the

indigence determination includes an

estimation of the value of in-kind

assistance the sponsor and others

provide. The State agency would

determine the amount of income and

other in-kind assistance provided in the

month of application. Each indigence

determination is good for 12 months

and is renewable for additional 12-

month periods. If the sponsored alien is

indigent, then the normal food stamp

budgeting process would begin. The

State agency counts in the food stamp

budget whatever actual cash

contributions the sponsor and others

provide.

Number of Additional Respondents:

We are asking that States provide

reasonable estimates regarding the

number of indigent sponsored aliens in

any given time frame. The Department

believes this is a small group and data

have not been collected to determine the

exact number of individuals involved.

We believe that only eligible lawful

permanent residents who are Hmong or

Highland Laotians or individuals who

have a U.S. military connection are

potentially subject to the sponsor

deeming provisions of the Program. In

as much as the provision applies only

to sponsored aliens who are sponsored

by an individual, and not an

organization, and for whom an affidavit

of support was executed on or after

December 19, 1997, we believe there

may be less than 500 individuals who

are subject to this provision and who are

food stamp eligible.

Estimated Number of Responses per

Respondent: We anticipate only one

response per respondent per year.

Estimate of Burden: Household

burden—We believe that the burden on

the household will not change. State

burden—We estimate the burden on the

State to be approximately 10 minutes for

collecting additional information to

determine the value of in-kind

assistance provided by the sponsor and/

or others and to determine the indigence

of the applicant household.

Estimated Total Annual Burden on

Respondents: Household burden—We

believe no additional burden is added to

the household. State burden—We

estimate the total burden to be (10 min/

60 min × 500 × 1/year) 83 additional

burden hours per year. Comments and/

or data regarding this estimated

percentage are encouraged.

Title: The Notification of Households

About Face-to-Face Interview Waivers.

OMB Number: 0584–0064.

Expiration Date: Three (3) years from

date of approval.

Type of request: One time

requirement to modify forms.

Abstract: Under the final rule the

eligibility worker must advise each

applicant of the possibility waiving a

face-to-face interview for a telephone

interview. Under the previous rule,

applicant households had to request

information on the possibility of

waiving the face-to-face interview.

Number of Additional Respondents:

We are asking that States provide

reasonable estimates regarding this

burden. Comments and/or data

regarding this estimated percentage are

encouraged. We are initially estimating

that each household that applies for

food stamps or applies for recertification

will be affected. In 1999, there were

8,139,774 initial applications and

9,992,025 recertification applications.

Combined, the total number of

applications in 1999 was 18,131,799.

Therefore, our initial estimate in the

number of respondents affected is

18,131,799.

Estimated Number of Responses per

Respondent: We estimate one response

per application, for a total estimate of

18,131,799 per year.

Estimate of Burden: Household

burden—We believe this does not affect

the burden on the household. State

burden: We estimate 10 seconds to

notify each applicant household.

Estimated Total Annual Burden on

Respondents: Household burden:—We

believe this will not affect the burden on

the applying households. State

burden—This totals to 50,366 hours per

year for the States [(10 seconds/60)/60 ×

18,131,799].

Title: Notification of Households That

Apply for Both Food Stamp Benefits

and TANF That: Time Limits of Other

Programs do not Apply to the Food

Stamp Program; and the Encouragement

of Households To Continue the Food

Stamp Application Process Despite

Requirements for Other Programs and/or

Actions of Other Programs.

OMB Number: 0584–0064.

Federal Register / Vol. 65, No. 225 / Tuesday, November 21, 2000 / Rules and Regulations 70137

Expiration Date: Three (3) years from

approval date.

Type of request: New data collection.

Abstract: Time limits—The final rule

requires the State agency to inform

households that receiving food stamps

will have no bearing on any other

program’s time limits. The interviewer

must advise households that are also

applying for or receiving PA benefits

that time limits and other requirements

that apply to the receipt of PA benefits

do not apply to the receipt of food

stamp benefits; and that households

which cease receiving PA benefits

because they have reached a time limit,

have begun working, or for other

reasons, may still qualify for food stamp

benefits. Encouragement—The final rule

provides that if the State agency

attempts to discourage households from

applying for cash assistance, it shall

make clear that the disadvantages and

requirements of applying for cash

assistance do not apply to food stamps.

In addition, it shall encourage

applicants to continue with their

application for food stamps. The State

agency shall in no way try to discourage

households from applying for food

stamps. The State agency shall inform

households that receiving food stamps

will have no bearing on any other

program’s time limits that may apply to

the household.

Number of Additional Respondents:

This provision applies only to

applicants who apply for both TANF

and food stamps.

Estimated Number of Responses per

Respondent: We estimate one response

per household that applies for both

Food Stamp benefits and TANF.

Estimate of Burden: Household

burden—We believe there is no burden

to the household for this provision.

State burden—We estimate 10 seconds

to notify of the two issues to each

applicant household that has applied to

both TANF and food stamps.

Estimated Total Annual Burden on

Respondents: Household burden—We

believe there is no burden to the

household in this provision. State

burden—We are requesting comments

from the State agencies on the burden

this provision imposes on the State

agencies. The National Databank

indicated 2.8 million households were

receiving food stamp benefits and PA

benefits in January 1999. Therefore, we

estimate that the total annual burden is

7,917 hours (2,800,000 × .00277 hours +

7,917) [10/60 = .16667 min. = .16667/60

= .00277 hours].

Title: The State Agency

Responsibilities for Misfiled Food

Stamp Applications.

OMB Number: 0584–0064.

Expiration Date: Three (3) years from

date of approval.

Type of request: New responsibility.

Abstract: This provision of the final

rule would: (1) Continue to allow the

State agency to require households to

file an application at a specific

certification office or allow them to file

an application at any certification office

within the State or project are; (2)

require that if an application is received

at an incorrect office, the State agency

advise the household of the address and

telephone number of the correct office

(3) require the State agency to forward

an application received at an incorrect

office to the correct office not later than

the next business day; and (4) remove

the requirement currently located in the

third sentence of § 273.2(c)(2)(ii) that

the State agency inform the household

that its application will not be

considered filed and the processing

standards must not begin until the

application is received by the

appropriate office.

Number of Additional Respondents:

We are asking that States provide

reasonable estimates regarding this

burden. Comments and/or data

regarding this estimated percentage are

encouraged. Since most project areas

have only one office, we believe the new

rule will affect only large project areas

with multiple offices. Further, within

that group of project areas, only those

which limit applications taken to a

specific geographic area or a specific

caseload characteristic will come under

the rule. Therefore, we are estimating

approximately 30 misfiled applications

per month in each of the 100 counties.

This totals approximately 36,000

misfiled applications per year.

Estimated Number of Responses per

Respondent: We believe this occurs

once per year per misfiled application.

Estimate of Burden: Household

burden—We do not believe this incurs

additional burden on the household.

State burden—This burden time is

dependent on the method in which the

misfiled application is forwarded. We

believe this burden would take the State

approximately 10 minutes per misfiled

application if the State agency faxed the

application one page at a time.

Estimated Total Annual Burden on

Respondents: Household burden—We

believe there is no burden to the

household for this provision. State

burden—This would take an additional

6,000 burden hours per year (10 min/60

min × 36,000 = 6000 hours).

Title: The Transition Notice.

OMB Number: 0584–0064.

Expiration Date: Three (3) years from

date of approval.

Type of request: New data collection.

Abstract: The final rule provides an

optional procedure for providing TANF

leavers with ‘‘transitional food stamp

benefits,’’ much in the same way

families receive transitional Medicaid

after leaving TANF rolls. Under the new

policy the State agency would freeze

food stamp benefits of households

leaving TANF rolls for up to 3 months,

depending on the period of time since

the household’s last certification. Near

the close of the transition period, the

State agency would act on information

collected from the household, either

adjusting the benefit level, or closing the

household’s food stamp case because it

is no longer eligible or it has failed to

provide sufficient information to

continue its eligibility for the Program.

In some cases, the State agency would

have to conduct a full recertification of

eligibility, if it was not possible to

extend the household’s certification

period beyond the statutory maximum

for its circumstances. This provision in

the final rule will require State agencies

to develop a new form; however, State

agencies may modify existing forms to

comply with the requirement.

Number of Respondents: This

provision in the final rule only affect

families leaving TANF. Those affected

households would receive a ‘‘Transition

Notice’’ (TN) advising the household

that due to the closure of cash

assistance, the food stamp allotment is

frozen at the pre-TANF closure amount.

In addition, the TN must advise the

household that to continue participating

in the Program, they must report

changes to the State agency within a

specified time frame, or report to a

recertification interview, as directed in

the TN.

Estimated Number of Responses per

Respondent: Household burden—We

believe there is no additional burden to

the household for this provision. State

burden—We do not anticipate

additional burden on the State agencies

in issuing this Transitional Notice since

this burden replaces that of the Notice

of Expiration (NOE) in such cases.

We estimate that about 15 State

agencies will implement TBA in the

next 3 years. The total annual burden on

the State for developing the form is

estimated to be a one-time adjustment of

20 hours to develop the form and

process. This totals 300 hours (20 × 15

State agencies = 300.

Title: The Request for Contact.

OMB Number: 0584–0064.

Expiration Date: Three (3) years from

date of approval.

Type of request: New data collection.

Abstract: Another new provision in

the final rule requires the State agency

70138 Federal Register / Vol. 65, No. 225 / Tuesday, November 21, 2000 / Rules and Regulations

to obtain information or clarify

information from the household during

the certification period. The new form,

request for contact (RFC), is necessary in

situations where the household has

reported a change, but the information

is so unclear that the State agency

cannot readily determine its effect on

the household’s benefit amount. The

final rule places the burden of clarifying

an issue on the household. The RFC

informs the household of the

information needed to continue its

current certification. Since the State

agency cannot readily determine a

household’s benefit amount without the

clarification or missing information,

then the information is considered

necessary. The State agency must issue

a written RFC that clearly advises the

household of the verification it must

provide or the actions it must take to

clarify its circumstances. The RFC

affords the household at least 10 days to

respond, either by telephone or by

correspondence, as the State agency

directs. The RFC also indicates the

consequences if the household fails to

respond to the RFC. Depending on the

household’s response to the RFC, the

State agency must take appropriate

action, if necessary, to close the

household’s case or adjust the

household’s benefit amount. This is a

new form and will be added to the

burden package calculation.

Number of Additional Respondents:

We estimate that 25 percent of the

change reports (12,375,185 × 0.25 =

343,796) will result in a request for

contact.

Estimated Number of Responses per

Respondent: We also estimate that on

average, one request for contact will be

issued in a 12-motnth period.

Estimate of Burden: Household

burden—It is difficult to estimate the

burden to the household, since the

manner in which the household

responds to the RFC varies. The

household may call the local food stamp

office to report information, arrive in

person at the office to report, write a

reply or send an email. The amount of

burden time on the household depends

on the manner in which the household

responds and the manner in which the

State will accept. Therefore, we

estimated the household burden at

approximately 10 minutes per notice. In

addition, some households will not

respond to the RFC. We estimate 25

percent will not respond to the notice.

State burden—Due to the automation

capabilities of most State agencies, we

estimate the burden on the State to issue

the RFC approximately 2 minutes per

request. We do not anticipate additional

burden on the State agencies in issuing

this RFC since this burden is already

calculated as part of the NOAA process.

The total annual burden on the State

for developing the form is estimated at

a one-time adjustment of 20 hours to

develop the form and process.

Estimated Total Annual Burden on

Respondents: Household burden—We

estimate that 25 percent of the change

reports (1,375,185 × 0.25 = 343,796) will

result in a request for contact. Since we

believe 25 percent will not respond to

the RFC, the remaining households who

do respond are anticipated to be

approximately 75 percent of the RFCs

issued. We calculate the estimated total

annual burden to the households will be

42,975 hours (343,796 RFC/year × 0.75

× 10 min/60 min per hour = 42,975

hours). State burden—We estimate the

annual burden would be 11,460 hours

(343,796 × 1 × 2/60) to issue the RFC,

assuming that it will take on average 2

minutes or 0.0333 hours to issue the

RFC.

Added to the annual burden are the

20 hours per form for each State agency

to create the forms. This totals 1,060

hours (20 × 53 = 1,060 hours).

Therefore, the combined total of the

annual burden on the State totals 12,520

hours (1,060 + 11,460 = 12,520 hours).

Executive Order 12988

We have reviewed this rule 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. We do

not intend this rule to have retroactive

effect unless so specified in the ‘‘Dates’’

paragraph of this preamble. Challengers

must exhaust all applicable

administrative procedures, prior to any

judicial challenge to the provisions of

this rule or the application of its

provisions.

Unfunded Mandate Analysis

Title II of the Unfunded Mandate

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

104–4, establishes requirements for

Federal agencies to assess the effects of

their regulatory actions on State, local,

and tribal governments and the private

sector. Under section 202 of the UMRA,

the Department generally must prepare

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

rules with ‘‘Federal mandates’’ that may

result in expenditures to State, local, or

tribal governments, or to the private

sector in the aggregate 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)

which impose costs on State, local, or

tribal governments or to the private

sector of $100 million or more in any

one year. Thus, this rule is not subject

to the requirements of sections 202 and

205 of the URMA.

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 food stamp

households and individuals

participants, FNS has determined that

there is no way to soften their effect on

any of the protected classes. FNS has no

discretion in implementing many of

these changes. The changes required to

be implemented by law, have been

implemented.

All data available to FNS indicate that

protected individuals have the same

opportunity to participate in the Food

Stamp Program as non-protected

individuals. FNS specifically prohibits

the State and local government agencies

that administer the program from

engaging in actions that discriminate

based on race, color, national origin,

gender, age, disability, marital or family

status. Regulations at 7 CFR 272.6

specifically state that ‘‘State agencies

shall not discriminate against any

applicant or participant in any aspect of

program administration, including, but

not limited to, the certification of

households, the issuance of coupons,

the conduct of fair hearings, or the

conduct of any other program service for

reasons of age, race, color, sex,

handicap, religious creed, national

origin, or political beliefs.’’

Discrimination in any aspect of program

administration is prohibited by these

regulations, the Food Stamp Act of 1977

(Food Stamp Act or the Act), the Age

Discrimination Act of 1975 (Pub. L. 94–

135), the Rehabilitation Act of 1973

(Pub. L. 93–112, section 504), and title

VI of the Civil Rights Act of 1964 (42

U.S.C. 2000d). Enforcement action may

be brought under any applicable Federal

law. Title VI complaints must be

processed in accordance with 7 CFR

part 15. Where State agencies have

Federal Register / Vol. 65, No. 225 / Tuesday, November 21, 2000 / Rules and Regulations 70139

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

272.6.

Regulatory Impact Analysis

Need for Action

We need to take this action with

respect to the Program to implement

provisions of Pub. L. 104–193

(PRWORA) and subsequent

amendments, which would: (1) Remove

specific requirements for State agency

processing of food stamp applications;

(2) revise requirements for determining

the eligibility of aliens; (3) count as

income certain State and local energy

assistance; (4) allow State agencies to

count all or part, or none of an alien’s

income in determining the benefits of

the rest of the household; (5) allow State

agencies to certify households

consisting entirely of elderly or disabled

members up to 24 months; (6) exclude

the earnings of students under age 18;

(7) make use of a homeless shelter

deduction optional; (8) allow State

agencies to mandate use of a standard

utility allowance if they have at least

one standard that includes heating and

cooling costs and one that does not; (9)

eliminate the exclusion for vendored

transitional housing payments for

homeless households; (10) allow use of

standard amounts in determining selfemployment expenses; (11) make

optional the issuance of combined

allotments to expedited service

households that apply after the 15th of

the month; (12) allow State agencies to

issue partial allotments to households in

treatment centers; (13) require proration

of benefits following any break in

certification; (14) allow State agencies to

accept an oral withdrawal from the

household for a fair hearing; (15) revise

requirements for producing or

displaying nutritional education

materials; (16) eliminate mandated

training standards; (17) eliminate the

requirement for reviewing and reporting

on office hours; (18) revise mail

issuance requirements in rural areas;

(19) prohibit Federal reimbursement for

recruitment activities from being

approved as part of a State agency’s

optional Outreach plan; (20) make

optional rather than mandatory the use

of the Income Eligibility and

Verification System and the Systematic

Alien Verification for Entitlements

match programs; and (21) establish

ground rules for implementing the

Simplified Food Stamp Program (SFSP).

In addition, we need to take this action

to implement Departmental initiatives

to revise the policy for counting the

resource value of licensed vehicles, to

provide an optional transitional benefit

for TANF leavers, to provide an optional

alternative reporting system of semiannual reporting for households with

earnings, and to make a change to

exclude from income on-the-job training

payments received under the Summer

Youth Employment and Training

Program as required by Section 702 of

the Workforce Investment Act.

Legislative Provisions

Budget Impact

This rule implements provisions from

two laws, PRWORA and AREERA.

Using assumptions from the 2001

Budget Agency Mid-session estimate,

we estimate the total Food Stamp

Program budget impact of this rule in

Fiscal Year (FY) 2000 to be ¥$617

million. We estimate the 5 year budget

impact for FY 2000 through FY 2004 to

be ¥$1.932 billion.

The legislative provisions have a

budget impact in FY 2000 of ¥$622

million and a 5 year budget impact for

FY 2000 through FY 2004 of ¥$3.002

billion.

The legislative savings primarily stem

from the provisions of PRWORA that

make many aliens ineligible to

participate (section 402) and the

provision that requires counting as

income for food stamp purposes most

State and local energy assistance

(section 808). The Program realizes

smaller savings from the following

provisions of PRWORA: section 807,

earnings of children; section 809,

standard utility allowances; section 811,

transitional housing payments; and

section 827, proration of benefits at

recertification. The SFSP authorized

under section 854 may result in savings

or increased Program costs with respect

to individual households; however, the

net impact of SFSP implementation

must be cost neutral.

Provisions in the rule that have

negligible budget impact are not

discussed in this analysis.

Section 402—Alien Eligibility

Section 402 of the PRWORA

significantly reduces the number of

legal aliens who are eligible for food

stamps. Effective August 22, 1996, for

applicants and August 22, 1997, for

current recipients, many aliens legally

admitted for permanent residence who

were previously eligible became

ineligible. The exceptions are those

admitted as refugees, asylees, Cubans,

Haitians, Amerasians, and those who

have had removal withheld who retain

eligibility for the first 5 years (later

changed to 7 years by AREERA) after

admission; lawful permanent residents

who have earned or been credited with

at least 40 quarters of coverage as

defined by the Social Security

Administration; and those who are

serving or have served in the U.S. armed

forces and their spouses and children.

Effective November 1, 1998, AREERA

made certain Hmong, Highland

Laotians, and American Indians born

outside of the U.S. eligible for food

stamps. It also made aliens who were

lawfully living in the U.S. on August 22,

1996, eligible for food stamps if they are

under 18, or are disabled, or were age

65 or older on August 22, 1996.

Those aliens who lost eligibility will

contribute to smaller State agency

caseloads. However, determining the

eligibility of individuals will be more

complicated. For certain categories of

aliens, State agencies will have to

determine when the individuals were

admitted. For other categories, State

agencies will have to obtain information

regarding the applicant’s work history.

Thus, there may be no significant

savings in caseworker time.

In FY 2000, without taking into

account the cost of restoring benefits to

selected aliens through AREERA, we

estimate that the budget impact would

have been ¥$440 million. The budget

impact for the 5-year period FY 2000–

FY 2004 is ¥$2.275 billion. We

estimate that in 1998, approximately

838,000 participants lost eligibility with

an average benefit loss of $23 a month

and another 950,000 people remained

eligible but lost an average of $31 a

month. About 80,000 people living in

households with ineligible aliens

received a slightly larger per person

benefit for those still eligible and

participating in the Program, on average

$12 per month. This is because of

economies of scale in the allotment

tables which are by household size, i.e.,

a two-person household based on no

income would receive a larger per

person allotment than a three-person

household based on no income. It is

important to realize that all of these

‘‘gainers’’ lived in households where the

total food stamp benefit available to the

household declined.

Based on information from a

simulation model using 1996 Food

Stamp Quality Control data, together

with information from the Immigration

and Naturalization Service (INS) on

immigration and naturalization patterns

and the Survey of Income and Program

Participation (SIPP) on the work

histories of aliens, we estimate that 20

percent of permanent residents meet the

40-quarters work exemption. Using

information from the Current

Population Survey on the veteran status

70140 Federal Register / Vol. 65, No. 225 / Tuesday, November 21, 2000 / Rules and Regulations

of aliens, we estimate that less than 1

percent meet the veteran’s exemption.

Moreover, because applications for

naturalization have increased

dramatically over the last 2 years, we

anticipate that naturalizations will

increase through FY 2001, reducing

somewhat the number of persons losing

eligibility and benefits through that time

period compared to FY 1998.

The enactment of AREERA on

November 1, 1998 restored benefits to

an estimated 175,000 legal immigrants

when fully implemented in FY 2002,

with a budget impact of $85 million in

2000 and $665 million for the five-year

period 2000–2004. At the time of

AREERA’s passage, the estimate of

immigrants that would receive restored

benefits was higher (225,000), but

changes in the economy have caused us

to revise those estimates downward.

PRWORA does not address how or

whether to count the income or

resources of the aliens made ineligible

by PRWORA for purposes of

determining eligibility or allotment

amounts for the rest of the household.

Alternatives were considered including

counting ineligible aliens’ resources and

all income; counting resources and a

pro-rated share of income; not counting

the ineligible aliens’ income, but

capping the resulting allotment for the

eligible members at the allotment a

similarly situated all citizen household

would receive; or counting neither

income nor resources. The alternative

chosen under the proposed rule would

be to allow the State agency to pick one

State-wide option for determining the

eligibility and benefit level of

households with members who are

aliens made ineligible under PRWORA.

State agencies may either: (1) Count the

resources and a pro-rated share of the

ineligible aliens’ income; or (2) count

the resources, not count the ineligible

aliens’ income, but cap the resulting

allotment for the eligible members at the

allotment amount the household would

receive were it not for the PRWORA

eligibility restrictions.

Using a simulation based on the 2000

baseline version of the 1996 QC

Minimodel, we estimate that the option

of excluding the income of PRWORAineligible aliens increases costs by an

estimated $2 million for FY 2001 and

$23 million for FY 2000 through FY

2004. (This cost is included in the total

for Departmental initiatives.) These

estimates take into account current State

practices and an expected shift of some

States from the first option.

Section 807—Earnings of Children

This provision revises the current

exclusion from income of the earnings

of elementary or secondary school

students under age 22 to exclude the

earnings of these students only if they

are under 18. Based on the 1996 Quality

Control data, it is estimated that the

benefits of approximately 2,700 students

will be reduced an average of $62 per

month. FY 2000 budget impact is

estimated at ¥$2 million and a 5-year

budget impact of ¥$12 million.

Section 808—Energy Assistance

This provision eliminates the

exclusion from income of most State

and local energy assistance payments.

Federal, State, or local one-time

payments for weatherization and

replacement or repair of heating or

cooling devices are excluded. All

federal energy assistance payments are

excluded, except those provided under

Title IV–A of the Social Security Act.

State agencies are required to count as

income the portion of the public

assistance grant previously excluded as

energy assistance. Using 1996 food

stamp QC data on the number of AFDC/

FSP households in each State and 1996

Green Book data on the average AFDC

disregard for state-provided energy

assistance, we estimated that benefits

for approximately 3.959 million

participants will be reduced, with each

person losing an average of $4.42 a

month. This results in a budget impact

of ¥$210 million for FY 2000 and a 5-

year budget impact of ¥$1.05 billion.

Section 811—Transitional Housing

Payments

This provision removes the statutory

exclusion from consideration as

household income any State PA or GA

payments made to a third party on

behalf of a household residing in

transitional housing for the homeless.

State agencies may continue to exclude

PA housing payments from income if

they are emergency or special payments

over and above the regular grant or are

provided for migrant or seasonal

farmworker households while they are

in the job stream. GA housing payments

may be excluded if they are provided by

a State or local housing authority, are

emergency or special payments, or the

assistance is provided under a program

in a State in which no GA payments

may be made directly to the household

in the form of cash. State agencies will

have to notify affected households that

their benefits will be reduced.

Several States had been renting hotels

to house PA households and the

additional value of this ‘‘welfare hotel’’

benefit was being excluded from income

in determining food stamp benefits.

Based on estimates derived from data on

AFDC and shelter payments made to the

number of food stamp households

estimated to be living in welfare hotels,

approximately 76,000 recipients will

lose benefits, for a budget impact of

¥$10 million in FY 2000 and a 5-year

budget impact of ¥$50 million. The

average benefit loss per person is about

$11 a month.

Section 809—Standard Utility

Allowances

This provision allows State agencies

to mandate use of a standard utility

allowance that includes heating or

cooling costs, provided the State agency

has another standard allowance that

does not include heating or cooling

costs and the mandatory standards will

not increase Program costs. The

PRWORA also provides that in a State

that does not choose to make standards

mandatory, households are allowed to

switch between actual expenses and a

standard only at recertification.

The rule provides requirements for a

nonheating/cooling standard and would

require State agencies to provide FNS

with sufficient data to determine

whether or not the State agency’s

proposed standards are cost-neutral.

The rule also provides that elderly or

disabled households certified for 24

months may switch at the 12-month

point when the State agency is required

to contact the household. The State

agency would be required to allow

households a choice between using

actual expenses or a standard when they

move and incur shelter expenses. The

rule also would allow households in

private rental housing to use a standard

allowance that includes heating or

cooling costs if they incur an expense

for heating or cooling separately from

their rent. Many of these households are

currently entitled to the standard

because they receive Low-Income Home

Energy Assistance (LIHEAP) payments.

Households in public rental housing

that incur only the cost of excess usage

are prohibited by the Food Stamp Act

from receiving a heating or cooling

standard.

The provision of the PRWORA

allowing mandatory utility standards

would increase State agency flexibility

and reduce the time needed to calculate

the shelter expenses of households

which previously claimed actual costs.

Savings result from two factors: (1) If a

State mandates a standard, households

with shelter costs higher than the SUA

would no longer be allowed to claim

actual costs; and (2) households will no

longer be allowed to switch between the

SUA and actual costs one additional

time during each 12-month period.

Using a simulation model based on

1994 data from the Survey of Income

Federal Register / Vol. 65, No. 225 / Tuesday, November 21, 2000 / Rules and Regulations 70141

and Program Participation (SIPP), and

adjusting for the fact that only five

States (Delaware, Louisiana, Michigan,

North Dakota, and Wyoming) with only

seven percent of the caseload initially

implemented this option, we estimate

that the benefits of approximately

141,000 people were reduced in 1998

for an average loss of a little more than

$5 a month, and 833 people lost

eligibility for an average monthly loss of

a little more than $11. We estimated the

total budget impact for these States to be

¥$10 million.

We assume that more States will

implement this provision, once they

turn their attention from implementing

TANF. We estimate that in 5 years,

States that account for 28 percent of

total benefit issuance will have opted

for required use of the SUA. Under

these assumptions, the total budget

impact is ¥$20 million in FY 2000 and

¥$155 million over 5 years. By FY

2004, slightly over 3,000 people may

lose eligibility.

Section 818—Treatment of the Income

of Ineligible Aliens

This rule would implement the

provision which allows State agencies

to elect to count either all or part of an

ineligible alien’s income if the alien is

in a category that was ineligible prior to

PRWORA when calculating the

eligibility and benefits of the other

individuals in the household. These

aliens are primarily aliens admitted

under color of law, those without

documentation to establish eligible

status, and those temporarily residing in

the country legally, such as diplomats

and students. (Treatment of the income

and resources of the classes of aliens

made ineligible by PRWORA is

different, and it is discussed above.)

In order not to give preferential

treatment to households with ineligible

aliens in classes that were ineligible

prior to PRWORA over citizen

households, the rule allows State

agencies a further option to count all of

the income for purposes of applying the

gross income test, but use a prorated

share to determine eligibility and level

of benefits. For example, a household

consisting of an undocumented alien

and a citizen may have an income

which would place the household over

the maximum income limit if all of it is

counted. However, if the undocumented

alien is excluded from the household

and only a prorated share of his or her

income is counted, the remaining

citizen member could be eligible. This

option would allow the State agency to

count all of the undocumented alien’s

income for purposes of determining if

the household’s gross income is below

the gross income limit but only counting

a prorated share for determining the

household’s allotment level. The State

agency will need to consider if the

number of cases affected will warrant

two different income computations.

Whatever option the States selects will

have to be applied to all ineligible aliens

in the same class.

Prior to the enactment of PRWORA,

States were required to prorate only a

share of the ineligible alien’s income to

the household. For example if a

household consisted of one ineligible

alien and two eligible participants,

under prorating, two-thirds of the

income of the ineligible alien would be

counted as income available to the food

stamp household. Under the 100

percent option, all of that ineligible

alien’s income would be counted.

Of the two States electing to count

100 percent of the income of ineligible

aliens, only one State has continued this

policy. The budget assumes only that

one State will continue to opt for the

100 percent option. Deeming 100

percent of the income of an ineligible

household member increases the

countable income of food stamp

households. Some households lose

eligibility if deeming 100 percent of the

ineligible aliens’ income causes their

countable income to exceed the

thresholds. Other households remain

eligible, but with a higher net income,

qualify for smaller benefits.

Using a simulation based on 1996

Food Stamp Quality Control data

adjusted to reflect rules in place in FY

1999, we estimate that under the

provision allowing States to count 100

percent of the income of aliens

ineligible prior to enactment of

PRWORA, approximately 1,000 people

remained eligible but lost an average of

$95 a month in benefits and 1,000

recipients became ineligible losing $190

a month in benefits. We estimate the

budget impact at ¥$5 million for FY

2000 and ¥$25 million for FY 2000

through FY 2004.

Section 827—Proration of Benefits at

Recertification

This provision requires that

provisions for prorating benefits at

recertification revert to those in place

before enactment of the Mickey Leland

Childhood Hunger Relief Act of 1993.

Except for migrant and seasonal

farmworker households, State agencies

must prorate benefits if there is any

break in certification. The law affects

State agencies to the extent that they

have to reprogram computers and revise

guidance to staff. Based on a 1989 GAO

study on recertification, entitled

Participants Temporarily Terminated

for Procedural Noncompliance, we

estimate that the benefits of

approximately 1.23 million people will

be reduced, for a budget impact of ¥$20

million in FY 2000 and ¥$100 million

over 5 years. Those losing benefits lose

an estimated average of less than $1.50

a month.

Departmental Initiatives

Budget Impact

The Departmental initiatives to revise

the policy for counting the resource

value of licensed vehicles, revise

somewhat the treatment of some

income, to provide an optional

transitional benefit for TANF leavers,

and to provide an optional alternative

reporting system of semi-annual

reporting for households with earnings

produce a cost which slightly lowers the

total savings from this rule. The cost of

the Departmental initiatives is $5

million in FY 2000 and sums to $1.070

billion for the 5-year period FY 2000–

FY2004.

Inaccessible Resources and Vehicles

The final rule allows some

households with licensed vehicles of

moderate value to participate in the

program, if they are otherwise eligible

and have little equity in the vehicle. The

amendment to 7 CFR 273.8(e)(18)

expands the list of inaccessible

resources to include vehicles which if

sold, would realize the seller a net

proceed of no more than $1,500.

Moreover, we are greatly simplifying the

vehicle resource determination for

households by eliminating the equity

test for most vehicles. We will

completely exclude vehicles used to

produce income, used as a home, used

to transport a disabled household

member, used to carry fuel or water, or

unlikely to produce a return exceeding

$1,500. For each adult household

member, we will exempt from the

equity test one licensed vehicle not

totally excluded and count that vehicle

to the extent that the fair market value

exceeds $4,650. For each household

member under 18 years of age, we will

exempt from the equity test one licensed

vehicle not totally excluded which the

minor drives to work, school or training,

or to look for work. Any vehicles not

exempted from the equity test are

subject to resource evaluation at the

higher of the excess fair market value or

the equity value.

The proposed rule set the limit on

inaccessible resources for most

households at $1,000. With publication

of the proposed rule, FNS granted

waivers to States to implement that

policy. As a result, the FY 2000 cost for

70142 Federal Register / Vol. 65, No. 225 / Tuesday, November 21, 2000 / Rules and Regulations

inaccessible resources, which reflects a

$1,000 limit and the number of States

which requested and received waiver

authority, rounds to less than $5

million. Comments received on this

provision urged FNS to increase the

limit to $1,500, which FNS has

accepted. This new policy will take

effect in FY 2001 and, therefore, the FY

2001 through FY 2004 costs reflect a

$1,500 limit.

State agencies are affected by this

provision because it greatly simplifies

the treatment of vehicles. It is expected

to reduce payment errors based on

incorrect application of the resource

tests.

Expanding the definition of

inaccessible resources costs $5 million

in fiscal year 2000, $85 million in fiscal

year 2001, $170 million in fiscal year

2002, $165 million in fiscal year 2003,

$145 million in fiscal year 2004, with a

five year total of $570 million. In fiscal

year 2001, when the $1,500 limit goes

into effect, 80,000 people gain, with an

average monthly benefit of $88.78.

Also, eliminating the equity test for

most, but not all, vehicles costs $0

million in fiscal year 2000, $30 million

in fiscal year 2001, $55 million in fiscal

year 2002, $40 million in fiscal year

2003, and $25 million in fiscal year

2004, with a five year total of $150

million. In fiscal year 2001, 27,000

people gain, with an average benefit of

$92.65.

On October 28, 2000, the President

signed the Agriculture, Rural

Development, Food and Drug

Administration, and Related Agencies

Appropriation Act of 2001 (Public Law

106–387). This law includes a provision

to allow States to substitute their TANF

vehicle rules for the food stamp vehicle

rules, where doing so would result in a

lower attribution of resources. The cost

of the vehicle changes in this regulation,

described above, capture the additional

budgetary impact that these regulatory

changes have in broadening food stamp

eligibility after allowing for the

expected impact of the new law.

Optional Transitional Benefits for TANF

Leavers

Several advocacy groups put forth a

suggestion for providing TANF leavers

‘‘transitional food stamp benefits,’’

much in the same way families receive

transitional Medicaid after leaving

TANF rolls. The new policy allows

State agencies to freeze food stamp

benefits of households leaving TANF

rolls for up to 3 months, depending on

the period of time since the household’s

last certification. Near the close of the

transition period, the State agency

would act on information collected from

the household, either adjusting the

benefit level, or closing the household’s

food stamp case because it is no longer

eligible or it has failed to provide

sufficient information to continue its

eligibility for the Program. In some

cases, the State agency would have to

conduct a full recertification of

eligibility if it is not possible to extend

the household’s certification period due

to the statutory limitation on the length

of certification periods. As the

household would have no reporting

requirement during the transitional

period, the State agency would incur no

QC liability for unreported changes in

household circumstances during the

period of time benefits are frozen.

While the Department encourages

State agencies to offer the Transitional

Benefits Alternative (TBA) to

households leaving the TANF rolls, in

order to ease the transition from PA,

serve as an important transitional work

support, and reinforce the fact that food

stamps are not dependent upon

eligibility for TANF, we did not offer

this procedure in the NPRM. State

agencies had no opportunity to

comment, either to raise objections or to

provide suggestions. For this reason, the

final rule establishes TBA as a State

agency option, not a mandatory

provision of the regulations.

Families generally leave TANF when

they go to work, exceed the income or

asset limit (due to employment or other

factors), fail to comply with the

behavioral or procedural requirements

of TANF, reach the Federally or Statedefined time limit, lose technical

eligibility, or leave voluntarily to

‘‘bank’’ their TANF months. For State

agencies electing the TBA, the

Department has structured the final rule

to allow maximum flexibility in

deciding which families leaving TANF

would be eligible for TBA. The final

rule requires such State agencies, at a

minimum, to provide TBA to all

families with earnings who leave TANF.

If the household is losing income as a

result of leaving TANF, the State agency

must adjust the food stamp benefit

amount before freezing the benefit

amount. For example, such treatment

might be appropriate when a TANF

family leaves cash assistance because it

has reached the time limit for such

assistance and has gained no source of

income which would replace the lost

cash assistance. On the other hand,

under the final rule State agencies may

not provide TBA to households which

are leaving TANF because: a household

member has violated a TANF provision

and the State is imposing a concomitant

food stamp sanction in accordance with

sections 819, 829, or 911 of PWRORA;

a household member has violated a food

stamp work requirement; a household

member has committed an intentional

Program violation; or the TANF case is

closing because the State agency is

taking action in response to information

indicating the household failed to

comply with Food Stamp reporting

requirements, e.g., the State agency

discovered unreported income or assets

through computer matching indicating

noncompliance with Food Stamp

reporting requirements.

Using data on TANF caseloads from

the Department of Health and Human

Services and data from TANF research

by many sources, we derived estimates

of the number of cases expected to leave

TANF.

Using 1998 QC data, an average FSP

benefit for TANF households was

inflated to 2001 and beyond. In general,

the transitional benefit policy provides

two additional months of benefits to

each case that leaves (the current system

provides one month due to the

processing requirements and the

requirement to issue a notice of adverse

action). We then multiply the monthly

number of eligible leavers by the

average benefit by 2 months of

additional benefits by 12 monthly sets

of leavers in a year to get the cost.

Further reductions to this cost were

made to account for: (1) The likelihood

that some of these cases would return to

the TANF program within the transition

period, thereby reducing the cost of

transitional benefits because they no

longer are eligible for them, (2) the fact

that many households with TANF have

12 month certification periods, and (3)

the fact that some households are not

eligible for transitional food stamps,

including households sanctioned off of

TANF that receive a comparable Food

Stamp sanction in accordance with

sections 812, 829 and 911 of PRWORA.

Current FSP law states that households

may not receive benefits beyond 12

months without recertification, so those

households in the 10th, 11th, or 12th

month of their certification periods do

not receive benefits for the entire

transition period.

Finally, we apply a phase-in to

account for State take-up rates. We

begin with the cost if all States were to

adopt the option, and then estimate that

States will take up this option such that

5 percent of the cost is incurred in fiscal

year 2001, 10 percent in fiscal year

2002, 15 percent in fiscal year 2003, and

25 percent in fiscal year 2004.

Ultimately we expect that up to 60

percent of the benefits that could be

issued via TBA will be issued by fiscal

year 2007, based on assumptions

regarding how many States will

Federal Register / Vol. 65, No. 225 / Tuesday, November 21, 2000 / Rules and Regulations 70143

implement this policy. We adopt these

phase-in assumptions based on what

has been learned thus far from the State

response to the quarterly reporting

option, and the fact that States will need

to implement computer systems

changes, which take time. As a result,

we expect in fiscal year 2001 about

3,000 cases each month to leave TANF

and receive two additional months of

transitional food stamp benefits of about

$226 per month (this is the weighted

average for all types of cases) for a total

cost of $15 million. By fiscal year 2004

the cost will rise to $73 million,

affecting 14,000 cases per month, with

a total cost for fiscal years 2001 to 2004

of $162 million.

Optional Semi-annual Reporting for

Households with Earnings

Because the Department is aware that

State agencies are reluctant to assign

working households long certification

periods because of potential

vulnerability for quality control errors

resulting from unreported changes, the

Department is adopting in this final rule

an optional reporting system for these

households. Under this option,

households with earned income

assigned a six-month certification

period may be required to report

changes in income that result in their

gross monthly income exceeding 130

percent of the poverty level a month, in

lieu of the requirement to report

changes in the amount of gross monthly

income that exceed $25. These

households would not be subject to the

remaining reporting requirements in 7

CFR 273.12(a)(1). The State agency shall

act on changes reported by the

household that increase benefits in

accordance with 7 CFR 273.12(c) and on

changes in public assistance and general

assistance grants and other sources that

are considered verified upon receipt by

the State agency. In order to adopt this

option, State agencies must assign these

households certification periods of 6

months or longer. State agencies may

opt to waive every face-to-face interview

in accordance with 7 CFR 273.2(e).

Using SIPP data covering one year, a

simulation was run which counted all

income changes (minus TANF changes,

since it is assumed the State would

know and act upon all of these changes)

and how many times a household

changed composition during the first six

months of the year and all of the

changes during the last six months of

the year. All of the income increases

were summed together and all of the

income decreases were summed

together and a net figure was calculated.

This income figure was changed to a

benefit figure by applying the average

benefit reduction rate and by adjusting

for the impact of household

composition changes on benefit levels.

Using the total benefits from QC data,

the percent of monthly benefits not

captured during the 6 month

certification period was calculated.

To get the cost of this policy, this

percentage was multiplied by the FY

2001 Mid-Session baseline benefits.

Several adjustments were made to

incorporate assumptions on reporting

behavior and the policy requirements

for when States must act on reported

changes.

Finally, a State phase-in rate is

applied. This rate is based on

expectations of what States will select

given all reporting options. We believe

that the phase-in will be low in the first

year (4 percent, for a FY 2001 cost of $3

million) as States decide which option

to implement, but that it will increase

rapidly and reach the maximum of 70

percent by 2005.

The cost in FY 2001 is $3 million and

rises to $51 million in FY 2004, with a

total cost from FY 2000 to FY 2004 of

$105 million. When fully implemented

it will affect nearly 1.5 million

households per month.

Allow the Self-Employed to Deduct the

Principal on Capital Expenditures

Current policy precludes allowing the

cost of capital assets in determining selfemployment income. We are revising

this policy to allow capital costs in

determining self-employment income.

We believe that this change recognizes

that capital costs are a legitimate

expense in producing self-employment

income and that the change will support

the self-employed working poor.

We turned to Internal Revenue

Service statistics to determine the

potential size of the new deduction. We

obtained information on the size of the

depreciation deduction taken by all

non-farm industries and the size of net

income after all deductions for these

industries. The depreciation deduction

is 16 percent net income. Using this as

a proxy for the size of the new food

stamp deduction, we multiplied it times

the average monthly self-employed

income in the 1998 Characteristics of

Food Stamp Households ($336). Next

we adjusted it for the earned income

deduction and the 30 percent benefit

reduction. On average, food stamp

benefits will increase by $13 per month.

Multiplying by the expected number of

households with self-employment

income (about 100,000) produces an

estimate of $15 million as the cost in

each year. The sum from FY 2001 to FY

2004 is $60 million.

Plain Language

We have written this rule under the

plain language guidelines to make it

clearer and easier to read. We have

edited wording that we preserved from

the proposed rule to comply with those

guidelines, using simpler words and

phrases where appropriate, and

changing sentences from passive to

active voice. We did not change the

meaning of any of the language brought

from the proposed rule.

Part 272—Requirements for

Participating State Agencies

Bilingual Requirements—Access to

Households With Language Barriers—7

CFR 272.4 and 7 CFR 272.6

Legal aid organizations, advocacy

groups, and State agencies commented

on the current bilingual standards at 7

CFR 272.4(b). As prescribed by Section

11(e)(1)(B) of the Food Stamp Act (7.

U.S.C. 2020(e)(1)(B)), the current rules

require State agencies to use appropriate

bilingual personnel and printed

materials in areas in the State in which

a substantial number of members of

low-income households speak a

language other than English. To

determine if a substantial number of

non-English speaking household resides

in an area, the current rules specify the

methodology for estimating the size of

non-English speaking households and

thresholds that trigger mandatory

bilingual services. Bilingual services

also must be provided during periods of

seasonal influx, such as the influx of

migrant or seasonal workers into project

areas for a short period of time.

While most comments indicate

general support for the current

standards at 7 CFR 272.4(b), many

commenters recommended additional

regulatory controls to ensure State

agencies are in compliance with Title VI

of the Civil Rights Act of 1964, Section

11(c) of the Food Stamp Act (7 U.S.C.

2020 11(c)) and corresponding Food

Stamp Program regulations at 7 CFR

272.6. Specifically, these commenters

recommended that the regulations be

amended to ensure non-English

speaking households have access to the

FSP by requiring State agencies to

provide bilingual services to all nonEnglish speaking households seeking

food stamp assistance, regardless of the

size of the low-income non-English

speaking population in the service area

or of how obscure the language may be.

Conversely, a State agency

commenting on current bilingual

standards asserts that PRWORA

amendments under Section 835 provide

State agencies with flexibility in

establishing appropriate bilingual

70144 Federal Register / Vol. 65, No. 225 / Tuesday, November 21, 2000 / Rules and Regulations

standards and that the Department was

remiss in not proposing amendments

that would either remove or

substantially reduce requirements at 7

CFR 272.4(b). The State agency further

stated that revision of the current

regulatory bilingual standards is

required by the President’s reform

initiative to remove overly prescriptive,

outdated and unnecessary regulations.

Even though Section 835 of PRWORA

amends Section 11(e)(2) of the Food

Stamp Act to provide State agencies

with flexibility to determine certain

processes that best serve eligible

households within the State, it does not

extend this flexibility to services

required by law, such as bilingual

services.

The Department appreciates the

comments received on both sides of this

issue. However, because of the strongly

divergent views offered by commenters,

the Department has decided to make no

changes at this time to the current

regulations. Although no regulatory

changes will be made at this time, we

would like to advise the public through

this preamble of the August 11, 2000

Executive Order 13166 entitled,

Improving Access to Services For Person

With Limited English Proficiency.

Executive Order 13166 directs Federal

agencies to ensure that recipients of

Federal financial assistance, such as the

State agencies administering the Food

Stamp Program, are providing persons

with limited English proficiency (LEP) a

meaningful opportunity to participate in

Federal programs and activities.

Providing a meaningful opportunity to

LEP persons to participate in the Food

Stamp Program ensures that State

agencies are in compliance with Title VI

of the Civil Rights Acts of 1964. State

agencies failing to provide meaningful

access would be in violation of Title VI

of the Civil Rights Act, which prohibits

discrimination on the basis of national

origin.

The Department of Justice (DOJ) has

issued guidance setting forth the

standards that Federal agencies and the

recipients of Federal funds must follow

to ensure that LEP persons have

meaningful access. Each Federal

Agency, in consultation with the DOJ,

must develop and implement guidance.

USDA is working to develop guidelines

in accordance with E.O. 13166 and the

Department of Justice Guidance.

State Employee Training—7 CFR

272.4(d)

Section 836 of PRWORA deleted all

Federal requirements for State employee

training. To reflect this change in the

law, the Department proposed to delete

all the mandatory training requirements

at 7 CFR 272.4(d). State agencies

commenting on this section support the

change. Some advocate and legal

organizations requested that the

Department withdraw the proposal and

retain current standards to ensure that

State agencies properly train employees,

especially those making eligibility

determinations, or rendering fair

hearing decisions.

The final rule adopts the proposed

rule at 7 CFR 272.4(d) as written. By

eliminating training requirements, we

are signaling our greater concern with

the outcome of training, that is, high

quality administration. However, we

strongly encourage states to continue to

provide quality training to their

employees. Quality training strengthens

Program administration and

communicates a strong message to

employees about the importance of a

well run Food Stamp Program. Where

program reviews indicate program

problems caused by deficiencies in staff

skills, we would expect State agencies

to upgrade training efforts.

Hours of Operation—7 CFR 272.4(g)

Section 848 of PRWORA deleted

previously designated Section 16(b) of

the Food Stamp Act. That section

required the Secretary of Agriculture to

establish standards for the periodic

review of food stamp office hours to

ensure that employed individuals were

adequately served by the FSP. It also

required State agencies to submit

regular reports specifying the

administrative actions that the State

planned to take to meet the standards

prescribed in that section.

To implement Section 848 of

PRWORA, the proposed rule specified

that State agencies would be responsible

for setting the hours of operation for

their food stamp offices. However, in

deciding the office hours to be offered,

State agencies would be required to

consider section 11(e)(2) of the Food

Stamp Act, as amended by section 835

of PRWORA. The amendments made by

section 835 of PRWORA require States

to accommodate households with

special needs, such as the elderly,

working poor or households residing on

Indian reservations. Finally, the

proposed provision no longer required

State agencies to assess or report on

office hours.

In the preamble to the proposed rule,

we requested suggestions for best

serving or providing program access to

eligible or potentially eligible working

individuals. Commenters most often

recommended expanded office hours.

One State agency, the Ohio Department

of Human Services, noted that State law

requires each county department of

human services to have hours of

operation outside the county

department’s normal hours of operation.

During these hours, the County

department will accept applications

from employed individuals for the

programs administered by the County

department and assist employed

program applicants and participants

with matters related to the programs.

Another State agency stated that it

improved its service accessibility by

using the option of a quarterly reporting

waiver for households with earnings. As

of July 1999, FNS extended to all State

agencies the option of requiring

households with earnings to submit

quarterly reports. Quarterly reporting is

viewed as a method for simplifying

reporting requirements and reducing

contacts by working households to their

local certification office.

We strongly support policies

establishing office hours or other

accommodations designed to facilitate

working families and to ensure that

working families have access to the FSP.

Extended office hours are very

successful in improving Program access

and enhancing a household’s ability to

succeed in work because it allows

working households to schedule

appointments and complete the

application process without missing

work. Also, State agencies that establish

alternate or extended hours may benefit

by receiving bonus awards from the

Department of Health and Humans

Services (HHS). Under HHS final rules

(65 FR 52814, August 30, 2000) entitled,

Bonus to Reward States for High

Performance Under the TANF Program,

a portion of the TANF bonus funding to

States will be based on their

performances in providing food stamps

to low-income working families.

Accordingly, the Department is

adopting in this final rule the proposal

at § 272.4(f) that requires State agencies

to consider the special accommodation

needs of populations they serve,

including households containing a

working person. Our regulatory focus is

on the desired outcome rather than the

means of achieving it. Recent data

indicate the FSP is vital in helping

families move to self-sufficiency and

that participation in the FSP is crucial

in ensuring that people working for low

wages have the help they need.

Nutrition Education Materials—7 CFR

272.5(b)

Section 835 of PRWORA deleted

section 11(e)(14) of the Food Stamp Act

(7 U.S.C. 2020(e)(14)). This section of

the Act, and corresponding regulations

at 7 CFR 272.5(b), required FNS to

supply State agencies with posters and

Federal Register / Vol. 65, No. 225 / Tuesday, November 21, 2000 / Rules and Regulations 70145

pamphlets containing information about

nutrition and the relationship between

diet and health. State agencies were

required to display these posters and to

make these pamphlets available at all

food stamp and public assistance

offices.

FNS proposed to implement the

PRWORA amendment by removing the

requirement that State agencies display

USDA materials. As noted in the

preamble to the proposed rule, the

deletion of this language does not lessen

FNS’ commitment to nutrition

education. The new paragraph shows

FNS’ commitment by encouraging State

agencies to develop optional State Food

Stamp Nutrition Education Plans as

permitted under 7 CFR 272.2(d)(2) to

educate households about the

importance of a nutritious diet and the

relationship between diet and health. As

of FY 2000, 48 State agencies have

approved nutrition education plans

which call for the expenditure of about

$200 million for nutrition education in

the FSP, of which 50 percent is financed

by Federal funds. Thus, the vast

majority of State agencies actively

support, promote and provide nutrition

education to FSP clients.

Comments received from State

agencies and organizations representing

States were supportive of the nutrition

education proposals at § 272.5.

However, one commenter requested that

FNS withdraw the proposal and another

objected to FNS encouraging States to

implement nutrition education plans.

Another commenter noted that State

agencies have committed millions of

dollars in non-federal funds to food

stamp program nutrition education.

The final rule adopts the proposed

rule at 7 CFR 272.5(b), as written. It is

a State option to implement and operate

a nutrition education plan. FNS

provides State agencies with

comprehensive guidance and with

broad flexibility in determining how it

will provide nutrition education to food

stamp recipients. This guidance is

updated annually and reinforces FNS’

commitment to nutrition education by

stressing the relationship of Program

regulations and Federal reimbursement

of costs for State nutrition education

activities that are necessary and

reasonable to benefit Program applicants

and participants. Finally, the FSP

reimburses State agencies with

approved Nutrition Education plans for

50 percent of their total allowable costs.

Optional Use of the Income and

Eligibility Verification System (IEVS)

and the Systematic Alien Verification

for Entitlements (SAVE) Program—7

CFR 272.8, 272.11 and 273.2

Section 840 of PRWORA amended

Section 11(e)(18) of the Food Stamp Act

(7 U.S.C. 2020(e)) to make IEVS and

SAVE State options. Thus, the proposed

rule removed the requirement that State

agencies operate either an IEVS or a

SAVE system. For State agencies

electing to use IEVS and SAVE, the

proposed rule only required that the

State agencies observe the requirements

of the data exchange agreements with

agencies from which data will be

obtained or exchanged. The preamble in

the proposed rule noted that quality

control (QC) reviews would continue to

use data obtained from IEVS and SAVE

as a case analysis tool.

Numerous State agencies commented

on this proposal and are supportive of

the option use IEVS and SAVE

requirements and of the proposed

elimination of IEVS and SAVE

requirements. State agencies which use

IEVS and SAVE will continue to

conduct data exchange agreements with

Federal sources. The data exchange

agreements, however, will no longer be

required as part of the State’s Plan of

Operation. A number of State agencies

objected to the continued use of IEVS

and SAVE as part of QC reviews. Two

State agencies commented that by using

IEVS and SAVE as part of QC, State

agencies in effect were not being given

the option to use IEVS and SAVE and

would need to continue with the

matches.

Current rules at 7 CFR 275.12 identify

the procedures State agencies and FNS

must follow when reviewing active

cases included in the QC active sample.

Under 7 CFR 273.12(c), a State agency

must conduct a full field review for all

selected active cases and this

investigation must include a review of

any information pertinent to a particular

case which is available through IEVS.

This requirement is consistent with QC

review procedures that mandate the

verification of all elements affecting the

households eligibility and benefit level

in the sample month under review.

The Department decided to retain the

current rules at 7 CFR 275.12 without

change because available data indicate

that IEVS data are generally useful

means of improving payment accuracy.

Their use by QC only reinforces longstanding policy that State adopt

methods of administration that secure

payment accuracy.

Under Section 840 of PRWORA, State

agencies may, but are not required to,

use IEVS and/or SAVE as part of their

responsibility in determining eligibility

and benefit levels for participating

households. Those State agencies

electing to use either IEVS and/or SAVE

are provided flexibility in determining

how best the IEVS and/or SAVE data

should be used. The use of IEVS as an

analysis tool does not diminish a State

agency’s option to use IEVS or SAVE

outside of the QC process.

Accordingly, the Department is

adopting the proposed amendments at 7

CFR 272.8, 7 CFR 272.11 and 7 CFR

273.2 in the final rule without change.

Part 273—Certification of Eligible

Households

Application Processing—7 CFR 273.2

As explained in the Notice of

Proposed Rulemaking (NPRM), section

835 of PRWORA amended sections

11(e)(2) and (e)(3) of the Act, 7 U.S.C.

2020(e)(2) and (e)(3) which govern the

food stamp application and certification

process. Section 11(e) now provides

more flexibility for State agencies to

tailor day-to-day operations of the

Program to the needs of individual

States while ensuring that households

continue to receive timely, accurate and

fair service. More specifically, section

835 removed the requirement that the

Secretary design a uniform national

food stamp application form and

eliminated dictates concerning what

information had to be included on the

application form and in what particular

location on the form. Section 11(e) of

the Act now provides that State agencies

must develop their own food stamp

application form and establish their

own operating procedures for local food

stamp offices. States may now use

electronic storage of applications and

other information, including the use of

electronic signatures. States must

provide a method of certifying and

issuing benefits to eligible homeless

individuals.

While the language of amended

Section 11(e) encourages personal

responsibility and provides more State

agency flexibility, it retains key specific

provisions to protect a client’s right to

timely, accurate, and fair service. The

Act continues to: (1) Require that

applications be processed within 30

days; (2) permit households to apply for

participation on the same day they first

contact the food stamp office during

office hours; (3) consider an application

as ‘‘filed’’ on the date the applicant

submits the application with the

applicant’s name, address, and signature

(benefits are calculated based on the

filing date of an application); (4) require

that an adult representative certify the

70146 Federal Register / Vol. 65, No. 225 / Tuesday, November 21, 2000 / Rules and Regulations

truth of the information on the

application, including citizenship or

alien status of each member, and that

such signature is sufficient to comply

with any provision of Federal law

requiring applicant signatures; and (5)

require that the State agency provide

each household, at the time of

application, a clear written statement

explaining what acts the household

must perform to cooperate in obtaining

verification and otherwise complete the

application process.

In the NPRM, we proposed to amend

7 CFR 273.2, ‘‘Application processing,’’

to incorporate the new requirements of

Section 11(e) of the Act, as amended by

various sections of PRWORA. In

addition, we proposed a major

streamlining of the current regulations

as part of a larger effort to reduce the

volume of Federal regulation.

In the NPRM, we sought to achieve a

new balance in the regulations between

maintaining customer protections in the

application process and providing

States greater flexibility in

administering the program. We received

a large volume of comments on our

proposed changes. Commenters

representing State agencies generally

supported the changes, but often

requested additional streamlining which

would provide even greater flexibility to

States in operating the program.

Commenters representing the advocacy

community, however, strongly objected

to many of the proposed changes on the

grounds that we were removing

important safeguards for applicants.

These commenters requested that

existing rules be restored and also

sought the adoption of new provisions

that would strengthen customer rights.

The significant disagreement among

commenters over the discretionary

provisions of the NPRM have caused us

to reconsider the merit of many of the

proposed changes. While existing

regulations are highly detailed, they do

provide a national standard of customer

service that promotes the basic statutory

purpose of providing timely, accurate

and fair service to applicants for, and

participants in, the Food Stamp

Program. In addition, given the sharp

decline in program participation among

eligibles since the passage of PRWORA

and acknowledged problems with

program access in several areas, we

must question the desirability at this

time of removing many of the

protections provided applicants and

participants under current regulations.

Given these considerations, we have

decided not to finalize the discretionary

provisions proposed in the NPRM. At

this time, we are finalizing only those

changes to current regulations

necessitated by PRWORA. For the other

sections of 7 CFR 273.2, we will be

retaining current rules.

Title of Part 273.2

In the NPRM, we proposed to change

the title of 7 CFR 273.2 from

‘‘Application processing’’ to ‘‘Office

operations and application processing.’’

We received no comments on the

proposal and are adopting it as final.

General Purpose—7 CFR 273.2(a)

In the NPRM, we proposed to replace

current paragraph (a), entitled ‘‘General

purpose,’’ with a new paragraph (a),

‘‘Office operations.’’ The new paragraph

would incorporate into the regulations

the new standards for operating food

stamp offices contained in Section

11(e)(2)(a) of the Act, as amended by

Section 835 of PRWORA. Specifically,

new paragraph (a) would require the

following: (1) That State agencies

establish their own procedures

governing office operations that the

State agency determines best serve

households in the State, including

households with special needs; (2) that

State agencies provide timely, accurate,

and fair service as required by Section

835 of PRWORA; (3) that State agencies

not impose a processing requirement for

another assistance program as a

condition of food stamp eligibility; and

(4) that State agencies have a procedure

in place for informing persons who wish

to apply for food stamps about the

application process and their rights and

responsibilities.

The comments received on this

proposal were all supportive of the

proposed amendment. One commenter

did fear that the prohibition on

imposing processing requirements for

other assistance programs as a condition

of food stamp eligibility might prohibit

States from utilizing household

information obtained under the

requirements of another program which

may affect the household’s food stamp

eligibility. This is not correct. The State

may consider household information

obtained when a household applies for

another public assistance program when

determining a household’s eligibility for

food stamps. The State, however, may

not require a household that is applying

only for food stamps to answer

questions on a joint application or

submit any information that is not

needed to complete a food stamp

eligibility determination.

The change to 7 CFR 273.2(a) is

necessary to reflect the new standards

for operating food stamp offices

contained in section 835 of PRWORA,

so we are adopting the change as final.

However, in the NPRM we had

proposed to move many of the sentences

in current paragraph (a) to other

sections under 7 CFR 273.2. Since we

are not finalizing many of the changes

to the other parts of 7 CFR 273.2

proposed in the NPRM, we are restoring

current paragraph (a) in the regulations.

That paragraph will be renumbered

(a)(2), and entitled ‘‘Application

processing.’’

Food Stamp Application—7 CFR

273.2(b)

Current paragraph (b) lists the

requirements for the food stamp

application form, including the

mandatory content for each form and

the requirement that deviations from the

national application form be approved

by FNS. In the NPRM, we proposed to

amend paragraph (b) to reflect new

requirements related to the food stamp

application form in Sections 11(e) of the

Act, as revised by section 835 of

PRWORA. Section 835 amended section

11(e) of the Act to remove the list of

mandatory application content

requirements. It also amended Section

11(e)(2) to require that State agencies

design their own application forms, and

to provide that the application form may

include the electronic storage of

information and the use of electronic

signatures.

Specifically, we proposed to amend 7

CFR 273.2(b) to require that State

agencies design their own application

forms, provide that the application form

may include the electronic storage of

information and the use of electronic

signatures, and remove the requirement

in current paragraph (b)(3) regarding the

need for prior FNS approval of Statedesigned applications which deviate

from the Federally designed application.

We also proposed to add a new

paragraph 7 CFR 273.2(b)(2) entitled

‘‘Application contents,’’ which would,

among other things, replace the list of

mandatory application content

requirements with a general

requirement that the application must

contain all necessary information to

comply with the Act and regulations.

Finally, we proposed to add a new

paragraph 7 CFR 273.2(b)(3) entitled

‘‘Jointly processed cases,’’ which would

set forth requirements for the processing

of joint applications used by States to

determine an applicant’s eligibility for

other assistance programs in addition to

the Food Stamp Program.

A number of commenters objected to

the proposed changes to 7 CFR 273.2(b).

Specifically, many opposed our

decision to remove the existing

mandatory application contents

requirements relating to the right of a

household to file an incomplete

Federal Register / Vol. 65, No. 225 / Tuesday, November 21, 2000 / Rules and Regulations 70147

application for food stamps. Under

current regulations at 7 CFR

273.2(b)(1)(iv) through (vii), each

application form must contain: (1) A

place on the front page of the form

where the applicant can write his/her

name, address, and signature; (2)

notification on or near the front page of

the application of the household’s right

to immediately file the application as

long as it contains his or her name,

address and signature; (3) a description

on or near the front page of expedited

service requirements; and (4)

notification on or near the front page of

the application that benefits are

provided from the date of application.

Commenters felt that without these

notifications, households may be

unaware of their right under Section

11(e)(2)(B)(iv) of the Act to file an

incomplete application, and would

likely postpone applying for food

stamps until they have time to complete

the entire application form.

We agree with the commenters that

much of the information currently

required in 7 CFR 273.2(b) should be

retained in the regulations. This

information, though no longer specified

in the Act, is necessary to meet the

standard set by PRWORA for providing

timely, accurate, and fair service to

applicants for, and participants in, the

Food Stamp Program. Therefore, we are

withdrawing most of our proposals to

amend 7 CFR 273.2(b) and will retain

current regulations. However, we are

making some changes to the existing

rules at 7 CFR 273.2(b)(1). In response

to comments, we are adding language to

7 CFR 273.2(b)(1)(iii) to make it clear

that the applicant is certifying to the

citizenship or eligible alien status of

only those household members applying

for benefits. We are adding a sentence

to 273.2(b)(v) that regardless of the type

of system a State agency uses (paper or

electronic) it must provide a means for

the applicant to immediately begin the

application process with name, address

and signature.

We are adding a new paragraph

273.2(b)(1)(viii) to incorporate the latest

nondiscrimination statement

appropriate for the Program. USDA

Departmental Regulation (DR) 4300–3,

Public Notification Policy, dated

November 16, 1999, establishes the

policy for ensuring positive and

continued notification of the USDA

equal opportunity policy to the public.

DR 4300–3 provides for three

nondiscrimination statements. These

statements govern: (1) Federallyconducted programs; (2) Food Stamp

Program recipient agencies; and (3)

Special Nutrition Programs and other

recipient agencies. Interested readers

may visit the FNS web site

(www.fns.usda.gov) and click on ‘‘Civil

Rights’’ to learn more about FNS’

nondiscrimination policy.

Finally, in new paragraph

273.2(b)(1)(ix), we are incorporating

language from paragraph 273.2(b)(3)

which requires that multi-program

application forms clearly afford

applicants the option of answering only

those questions relevant to the program

or programs for which they are

applying. We are revising current

paragraph (b)(3) in its entirety to

incorporate changes necessitated by

PRWORA. That paragraph, which

requires States to seek prior FNS

approval for State-designed applications

which deviate from the Federally

designed application, is no longer

necessary because Section 835 of

PRWORA eliminated the requirement

that State agencies use a Federallydesigned application. However, we are

incorporating the language that was

proposed at (b)(3) to address comments

regarding improving access to the

Program.

Several commenters expressed

concern that the current practice of

asking all household members for

information regarding their citizenship,

immigration status, and possession of

social security numbers was a

significant barrier to participation for

certain eligible low-income individuals.

U.S. citizen and eligible alien members

of households containing

undocumented aliens or legal aliens

whose immigration status does not

permit them to work may feel

apprehensive about providing the State

agency with sensitive information about

the lack of documentation or social

security numbers of certain household

members. On September 21, 2000, this

Department and the DHHS issued a

letter to all State health and welfare

officials, subject: ‘‘Policy Guidance

Regarding Inquiries into Citizenship,

Immigration Status and Social Security

Numbers in State Applications for

Medicaid, State Children’s Health

Insurance Program (SCHIP), Temporary

Assistance for Needy Families (TANF),

and Food Stamp Benefits’’ (the ‘‘TriAgency Letter’’). Readers may visit the

FNS web site (www.fns.usda.gov) and

click on ‘‘Food and Nutrition Service’’,

then ‘‘Food Stamps,’’ and then ‘‘Joint

Guidance on Citizenship, Immigration &

SSNs.’’ The Tri-Agency Letter addressed

the concerns of the immigrant

community by providing an option to

State agencies to structure application

forms so that households are allowed to

declare certain household members to

be ‘‘non-applicants,’’ if they did not

wish to answer questions about

citizenship, immigration status, or the

possession of a social security number.

Any household member so designated

would be determined to be an ineligible

household member under § 273.11(c)

and would not receive Program benefits.

Further, such ineligible household

members must otherwise cooperate fully

by disclosing their income, resources,

and any other information the State

agency needs to determine the eligibility

and benefit amount of the other

household members.

If a state decides not to permit

individual family or household

members to decline to provide

citizenship, immigration status or SSN

information early in the application

process, the state must still ensure that

their applications forms promote

enrollment of eligible families and

eliminate the potential for

discriminatory impact on eligible

applicants based on national origin.

Furthermore, even in those states that

elect not to offer applicants early

opportunity to decline to reveal

citizenship, immigration status, or SSN

information, long-standing policy

directs that when a household member

does not disclose his or her citizenship,

provide or apply for an SSN, or

establish satisfactory immigration

status, the State agency must determine

that household member ineligible for

benefits, but cannot deny benefits to

eligible citizen or immigrant household

members simply because other

household members fail to disclose such

information.

Some commenters suggested that the

final rule should require State agencies

to make early declaration of ‘‘nonapplicant’’ status available for

individuals who know they do not have

documents to prove their immigration

status, or cannot possess social security

numbers. In this regard, the Department

is still very concerned that current State

agency application forms and processes

inadvertently may have the effect of

deterring eligible applicants and

recipients who live in immigrant

households from enjoying equal

participation and access to Program

benefits based on their national origin,

in violation of section 11(c) of the Food

Stamp Act and Title VI of the Civil

Rights Act of 1964. However, as the

NPRM did not address this issue at all,

we will not proceed further without

consultation with all partners and

stakeholders through a future

rulemaking. In the meantime, the

Department encourages State agencies to

adopt the option allowing them to

adjust their application forms and

processes to accommodate households

containing some members who know

70148 Federal Register / Vol. 65, No. 225 / Tuesday, November 21, 2000 / Rules and Regulations

they do not have documents to prove

their immigration status or who might

have difficulty in applying for a social

security number.

7 CFR 273.2(c)—Filing an Application

In the NPRM, we proposed to amend

paragraph 7 CFR 273.2(c), ‘‘Filing an

application.’’ We proposed to add a new

paragraph 7 CFR 273.2(c)(1) entitled

‘‘Filing process.’’ The new paragraph

would: (1) Retain the requirement

appearing in the first sentence of current

paragraph (c)(1) regarding the manner in

which applications can be submitted;

(2) include new language that clarifies

that the application may be submitted

by facsimile transmission as well as in

person, through an authorized

representative, or by mail; (3) include

new language that recognizes that some

State agencies are using on-line or other

types of automated applications that

may require the applicant to come into

the local office to complete the

application; (4) include the requirement

appearing in the fifth sentence of

current paragraph (c)(1) that allows an

applicant to file an incomplete

application provided it contains at the

least the applicant’s name, address, and

signature; (5) remove the language

appearing in the sixth sentence of

current paragraph (c)(1) which requires

State agencies to document the date the

application was filed by recording on

the application the date it was received

by the food stamp office; and (6) provide

that applications signed through the use

of electronic signature techniques and

applications containing handwritten

signatures which are then transmitted to

the appropriate office via fax or other

electronic transmission technique are

acceptable.

We proposed to add a new paragraph

7 CFR 273.2(c)(2) entitled ‘‘Households

right to file.’’ The new paragraph would

require the State agency to: (1) Make

food stamp applications readily

accessible to all potentially eligible

households or to anyone who requests

one; (2) provide an application in

person or by mail to anyone who

requests one; (3) mail an application by

the next business day to anyone who

requests an application by mail; (4)

allow a household to file an application

on the same day it contacts the food

stamp office during office hours; (5) post

signs or make available other advisory

materials explaining a person’s right to

file an application on the day of their

first contact with the food stamp office

and the application processing

procedures; (6) notify all persons who

contact a food stamp office and either

request food assistance or express

financial and other circumstances

which indicate a probable need for food

assistance, of their right to file an

application and encourage them to do

so.

New paragraph (c)(2) would also

address the handling of applications

filed at the wrong certification office.

The new paragraph would: (1) Continue

to allow the State agency to require

households to file an application at a

specific certification office or allow

them to file an application at any

certification office within the State or

project area; (2) require that if an

application is received at an incorrect

office, the State agency advise the

household of the address and telephone

number of the correct office; (3) require

the State agency to forward an

application received at an incorrect

office to the correct office not later than

the next business day; and (4) remove

the requirement currently located in the

third sentence of 7 CFR 273.2(c)(2)(ii)

that the State agency inform the

household that its application will not

be considered filed and the processing

standards must not begin until the

application is received by the

appropriate office.

We proposed to add a new paragraph

7 CFR 273.2(c)(4) entitled ‘‘Notice of

required verification.’’ The new

paragraph would require that State

agencies: (1) Provide households, at the

time of application for certification and

recertification, with a clear written

statement of what acts the household

must perform in cooperating with the

application process, and identify

potential sources of required

verification; and (2) inform special

needs households of the State agency’s

responsibility to assist them in

obtaining required verification,

providing the household is cooperating

with the State agency. Special needs

households were defined as including,

but not limited to, households with

elderly or disabled members,

households in rural areas with lowincome members, homeless individuals,

households residing on reservations,

and households in areas in which a

substantial number of members of lowincome households speak a language

other than English.

Finally, we proposed to remove

current paragraph (c)(5), and to

redesignate current paragraph

273.2(c)(6) ‘‘Withdrawing an

application,’’ as new paragraph (c)(3).

Numerous commenters objected to

some of the proposed changes to 7 CFR

273.2(c) on the grounds that we were

removing important safeguards for

applicants. For example, one

commenter opposed the revision to 7

CFR 273.2(c)(1) which deleted the

requirement that States encourage a

household to file an application on the

same day the household first contacts

the food stamp office for assistance. The

commenter thought that the language to

encourage same day filing should be

retained and expanded to prohibit State

agencies from suggesting any

disadvantages there might be to

applying for food stamps and require

them to explain that possible

disadvantages of applying for other

programs do not relate to the Food

Stamp Program.

Many commenters also objected to

our proposal to repeal the current

requirement that the food stamp office

document the date an application is

filed by recording on the application the

date it is received. The commenter

thought that, rather than delete the

requirement, the Department could

make it more flexible to account for the

different ways that States may have for

recording application filing dates, such

as through automated systems.

Many commenters also objected to the

proposal to provide States with an extra

day for mailing an application to a

household that requests one over the

telephone and for mailing applications

to the correct office when filed at the

incorrect office. The commenters noted

that the proposed changes will likely

result in affected households losing onethirtieth of their benefits for the month

of application. The commenter

recommended that the proposed

regulations be amended to offer States

the option of forwarding a misfiled

application by mail the day it is

received or by fax the next day. The

commenter also recommended that the

final rules provide an exception to the

current requirement for mailing an

application the day it is requested by

phone to allow for when the request is

made after the last mail collection of the

day.

Some commenters believed that the

proposed provision did not go far

enough in providing flexibility for State

agencies, and recommended further

simplification to the regulations. One

commenter remarked that the proposed

regulations at 7 CFR 273.2(c)(2), (c)(3),

and (c)(4) appeared to be more

prescriptive than required by the Food

Stamp Act and Section 835 of PRWORA

and should be redrafted in the final rule

to allow States the flexibility prescribed

by the Act to establish their own

procedures in the operation of local

offices.

Giving the considerable disagreement

on the proposed provisions among

commenters, and our commitment to

retaining provisions in the regulations

that meet the goal of PRWORA to

Federal Register / Vol. 65, No. 225 / Tuesday, November 21, 2000 / Rules and Regulations 70149

provide timely, accurate, and fair

service to applicants for, and

participants in, the Food Stamp

Program, we have decided to withdraw

the proposed changes to 7 CFR 273.2(c).

We may consider revising these

regulations in a future proposed

rulemaking. At this time, we are

implementing only those changes to the

existing regulations at 7 CFR 273.2(c)

that are necessitated by PRWORA.

Current regulations at 7 CFR

273.2(c)(1) require that households must

file food stamp applications by

submitting the forms to the food stamp

office either in person, through an

authorized representative, or by mail.

No provision is made for the electronic

submission of applications. As noted

above, however, Section 11(e)(2)(C) of

the Act, as amended by Section 835 of

PRWORA, now allows for the use of

signatures provided and maintained

electronically, for the storage of records

using automated retrieval systems only,

and for any other feature of a State

agency’s application that does not rely

exclusively on the collection and

retention of paper applications or other

records. In accordance with the revised

provisions of Section 11(e)(2)(C) of the

Act, we had proposed in the NPRM to

revise section 7 CFR 273.2(c)(1) to

specifically provide that applications

signed through the use of electronic

signature techniques and applications

containing handwritten signatures

which are then transmitted to the

appropriate office via fax or other

electronic transmission technique are

acceptable means of filing a food stamp

application.

We received several comments in

support of the change, and are finalizing

the provision at 7 CFR 273.2(c)(1). One

commenter thought that the household

should be given a paper printout of

whatever information is recorded

electronically in order to be able to

review it and correct errors before the

certification process has gone too far.

We agree with the commenter that the

household should be able to verify the

information that has been recorded.

However, we believe how that should be

done should be left up to the State

agency and we are amending the final

rule accordingly.

We are making three additional

changes to the current regulations in

response to comments. The current

regulations at 7 CFR 273.(2)(c)(1)(i)

provide that the State agency must

encourage households to file an

application on the same day the

household or its representative contacts

the food stamp office in person or by

telephone and expresses interest in

receiving food stamps. One commenter

pointed out that some applicants for

assistance may not be aware of the Food

Stamp Program, or aware that they

might be eligible, so they don’t express

interest in the specific Program, even

though they express concerns about

food security. Therefore, in response to

comments and to increase access to the

Program, we are adding that the State

agency must encourage a household to

file an application for the Program if it

expresses concerns about food

insecurity.

Current regulations at 7 CFR

273.2(c)(2)(ii) provide that the

certification office shall offer to forward

the household’s application to the

appropriate office that same day if the

household has completed enough

information on the application to file.

One commenter suggested that State

agencies may not be able to forward the

application on the same day. In order to

give the State agencies some flexibility,

while at the same time protecting the

interests of the applicant, this

commenter suggested we allow the State

agency to forward it the next day,

providing that the State agency ensures

it arrives in the appropriate office the

day it was forwarded. In other words, it

can send it electronically, via fax, or

courier, as long as it arrives the day it

was forwarded. We agree that this will

afford the State agency flexibility and

protect the applicant. Therefore, we are

modifying 7 CFR 273.2(c)(2)(ii) to

provide that the State agency may

forward the application the next day by

any means that ensure the application

arrives at the appropriate office the day

it was forwarded.

One commenter expressed concern

that in an attempt to divert households

from public assistance, the State agency

might inadvertently divert a household

from applying for food stamps. This

commenter suggested that in order to

protect applicants rights, we amend 7

CFR 273.2(c)(2)(i) and remind State

agencies not to discourage households

from applying for food stamps. In

response to these comments and in an

attempt to increase Program access, and

in conformance with changes we are

making at 7 CFR 273.2(j) which are

discussed later in this preamble, we are

providing at 7 CFR 273.2(c)(2)(i) that if

the State agency attempts to discourage

households from applying for cash

assistance, it shall make clear that the

disadvantages and requirements of

applying for cash assistance do not

apply to food stamps. In addition, it

shall encourage applicants to continue

with their application for food stamps.

The State agency shall inform

households that receiving food stamps

will have no bearing on any other

program’s time limits that may apply to

the household.

Finally, current regulations at 7 CFR

273.2(c)(3) require that State agencies

make application forms readily

accessible to potentially eligible

households and provide an application

form to anyone who requests one. One

commenter pointed out that many State

agencies now use paperless or

interactive electronic systems and no

longer keep paper applications in stock.

Therefore, to accommodate the various

types of systems in use by State

agencies, and to ensure that applicants

receive timely, accurate and fair service,

we are modifying the language at 7 CFR

273.2(c)(3) to provide that regardless of

the type of system a State agency uses

(paper or electronic), the State agency

must provide a means for applicants to

begin the application process

immediately by providing a name,

address and signature.

Household Cooperation—7 CFR

273.2(d)

In the NPRM, we proposed to amend

current regulations at 7 CFR 273.2(d),

which contain provisions related to

household cooperation in the

application process and quality control

reviews. We proposed to retain all of the

contents of current paragraph (d)(2), and

amend paragraph (d)(1) as follows: (1)

Rename the paragraph ‘‘Cooperation

with application process’’; (2) remove

the example of ‘‘refusal to cooperate’’

appearing in current paragraph (d)(1);

(3) expand on the policy regarding

household cooperation with subsequent

reviews to provide that a subsequent

review can be in the form of an in-office

interview; and (4) remove the last two

sentences of current paragraph (d)(1),

which concern the failure of a person

outside of the household to cooperate

with a request for verification.

One commenter strongly opposed our

amendments to 7 CFR 273.2(d)(1). The

commenter believed that in revising the

paragraph, we had omitted words and

phrases that were critical to preserving

the rights of food stamp participants and

which may leave the requirements of

the paragraph open to misinterpretation.

For example, existing regulations

require that for a food stamp office to

deny a household’s application for

refusal to cooperate, the household must

be able to cooperate but clearly

demonstrate that it will not take actions

it can take that are required to complete

the application process. In the proposed

rule, we had removed the words ‘‘it can

take’’ from the sentence, believing them

to be unnecessary. The commenter

believed, however, that removal of the

words it can take would leave the

70150 Federal Register / Vol. 65, No. 225 / Tuesday, November 21, 2000 / Rules and Regulations

sentence open to new interpretations,

including the possibility that a

household could be denied food stamps

based on its failure to produce a

document that has been destroyed or its

failure to obtain a note from its

estranged landlord.

The commenter also objected to our

proposal to remove the example of

‘‘refusal to cooperate’’ appearing in

current paragraph (d)(1). The example,

which is meant to illustrate the

difference between a household being

unable to cooperate and refusing to

cooperate in completing the application

process, states that to be denied for

refusal to cooperate, a household must

refuse to be interviewed and not merely

fail to appear for the interview. We

proposed removing the example because

there are numerous ways that a

household could refuse to cooperate,

and the example is not definitive. The

commenter believed, however, that the

example illustrates an important

principle—protecting applicants that

make good faith efforts to cooperate—

which does not exist in many TANF

programs, and which, without a

concrete example, may not be applied

properly by eligibility workers whose

primary training has been in AFDC and

TANF.

The commenter also objected to our

proposal to remove the last two

sentences of current paragraph (d)(1),

which concern the failure of a person

outside of the household to cooperate

with a request for verification. The first

of these sentences provides that the

State agency may not determine a

household to be ineligible when a

person outside of the household fails to

cooperate with a request for verification.

Section 835 of PRWORA amended

section 11(e)(3) of the Act to remove this

requirement. The last sentence of

current paragraph (d)(1) describes

certain individuals who are not

considered ‘‘outside’’ the household for

the purpose of the existing provision

and, because of the change brought

about by Section 835 of PRWORA, is no

longer necessary. We noted in the

proposed rule that removal of these two

sentences does not change current

policy because refusal to cooperate

continues to be defined as refusal by a

household member. The commenter

argued, however, that without a clear

statement in the regulations that a

household may not be determined

ineligible because of the failure of a

person outside the household to

cooperate with a request for verification,

eligibility workers are likely to fail to

apply the principle and incorrectly deny

applications.

We agree with the commenter that

clarity in the regulations is critical to

ensuring that all food stamp applicants

and participants receive timely, accurate

and fair service. Therefore, we are

withdrawing our proposal to amend

paragraph 7 CFR 273.2(d)(1) and we are

retaining the existing language of the

paragraph with one modification. We

are reminding State agencies that they

must also assist households in obtaining

the required verification if the

household is cooperating with the State

agency as provided for by paragraph 7

CFR 273.2(c)(5).

Interviews—7 CFR 273.2(e)

In the NPRM, we proposed to amend

current regulations at 7 CFR 273.2(e),

which address interview procedures.

Chief among the changes was a proposal

to eliminate the requirement that every

household have a face-to-face interview

at all recertifications. As discussed in

the NPRM, prior to PRWORA, the Act

did not contain an explicit provision

requiring food stamp applicants to be

interviewed. Rather, the requirement is

inferred. Section 11(e)(2) did provide

language which allowed elderly/

disabled households to request a waiver

of the in-office interview under certain

conditions. Section 835 of PRWORA

amended section 11(e)(2) of the Act to

remove this waiver language, thereby

eliminating any reference in the Act to

the fact that in-office interviews are

conducted. In consideration of the

removal of the waiver language and in

the spirit of PRWORA, the Department

chose to reevaluate current policy and

proposed in the NPRM to replace the

current interview requirement with the

requirement that a face-to-face interview

be required at the time of initial

certification and at least once every 12

months thereafter unless the household

is certified for longer than 12 months or

the face-to-face interview is waived by

the State agency. This proposal would

eliminate the requirement to conduct a

face-to-face interview at the time of

recertification if it occurs during the 12-

month period since the last face-to-face

interview.

In addition, we proposed to amend

current rules at 7 CFR 273.2(e)(2) which

address waivers of the interview

requirement. Prior to enactment of

PRWORA, the interview could only be

waived if requested by the household

because the household was unable to

appoint an authorized representative

and had no adult household members

able to come to the office because the

members were elderly, mentally or

physically handicapped, lived in a

location not served by a certification

office, had transportation difficulties, or

had similar hardships as determined by

the State agency. Section 835 of

PRWORA struck this waiver provision

from the Act and amended Section

11(e)(2) of the Act to provide State

agencies the authority to waive an

interview without first being requested

by a household. In the NPRM, we

proposed to amend 7 CFR 273.2(e) to

require the State agency to waive the inoffice face-to-face interview in favor of

a telephone interview or announced

home visit for household hardship

cases. The proposal allowed the State

agency to determine what constitutes

hardship cases. It also allowed the State

agency to waive the in-office interview

in favor of a telephone interview or

scheduled home visit for households

with no earned income if all of its

members are elderly or disabled. Under

the proposal, the State agency would

continue to be required to grant a faceto-face interview to any household that

requests one.

Most commenters were supportive of

our proposals to revise the face-to-face

interview requirements, which were felt

to be burdensome on both participants

and State agencies. Because of that

support and because the changes stem

from amendments to the Act made by

PRWORA, we are adopting the

proposals as final in this rule.

In addition to the above noted

changes, we also proposed in the NPRM

to further revise 7 CFR 273.2(e) to

simplify current provisions and provide

more State agency flexibility in the area

of scheduling interviews. However, we

received mixed remarks on these

proposed changes from commenters.

Several commenters, while supporting

the added flexibility provided to State

agencies, thought we did not go far

enough in simplifying current rules. For

example, several commenters requested

that we remove the current requirement

that the State agency hold applications

pending until the 30th day from the date

of application when an applicant misses

the scheduled interview or fails to

provide requested information or

verification within 10 days of the

request. This would allow States to take

immediate action to deny an application

after a missed interview or the

expiration of the 10-day period for

return of requested information.

Other commenters felt that the

proposed regulations did not provide

enough safeguards for food stamp

applicants and recipients. These

commenters thought that the rules

should more closely reflect the priority

the Administration has given to

preserving access to food stamps for

low-income families in need, and

should be amended to include

Federal Register / Vol. 65, No. 225 / Tuesday, November 21, 2000 / Rules and Regulations 70151

additional requirements, such as the

following: (1) The food stamp office

should routinely notify all applicants

about the possibility of waiving the faceto-face interview in cases of hardship

and the procedures for requesting such

waivers; (2) the food stamp office

should notify all applicants that they

may send an authorized representative

to their interview if they cannot attend

personally; (3) the food stamp office

should notify the applicant of the date

and time of the interview in person, by

telephone, or by letter mailed at least

seven days in advance of the scheduled

interview; (4) the food stamp office

should send an applicant that misses a

scheduled interview a notice informing

him or her of this fact. The notice

should ensure that the household has at

least 10 days (or, if longer, until the

thirtieth day following the date of

application) in which to contact the

food stamp office to reschedule an

interview before the application may be

denied and should provide a general

telephone number the applicant may

call to reschedule the appointment

without having to reach any particular

eligibility worker; (5) the food stamp

office should reschedule the interview

for any applicant that visits or calls the

office on or before the thirtieth day after

filing his or her application if the

household indicates a continued

interest in receiving food stamps; and

(6) the food stamp office should be

required to accommodate working

families in one of the following three

ways: (a) When the office is open during

hours the applicant does not work, offer

the applicant an interview time that

does not conflict with his or her work

schedule; (b) if the food stamp office is

not open during hours when the

applicant is not working, offer the

applicant a telephone interview,

perhaps during the applicants lunch

hour or scheduled break; or (c) attempt

to reschedule the first missed interview.

Given the considerable disagreement

among commenters on our proposals to

amend 7 CFR 273.2(e), and the

Department’s commitment to ensuring

that all food stamp applicants and

participants receive timely, accurate and

fair service, we have decided to

withdraw most of the proposed changes

not required by PRWORA and to retain

current rules. However, we are taking

this opportunity to remind State

agencies of current policy: (1) State

agencies should take into consideration

the needs of the household and

accommodate these needs when

scheduling interviews as much as

possible (such as scheduling interviews

for working households when the

applicant is not scheduled to work or

after hours); (2) State agencies should

schedule interviews so that the

household has at least 10 days to

provide requested verification before the

end of the 30 day processing period; (3)

State agencies may not request private

information from households during a

group interview; (4) State agencies may

not require households to report for an

in-office interview during their

certification period, though they may

request households to do so. For

example, State agencies may not require

households to report en masse for an inoffice interview during their

certification periods simply to review

their case files, or for any other reason.

The latter reminder is being

incorporated into the regulations at 7

CFR 273.2(e).

We are finalizing two proposed

changes put forth in the NPRM. Current

regulations at 7 CFR 273.2(e)(3) require

State agencies to schedule a second

interview if a household fails to attend

the first scheduled interview. In the

NPRM, we proposed to delete that

requirement. As noted in the NPRM,

some State agencies have found it

burdensome to schedule multiple

interviews and have found that a

household that fails to attend the first

scheduled interview frequently does not

attend a second scheduled interview.

For many years, we have granted State

agencies waivers of the requirement to

reschedule a missed interview, under

the waiver authority in 7 CFR 272.3(c),

on the conditions that the State agency

notify each household on the

application or interview appointment

notice that it is the household’s

responsibility to contact the State

agency to reschedule a missed

interview, and that the State agency not

deny the household’s application prior

to the 30th day after application.

As with many of our proposals,

comments received on our proposal to

remove the requirement that State

agencies reschedule a missed interview

were mixed. Some commenters strongly

supported the change, noting that

requiring State agencies to schedule a

second interview if the applicant fails to

attend the first scheduled interview is

not only burdensome but unnecessary,

because those households that miss the

first interview and do not reschedule it

on their own, frequently, if not always,

do not attend the second scheduled

interview either. Other commenters,

however, were concerned that changing

the policy could result in the denial of

food stamps to working families who,

unable to attend the first interview due

to a work conflict or sick child, may

have difficulty reaching the food stamp

office or scheduling an interview time

they can make before the end of the 30-

day period.

We recognize that a household may

not be able to attend a scheduled

interview. However, in the spirit of

PRWORA, which focuses on State

agency flexibility in the certification

process and household responsibility,

we are removing the requirement that

the State agency reschedule a missed

interview. However, we are adding a

requirement to 7 CFR 273.2(e)(3) that

the State agency must send a notice to

the households that miss their interview

appointments indicating that it missed

the scheduled interview and informing

the household that it is responsible for

rescheduling a missed interview. In

addition, we are reminding State

agencies that if the household contacts

the State agency within the 30 day

processing period, the State agency

must schedule a second interview. We

are making a conforming amendment at

273.2(h)(1)(i)(D). We are also adding a

statement to the same section that

reminds the State agency that it may not

deny a household’s application prior to

the 30th day after application if the

household fails to appear for the initial

interview.

We proposed at 7 CFR 273.2(e)(1) that

interviews may be conducted at the food

stamp office or another mutually

convenient location of the State

agency’s choosing, including a

household’s residence. One commenter

suggested we reword the statement to

provide that the location be ‘‘mutually

acceptable’’ as opposed to a ‘‘mutually

convenient location of the State

agency’s choosing.’’ The commenter

argued that a mutually acceptable

location is by definition acceptable to

the food stamp office. In addition, this

commenter stated that the regulations as

written could be read that applicants

must be interviewed in their homes.

Since home interviews can be viewed as

invasive and demeaning, the household

should be allowed to suggest another

location. If the alternative is

inconvenient to the food stamp office, it

can always decline. We agree with the

commenter that the State agency and the

household should agree on a location.

Therefore, we are modifying the

proposed language and finalizing it to

provide that interviews may be

conducted at the food stamp office or

another mutually acceptable location,

including a household’s residence.

However, we are also reminding State

agencies that if the interview is to be

conducted in a household’s residence, it

must be scheduled in advance with the

household.

70152 Federal Register / Vol. 65, No. 225 / Tuesday, November 21, 2000 / Rules and Regulations

We proposed at 7 CFR 273.2(e)(2) that

the State agency must waive the face-toface interview in favor of a telephone

interview on a case-by-case basis

because of household hardship

situations. One commenter said that

since food stamp offices are no longer

required to reschedule missed

interviews, the opportunity for a waived

interview becomes much more

important, especially for those

applicants for whom coming into the

office is a hardship. However, few

households are aware of this option.

Therefore, this commenter suggested

that we require State agencies to notify

households of their right to a waiver of

the face-to-face interview. We agree

with this comment. Therefore, at 7 CFR

273.2(e)(2) we are adding the

requirement that State agencies must

notify the applicant that it will waive

the face-to-face interview for hardship

situations as determined by the State

agency. In addition, we are retaining

current rules which provide that

household hardship situations include,

but are not limited to: illness,

transportation difficulties, care of a

household member, hardships due to

residency in a rural area, prolonged

severe weather, or work or training

hours which prevent the household

from participating in an in-office

interview.

We are making an additional change

to current regulations at 7 CFR 273.2(e)

in response to comments. In their

remarks, several commenters objected to

the practice in some State offices of

scheduling interviews on a ‘‘first-come,

first-served’’ basis. Typically, a local

agency will establish a ‘‘quota’’ for the

number of applicants that staff can

interview during established working

hours. Potential applicants will begin to

line up in front of the office early in the

morning in hopes of getting an

interview that day. Once the number of

applicants in line reaches the ‘‘quota’’,

the local agency will accept no more

individuals for an interview. The local

agency will continue to accept

applications, but staff advise any further

potential applicants to come back the

next working day. Under this procedure,

a household may have to return to the

food stamp office several times in order

to be interviewed for the program. This

policy is not acceptable as it clearly

presents a barrier to participation for

certain groups, such as working

families, who cannot afford to take time

off repeatedly in an attempt to be

interviewed. It also violates the

principle implied in 7 CFR 273.2(e) that

the State agency schedule a specific date

and time for an interview for every

applicant household. Therefore, we are

amending the regulations at 7 CFR

273.2(e) to clearly require that the State

agency must schedule an interview for

each applicant that is not interviewed

on the day he or she submits an

application. To the extent practicable,

States should schedule the interview to

accommodate the needs of groups with

special circumstances, including

working families.

Verification—7 CFR 273.2(f)

Current 7 CFR 273.2(f) sets forth the

procedures, including the types of

documents required, for providing

verification to establish the accuracy of

statements on the application. In the

NPRM, we proposed to amend

paragraph (f) to incorporate changes

required by PRWORA and to respond to

the President’s regulatory reform

initiative. We received a vast number of

comments on our proposed changes to

this section. Many commenters thought

that while FNS had proposed some

useful simplification of requirements

related to verification, the agency did

not go far enough in streamlining

current requirements. These

commenters thought that the rules

should go further and, among other

things, leave verification requirements

to be decided by States, which should

be given the flexibility to target

verification requirements to items most

likely to cause payment errors and relax

others in the interest of facilitating

program access.

Other commenters strongly opposed

our decision to remove many of the

provisions in the current regulations.

The commenters thought that without

these provisions clearly stating

verification requirements State

eligibility workers could misapply

policies, effectively discouraging

households from following through with

their program application. For example,

one commenter thought that the

Department should reinstate the

requirements at current section

273.2(f)(1)(vii) which provide that any

documents which reasonably establish

the applicant’s identity must be

accepted and no requirement for a

specific type of document, such as a

birth certificate, may be imposed.

Without this language, the commenter

feared that some food stamp offices

would insist that a household produce

the one form of verification they

consider ‘‘best’’ even if the applicant

lacks that form of identity. The same

commenter thought that FNS should

reinstate in section 273.2(f)(1)(vi) a cross

reference to section 273.3(a), which

prohibits States from establishing

durational residency requirements. The

commenter notes that while section

273.3(a) would continue to prohibit

durational residency requirements,

without a cross-reference to that

provision in the verification rules, it

could be missed by many eligibility

workers, resulting in improper denials.

Given the considerable disagreement

among commenters on our discretionary

proposals to amend 7 CFR 273.2(f), we

have decided to withdraw those

proposed changes and retain current

regulations. We may consider again

proposing revisions to 7 CFR 273.2(f) in

a future rulemaking. At this time, we are

adopting into the regulations changes

necessitated by PRWORA.

In response to comments, we are

retaining one sentence from the NPRM

in the final rule. The final rule at 7 CFR

273.2(f) will remind State agencies to

give households at least 10 days to

provide required verification in

accordance with 7 CFR 273.2(h)(1)(i)(C)

and refer State agencies to 7 CFR

273.2(i)(4) which contain the

verification procedures for expedited

service cases.

The regulations at current paragraph

(f)(1)(xi) provide the requirements for

verifying the shelter costs of homeless

households who claim shelter costs

greater than the homeless household

shelter standard. In the NPRM, we

proposed to revise the first sentence of

this section to conform with Section 5(e)

of the Act, 7 U.S.C. 2015(e)(5), as

amended by Section 809 of PRWORA,

which establishes an optional homeless

household shelter deduction. This

PRWORA change is discussed later in

this preamble. The revised sentence

requires homeless households claiming

shelter expenses to provide verification

of their shelter expenses in order to

qualify for the homeless shelter

deduction if the State agency has such

a deduction. We also proposed to

remove the language currently

appearing in the second and third

sentences of the paragraph which

requires the eligibility worker to use

prudent judgment in determining if the

homeless household’s verification of

shelter expenses is adequate and

provides an example. These sentences

do not provide specific verification

requirements and thus, we believed, are

not necessary.

One commenter objected to requiring

verification of shelter expenses over and

above the homeless shelter deduction.

The commenter pointed out that under

section 5(e)(5) of the Act, States are not

required to limit this deduction to

households that can verify shelter costs.

States may choose not to do so in

recognition of the fact that when people

pay for temporary shelter, it is

Federal Register / Vol. 65, No. 225 / Tuesday, November 21, 2000 / Rules and Regulations 70153

commonly through informal

transactions that are impossible to

verify. The commenter expressed

concern that if the final rules mandate

verification of these expenses, they are

likely to result in the effective

elimination of this deduction: States

may find verifying incidental shelter

expenses too burdensome and errorprone and drop the deduction, or; in

those States that maintain it, few

homeless households would produce

satisfactory verification. We agree with

this commenter. Therefore, we are

deleting the requirement at 7 CFR

273.2(f)(1)(xi). We are moving that

provision to 7 CFR 273.2(f)(2)(iii) under

which States may verify the information

if questionable. In addition, several

commenters objected to our intention to

remove the second and third sentences

of paragraph (f)(1)(xi). One commenter

thought that eliminating the option of

allowing State agencies to use prudent

judgment if the household claims

shelter expenses but is unable to

provide verification places an undue

burden upon this very vulnerable

population. We agree with the

commenters that retaining the last two

sentences in current paragraph (f)(xi)

may prevent an unnecessary verification

burden on homeless households, and

we are retaining the two sentences in

this rule at 7 CFR 273.2(f)(2)(iii).

Current paragraph (f)(4)(i) and (ii)

provide that the State agency may use

a collateral contact to verify information

provided by an applicant. One

commenter expressed concern that

collateral contacts impair the

confidentiality protections of the

statute. This commenter warned that an

inquiry from the food stamp office

makes it obvious that a household has

applied for benefits. This might be an

embarrassment to the household.

Therefore, to respond to this

commenter’s concerns, we are revising 7

CFR 273.2(f)(4)(ii) to provide that when

talking with a collateral contact, State

agencies should disclose only the

information that is absolutely necessary

to get the information being sought.

State agencies should avoid disclosing

that the household has applied for food

stamps, and should not disclose any

information supplied by the household,

especially information that is protected

by 7 CFR 273.1(c). State agencies should

also not suggest that the household is

suspected of any wrong doing.

Current paragraph (f)(4)(iii) governs

use of home visits in the event

documentary evidence is insufficient.

One commenter expressed concern that

some State agencies may justify home

visits for the entire caseload or certain

segments of the caseload by asserting

that certain households are more errorprone. Certainly our intention in this

provision is not to sanction universal

mandatory home visits or home visits

for households that fit error-prone

profiling. Certainly rumors of such a

policy could have a chilling effect on

program participation. We are taking

this opportunity to remind State

agencies that home visits are to be used

only when documentary evidence is

insufficient to make a firm

determination of eligibility or benefit

level, and the home visit is announced

in advance. In addition, in response to

this commenter and to improve Program

access, we are amending 7 CFR

273.2(f)(4)(iii) to provide that home

visits are to be used on a case-by-case

basis where the supplied documentation

is insufficient. Simply because a

household fits a profile of an errorprone household doesn’t mean that it

has not provided sufficient verification.

In addition, we are reminding State

agencies to assist the household in

obtaining verification in accordance

with 7 CFR 273.2(c)(5). The commenter

also suggested that we broaden the

prohibition on unannounced

investigatory home visits. Such an

action is beyond the scope of this rule.

However, we are taking this opportunity

to suggest that State agencies consult

their legal counsel on their authority to

stage unannounced home visits that are

intended to investigate fraud. Neither

the Food Stamp Act nor the Program

regulations provide authority for such

visits.

Current paragraph (f)(5)(i) requires

State agencies to help applicants with

verification, allows households to

supply documentary evidence in person

or through another means, prohibits

State agencies from requiring

households to present verification in

person, and requires the State agency to

accept any reasonable documentary

evidence provided by households.

Section 835 of PRWORA revised section

11(e) of the Act to remove the

requirement that State agencies assist

households in obtaining verification and

the prohibition against requiring

households to present additional proof

of a matter for which the State agency

already possesses current verification.

While PRWORA removed the

requirement to assist all households in

the verification process, there remains a

mandate to offer assistance to special

needs households.

Although Section 835 of PRWORA

did remove several requirements related

to verification from the Act, we have

decided not to change the substance of

the current regulation. We believe that

the current, long standing policies at 7

CFR 273.2(f)(5)(i) are a necessary

adjunct of the PRWORA requirement

that State agencies provide accurate,

timely, and fair service. This includes

the policy that States assist all

applicants in obtaining verification.

Although the Act now requires States to

assist, at a minimum, households with

special needs, we believe that in order

to satisfy the Act’s standard of timely,

accurate and fair service, States must be

required to assist all households in

obtaining verification. The final rule

does amend the current language to

allow households to submit

documentation by facsimile or other

electronic devices.

Current paragraph (f)(9) provides

procedures for using IEVS information

to verify eligibility and benefits. To

conform to the changes we previously

discussed under section 272.8, in the

final rule, we are amending the title of

7 CFR 273.2(f)(9) and the contents of

paragraph (f)(9)(i) to indicate that use of

IEVS is now a State option. If State

agencies do access IEVS, the procedures

contained in the remainder of paragraph

(f)(9) are still appropriate and, therefore,

we are making no other changes to the

section.

Current paragraph (f)(10) provides

procedures for verifying alien status

through the SAVE system. To conform

to the changes we previously discussed

under § 272.11, in this final rule, we are

amending the introductory paragraph of

7 CFR 273.2(f)(10) to indicate that use

of SAVE is now a State option. If State

agencies do access SAVE, the

procedures contained in the remainder

of paragraph (f)(10) are still appropriate

and, therefore, we are making no other

changes to the section.

We also proposed in the NPRM to

make a number of revisions to

paragraph (f) to reflect changes in the

procedures for verifying alien status in

the Food Stamp Program required by

PRWORA and other Federal laws. A

discussion of those proposed revisions

follows in the paragraphs set forth

below.

How Must State Agencies Verify Eligible

Alien Status?

Section 402 of PRWORA and Sections

503 through 509 of AREERA made

extensive changes in requirements for

alien eligibility which affect the

verification requirements. The changes

affecting eligibility are described below

under the discussion of alien eligibility

at section 273.4 in this final rule.

Section 432 of PRWORA also affects the

requirements for verification of alien

eligibility. Section 432(a) of PRWORA

and subsequent amendments required

the Attorney General to publish

70154 Federal Register / Vol. 65, No. 225 / Tuesday, November 21, 2000 / Rules and Regulations

regulations providing requirements for

verifying that a person applying for a

Federal public benefit is a qualified

alien or is a U.S. citizen or non-citizen

national and is eligible to receive the

benefit. The Department of Justice (DOJ)

developed Interim Guidance, which it

published in the Federal Register on

November 17, 1997 (62 FR 61344). State

agencies should also be aware that DOJ

will be publishing a final rule on

Verification of Eligibility for Public

Benefits. DOJ published the proposed

rule in the Federal Register on August

4, 1998 (63 FR 41662). Our proposed

rule referenced the forthcoming final

rule. We proposed that the Department

would incorporate into the final version

of this rule relevant changes to alien

verification procedures that DOJ’s

makes in its final rule. The Interim

Guidance provides currently acceptable

procedures for the verification of

citizenship, alien status, and military

connections. Section 432(b) of PRWORA

provided that not later than 24 months

after the date the verification regulations

are adopted, States that administer a

program that provides a Federal public

benefit must have in effect a verification

system that complies with the new

regulations. We proposed to remove

current paragraphs (f)(1)(ii)(B), (C), and

(D), which mandate the types of

documents that State agencies must use

for verification. State agencies may refer

to the DOJ Interim Guidance, Program

policy interpretations, and the Social

Security Administration (SSA)

procedures for obtaining work history

information. These sources provide

examples of verification, including

verification the household provides,

which State agencies may use in

developing their own verification

requirements.

The Department proposed to remove

current 7 CFR 273.2(f)(1)(ii)(A), which

requires the household to provide

verification that each alien is eligible. In

the introductory paragraph (f)(1)(iv), we

proposed that State agencies must verify

the immigration status of all aliens and

other factors relevant to the eligibility of

individual aliens prior to certification.

Other factors relevant to the eligibility

of individual aliens could be the date of

admission or date status was granted;

military connection; 40 qualifying

quarters of work coverage; battered

status; Indian, Hmong or Highland

Laotian status; place of residence on

August 22, 1996; or age on August 22,

1996. We also proposed to include in

new paragraph (f)(1)(iv) the provision

from the first sentence of current

paragraph (f)(1)(ii)(G), which provides

that an alien whose eligibility is

questionable is ineligible until the alien

provides acceptable documentation,

with two exceptions which would be

contained in new paragraphs (f)(1)(ii)(A)

and (B). We would remove the last

sentence of current paragraph

(f)(1)(ii)(G) because the reference to 7

CFR 273.11(c) is unnecessary. These

changes, would eliminate current

paragraph (f)(1)(ii)(G). In regard to

expedited service, State agencies would

have determined the eligible status of

aliens prior to certification, but could

postpone verification in accordance

with paragraph (i).

Pursuant to the President’s regulatory

reform initiative, we proposed to

remove the first two sentences and the

last sentence of current paragraph

(f)(1)(ii)(E) because they do not provide

any significant guidance to State

agencies and are unnecessary. New

paragraph (f)(1)(ii)(A) would include the

provisions appearing in the third and

fourth sentences of current paragraph

(f)(1)(ii)(E), with some changes in

wording for clarity. The third sentence

of current paragraph (f)(1)(ii)(E)

provides that when a State agency

accepts a non-INS document from the

household as reasonable evidence of

alien status, the State agency must send

the document to INS for verification.

The fourth sentence of current

paragraph (f)(1)(ii)(E) provides that the

agency must not delay, deny, reduce or

terminate an individual’s benefits while

awaiting such verification. With these

changes, current paragraph (f)(1)(ii)(E)

would be eliminated.

Several advocacy groups thought that

the introductory text of paragraph

(f)(1)(iv) (‘‘[t]he immigration status of

aliens must be verified.’’) would lead

State agencies to attempt to verify the

immigration status of ineligible aliens.

We did not intend such a result. The

final rule makes it clear that the

Department is authorizing State

agencies to verify only the status of

aliens claiming eligible immigration

status. Moreover, we are retaining the

language of the current rule indicating

that households must have the option to

withdraw the application or participate

without an alien who does not wish the

State agency to contact INS to verify his

or her status. We received only a few

comments on the proposal to require

State agencies to use the DOJ

verification guidance in developing

their verification procedures. One State

agency thought that the proposal to

make use of SAVE optional gave State

agencies the authority to verify the

immigration status of certain aliens only

if questionable. This is clearly not the

case. Verification of immigration status

is mandatory for all applicant alien

household members, whether or not a

State agency elects to use SAVE.

Another State agency felt that the

Department should not adopt by

reference unpublished DOJ rules which

might impose burdensome verification

requirements on State agencies. The

Department recognizes the State

agency’s concerns, and the final rule

deletes the reference to a future DOJ

final rule. However, as stated

previously, PRWORA section 432(a)

charges DOJ with the responsibility for

publishing rules for verification of alien

status and citizenship. PRWORA section

432(b) requires State agencies to comply

with such regulations. As of the date of

publication of this final rule, DOJ has

not published its final rule outlining the

verification requirements. However, we

understand that DOJ is making changes

to the rule in response to the comments

it received in the proposed rule. Once

DOJ issues its final rule, the Department

will review its provisions and determine

if further rulemaking is appropriate for

the Program.

We proposed a new paragraph

(f)(1)(iv)(B) to address verification of

alien eligibility when work history is

questionable. Section 402(a)(2)(B) of

PRWORA provides that aliens lawfully

admitted for permanent residence may

be eligible for food stamps if they can

be credited with 40 qualifying quarters

of work. The conforming amendment

proposed here would provide that State

agencies must obtain verification of

eligibility based on 40 qualifying

quarters of work before the State agency

may certify the alien, unless the State

agency or the applicant has submitted a

request to SSA regarding the number of

quarters of work that can be credited,

SSA has responded that the individual

has fewer than 40 quarters, and the

individual or the State agency has

documentation from SSA that SSA is

conducting an investigation to

determine if more quarters can be

credited. If the State agency can

document that SSA is conducting an

investigation, the individual may

participate for up to 6 months from the

date of the first determination that the

number of quarters was insufficient for

eligibility. This provision is based on an

interpretation of the phrase ‘‘has worked

40 qualifying quarters of coverage’’ set

forth in section 402(a)(2)(B)(ii) of

PRWORA. An immigrant, under the

express terms of section 402(a)(2)(B),

would be eligible for food stamp

benefits if the immigrant had actually

worked 40 qualifying quarters of

coverage, notwithstanding SSA’s

inaccurate or incomplete recording of

the immigrant’s work history. Food

Federal Register / Vol. 65, No. 225 / Tuesday, November 21, 2000 / Rules and Regulations 70155

stamp eligibility is premised on the

immigrant’s act of working the 40

quarters rather than SSA’s recording of

the immigrant’s work history. Thus, in

keeping with past practice concerning

the receipt of benefits pending the

completion of Federal government

verification, we proposed to permit

immigrants to receive food stamp

benefits for a maximum period of 6

months. We emphasized that food

stamp benefits pending the completion

of an SSA investigation are only

available to an alien who: (1) Is

admitted as a lawful permanent resident

under the Immigration and Nationality

Act (INA), i.e., an immigrant; (2) SSA

has determined has fewer than 40

quarters of coverage; and (3) provides

the State agency with documentation

produced by SSA indicating SSA is

investigating the number of quarters

creditable to the alien.

One advocacy group felt that

proposed 6-month period for resolution

of quarters of coverage disputes with the

SSA was arbitrary, unfair, and

noncompliant with the SAVE statute.

Moreover, they thought the Department

should allow participation pending the

outcome of any Federal agency’s

investigation of a matter which bears on

the individual’s eligible alien status,

and the State agency’s determination of

‘‘battery or extreme cruelty,’’ as long as

the alien is cooperating with the

investigation. We are partially adopting

this suggestion in the final rule. The

SAVE statute requires the Department to

accept an alien’s attestation of

‘‘satisfactory’’ alien status until verified

through SAVE. However, PRWORA

imposed new facets of verification of

eligibility factors for aliens which go far

beyond the verification of immigration

status with the INS which the SAVE

statute contemplates. For example, in

addition to immigration status, status as

a veteran and possession of 40 quarters

of Social Security coverage now have a

bearing on an alien’s eligibility. As

Congress did not amend the SAVE

statute to provide for attestation of

matters beyond those which the State

agency can confirm through INS, we

find no mandate to expand affirmation

of status to encompass verification of

information held in the files of other

Federal agencies. Nor do we believe that

Congress intended that we allow an

indefinite period for completion of the

verification process. After several years

of operating under the 6-month limit,

the Department is unaware of any

instances where SSA was unable to

complete a requested investigation

within the established time frame.

Accordingly, we are preserving this time

frame in the final rule. However, the

Department is using its discretionary

authority to add to the final rule a

provision requiring that State agencies

certify the individual pending the

results of an investigation for up to 6

months when the applicant or the State

agency has submitted a request to a

Federal agency for verification of

information which bears on the

individual’s eligible alien status. For

example, a State agency may find it

necessary to contact the Department of

Veterans Affairs to confirm an

immigrant’s veteran status. On the other

hand, we are unable to extend the same

procedure to an alien who is pursuing

qualified alien status based on the

outcome of a State agency’s

determination of battery or extreme

cruelty. There is a real distinction

between an alien seeking qualified

status based on battery and an alien who

already possesses an eligible

immigration status. An alien cannot

legally attest to food stamp eligibility

based on an immigration status she does

not yet possess. In order to have

qualified aliens status, the alien must

initiate a claim for such status and

receive a favorable determination from

the State agency. In this respect, such an

alien is in the position of an asylum

applicant or an applicant for

naturalization. Unless and until INS

actually grants the alien an eligible

immigration status, he or she remains

ineligible for the Program.

A commenter thought that State

agencies could read the proposed rule to

limit the verification of quarters of

coverage to information contained in

SSA’s files. We did not intend such a

reading of the rule. The commenter

correctly pointed out that SSA records

do not show current year earnings and

in some cases the last year’s earnings,

depending on the time of request. Also,

in some cases, an applicant may have

work from uncovered employment that

SSA does not document, but is

countable toward the 40 quarters test. In

both of these cases, the individual,

rather than SSA, would need to provide

the evidence need to verify the quarters.

While we believe that State agencies are

following the SSA guidance for

determining 40 quarters of coverage, we

did reword the final rule to make these

points clear. Finally, the same

commenter thought that State agencies

lack the resources to correlate 40

quarters of coverage information with

the immigrant’s possible participation

in a Federal means-tested public benefit

program during the time the quarters

were earned by the immigrant, or by a

parent or spouse. Consequently, the

burden of verifying that quarters are

countable would fall on the immigrant

himself. The commenter urged the

Department to limit verification of

participation in a Federal means-tested

public benefit program to those

situations where the State agency knows

of such participation based on a specific

communication from SSA or because

the State agency itself provided the

federal means-tested public benefit at

issue. Otherwise, the Department

should permit States agencies to rely

conclusively on reports of quarters from

SSA and to be immune from subsequent

QC scrutiny based on these decisions.

The Department is unwilling to adopt

this suggestion. First, such a policy

likely would defeat the purpose of the

statutory ban on counting quarters of

Social Security coverage of immigrants

who participate in Federal means-tested

benefit programs while they are earning

the quarters of coverage. Second, we are

retaining that requirement that State

agencies assist households in providing

required verification. Accordingly, State

agencies must devote sufficient

resources to observe the statutory

mandate with due diligence.

We proposed to remove current 7 CFR

273.2(f)(1)(ii)(F). That paragraph

specifies that the State agency must

provide alien applicants sufficient time

(at least 10 days) to provide verification

and that the State agency must provide

benefits timely. The time period for

providing verification would be

included in the introductory text of

paragraph (f). In as much as the

Department is not revising this

paragraph in the final rule, we are

restoring, but revising, the provision in

the final rule to delete the reference to

acceptance of non-INS documentation.

How Must State Agencies Verify U.S.

Citizenship or Non-Citizen National

Status?

Paragraph (f)(2)(ii) currently provides

requirements for verification of

citizenship if a household’s statement

that a household member is a U.S.

citizen is questionable. We proposed to

combine paragraphs (f)(2)(i) and (f)(2)(ii)

into a new paragraph (f)(2) and revise

the provisions regarding verification of

citizenship. We proposed to retain the

requirement that State agencies verify

citizenship only if it is questionable. We

also proposed to retain the provision

that participation in another program

that requires verification of citizenship

is acceptable proof of citizenship, if

verification was obtained for the other

program. As indicated above under the

discussion of verification of alien

eligibility, DOJ also has provided

guidelines for verification of

70156 Federal Register / Vol. 65, No. 225 / Tuesday, November 21, 2000 / Rules and Regulations

citizenship. Therefore, we proposed to

remove the verification guidance in

current paragraph (f)(2)(ii) and provide

in new paragraph (f)(2)(ii) that State

agencies must verify citizenship in

accordance with the DOJ guidance if a

household member’s citizenship status

is questionable.

State agencies and advocacy groups

generally supported the proposal to

verify a statement of citizenship only

when questionable. Several advocacy

groups asked the Department to restore

a deleted provision allowing a

declaration from a citizen that the

household member in question is a

citizen. One State agency felt that the

Department should not adopt by

reference unpublished DOJ rules which

might impose burdensome verification

requirements on State agencies. The

same State agency suggested that the

Department allow State agencies to

accept statements of parents on behalf of

children who as minors obtained

derivative citizenship when their

parents naturalized. The State agency

observes that many individuals cannot

produce documentation of this category

of derivative citizenship as the INS

documents cost $160.

In response to comments, we are

modifying the proposed language to add

a requirement to verify the non-citizen

national status of individuals whose

status is questionable, in addition to the

existing requirement to verify the U.S.

citizenship of individuals whose

citizenship is questionable. The

addition conforms to the final language

of section 273.4(a), as we are adding

U.S. non-citizen nationals to the groups

of individuals eligible for participation

in the Program. We are restoring the

language of the current regulations

requiring State agencies to accept the

written statement of a third party with

personal knowledge of the household

member’s U.S. citizenship or noncitizen national status. We are retaining

the requirement in the current

regulations, that, absent verification or

third party attestation of U.S.

citizenship or non-citizen national

status, the member whose citizenship is

in question is ineligible to participate

until the issue is resolved. State

agencies must treat such an individual

as an ineligible alien and treat the

income and resources as set forth in

section 273.11(c). Finally, we do not

believe it is necessary to include a

specific provision relating to

verification of the citizenship of

children who naturalize with their

parents. Under the final rule, a

naturalized parent, or other

knowledgeable third party, could attest

to the citizenship of the child, if the

State agency had reason to question the

child’s citizenship.

Normal Processing—7 CFR 273.2(g)

Delays in Processing—7 CFR 273.2(h)

In the NPRM, we proposed to

combine and revise the requirements in

7 CFR 273.2(g) and (h), which currently

address the procedures for processing

applications and handling delays in

processing, respectively, and

redesignate the new paragraph as 7 CFR

273.2(h). We proposed to include in

new paragraph (g) provisions related to

authorized representatives. This section

is addressed below. The proposed

changes to the requirements for

application processing were made to

allow State agencies to establish their

own operating procedures and to give

them more flexibility in processing

applications. In the NPRM, we proposed to amend

new 7 CFR 273.2(h) as follows: (1)

Retain in (h)(1) the policy contained in

current paragraph (g)(1) that State

agencies provide eligible households an

opportunity to participate within 30

days of the date of application; (2)

remove, as unnecessary, the third

sentence of current paragraph (g)(1)

referring to the special procedures in 7

CFR 273.2(i) for expedited service; add

to new paragraph (h)(1) the first

sentence of current paragraph (g)(3),

which requires that a notice of denial be

sent within 30 days if the household is

found to be ineligible; and (4) delete the

remainder of current paragraph (g)(3) to

enhance State agency flexibility. We also proposed to add a new

paragraph (h)(2) which would require

State agencies to continue to process

cases if the State agency is at fault for

not processing the case within the 30-

day time period. If the State agency is

at fault for delaying the application

process, benefits would be restored back

to the application filing date. If the

household is at fault for the delay, the

State agency may either deny the case

or hold it pending for an additional

period of time to be determined by the

State agency but not more than 2

months. If the household is at fault for

the delay, benefits would be provided

retroactive to the date the household

takes the required action. We also proposed to add a new

paragraph (h)(3), which would retain,

but consolidate, the current procedures

for determining the cause of a delay.

Delays that are the fault of the State

agency include, but are not limited, to

failure to explore and attempt to resolve

with the household any unclear and

incomplete information provided at the

interview; failure to inform the

household of the need for one or

members to register for work and allow

the members at least 10 days to

complete work registration; failure to

provide the household with a statement

of required verification and allow the

household at least 10 days to provide

the missing verification; and failure to

notify the household that it could

reschedule a missed interview. Delays

that are the fault of the household

include, but are not limited to, failure to

cooperate with the State agency in

resolving any unclear or incomplete

information provided at the interview;

failure to register household members

for work; failure to provide missing

verification; and failure to reschedule a

missed interview appointment.

Finally, we proposed that 7 CFR

273.2(g)(2), which addresses the

issuance of combined allotments for

households that apply after the 15th of

the month, be redesignated with minor

editorial changes as 7 CFR 273.2(h)(4).

As with many of the other provisions

in the NPRM, the comments received on

our proposed changes to 7 CFR 273.2(h)

were mixed. On the one hand, several

commenters were very supportive of the

proposals, especially our decision to

remove much of the prescriptive

language regarding handling of

applications when the decision is

delayed beyond 30 days. Many of these

commenters, however, requested further

simplification to the regulations. Several

commenters again requested that we

amend the regulations to allow State

agencies to take immediate action to

deny an application after a missed

interview or the expiration of the 10-day

period for return of requested

information.

On the other hand, many commenters

opposed the Department’s proposal to

repeal provisions in existing paragraphs

(g) and (h) which address client

protections. For example, one

commenter objected to our proposal to

remove the requirement at current 7

CFR 273.2(h)(2)(A) that the State agency

reopen a case that has been denied for

failure to take a required action if the

household takes the required action

within 60 days from the date of

application. The commenters noted that

without this provision, households can

be required to submit a new application

and restart the application process even

though they have produced the

verification necessary to determine their

eligibility, which may cause some

households to be discouraged and

abandon their efforts to obtain food

stamps. The same commenters opposed

the Department’s proposed rewording of

the current requirement at

273.2(h)(1)(i)(C). This provision

provides that where verification is

Federal Register / Vol. 65, No. 225 / Tuesday, November 21, 2000 / Rules and Regulations 70157

incomplete, the State agency must

provide the household with a statement

of required verification, offer to assist

the household in obtaining required

verification, and allow the household

sufficient time to provide the missing

verification. Sufficient time is defined

as at least 10 days from the date of the

State agency’s initial request for the

‘‘particular verification’’ that was

missing. In the NPRM, we dropped the

words ‘‘particular verification.’’

Although no change in policy was

intended, some commenters felt that

dropping the words could potentially

weaken the principle significantly. For

example if the household presents

verification that is deemed insufficient

by the State agency, the household may

not have sufficient time left in the 10-

day period to get the specific

documentation requested by the State.

Given the considerable disagreement

among commenters on our proposals to

amend existing paragraphs (g) and (h),

and the Department’s commitment to

ensuring that all food stamp applicants

and participants receive timely, accurate

and fair service, we have decided to

withdraw the proposed changes and

retain current rules, with one exception

as discussed below.

One commenter pointed out that some

States require prolonged job searches

prior to registering persons for work in

their TANF-funded programs. To avoid

confusion, this commenter argued, the

rules at 7 CFR 273.2(h)(i)(B) should

clarify that households cannot be

denied food stamp work registration on

that basis. In addition, because some

persons with disabilities may feel it

would be dishonest to register if they

are unable to work, no household

should have its application delayed or

denied for failure to register unless the

food stamp office has reviewed the

possibility of an exemption. We agree

with this commenter, but believe that

program policy has always called for the

resolution of work registration status

before any food stamp work requirement

may be imposed. Therefore, at 7 CFR

273.2(h)(i)(B), we are clarifying that

State agencies determine if an

individual is exempt from work

registration prior to requiring a

household member to register.

Authorized Representatives—7 CFR

273.2(g)

In the NPRM, we proposed to

redesignate the provisions of current 7

CFR 273.1(f) on authorized

representatives as paragraph 7 CFR

273.2(g). We also proposed to move into

that new section all of the requirements

governing use of authorized

representatives that appear in 7 CFR

273.1(f), 7 CFR 273.11(e) and (f), and 7

CFR 274.5, and to condense and revise

those requirements. We also proposed to

(1) move the provisions for using

treatment centers and group homes as

authorized representatives currently

located at 7 CFR 273.1(f)(2) to 7 CFR

273.11(e) and (f); (2) remove the

introductory paragraph of 7 CFR

273.1(f)(2) because it is unnecessary; (3)

include the discussion in 7 CFR

273.1(f)(2)(1)(i) regarding drug and

alcohol treatment centers in 7 CFR

273.11(e)(1) in place of the reference to

7 CFR 273.1(f)(2); (4) move the first,

second, fourth, fifth, and last sentences

in current 7 CFR 271.2(f)(2)(ii) regarding

group living arrangements into 7 CFR

273.11(f)(1); move the sixth sentence of

current 7 CFR 271.2(f)(2)(ii) into 7 CFR

273.11(f)(7); (5) remove the remainder of

7 CFR 271.2(f) because it is unnecessary;

(6) add a reference to 7 CFR 273.11(e)

and (f) to new paragraph 7 CFR

273.2(g)(1)(iii); and (7) remove 7 CFR

273.1(f) and 7 CFR 274.5.

We proposed to entitle 7 CFR

273.2(g)(1) ‘‘Applying for benefits.’’ We

proposed to include in new paragraph

(g)(1)(i) the provisions of current 7 CFR

273.1(f), (f)(1)(i) and (f)(1)(ii) with minor

editorial changes. The new paragraph

would include the current provisions

that allow an authorized representative

to act for the household in the

application process and to complete

work registration forms for those

household members required to register

for work. It would also continue to

require the State agency to inform the

household of its liability for

overissuances which result from

erroneous information given by the

authorized representative. We would

also remove current paragraph (3)

regarding nonhousehold members who

can apply for minors and include the

content in new paragraph (f)(ii).

We also proposed to remove the

information in introductory paragraph 7

CFR 274.5(a) and the first sentence of

paragraph (b) because they are

unnecessary. The contents of paragraph

(a)(1) and the second sentence of

paragraph (a)(2) would be included in

new paragraph (g)(2) entitled

‘‘Obtaining food stamp benefits’’ with

minor editorial changes. The new

paragraph would include the current

provisions for encouraging the

household to name an authorized

representative for obtaining benefits at

the time of application, that the

representative’s name be recorded in the

household’s case file and on its ID, and

that the representative for obtaining

benefits may be the same person

designated to make application on

behalf of the household. In the new

paragraph (g)(2)(ii), we proposed to

include a reference to 7 CFR 274.10(c)

which provides for designating an

emergency authorized representative

subsequent to the time of certification.

We proposed to add a new paragraph

(3) entitled ‘‘Using benefits.’’ This

paragraph would include the

information currently contained in 7

CFR 274.5(a)(6) and (7) and 274.5(c).

The last sentence in 7 CFR 274.5(c)

which prohibits a person disqualified

for committing an intentional Program

violation from using benefits on behalf

of the household would be removed.

We also proposed to combine the

current restrictions on designating

authorized representatives in 7 CFR

273.1(f)(4) for application processing

and 7 CFR 274.5 for obtaining benefits

into proposed paragraph 7 CFR

273.2(g)(4), entitled ‘‘Restrictions on

designations of authorized

representatives.’’ We proposed to revise

the provisions to omit examples and

other unnecessary language. Proposed

paragraph (4)(i) would provide that

State agency employees involved in

certification and issuance and retailers

authorized to accept food stamp benefits

may not act as authorized

representatives without the specific

written approval of the designated State

agency official and only if that official

determines that no one else is available

to serve as an authorized representative.

Proposed paragraph (4)(ii) would

provide that individuals disqualified for

intentional Program violations cannot

act as authorized representatives while

they are disqualified unless no one else

is available. Proposed paragraph (4)(iii)

would include the provisions for

disqualifying authorized representatives

for misrepresentation or abuse, and

paragraph (4)(iv) would contain the

current provision that homeless meal

providers may not act as authorized

representatives for homeless food stamp

recipients. Proposed paragraph (4)(v)

would allow the State agency to restrict

the number of households an authorized

representative may represent.

Our proposal to consolidate the

provisions on authorized

representatives into one section of the

regulations was generally well received

by commenters. One commenter did

object to our proposal to remove the

requirement currently contained at 7

CFR 274.5(a)(2) that requires food stamp

offices to take steps to ensure that farm

workers are acting voluntarily when

they designate a grower or labor

contractor as their authorized

representatives. The commenter noted

that since employers have so much

leverage over farm workers, they and

their family members should be

70158 Federal Register / Vol. 65, No. 225 / Tuesday, November 21, 2000 / Rules and Regulations

prohibited from serving as authorized

representatives unless it is clear that the

household needs such assistance and

has no one else to whom to turn. We

concur with the commenter that the

potential for fraud and abuse still exists

in such situations and are therefore

reinstating the requirement.

Several commenters objected to the

proposal in 7 CFR 273.2(g)(4)(iii) to

exempt drug and alcohol treatment

programs from disqualification in cases

of fraud. The commenters thought that

fraudulent acts committed by substance

abuse treatment centers should be

treated in the same manner as similar

acts by retailers. One commenter asked

that FNS provide instructions in these

regulations on what actions States

should take when it is discovered that

a treatment center or group home

knowingly provided false information or

misused benefits.

Current regulations at 7 CFR 274.5(d)

provide that drug and alcohol treatment

centers and the heads of group living

arrangements which act as authorized

representatives for their residents and

which intentionally misrepresent

households circumstances may be

prosecuted under applicable State fraud

statutes for their acts. We are amending

the proposed regulations on authorized

representatives to include this

provision.

One commenter thought that

proposed regulations at 7 CFR

273.2(g)(1) addressing when a

household may use an authorized

representative are too limiting for

households with disabilities. The

commenter thought that persons with

disabilities should be permitted to

nominate an authorized representative

in cases where completing the

application process would be unusually

burdensome for them but not literally

impossible.

The proposed regulations at 7 CFR

273.2(g)(1) permit a household to utilize

an authorized representative when ‘‘a

responsible member of the household

cannot complete the application

process.’’ We believe that this language

is sufficiently broad to allow persons

with disabilities who may find

completing the application process

unduly burdensome to utilize an

authorized representative. Therefore, we

are not changing the proposed

provision.

The same commenter thought that

proposed regulations at 7 CFR

273.2(g)(ii) preclude non-household

members from serving as authorized

representatives except for those cases in

which the non-household member is the

only adult in the household. We

disagree with the commenter. The

proposed regulations at 7 CFR

273.2(g)(1)(i) clearly state that a nonhousehold member may be designated

as an authorized representative and

does not limit that authority to

situations in which the nonmember is

the only adult in the household.

A commenter thought that the

proposed regulations should be

amended to permit households to

designate authorized representatives to

carry out household responsibilities

during the certification period, such as

submitting reports on changes in

household circumstances, as well as at

application.

The Department did not intend for the

proposed regulations to prohibit

authorized representatives from carrying

out household responsibilities during

the certification period. We recognize

that there may be instances in which a

household cannot satisfy program

requirements after certification, such as

submitting information on changes in

household circumstances. Therefore, we

are amending the proposed regulations

at 7 CFR 273.2(g)(1) to provide that the

authorized representative designated for

application processing purposes may

also fulfill household responsibilities

during the certification period. The

household will be liable for any

overissuances that results from

erroneous information given during the

certification period by the authorized

representative.

One commenter requested that the

proposed language at 7 CFR

273.2(g)(1)(iii) be clarified regarding the

use of authorized representatives for

individuals residing in group living

arrangements. The provision requires

that residents of drug or alcohol

treatment centers and group homes

apply and be certified for food stamps

through the use of authorized

representatives in accordance with

sections 273.11(e) and (f). The

commenter noted that regulations at 7

CFR 273.11(f) allow residents of a group

home to apply either through the

center’s authorized representative or on

their own behalf. We are clarifying the

regulations at 7 CFR 273.2(g) to note the

distinction in the requirements to use

authorized representatives that exist for

residents of drug or alcohol treatment

centers and group homes.

We are adopting the proposed

regulations on authorized

representatives as final with the changes

noted above, including those changes to

§ 273.11(f). However, because we are

retaining current regulations at 7 CFR

273.2(g), we are designating the section

on authorized representatives as 7 CFR

273.2(n).

Expedited Service—7 CFR 273.2(i)

In the NPRM, we proposed to amend

7 CFR 273.2(i), which lists the

categories of households entitled to

expedited service and establishes the

procedures that State agencies must use

in providing that service. Section 838 of

PRWORA amended Section 11(e)(9) of

the Act, (7 U.S.C. 2020(e)(9)) by

removing households consisting entirely

of homeless people as a category of

households entitled to expedited service

and increasing the number of days

which State agencies have to provide

expedited service from 5 to 7 calendar

days. We proposed to implement the

changes resulting from section 838 of

PRWORA by amending 7 CFR 273.2(i)

as follows: (1) removing the reference to

homeless households in current

paragraph (i)(1)(iii); (2) renumbering

paragraph (iv) as (iii); and (3) changing

the expedited processing time frame

appearing in current paragraph (i)(3)

from 5 days to 7 days.

Our proposals to amend 7 CFR

273.2(e) to implement the requirements

of section 838 of PRWORA have already

been finalized in another rule, the NonDiscretionary Provisions of the Personal

Responsibility and Work Opportunity

Reconciliation Act of 1996, published

on October 30, 2000 (65 FR 64581).

Please refer to that rule for a complete

understanding of the final provisions.

In addition to making the changes to

7 CFR 273.2(i) mandated by PRWORA,

we also proposed to amend the section

by removing repetitive definitions and

simplifying the procedures for

providing expedited service.

Comments received on the proposed

discretionary changes were mixed.

Some commenters, while supporting the

increased flexibility provided under the

revised regulations, thought the

Department should go still farther in

simplifying expedited service

requirements for State agencies. For

example, one commenter opposed the

regulations at the renumbered paragraph

(i)(6), which provide no limit on the

number of times a household can be

certified under expedited service

procedures. The commenter saw no

logical reason why households that fail

to submit timely recertification

applications should be rewarded with

the ability to receive benefits

expeditiously, and preferred that

expedited service be reserved to

households newly applying and those

who have been off the program for a

month. Other commenters felt that the

revised regulations failed to contain

sufficient provisions protecting

customer rights. One commenter

thought that the food stamp office

Federal Register / Vol. 65, No. 225 / Tuesday, November 21, 2000 / Rules and Regulations 70159

should be required to contact

households that submit incomplete

applications promptly to request more

information and to inform them that

they may be eligible for expedited

issuance based on gross income, liquid

resources, and shelter costs. In addition,

the commenter thought that application

forms should be required to have a

prominent place on or near the front

where the household can indicate its

gross income, liquid resources, shelter

costs, and status (or not) as a migrant or

seasonal farm worker. The commenter

thought that if a ready opportunity is

offered to provide this information,

many households are likely to do so,

facilitating the screening for expedited

issuance of applications that are mailed

in or dropped off by applicants whose

work schedules prevent them from

waiting to meet with agency staff.

Given the considerable disagreement

among commenters on our proposals to

amend paragraph (i), and the

Department’s commitment to ensuring

that all food stamp applicants and

participants receive timely, accurate and

fair service, we have decided to

withdraw the proposed changes and

retain current rules.

PA, GA and Categorically Eligible

Households—7 CFR 273.2(j)

As noted in the proposed rule, section

835 of PRWORA amended section 11(e)

of the Act to eliminate the mandate for

the joint processing of applications for

households in which all members are

receiving public assistance (PA),

supplemental security income (SSI), or

general assistance (GA). However, State

agencies retained the option to continue

to jointly process these cases.

Accordingly, we proposed in the NPRM

to revise current paragraph (j) in its

entirety. Specifically, we proposed to

revise the paragraph as follows: (1)

retain pertinent provisions related to the

categorical eligibility of certain

households for the Food Stamp

Program; (2) remove provisions or

references associated with mandatory

joint application processing; and (3)

retain those joint processing provisions

we believe are necessary to protect the

client should a State agency opt to

continue joint processing of TANF, SSI

or GA households.

We received a large number of

comments opposing the changes made

in the NPRM to paragraph (j). Many

commenters felt that our proposal

removed too many existing safeguards

for applicants. For example, some

commenters thought that many of the

provisions in current paragraph 7 CFR

273.2(j)(1)(iv) should be retained,

including the provision which requires

a food stamp office to postpone denying

the application of a household that is

applying for TANF-funded benefits and

that would be categorically eligible for

food stamps if the household’s TANF

application is approved, and the

provision which requires that notices

denying food stamps to households with

applications pending for cash assistance

or SSI should inform the household that

it should notify the food stamp office if

its cash assistance or SSI benefits are

approved.

Commenters requested that we restore

many other provisions as well,

including the provision in current

section 273.2(j)(1)(iii) which prohibits

food stamp offices from delaying a

household’s food stamp benefits beyond

30 days if the State has sufficient

verification to determine food stamp

eligibility even if it is waiting for further

information it needs to determine the

family’s eligibility for TANF-funded

benefits, and the provision in current

section 273.2(j)(4)(vi) which does not

require that all household members

receive benefits from the same

assistance program to be categorically

eligible for food stamps.

Given the considerable opposition

raised by commenters to our proposed

changes to 7 CFR 273.2(j), we are

withdrawing most of those changes at

this time. The existing provisions in

paragraph (j) promote program access

among recipients of other assistance

programs, and we agree with the

commenters that, given the

Department’s commitment to ensuring

program access and to providing timely,

accurate and fair service to applicant

and participants, the provisions should

be retained at this time.

However, we are making several

changes to paragraph (j) to reflect

changes in the Act brought about by

PRWORA and to address comments

received on the NPRM.

Section 835 of PRWORA amended

section 11(e) of the Act to eliminate the

mandate for joint application processing

for households in which all members

are receiving PA, SSI, or GA. However,

State agencies may opt to continue to

jointly process these cases. To reflect

this change in the law, we are amending

the introductory paragraph of (j), and

paragraphs (j)(1)(i) and (j)(3).

Several commenters were

disappointed that the proposed

regulations did not require food stamp

offices to inform households that TANF

time limits or other requirements do not

apply to the receipt of food stamp

benefits. These commenters cited recent

studies which indicate that many

families that are eligible for food stamps

are leaving the program at the same time

their cash assistance cases are closed.

The commenters feared that many of

these households are prematurely

leaving the Food Stamp Program

because of the erroneous belief that they

are no longer eligible for food stamps

when they lose eligibility for TANF.

Participation in the Program is a vital

component of the transition from

welfare to work. Eligible households

that fail to take advantage of the

Program because of confusion over the

linkage between TANF and food stamp

eligibility lose a vital nutritional

support and jeopardize their ability to

become self-sufficient. Therefore, we

agree with the commenters that food

stamp applicants and recipients that

also participate in the TANF program

should be informed that their eligibility

for food stamps does not necessarily

cease when they lose eligibility for

TANF. We are amending the regulations

at 7 CFR 273.2(j)(1) to require that the

State agency notify households applying

for TANF that the time limits or other

requirements that apply to the receipt of

TANF benefits do not apply to the

receipt of food stamp benefits. Further,

State agencies must notify such

households that if TANF benefits cease

because they have reached a time limit,

have begun working, or for other

reasons, they may still qualify for food

stamp benefits. We are making a similar

amendment to 7 CFR 273.2(e)(1).

One commenter expressed concern

that in an attempt to divert households

from applying for TANF, State agencies

may inadvertently be diverting

households from applying for food

stamps. This commenter suggested we

include language reminding State

agencies not to discourage households

from applying for food stamps. In

response to this comment and in an

attempt to increase Program access, we

are providing at 273.2(j) that if the State

agency attempts to discourage

households from applying for cash

assistance, it shall make clear that the

disadvantages and requirements of

applying for cash assistance do not

apply to food stamps. In addition, it

shall encourage applicants to continue

with their application for food stamps.

The State agency shall inform

households that receiving food stamps

will have no bearing on any other

program’s time limits that may apply to

the household.

One legal assistance group

commented that a local welfare agency

required joint applicants for food

stamps and cash assistance to submit to

at least five separate interviews in its

process for determining eligibility.

Failure of the household to attend any

one of these interviews or to provide

70160 Federal Register / Vol. 65, No. 225 / Tuesday, November 21, 2000 / Rules and Regulations

verification of circumstances as required

under the cash assistance rules will

result in denial of the application. This

is the case even if the household

submitted verification which would be

acceptable in a food stamp only case.

The current regulations allowing State

agencies to use PA verification rules for

factors of eligibility which are common

to both food stamps and cash assistance

could be read to sanction the local

agency’s practices. However, it was

never the Department’s intent that a

household could be denied both food

stamps and cash assistance, if it had

complied with the food stamp

verification requirement, but had failed

to comply with a more stringent cash

assistance requirement. While the

Department believes that the language of

the current rule expresses this intent, it

is apparent that it is subject to

interpretation in ways not in

consonance with our policy.

Accordingly, the final rule amends 7

CFR 273.2(j)(1)(iii) to clarify this intent.

State agencies may continue to use PA

verification rules for factors of eligibility

which are common to both food stamps

and cash assistance; however, the State

agency may not deny the household’s

food stamp application if it has

provided sufficient verification in

accordance with food stamp rules. For

example, a State agency may not deny

a household’s food stamps under joint

processing, if it has submitted

verification of its circumstances

sufficient for food stamp purposes, but

fails to submit to a home visit required

for cash assistance purposes.

Several commenters thought that the

final rules at 7 CFR 273.2(j) should be

updated to incorporate the substance of

the Department’s July 14, 1999,

guidance on categorical eligibility as

well as the key points of clarifying

questions and answers it has issued

since. The guidance clarified categorical

eligibility in the Program by stating that

it applies not just to households

receiving cash assistance under TANFfunded programs but also to those

receiving or authorized to receive noncash or in-kind benefits or services from

such programs.

We agree with the commenters and

are amending paragraph (j)(2) to

incorporate into current regulations

much of the Department’s July 14, 1999,

guidance on categorical eligibility, with

modifications. It has come to our

attention that this policy has allowed

State agencies to use categorical

eligibility beyond the scope of what was

originally intended. The original intent

of categorical eligibility was to reduce

the administrative burden on State

agencies by simplifying the certification

process and eliminating the need for the

eligibility worker to apply two different

income eligibility tests for a household

applying for public assistance and food

stamps. Therefore, Congress allowed the

State agency to apply the public

assistance income and resource tests to

applicants of both programs, thus

eliminating the need to satisfy a second

income eligibility test for the Food

Stamp Program. However, the context

for categorical eligibility changed after

PRWORA, particularly because TANF is

a block grant and can be used to support

in-kind and non-cash benefits and

services to low-income working families

who may or may not be required to meet

income eligibility criteria. The four

purposes of the TANF block grant are to

(1) provide assistance to needy families

so that children may be cared for in

their own homes or in the homes of

relatives; (2) end the dependence of

needy parents on government benefits

by promoting job preparation, work, and

marriage; (3) prevent and reduce the

incidence of out-of-wedlock pregnancies

and establish annual numerical goals for

preventing and reducing the incidence

of these pregnancies; and (4) encourage

the formation and maintenance of twoparent families. Funds spent to meet the

first and second purposes of the block

grant must be spent on ‘‘needy

families’’, as defined by the State, and

thus applicants must meet the State’s

definition of ‘‘needy’’. Funds spent to

meet the third and fourth purposes of

the block grant are not limited to ‘‘needy

families.’’ In general, States have

designed their TANF cash assistance

programs and support services for

families who meet income eligibility

criteria. However, some TANF services

do not have income eligibility criteria.

We believe that it is inappropriate to

confer food stamp eligibility without

income eligibility criteria. Therefore, in

this regulation, we are modifying the

policy that was set forth on July 14,

1999. We have decided to confer

categorical eligibility to all households

authorized to receive TANF funded

benefits and services designed to further

TANF purposes one and two, which by

statute must be targeted to ‘‘needy

families.’’ In addition, we have decided

to confer categorical eligibility to all

households authorized to receive TANF

funded benefits and services designed to

further TANF purposes three and four,

as long as those services have income

eligibility criteria set at 200 percent of

the Federal poverty level or lower. We

made this decision in order to (1) ensure

that only TANF benefits and services

with income eligibility criteria confer

categorical eligibility, and (2) maximize

the usefulness of categorical eligibility

based upon an analysis by HHS which

determined that for services with

income eligibility criteria, such criteria

tend to be set at 200 percent of the

Federal poverty level or lower (although

some States may have income eligibility

criteria at higher levels).

At the same time, we realize that

some households no longer qualify for

cash assistance simply because they

have reached a time limit. Some

households, simply by virtue of their

past participation in the TANF cash

assistance program, receive postassistance transitional benefits, such as

child care. Such programs are covered

by the categorical eligibility policies

described above. If transition services

are designed to further TANF purposes

one and two, they confer categorical

eligibility since those households must

meet the State’s definition of ‘‘needy’’.

If transition services are designed to

further TANF purposes three and four,

they confer categorical eligibility as long

as the transition services have an

income eligibility test set at 200 percent

of the Federal poverty level or below.

Though we believe that the regulations

as written cover these individuals,

where States have discretion pursuant

to this rule and as described below, we

are urging them to identify such

programs as conferring categorical

eligibility for food stamp purposes.

We realize that there are several State

agencies that have identified programs

to confer categorical eligibility for food

stamps that are designed to further

purposes three and four of the TANF

block grant and that either have income

eligibility criteria above 200 percent of

the poverty level or have no income

eligibility criteria at all. In order to

satisfy the new requirements of this

rule, we recognize that State agencies

will need time to adjust processes so

that certain programs no longer confer

categorical eligibility. Therefore, in

order to give State agencies the

necessary time to make these changes,

we are providing that State agencies

may continue to use these programs to

confer categorical eligibility for food

stamp purposes until September 30,

2001.

Based on the above discussion, in this

rule at 273.2(j)(2), households that meet

the following requirements would be

categorically eligible: (1) households in

which all members receive or are

authorized to receive cash assistance

through a program funded in full or in

part with Federal money under Title IV–

A or with State money counted for

maintenance of effort (MOE) purposes

under Title IV–A; (2) households in

which all members receive or are

Federal Register / Vol. 65, No. 225 / Tuesday, November 21, 2000 / Rules and Regulations 70161

authorized to receive non-cash or inkind services or benefits from a program

that is more than 50 percent funded

with State money counted for MOE

purposes under Title IV–A or Federal

money under Title IV–A and that is

designed to further purposes one and

two of the TANF block grant; (3)

households in which all members

receive or are authorized to receive noncash or in-kind services or benefits from

a program that is more than 50 percent

funded with State money counted for

MOE purposes under Title IV–A or

Federal money under Title IV–A and

that is designed to further purposes

three and four of the TANF block grant

and that requires participants to have a

gross monthly income at or below 200

percent of the Federal poverty level; (4)

households in which all members

receive or are authorized to receive SSI

benefits, and (5) households in which

all members receive or are authorized to

receive PA and/or SSI benefits in

accordance with (j)(2)(i)(A) though

(j)(2)(i)(D) of this section.

Also, State agencies have the option

to extend categorical eligibility to the

following households if doing so will

further the purposes of the Food Stamp

Act: (1) households in which all

members receive or are authorized to

receive non-cash or in-kind services or

benefits from a program that is less than

50 percent funded with State money

counted for MOE purposes under Title

IV–A or Federal money under Title IV–

A and that is designed to further

purposes one and two of the TANF

block grant. States must inform FNS of

the TANF services that confer

categorical eligibility under this option;

(2) subject to FNS approval, households

in which all members receive or are

authorized to receive non-cash or inkind services or benefits from a program

that is less than 50 percent funded with

State money counted for MOE purposes

under Title IV–A or Federal money

under Title IV–A and that is designed to

further purposes three and four of the

TANF block grant and that requires

participants to have a gross monthly

income at or below 200 percent of the

Federal poverty level; (3) households in

which one member receives or is

authorized to receive benefits according

to (j)(2)(i)(B), (j)(2)(i)(C), (j)(2)(ii)(A) and

(j)(2)(ii)(B) of this section and the State

agency determines that the whole

household benefits.

In response to comments and to

incorporate current policy, we are

including at 273.2(j) the definition of

‘‘authorized to receive.’’ For purposes of

this provision, ‘‘authorized to receive’’

means that an individual has been

determined eligible for benefits under

PA program funded in full or in part

with Federal money under Title IV–A or

with State money counted for

maintenance of effort (MOE) purposes

under Title IV–A, and has been notified

of this determination, even if the

benefits have been authorized but not

received, authorized but not accessed,

suspended or recouped, or not paid

because they are less than a minimum

amount.

Finally, several commenters requested

that FNS amend current rules at section

273.2(j)(2)(vii)(F) which prohibit States

from denying categorically eligible

households when they are eligible for

no food stamp benefit. One commenter

noted that as a result of the

Department’s July 1999 guidance on

categorical eligibility, significantly more

households are likely to be categorically

eligible but eligible for no food stamp

benefit due to their income. To require

States to certify such households for

zero benefits would be administratively

burdensome and could discourage

States from adopting expansive

categorical eligibility policies. The

commenter recommended that the

regulations should be revised to give

States the same option to treat

categorically eligible households that

are eligible for zero benefits in the same

manner as they treat households that are

not categorically eligible: where a

household’s net income exceeds the

level at which benefits are provided,

States should be allowed to choose

between denying the application or

certifying the case but suspending

benefits.

We agree with the commenters that

allowing States to deny categorically

eligible households when they are

eligible for no food stamp benefit would

alleviate administrative burdens on

States and eliminate a potential barrier

to States adopting more expansive

categorical eligibility policies. Therefore

we are amending current rules at section

273.2(j)(2)(vii)(F) to make this change.

Alien Eligibility—7 CFR 273.4

We proposed to revise 7 CFR 273.4(a)

to remove references to those aliens no

longer eligible and add provisions

referencing the alien provisions of Title

IV of PRWORA, as amended. We also

proposed to revise the section to remove

unnecessary and overly prescriptive

requirements. As discussed above, we

also made conforming amendments to 7

CFR 273.2(f)(1)(ii) to address

verification of alien eligibility under the

new alien eligibility requirements and

to reference the DOJ Interim Guidance.

What is a Citizen?

We proposed to add a reference in

paragraph (a)(1) to the DOJ Interim

Guidance which includes a definition of

the term ‘‘citizen.’’ Several commenters

pointed out that they could not find this

reference in the regulatory amendment.

We inadvertently omitted this reference

in the proposed rule; however, it

appears in the text of the final rule.

We proposed to add the term ‘‘noncitizen national’’ to paragraph (a)(2) to

clarify that non-citizen nationals are

eligible to participate. Several

commenters pointed out that the term

appearing in the regulatory text, ‘‘alien

national,’’ was not usual DOJ

terminology. The use of this term was a

drafting error. The final rule uses the

term ‘‘non-citizen national’’ and

includes a reference to the definition in

the DOJ Interim Guidance.

What is a Qualified Alien?

In accordance with section 431 of

PRWORA, we proposed to define a

qualified alien as:

(1) an alien who is lawfully admitted

for permanent residence under the INA;

(2) an alien who is granted asylum

under section 208 of the INA;

(3) a refugee who is admitted to the

United States under section 207 of the

INA;

(4) an alien who is paroled into the

United States under section 212(d)(5) of

the INA for a period of at least 1 year;

(5) an alien whose removal or

deportation is being withheld under

section 241(b)(3) or 243(h) of the INA;

(6) an alien who is granted

conditional entry pursuant to section

203(a)(7) of the INA as in effect prior to

April 1, 1980;

(7) a battered alien, an alien whose

child has been battered, or an alien

child of a battered parent; or

(8) a Cuban or Haitian entrant as

defined in section 501(e) of the Refugee

Education Assistance Act of 1980.

Several State agencies objected to the

requirement that State agencies

determine if an alien has been subjected

to ‘‘battery or extreme cruelty’’ with

respect to establishing qualified alien

status. Some State agencies and many

advocacy groups suggested that we

establish national standards for State

agency use in making determinations of

‘‘battery or extreme cruelty.’’ One State

agency worried that FNS would

scrutinize ‘‘battery or extreme cruelty’’

determinations through the Quality

Control process. While national

standards for such determinations might

be good public policy, Congress clearly

delegated the authority for making such

decisions to the States, assisted by

70162 Federal Register / Vol. 65, No. 225 / Tuesday, November 21, 2000 / Rules and Regulations

guidance from the U.S. Attorney

General. (See Exhibit B to Attachment 5

of the DOJ Interim Guidance.) We can

find no authorization to preempt the

States’ authority in these matters.

Moreover, we believe the Attorney

General’s Interim Guidance is sensible

and comprehensive. We defer to her

expertise in immigration matters and

feel that State agencies would do well

to follow her suggestions. Accordingly,

we are not changing the proposed

language in the final rule. We do wish

to point out that FNS does not intend

to review State agency ‘‘battery or

extreme cruelty’’ determinations

through the food stamp QC process. The

Department has no mandate to question

the substance of State agency

determinations on this issue. However,

once a State agency makes a ‘‘battery or

extreme cruelty’’ determination, food

stamp QC will assess whether the State

agency timely and correctly applied its

determination to the food stamp case

under review.

Which Aliens Must Be Both Qualified

Aliens and Food Stamp Eligible Aliens?

To be eligible for food stamps, most

aliens must be both a qualified alien as

defined in section 431 of PRWORA and

meet one of the food stamp criteria in

section 402 of PRWORA. Section 402, as

amended by the Balanced Budget Act,

limits eligibility for food stamps to

qualified refugees, asylees, deportees,

specified Amerasians, Cuban and

Haitian entrants, certain legal

permanent residents, and veterans and

active duty personnel and the spouse

and unmarried dependent children of

the veterans and active duty personnel.

We proposed to include the list in

paragraph (a)(5)(ii).

We received numerous comments on

the iteration of aliens who must have

qualified alien status and food stamp

eligible status. Several State agencies

and many advocacy groups requested

that the Department clarify the

regulation to indicate that each category

of eligible immigration status stands

alone for purposes of determining

eligibility. For example, a refugee is

eligible for 7 years from the date of

entry, even if he or she adjusts status to

lawful permanent resident status later

during that 7-year period. We thought

the regulation language was clear that,

as illustrated in the example,

adjustment to a more limited status does

not override eligibility based on an

earlier less rigorous status, or that if

eligibility expires in one eligible status,

the alien may yet be eligible under

another. However, in view of the

comments, we are adding a paragraph to

the final rule to emphasize this point. A

number of commenters thought the

Department should require that State

agencies provide a 1 to 2 year advance

warning to aliens in a time-limited

eligibility status that they are

approaching the limit and that to

continue participating they have some

other basis of eligibility once they reach

the limit. We are not adopting this

suggestion, as we are reluctant to

impose this burden on State agencies.

We believe that Program informational

materials directed to immigrant

populations adequately explain the food

stamp eligibility requirements for aliens

and that the immigrant community is

well aware of the time limits and other

requirements. Moreover, we have

doubts about the utility of the

suggestion. Through the policy changes

in PRWORA, Congress intended to

provide impetus to aliens to become

naturalized citizens as soon as possible.

Consider the case of a refugee couple

who have continuously worked and

participated in the Program for 5 years

since they entered the U.S., and have

adjusted to lawful permanent resident

status. Unless that couple has diligently

pursued meeting all the requirements

for naturalization, a warning at the end

of the 5th or 6th year will come too late.

After the 7-year period expires, and

these aliens have not naturalized, they

will likely lose food stamp eligibility, as

none of the quarters of social security

coverage will count due to their

participation in the Program. A State

agency thought that aliens with a

pending application for lawful

permanent resident status should

remain eligible, even though the 7-year

period of eligibility had expired. The

Department cannot adopt this

suggestion, as the statute does not allow

such treatment.

What Are the Requirements for

Eligibility as a Lawful Permanent

Resident?

Under section 402(a)(2)(B) of

PRWORA, the eligibility of aliens

lawfully admitted for permanent

residence is limited to those who have

earned or can be credited with 40

qualifying quarters of work. An alien

may get credit for all of the qualifying

quarters worked by a parent of the alien

before the alien becomes age 18 and the

quarters worked by a spouse of the alien

during their marriage, if they are still

married or the spouse is deceased. We

proposed to include this requirement in

the introductory language of the new

paragraph (b)(1).

To establish eligibility based on 40

quarters of work, the State agency may

request information from the Social

Security Administration through the

Quarters of Coverage History System

(QCHS) and/or obtain verification from

the household. State agencies may

request and receive information

regarding qualifying quarters from SSA

according to SSA instructions. For each

individual (other than the person who

signed the application) whose SSN is

submitted to SSA with a request for

quarters of coverage information, the

State agency must obtain a signed form

consenting to the release of the

information. This form is to be filed in

the household’s case file. Section 5573

of the Balanced Budget Act authorizes

SSA to disclose quarters of coverage

information concerning an alien and an

alien’s spouse or parents to other

government agencies. Therefore, if the

household needs quarters of coverage

based on relationship and it cannot

obtain a signed form, the State agency

may submit a request to SSA for

information regarding the individual’s

work history. These requests will be

processed manually by SSA. Procedures

for requesting information from SSA are

contained in SSA’s manual for obtaining

quarters of coverage information.

Aliens who can be credited with 40

qualifying quarters, as reported by SSA,

would be certified, if otherwise eligible.

Those who do not have 40 quarters

according to SSA records and who

accept that determination would be

denied participation. However,

individuals who believe they should be

credited with more quarters of work

may request that SSA investigate their

work history to determine if more

quarters can be credited. As indicated

above under the discussion of

verification of alien eligibility, we

proposed to require that if SSA is

conducting an investigation to

determine if more quarters can be

credited, the applicant may participate

pending the results of the investigation

for up to 6 months from the date of

SSA’s original finding of insufficient

quarters. We proposed a conforming

amendment to include this requirement

in the verification requirements in new

7 CFR 273.2(f)(1)(iv)(B).

SSA has prepared guidance for State

agencies to use in requesting work

history information through the QCHS.

Through this system, State agencies are

able to obtain information about work

performed in jobs covered by Title II of

the Social Security Act and some work

that is not covered by Title II, such as

some employment with Federal, State,

or local governments or nonprofit

organizations. If the State agency cannot

obtain work history information from

SSA, the State agency will have to

obtain verification of work from the

applicant or other available data

Federal Register / Vol. 65, No. 225 / Tuesday, November 21, 2000 / Rules and Regulations 70163

sources. This will always be the case for

recent quarters (lag quarters) worked

because of the time it takes SSA to

update the database using the most

recent tax returns.

Section 402(a)(2)(B)(ii) of PRWORA

also provides that no qualifying quarter

creditable for a period beginning after

December 31, 1996, can be included as

one of the credited quarters if the

individual received any Federal meanstested public benefit (as provided under

section 403) during that quarter. Section

435 of PRWORA provides that no

qualifying quarter for any period after

December 31, 1996, by a parent or

spouse of the alien may be included if

the parent or spouse received any

Federal means-tested public benefit

during that quarter. Section 403(c)

includes a list of types of assistance or

benefits that are exempt from the

prohibition (exempt assistance). The list

includes: certain emergency medical

assistance; short-term, non-cash

emergency disaster relief; assistance

under the National School Lunch Act;

assistance under the Child Nutrition Act

of 1966; certain non-Title XIX public

health assistance; certain foster care and

adoption payments; student assistance

provided under titles IV, V, IX, and X

of the Higher Education Act of 1965,

and titles III, VII, and VIII of the Public

Health Service Act; benefits under the

Head Start Act; and benefits under the

Workforce Investment Act. The list also

includes in-kind services which may

not be means-tested, such as soup

kitchens and short-term shelter,

specified by the Attorney General. The

DOJ published a Notice in the Federal

Register on August 30, 1996 (61 FR

45985), containing a non-exclusive list

of the types of exempt in-kind services.

Each Federal agency which issues

means-tested public benefits is

responsible for identifying and

publishing a list of benefits to which the

term ‘‘Federal means-tested public

benefit’’ as used in PRWORA applies.

According to Federal Register notices

published by HHS (62 FR 45256) and

SSA (62 FR 5284) on August 26, 1997,

TANF, Medicaid, and SSI are Federal

means-tested public benefits. According

to a Federal Register notice published

by this Department on July 7, 1998 (63

FR 36653), the Food Stamp Program and

the block grant food assistance programs

in Puerto Rico, American Samoa, and

the Commonwealth of the Northern

Mariana Islands are the only FNS

program to which the term applies. We

proposed that ‘‘received’’ means that the

alien actually received the assistance or

food stamps in the quarter in question.

Several commenters suggested that we

specify in the regulations the programs

which are Federal means-tested public

benefits. We are not adopting this

suggestion, since we do not wish to

amend the regulations every time a

Federal agency adds a program to the

list. However, we do intend to keep a

current list posted on the FNS web site,

so that interested parties will have easy

access to this information.

We proposed to provide in paragraph

(a)(5)(ii)(A) that if an alien was

determined eligible for any Federal

means-tested public benefit as defined

by the agency providing the benefit or

was certified to receive food stamps

during any quarter after December 31,

1996, the quarter cannot be credited

toward the 40-quarter total. Likewise, if

the alien needs a quarter from a parent

or spouse, the parent or spouse’s quarter

cannot be counted if the parent or

spouse was determined eligible for any

Federal means-tested public benefit or

was certified to receive food stamps

during the quarter. For example, if the

alien worked and the alien’s parents

received SSI in the first quarter of 1997,

the alien would have one quarter

counted because the alien worked and

did not receive assistance; if the alien

did not work but the alien’s parents

worked and received SSI, the alien

would not have any countable quarters.

The Department received several

comments on the 40 quarters of

coverage provisions. One commenter

thought that the Department should

specify that a quarter earned by a parent

or spouse is creditable to the worker and

transferable to the spouse or child even

when the child of the parent or the

spouse receives a federal means-tested

public benefit. The Department cannot

adopt this suggestion as it violates the

clear language of the statute. Moreover,

SSI follows the same policy. The same

commenter suggested that the

Department should mandate that

quarters worked before a child is born

or adopted are creditable. We are adding

clarifying language in the final rule as

such a policy was our intent. The same

commenter urged the Department to

make it clear that up to four quarters can

be earned in any year when an

immigrant has sufficient earnings

during periods of nonreceipt of benefits.

The commenter further suggested that

the Department structure the

computation of qualifying quarters so

that an alien could evade the strictures

of the statute by foregoing receipt of a

Federal means-tested public benefit in a

quarter and earning enough in that

quarter to receive credit for 4 quarters of

coverage. The commenter opined that

the alien could then receive a Federal

means-tested public benefit in the other

quarters of the year and that such

receipt would not disqualify the

quarters earned in a period of

nonreceipt of a Federal means-tested

public benefit. The commenter correctly

points out that SSA allows credit for a

maximum of four quarters of coverage

for earnings received in a period of less

than 1 year. SSA bases credit for

quarters on the individual’s earnings

over the course of the year, not on the

amount earned in each calendar quarter.

Since this point is made clear in SSA’s

guidance we saw no need to include the

issue in the proposed regulations. The

Department is not adopting the

commenter’s suggestion, because it is at

odds with the procedures SSA uses to

determine qualifying quarters for SSI.

Even if a worker earns enough in one

quarter to qualify for 4 quarters of

coverage, SSA does not credit a quarter

until it actually begins. Credit for the

quarter accrues on the first day of the

quarter. Thus, it is possible to correlate

qualifying quarters of coverage with

quarters in which the alien or the alien’s

parents or spouse received a Federal

means-tested public benefit. The final

rule does provide more guidance for

determining qualifying quarters. We are

adding language to the final rule

specifying that State agencies must

evaluate quarters of coverage and

receipt of Federal means-tested public

benefits on a calendar year basis. If an

alien earns 4 quarters coverage in a

calendar year and receives Federal

means-tested public benefits in 2

quarters of that year, the State agency

must disqualify 2 of the quarters of

coverage so earned. Finally, the same

commenter urged the Department to

require that quarters of coverage

credited from the earnings of a spouse

continue even if the couple

subsequently divorces. The commenter

argued that current FNS policy allows

State agencies the option of crediting

such quarters of coverage to a divorced

spouse even after the former spouse is

recertified and that a uniform national

policy would be preferable. The

commenter’s statement is not an

accurate portrayal of FNS policy. The

FNS guidance on this matter allows

States to use discretion in this matter

either by immediately discrediting the

quarters of a divorced spouse or by

waiting until the household’s next

recertification. However, once the State

agency redetermines eligibility, the

alien loses the quarters of the former

spouse. In view of the clear language of

the statute, the Department is not

adopting the commenter’s suggestion.

However, to be consistent with SSI

policy, the final rule provides that once

the State agency determines eligibility

70164 Federal Register / Vol. 65, No. 225 / Tuesday, November 21, 2000 / Rules and Regulations

based on the quarters of coverage of the

spouse, such eligibility continues until

the household’s next recertification.

Also, for consistency with SSI policy,

the final rule stipulates that if the alien

earns the 40th quarter of coverage prior

to applying for food stamps in that same

quarter, the State agency must allow

that quarter toward the 40 qualifying

quarters total. Finally, the final rule

codifies a DOJ legal determination that

qualifying quarters of work not covered

by Title II of the Social Security Act

may be credited in determining the

eligibility of an immigrant. According to

DOJ’s determination, Congress intended

to adopt the mechanism used by SSA

for calculating the amount of wages

necessary to obtain a quarter of

coverage, but not the limitations on the

types of employment in which the

wages may be earned.

Which Qualified Aliens are Subject to a

7-Year Eligibility Limit?

Section 402(a)(2)(A) of PRWORA

provided that refugees admitted under

section 207 of the INA, asylees admitted

under section 208 of the INA, and aliens

whose deportation or removal has been

withheld under sections 243(h) or

241(b)(3) of the INA would be eligible

for 5 years. Refugees would be eligible

for 5 years from the date of entry into

the country, asylees would be eligible

for 5 years from the date asylum was

granted, and deportees would be eligible

for 5 years from the date deportation or

removal was withheld. Section 5302 of

the Balanced Budget Act of 1997

reorganized section 402(a)(2)(A) to

separate the requirements for eligibility

for SSI and food stamps and to provide

in paragraph (A)(ii)(IV) that an alien

granted status as a Cuban or Haitian

entrant, as defined in section 501(e) of

the Refugee Education Assistance Act of

1980, would be eligible for 5 years from

the date granted that status. Section

5306 of the Balanced Budget Act further

amended section 402(a)(2)(A) of

PRWORA to add a new paragraph

(A)(ii)(V) which provided that certain

Amerasians would be eligible for 5 years

from date admitted to the United States

as an Amerasian immigrant pursuant to

section 584 of the Foreign Operations

Appropriations Act, incorporated as

section 101(e) of Public Law 100–202 as

amended by Public Law 100–461. This

legislation provided for certain

Amerasians in Vietnam, with their close

family members, to be admitted to the

U.S. as immigrants through the Orderly

Departure Program beginning on March

20, 1988. These Amerasians will be

admitted for permanent residence at the

point of entry.

The AREERA further amended section

402 of PRWORA. Section 503 of

AREERA amended section 402(a)(2)(A)

of PRWORA to extend the time period

that refugees, asylees, deportees,

Cubans, Haitians, and Amerasians can

be eligible from 5 years to 7 years.

Section 402(a)(1) of PRWORA makes all

other types of qualified aliens (with the

exceptions of lawful permanent

residents with 40 qualifying quarters of

work and alien members of the armed

forces, alien veterans, and certain

members of such an alien’s family)

ineligible for food stamps for as long as

they maintain their current alien status;

all other non-qualified aliens are

ineligible under section 401(a) of

PRWORA. Section 504 of AREERA

amended section 402(a)(2)(F) of

PRWORA to provide that aliens who are

receiving benefits or assistance for

blindness or disability as defined in

section 3 (r) of the Food Stamp Act may

be eligible for food stamps provided that

they were lawfully residing in the

United States on August 22, 1996.

Section 506 of AREERA added a new

section (I) to section 402(a)(2) of

PRWORA to make aliens eligible if they

were lawfully residing in the United

States on August 22, 1996 and they were

65 years of age or older on that date.

Section 507 of AREERA added a new

section (J) to section 402(a)(2) of

PRWORA to make aliens eligible if they

were lawfully residing in the United

States on August 22, 1996 and are

currently under 18 years of age. We

proposed to include the alien eligibility

criteria added by AREERA in section 7

CFR 273.4(a).

One commenter thought that the

provision relating to aliens who were

legally residing in the United States on

August 22, 1996, and were age 65 or

older on that date could be clarified by

specifying that the provision applied to

aliens born on or before August 22,

1931. The Department has adopted this

suggestion.

In order to formalize our existing

guidance on the applicability of the

disparate eligibility requirements

enumerated in section 402 and section

403 of PRWORA, we proposed to apply

the requirements of PRWORA section

402 uniformly to the Food Stamp

Program. We received no comments on

this determination. Because we are

currently reviewing our existing

guidance, we decided not to address the

applicability of PRWORA section 403 to

the Program in this final rule. We will

issue revised guidance if necessary as a

result of our review.

Under section 402(a)(2)(C) of

PRWORA, an alien lawfully residing in

any State who is a veteran honorably

discharged for reasons other than alien

status or who is on active duty in the

Armed Forces of the United States for

reasons other than training or the

spouse or unmarried dependent child of

a veteran or person on active duty is

eligible to participate. Section 5563 of

the Balanced Budget Act of 1997

amended the provision regarding

military-related eligibility to: (1) apply

the minimum active duty service

requirement (24 months or the period

for which the person was called to

active duty); (2) expand the definition of

‘‘veteran’’ to include military personnel

who die while on active duty and

certain aliens who served in the

Philippine Commonwealth Army during

World War II or served as Philippine

Scouts after World War II; and (3) add

eligibility for the unremarried surviving

spouse of a deceased veteran, provided

the couple was married for at least one

year or for any period if a child was

born of the marriage or was born to the

veteran and the spouse before the

marriage and the spouse has not

remarried.

We proposed to define an unmarried

dependent child for purposes of section

402(a)(2)(C) regarding persons with a

military connection to include a legally

adopted or biological dependent child

of an honorably discharged veteran or

active duty member of the Armed

Forces if the child is under the age of

18 or a full-time student under the age

of 22. It would also include a child of

a deceased veteran provided the child

was dependent upon the veteran at the

time of the veteran’s death. In addition,

we proposed to include a disabled child

age 18 or older if the child was disabled

and dependent on the active duty

member or veteran prior to the child’s

18th birthday. This definition is

consistent with that developed for the

Supplemental Security Income (SSI)

program. We also proposed to apply this

definition of an unmarried dependent

child to section 402(a)(2)(K) regarding

unmarried dependent children of

Hmong and Highland Laotians. Section

431(a) of PRWORA provides that except

as otherwise provided, the terms used

have the same meaning given such

terms in section 101(a) of the INA.

However, there is no definition of a

child in section 101(a), and there are

two definitions in 101(b), one for

immigration purposes and one for

nationality purposes. Because of the

ambiguity of the law and the fact that

both of the INS definitions are much

more complicated than the definition

used for SSI purposes, we proposed to

use the SSI definition of dependent

child. We also considered using

Federal Register / Vol. 65, No. 225 / Tuesday, November 21, 2000 / Rules and Regulations 70165

dependent as used for other food stamp

purposes such as the work registration

exemption, but believe they are too

restrictive for this purpose.

We proposed to include the eligibility

provision for individuals with a military

connection in new paragraph

(a)(5)(ii)(G).

Under current regulations at 7 CFR

273.4(a)(8) and (a)(9), aged, blind, or

disabled aliens admitted for temporary

or permanent residence under section

245A(b)(1) of the INA and special

agricultural workers admitted for

temporary residence under section

210(a) of the INA are eligible to

participate. The PRWORA does not

address the status of aliens admitted for

temporary residence. Therefore, these

aliens are eligible only if they meet the

requirements of section 402 of PRWORA

described above, and we proposed to

remove paragraphs (a)(8) and (a)(9).

We also proposed to remove 7 CFR

273.4(b), (c) and (d) as unnecessary and

redesignate paragraph (e) as paragraph

(b). Current paragraph (b) is a partial list

of ineligible aliens. Current paragraph

(c) refers to the provisions in 7 CFR

273.11(c)(2) for treatment of the income

and resources of an ineligible alien and

is unnecessary. Current paragraph (d)

explains how to treat the income and

resources of an alien while awaiting a

determination of an individual’s eligible

alien status. Provisions governing the

treatment of individuals while awaiting

verification of eligible alien status are

located at 7 CFR 273.2(f)(1)(ii), and it is

not necessary to repeat the procedure at

7 CFR 273.4. We would retain in

redesignated paragraph 7 CFR 273.4(b)

the requirement in current 7 CFR

273.4(e) to report illegal aliens to INS.

We proposed a conforming

amendment to 7 CFR 273.1(b)(2)(ii),

concerning ineligible household

members. We proposed to change the

reference in 7 CFR 273.1(b)(2)(ii) from

‘‘§ 273.4(a)’’ to ‘‘§ 273.4’’ because both

paragraphs 273.4(a) and (b) describe

eligibility requirements for aliens.

What Does the Term ‘‘Lawfully

Residing’’ Mean?

Several advocacy groups suggested

that we add a definition of the term

‘‘lawfully residing’’ in the United States

to the final rule. Such groups further

suggested that the DOJ definition of

‘‘lawfully present’’ for purposes of

receiving benefits under Title II of the

Social Security Act could be used for

food stamp purposes. The DOJ

definition gives lawfully present status

to the following aliens:

(1) A qualified alien as defined in

section 431(b) of Pub. L. 104–193;

(2) An alien who has been inspected

and admitted to the United States and

who has not violated the terms of the

status under which he or she was

admitted or to which he or she has

changed after admission;

(3) An alien who has been paroled

into the United States pursuant to

section 212(d)(5) of the INA for less than

1 year, except:

• Aliens paroled for deferred

inspection or pending exclusion

proceedings under 236(a) of the INA;

and

• Aliens paroled into the United

States for prosecution pursuant to 8 CFR

212.5(a)(3);

(4) An alien who belongs to one of the

following classes of aliens permitted to

remain in the United States because the

Attorney General has decided for

humanitarian or other public policy

reasons not to initiate deportation or

exclusion proceedings or enforce

departure:

• Aliens currently in temporary

resident status pursuant to section 210

or 245A of the INA;

• Aliens currently under Temporary

Protected Status (TPS) pursuant to

section 244A of the INA;

• Cuban-Haitian entrants, as defined

in section 202(b) Pub. L. 99–603, as

amended;

• Family Unity beneficiaries pursuant

to section 301 of Pub. L. 101–649, as

amended;

• Aliens currently under Deferred

Enforced Departure (DED) pursuant to a

decision made by the President;

• Aliens currently in deferred action

status pursuant to Service Operations

Instructions at OI 242.1(a)(22);

• Aliens who are the spouse or child

of a United States citizen whose visa

petition has been approved and who

have a pending application for

adjustment of status;

(5) Applicants for asylum under

section 208(a) of the INA and applicants

for withholding of deportation under

section 243(h) of the INA who have

been granted employment authorization,

and such applicants under the age of 14

who have had an application pending

for at least 180 days.

We are adopting this suggestion to

clarify eligibility requirements for

Hmong and Highland Laotian tribal

members, and certain individuals whose

eligibility depends on their lawful

residence in the United States on

August 22, 1996. While we are adopting

DOJ’s definition by reference, we are not

repeating the definition in the final rule.

We now believe a definition of the term

‘‘lawfully residing in the United States’’

is necessary for two reasons. First,

although Hmong and Highland Laotian

tribal members do not have to be

qualified aliens to be eligible for food

stamps, they still must have a lawful

immigration status. The definition set

forth at 8 CFR 103.12(a) will provide

guidance to State agencies in making

this determination. Second, aliens who

must qualify under the AREERA

amendments to PRWORA to be eligible

for food stamps must meet two separate

tests: (1) the alien had to be lawfully

residing in the United States on August

22, 1996; and (2) the alien must have

current status as a qualified alien (with

the above-noted exception for Hmong

and Highland Laotians). The final rule

clarifies that an alien may have had an

immigration status on August 22, 1996,

that would not currently qualify the

alien for participation. As long as the

alien met the definition of ‘‘lawfully

residing in the United States’’ then, the

alien may be eligible for food stamps, if

now he or she has adjusted to a

qualifying immigration status. For

example, a 70 year old alien had an

application for asylum pending as of

August 22, 1996. Subsequently, the INS

grants the asylum request. The alien is

eligible for 7 years from the date of the

granting of asylum. On the other hand,

an individual who was present in the

United States on August 22, 1996, but

not lawfully residing in the United

States, may not use this provision to

access food stamp benefits. This is true

even if he or she later achieves a

qualifying immigration status. For

example, an undocumented then-66

year old alien was present in the United

States on August 22, 1996. The alien

subsequently leaves the county and

returns as a LPR. Unless the alien has

earned or can get credit for 40 quarters

of Social Security coverage, the alien is

not eligible for food stamps.

May any Non-Qualified Aliens

Participate in the Program?

Section 505 of AREERA amended

section 402(a)(2)(G) of PRWORA to

provide that aliens who are American

Indians born in Canada to whom the

provisions of section 289 of the

Immigration and Nationality Act apply

or who are members of an Indian tribe

as defined in section 4(e) of the Indian

Self-Determination and Education

Assistance Act may be eligible for food

stamps. Section 508 of AREERA added

a new section (K) to section 402(a)(2) of

PRWORA to make any individual

eligible who is lawfully residing in the

United States and was a member of a

Hmong or Highland Laotian tribe at the

time that the tribe rendered assistance to

United States personnel by taking part

in a military or rescue operation during

the Vietnam era (August 5, 1964–May 7,

70166 Federal Register / Vol. 65, No. 225 / Tuesday, November 21, 2000 / Rules and Regulations

1975). Section 508 further extends food

stamp eligibility to the spouse, or

unremarried surviving spouse, and

unmarried dependent children of such

Hmong or Highland Laotian. Section

509 of AREERA amended section 403(b)

of PRWORA to provide that American

Indians made eligible by section 505

and Hmong and Highland Laotians and

their families made eligible by section

508 do not have to be qualified aliens

to be eligible for food stamps. We

proposed that members of these groups

are the only aliens who can be eligible

for food stamps without being a

qualified alien as defined in section 431

of PRWORA.

There were several comments relating

to the eligibility of Hmong and Highland

Laotians. One commenter thought the

Department should simply confer

eligibility on any person who was a

member of a Hmong or Highland

Laotian tribe on or prior to May 7, 1975.

We are not adopting this suggestion.

The Department has no authority to

change the clear requirement of the

statute. One State agency suggested that

the Department include step-children in

the definition of ‘‘dependent child’’ for

purposes of determining eligible status

under section 508. As stated previously,

the Department is adopting the

definition as proposed for the sake of

consistency with SSI.

How Must State Agencies Comply With

the Requirement To Report Illegal

Aliens?

The Department proposed no changes

in, nor received any comments on, the

requirement in renumbered 7 CFR

273.4(b)(1) to report illegal aliens.

However, we are taking this opportunity

to recognize the September 28, 2000 (65

FR 58301) publication of the

Interagency Notice providing guidance

for compliance with PRWORA section

404. PRWORA section 404 requires

certain Federal and State entities at least

four times annually, to notify the INS of

any alien the entity ‘‘knows’’ is not

lawfully present in the U.S. The

Interagency Notice specifies that a

government entity ‘‘knows’’ that an

alien is present illegally only when the

entity’s finding or conclusion of

unlawful presence is made as part of a

formal determination subject to

administrative review and is supported

by a determination of the INS or the

Executive Office of Immigration Review,

such a Final Order of Deportation.

PRWORA section 404 does not apply to

the Food Stamp Program; however, for

purposes of complying with the

reporting requirement in 7 CFR

273.4(b)(1), the Department considers a

State agency to be compliant if it limits

its reporting of illegal aliens for food

stamp purposes to the standard of

‘‘knowing’’ established in the abovecited Interagency Notice. We believe

that ‘‘knowing’’ that an alien is present

illegally as defined in the Interagency

Notice is consistent with the State

agency ‘‘determining’’ that an alien is

present illegally as required under 7

CFR 273.4(b)(1), as interpreted to

conform with the September 28, 2000

(65 FR 58301) Interagency Notice

providing guidance for compliance with

PRWORA Sec. 404.

How Must State Agencies Treat the

Deemed Income and Resources of

Sponsored Aliens?

We proposed to move the sponsored

alien provisions from 7 CFR 273.11(j) to

new paragraph 7 CFR 273.4(c) and to

renumber 7 CFR 273.11(k) as 7 CFR

273.11(j). This will consolidate most of

the alien provisions.

Current rules at 7 CFR 273.11(j)

establish special procedures for

determining the income and resources

of sponsored aliens. Sponsored aliens

are individuals lawfully admitted to the

United States for permanent residence.

A sponsor is a person who executed an

affidavit of support on behalf of an alien

as one of the conditions required for the

alien’s entry into the United States. The

current rules require that a portion of

the gross income and resources of the

sponsor and the sponsor’s spouse (if

living with the sponsor) be deemed to

the sponsored alien for a period of 3

years from the date of the sponsored

alien’s entry into the country as a

lawfully admitted permanent resident

alien. Under section 5(i) of the Food

Stamp Act, the income of the sponsor

and the sponsor’s spouse (if living with

the sponsor) is the total annual income

reduced by the income eligibility

standard for a household equal in size

to the sponsor’s household, and

deeming continues for only 3 years. The

Act also requires the subtraction of

$1,500 from the resources of the sponsor

and the sponsor’s spouse prior to

deeming the remainder to the alien.

Section 421 of PRWORA, as modified

by the OCAA and the Balanced Budget

Act, contains several provisions which

revise the current requirements. First,

section 421(a)(1) provides that,

notwithstanding any other provision of

law, the income and resources of the

alien must be deemed to include the

income and resources of any person

who executed an affidavit of support

pursuant to section 423 of PRWORA

which is a legally binding contract.

Section 421(a)(2) provides that the

income and resources of the spouse (if

any) of the person executing the

affidavit are to be deemed to the alien.

Section 421(b) provides that the

deeming must continue until the alien

becomes a citizen or has worked 40

qualifying quarters of coverage as

defined under title II of the Social

Security Act or can be credited with

such qualifying quarters. Any quarter

creditable for a period beginning after

December 31, 1996, cannot be credited

if the alien received any Federal meanstested public benefit during the quarter.

Section 403 includes a list of types of

assistance exempt from the prohibition

against allowing a quarter of work credit

for a quarter in which an alien received

any means-tested public benefit. This

list of exempt assistance is addressed in

the discussion of alien eligibility

requirements above.

Section 552 of OCAA amends section

421 of PRWORA to provide two

exceptions to the requirement that the

income and resources of the sponsor(s)

and sponsor’s spouse be deemed to the

sponsored alien. For indigent aliens

deeming is limited to the amount

actually provided by the sponsor to the

alien for a period beginning on the date

of such determination and ending 12

months after such date. The Department

proposed that the State agency establish

criteria for determining when an alien is

unable to obtain food and shelter

considering all income and assistance

provided by individuals and thus

should be considered indigent. The

State agency must notify the Attorney

General of each such determination,

including the names of the sponsor and

the sponsored alien involved. Deeming

is eliminated for 12 months for battered

alien spouses and children and parents

of battered children if the benefit

provider determines that the battering is

substantially connected to the need for

benefits. Section 5571 of the Balanced

Budget Act of 1997 includes the alien

child of a battered parent in this

provision. Deeming of the batterer’s

income and resources is eliminated after

12 months if the battery is: (1)

recognized by a court or the INS; and (2)

has a substantial connection to the need

for benefits. These provisions do not

apply if the battered alien lives with the

batterer.

Section 423, as amended by section

551(a) of the OCAA, provides that the

sponsored alien provisions in PRWORA

apply to aliens who are sponsored

under a new legally binding affidavit of

support. It also requires that if a

sponsored alien has received any

benefits under a means-tested public

benefit program, the State agency must

request that the sponsor provide

reimbursement in the amount of such

assistance. If, within 45 days after the

Federal Register / Vol. 65, No. 225 / Tuesday, November 21, 2000 / Rules and Regulations 70167

request for reimbursement, the sponsor

has not indicated a willingness to

commence payment, the State agency

may bring legal action against the

sponsor pursuant to the affidavit of

support. The DOJ published an interim

rule with request for comments on the

new affidavits of support and

reimbursement provisions in the

Federal Register on October 20, 1997

(62 FR 54346). The rule is effective on

December 19, 1997, and the new

affidavits of support should be used for

all aliens who become sponsored after

that date.

The Department proposed to revise 7

CFR 273.11(j) to incorporate provisions

of PRWORA, OCAA, and the Balanced

Budget Act of 1997 and to streamline

the section by increasing State agency

flexibility and removing redundant

requirements. Our proposals generated

many adverse comments. Generally,

State agencies and advocacy groups

opposed the proposals to delete the

provisions of the current regulation,

which tend to reduce the amount of the

sponsor’s income and resources which

could be considered available to the

sponsored alien. Many commenters

urged us to restore the deductions from

the sponsor’s income and resources

which are included in the current

regulations. Commenters worried that

the proposals, if implemented, would

result in the ineligibility of other

household members, particularly U.S.

citizen children of sponsored aliens,

ostensibly an unintended result of the

deeming provisions. They felt the

proposed rule was antithetical to the

Department’s efforts to increase

participation of low-income households

containing eligible aliens and U.S.

citizens. Commenters also cited the

inequity of counting the deemed income

of the sponsored alien as being available

to individuals for whom the sponsor has

executed no affidavit of support.

The Department carefully reviewed

the concerns the commenters raised on

this difficult issue. We struggled to find

a sensible way to comply with new

PRWORA deeming provisions, while

taking into account the existing

requirements of section 5(i) of the Act.

During formulation of the final rule, we

had extensive discussions of this issue

with other agencies within the

Executive Branch. Based on these

conversations and comments we

received, we determined that the

provisions of PRWORA which require

deeming of a sponsor’s income and

resources do not conflict with the

provisions of the Act specifying how to

calculate the amount of money to deem

from a sponsor. Therefore, those Food

Stamp Act provisions remain in effect.

We concluded that the best reading of

the law, in consideration of the

comments received and the

determination noted above, would be to

modify the proposed rule as follows.

Outlined below are the proposals and

changes we made in the final rule:

1. We proposed in new paragraph

(c)(1) to add a reference to section 213A

of the INA, which contains

requirements for the affidavit of

support. We incorporated the definition

of ‘‘sponsor’’ in the definition of

‘‘sponsored alien’’ and removed the

definitions of ‘‘Date of entry’’ and ‘‘Date

of admission’’ because those terms are

no longer relevant to the new deeming

requirements

Several commenters questioned the

ability of the Department to require

deeming of income from spouses who

had not executed an affidavit of support.

One State agency thought that the

regulation was unclear on the point of

the obligation of a spouse to support the

sponsored alien. The State agency asked

for guidance in situations where the

affidavit of support predates the

marriage, or the spouse signs an

affidavit of support and subsequently,

the couple divorce.

The Department agrees that the

obligation of spouses to support the

sponsored alien needs clarification.

There seems to be an inconsistency

between the provision in PRWORA

requiring the deeming of the income of

an individual who has executed an

affidavit of support on behalf of an

immigrant and the provision requiring

the deeming of income of a spouse

without specifying whether this

individual has also executed an affidavit

of support (either Form I–864 or Form

I–864A). We look to the INS regulations

at 8 CFR 213a to resolve this apparent

inconsistency. Through its regulation,

INS has made it clear that only

individuals who execute legally binding

contracts for support are responsible for

the support of the sponsored alien.

Further, only those individuals who

have signed either Form I–864 or Form

I–864A are responsible for reimbursing

the value the value of Federal meanstested public benefits paid to an eligible

sponsored alien. The final rule specifies

that only those persons who have

executed affidavits of support are

sponsors.

One State agency observed that

sponsored status is not indicated on the

‘‘green card’’ or on ASVI; therefore, staff

are unable to identify sponsored aliens,

absent specific Interim Guidance from

FNS. The State agency correctly

observed that sponsored status is not

indicated on the I–551 or through ASVI.

However, as there is no list of categories

of legal permanent residents who would

be excluded from obtaining a sponsor,

the Department expected that eligibility

workers would need to explore

sponsored alien status with all

immigrants during the application and

verification process. In view of the State

agency’s concern, FNS will explore the

need for and possibly issue additional

guidance on this issue.

2. We proposed to revise the

introductory text of current paragraph

(j)(2) to incorporate our original reading

of the statute that PRWORA requires

that all of the sponsor’s income and

resources be counted in determining the

eligibility and benefits of the sponsored

alien, and that deeming lasts until the

alien becomes a citizen or can be

credited with 40 qualifying quarters of

coverage. The income and resources of

sponsored aliens, whether they are

eligible or ineligible aliens, would

include the income and resources of the

sponsor and would be counted in

determining the eligibility and benefits

of the rest of the household, in

accordance with 7 CFR 273.11(c). We

proposed to remove the provision in

current paragraph (j)(2)(v) requiring the

counting of the income and resources of

both the sponsor and sponsor’s spouse

in determining eligibility. We proposed

to remove the provisions of current

regulations in paragraph (j)(2)(i)(A)

allowing a 20 percent deduction from

the sponsor’s earned income and

paragraph (j)(2)(i)(B) allowing a

deduction for an amount equal to the

Program’s monthly gross income

eligibility limit for a household equal in

size to the sponsor’s household. We

proposed also to remove the provision

allowing use of the income amount

reported for AFDC purposes in current

paragraph (j)(2)(ii). We proposed to

remove the provision of paragraph

(j)(2)(iv) which limits the deemed

amount of the sponsors’ resources to

those in excess of $1,500 to conform

with our reading of PRWORA section

421 regarding deeming of sponsor

resources. With the removal of these

provisions, we proposed to retain and

designated as paragraphs (c)(2)(i) and

(c)(2)(ii), respectively current

paragraphs (j)(2)(iii) regarding money

the sponsor pays to the alien and

(j)(2)(iv) requiring the division of the

income and resources of the sponsor

among the number of aliens sponsored

by that sponsor. We proposed to delete

current paragraph (j)(2)(vii) which

provides specific procedures for

handling changes in sponsors in order

to provide State agency flexibility. We

believed that the State agency is in the

best position to make these decisions.

70168 Federal Register / Vol. 65, No. 225 / Tuesday, November 21, 2000 / Rules and Regulations

Requirements contained elsewhere in

current regulations for reporting and

acting on changes that affect a

household’s eligibility or benefit levels

are already comprehensive and we

believed there was no additional

Federal interest to be protected by

providing specific procedures for this

particular kind of change.

In the final rule, the Department is

making significant revisions to the

deeming provisions, and is limiting

their application to situations where the

sponsored alien is an eligible alien. We

felt that PRWORA gave the Department

discretion to determine whether section

421 requires that the amount of income

and assets of a sponsor of an ineligible

alien be counted in the food stamp case

of a household which includes both

eligible and ineligible members.

Accordingly, the final rule excludes the

deemed income and resources of an

ineligible sponsored alien.

However, we could find no such

latitude in the case of an eligible

sponsored alien. In as much as the

eligible alien is a household member,

we see no way to exclude the income

and resources, including the deemed

income and resources of the alien’s

sponsor, from the calculation of

household eligibility and benefit

amount, if the sponsored alien is not

indigent as discussed below. In the final

rule, we are restoring some significant

provisions of the current regulations

relating to the computation of the

sponsor’s income and assets. These are

the provisions allowing a 20 percent

deduction from the sponsor’s earned

income and allowing a deduction for an

amount equal to the monthly gross

income eligibility limit for a household

equal in size to the sponsor’s household,

and the provision which limits the

deemed amount of the sponsors’

resources to those in excess of $1,500.

The final rule also provides that the

normal food stamp definitions of

income and resources apply to the

determination of sponsor income and

resources. To the extent that another

assistance program the State agency

administers collects gross income

information on sponsors from sponsored

aliens, the State agency may use this

information in the sponsored alien’s

food stamp case. Several commenters

suggested that the Department raise the

resource exclusion to $2,000 to conform

to the resource limit for households

without an elderly member as set forth

in section 5(g)(1) of the Act. We are

unable to adopt this suggestion, as

Congress did not raise the threshold

amount for excluding the resources of a

sponsor when it raised the general

resource limits for households without

an elderly member.

3. Current paragraph (j)(3) exempts

the following aliens from the deeming

provisions: aliens whose sponsor is

participating in the Program in the same

household as the sponsored alien or in

a separate household, aliens who are

sponsored by a group as opposed to an

individual, and aliens not required to

have sponsors. We proposed to delete

the exemption for aliens whose sponsor

is participating in the Food Stamp

Program in a separate household from

the sponsored alien. We proposed to

retain the exemption for sponsored

aliens who are included in the same

household as the sponsor so that the

State agency does not double count

sponsor’s income and resources. We

proposed to add exemptions for

indigent aliens and certain battered

aliens and the child of a battered alien

as provided in the OCAA and the

Balanced Budget Act of 1997 and to

require reporting each indigence

determination to the Attorney General.

Many commenters opposed the

proposal to delete the exemption from

deeming for sponsored aliens whose

sponsor participates in the Program in a

separate household. The Department is

not adopting this suggestion. As stated

previously, section 423 of PRWORA

provides that the deeming provisions

apply to aliens who are sponsored

under a new legally binding affidavit of

support. The provision does not apply

to aliens who are not required to have

an affidavit of support filed on their

behalf, nor to those who have an

organization, as opposed to a ‘‘person,’’

as their sponsor. The Department’s

regulations excuse from the deeming

provisions sponsored aliens who

participate in the Program in the same

food stamp household as their sponsor.

In this instance, the food stamp

household concept already requires

consideration of the income and assets

of all eligible household members.

Beyond the just-noted exceptions to

deeming, the Department sees no legal

basis for excusing an eligible sponsored

alien from the deeming requirements,

simply because the sponsor is receiving

food stamps. Receipt of food stamps

does not render invalid the affidavit of

support the sponsor has signed.

However, the Department has restored

the provisions of the current regulations

with respect to the amount of deemed

income that State agencies may count in

the food stamp case of an eligible

sponsored alien. Accordingly, little or

no income or resources of a sponsor

who is participating in the Program

could be deemed in the food stamp case

of a eligible sponsored alien.

Some State agencies and many

advocacy groups suggested that we

establish national standards for State

agency use in making determinations of

‘‘indigence’’ with respect to excusing

sponsored aliens from the deeming

provisions. After consultation with the

INS, the Department has determined

that it does have authority to mandate

such standards and the final rule adopts

the suggestion. Section 423 of PRWORA

requires the State agency to determine

that a sponsored alien would, in the

absence of the assistance provided by

the State agency, be unable to obtain

food and shelter, taking into account the

alien’s own income, plus any cash, food,

housing, or other assistance provided by

other individuals, including the

sponsor. The State agency must notify

the Attorney General of each such

determination, including the names of

the sponsor and the sponsored alien

involved. The final rule emphasizes the

indigence exception by more closely

defining the term ‘‘inability to obtain

food and shelter without assistance.’’

Under the final rule, a sponsored alien

is indigent if the sum of all the

sponsored alien’s household’s income

and any assistance the sponsor or others

provide (cash or in-kind) is less than or

equal to 130 percent of the poverty

income guideline. The Department feels

that the 130 percent of poverty income

guideline is a well-recognized

benchmark for determining if a

household is in need of food stamps and

other government assistance. However,

to comply with the statute, and unlike

a normal determination of income for

food stamp eligibility purposes, the

indigence determination includes the

value of in-kind assistance the sponsor

and others provide. The State agency

would determine the amount of income

and other assistance provided in the

month of application. Each indigence

determination is good for 12 months

and is renewable for additional 12-

month periods. If the sponsored alien is

indigent, then the normal food stamp

budgeting process would begin. The

State agency would count in the food

stamp budget whatever actual cash

contributions the sponsor and others

make.

The Department believes the

procedure for determining indigence

would work as follows:

A. The eligibility worker (EW) would

inquire about sponsored alien status if

an alien is a LPR.

B. If the LPR is an eligible sponsored

alien, then the EW would make an

indigence determination.

C. If the alien is indigent, then the EW

processes the case as normal, counting

only the actual amount of cash support

Federal Register / Vol. 65, No. 225 / Tuesday, November 21, 2000 / Rules and Regulations 70169

from the sponsor. If the alien is not

indigent, then the EW would require the

sponsored alien to collect information

on the total amount of the sponsor’s

income and assets and deem

appropriate amounts to establish

eligibility and benefit amount.

4. We proposed to retain the

provisions of current paragraph (j)(4)

concerning the sponsored alien’s

responsibility for obtaining the

cooperation of the sponsor and

providing information about the sponsor

to the State agency.

Some commenters questioned how a

sponsored alien could garner

information from a sponsor with whom

the alien’s relationship had soured,

particularly if the sponsor were

battering the alien. We are leaving this

language unchanged in the final rule;

however, the Department has restored

the requirement that State agencies

assist aliens in obtaining information

from recalcitrant sponsors.

5. We proposed to delete the

provisions of current paragraph (j)(5)

which lists specific responsibilities of

the State agency for processing cases

involving households with sponsored

aliens. We believed that these

requirements are unnecessary because

the State agency is aware of the

information about the sponsor that must

be obtained and there is no need to

provide detailed regulatory

requirements. We received no adverse

comments on this provision, so we are

leaving the proposed language

unchanged in the final rule.

We proposed to renumber current

paragraph (j)(6) concerning procedures

for acting on a household’s application

pending receipt of verification about the

sponsor’s income and resources as

paragraph (j)(5). We proposed to delete

the last sentence of current paragraph

(j)(6) in the new paragraph (j)(5). That

sentence requires State agencies to assist

aliens in obtaining verification in

accordance with the provisions of

current § 273.2(f)(5). In accordance with

amendments made by PRWORA

discussed above, we proposed to

remove the requirement to assist

households in obtaining verification

from the regulations. Inasmuch as the

Department is retaining current

§ 273.2(f)(5), we are restoring this

reference to the final rule.

6. We proposed to remove current

paragraph (j)(7) requiring the

Department to enter into a

Memorandum of Agreement between

the Department and other Federal

agencies as this is a Federal

responsibility, and it is addressed by

DOJ’s interim rule published on October

20, 1997, (62 FR 54346). We received no

adverse comments on this provision, so

we are leaving the proposed language

unchanged in the final rule.

7. We proposed to remove the

provisions of current paragraph (j)(8)

concerning overissuances which may

result from the use of incorrect sponsor

information. A State agency asked us to

clarify the status of recipient claims

filed against sponsors pursuant to 7 CFR

273.11(c)(8)(iii). The State agency

worried that any such claims might

become uncollectible once the new rule

is effective.

In regard to the State agency’s

question on the status of overissuance

claims against sponsors, current

§ 273.11(j)(8)(iii) and the requirements

of PRWORA section 423(e), address

completely separate issues. The USDA

regulation addresses recipient claims

situations where a sponsor is at fault for

providing inaccurate information to the

State agency for the purpose of

establishing the eligibility and benefit

amount of the sponsored alien’s

household. PRWORA section 423(e)

addresses situations where the sponsor

has executed the specified affidavit of

support and owes the benefit-providing

agency the value of any Federal meanstested public benefits provided to the

sponsored alien. (This issue is discussed

extensively in the following paragraph.)

Accordingly, any existing claims against

sponsors filed under 7 CFR

273.11(j)(8)(iii) remain valid claims.

After the State agency implements the

final rule, any recipient claims arising

from overissuances to a household

which includes a sponsored alien will

be the sole responsibility of that

household.

8. The NPRM did not establish any

procedures for sponsor reimbursement

of means-tested public benefits

provided to sponsored aliens, as

stipulated under PRWORA section

423(e). Instead, in the proposed rule’s

preamble, the Department directed

readers to refer to an Interim DOJ rule

published on October 20, 1999 (62 FR

54346). There was much adverse

commentary from State agencies and

advocacy groups on the lack of policy

direction on this issue.

Advocacy groups urged the

Department to be more specific as to the

calculation of benefits for which a State

agency could bill a sponsor when the

eligible sponsored alien receives food

stamp benefits. Advocacy groups also

urged us to prevent State agencies from

billing sponsors until the Department

and other Federal agencies develop

uniform collection procedures through

the regulatory process. Several State

agencies and advocacy groups urged the

Department to exempt certain sponsors

from the requirement to reimburse the

Federal government for the value of

food stamps issued to eligible sponsored

aliens.

During the development of the final

rule, it became apparent to us that the

issue of billing sponsors for the value of

means-tested public benefits was

extremely complex and could not be

resolved without coordination and

consultation with other Federal

agencies. After consultation with

appropriate departments of the

Executive Branch, we have decided not

to regulate this issue until the

Department has completed a thorough

policy development process in

coordination with other Federal

agencies, with one exception discussed

below.

The final rule addresses the issue of

State agencies billing sponsors who

themselves participate in the Program,

either in the same household or in a

separate household. Commenters have

raised an issue which is not easily

resolved. Under the OCCA amendment

to PRWORA, an intending sponsor must

demonstrate the means to maintain an

annual income of at least 125 per cent

of the Federal poverty income guideline

for the sponsor’s household size,

including any dependents and the

sponsored alien(s). Also, a sponsor may

qualify financially based on the

anticipated contribution of the

sponsored alien to the sponsor’s

household’s income. The annual income

requirement is no less than 100 percent

of the Federal poverty income guideline

if the sponsor is an active duty member

of the armed forces and the intending

immigrant is the sponsor’s wife or child.

Further, the obligation of the sponsor to

support a sponsored alien ceases only

when the alien naturalizes or when the

alien works or can get credit for 40

quarters of social security coverage.

However, the framers of the OCCA

amendment to PRWORA apparently did

not contemplate that individuals and

their families who meet the minimum

financial requirements for sponsorship

may yet qualify for food stamps, as well

as other Federal means-tested public

benefits. The general gross income

guideline for the Program is 130 per

cent of the Federal poverty income

guideline. The gross income test does

not apply to households which include

a member age 60 or older; rather, such

households must pass a net income test

of 100 percent of the Federal poverty

income guideline, after deducting

allowable expenses from gross income.

The Department does not believe that

Congress intended that in order to

comply with the law State agencies

must bill sponsors for the value of food

70170 Federal Register / Vol. 65, No. 225 / Tuesday, November 21, 2000 / Rules and Regulations

stamp benefits paid to the eligible

sponsored alien, notwithstanding the

fact that the sponsors themselves are

eligible for the Program or that the

eligible sponsored alien is a member of

the sponsor’s food stamp household.

After consultation with DOJ, the

Department believes it has the authority

to forestall such an incongruous result.

Accordingly, the final rule exempts

sponsors who are themselves

participating in the Program from

receiving bills from State agencies for

the value of food stamp benefits

provided to an alien for whom they

have signed an affidavit of support.

9. Finally, based on comments from

State agencies and advocacy groups, the

final rule deletes the requirement in the

proposed rule that State agencies may

prorate the income and resources of the

sponsor among multiple sponsored

aliens only if the sponsored aliens apply

for or participate in the Program.

However, the final rule retains the

requirement that the State agency must

prorate the deemed income among the

various sponsored aliens regardless of

whether the sponsor participates in the

program (as set forth in § 273.4(c)(2)(v)).

7 CFR 273.8

Inaccessible Resources—Vehicles—7

CFR 273.8(e) and (f)

We proposed to amend section

273.8(e)(18) to allow vehicles to be

treated as inaccessible resources. We

also proposed to amend section

273.8(h)(1) to add a provision for

excluding the value of a vehicle that the

household is unable to sell for any

significant return because the

household’s interest is relatively slight

or the costs of selling the household’s

interest would be relatively great. The

rule would have excluded any vehicle

which was likely to produce a return of

less than $1,000 or $1,500, depending

on the household’s resource limit. We

also solicited public comment on the

ways in which we could simplify the

method for evaluating vehicles.

Currently, the rules are fairly complex.

Some vehicles are exempted from

consideration as a resource. Others

which are nonexempt, but are the

household’s only transportation or are

used for employment or training are

subject only to the fair market test. A

third category of household vehicles is

subject to a dual test, which counts as

a resource the higher of the fair market

value in excess of $4,650 or the equity

value. (Section 810 of PRWORA

amended section (5)(g) of the Act to set

the fair market value exclusion limit at

$4,650, effective October 1, 1996. See

the final rule ‘‘Food Stamp Program:

Non-Discretionary Provisions of the

Personal Responsibility and Work

Opportunity Reconciliation Act of

1996’’ published in the Federal Register

on October 30, 2000 (65 FR 64581) for

further information.) We advised

commenters that the fair market value

test is established by statute, while the

equity test is subject to Departmental

discretion.

The proposal to allow vehicles to be

considered under the inaccessible

resources provision received

widespread support. Many commenters

agreed that the rule change would help

working households achieve or

maintain self-sufficiency. Several

commenters suggested raising the

threshold amount for determining

inaccessibility to higher amounts than

we proposed. Commenters pointed out

that the food stamp fair market value

limit had simply not kept pace with the

value of a modest, reliable vehicle in

today’s economy. Commenters argued

that the Department should eliminate

the equity value test as this was not

required by statute and its use unduly

complicated the resource determination

for vehicles. State agencies generally

supported the rule change, but worried

that estimating the proceeds of the sale

of a vehicle would be complex.

Moreover, they thought the ‘‘proceeds

value’’ of a vehicle would be subject to

constant recalculation as the household

paid down its loan balance.

State agencies correctly observed that

the ‘‘proceeds value’’ of an inaccessible

resource would require periodic

evaluation as the loan balance on the

resource declines. As the Department

did not propose to amend the change

reporting requirements of 7 CFR

273.12(a) in connection with this

rulemaking, we intend that State

agencies assess the vehicle’s continued

inaccessibility at recertification. In its

July 1999 food stamp initiative, the

Department offered State agencies the

opportunity to increase program access

and improve accuracy rates. By use of

reporting options and other available

waivers, State agencies may limit the

number of times eligibility workers need

to reevaluate inaccessibility by

assigning households the longest

certification period consistent with the

stability of their circumstances. Also,

some State agencies worried that the

way the Department structured the

proposed rule, eligibility workers would

have to evaluate almost every vehicle

for inaccessibility before going on to the

fair market value and equity tests. This

was not our intent. The way we

sequence issues in the regulations to

meet regulatory drafting requirements is

not necessarily the best way to address

issues in the actual certification process.

State agencies may find it more

expedient and efficient to instruct

eligibility workers and program

computer systems to follow a different

sequence, as long as they achieve the

correct outcome. For example, if a

household’s only vehicle has a fair

market value of no more than $4,650, it

is not necessary to inquire further into

its accessibility. In actual practice,

inaccessibility might be the test of last

resort, if the eligibility worker could not

find any other way to exclude the

vehicle from resource consideration.

We are sympathetic to commenters’

concerns that the current fair market

value limit is outdated. However, as the

fair market value threshold is set by

statute, any modification to the current

policy is beyond the scope of this

rulemaking.

In the final rule we are using our

discretion to simplify greatly the

resource determination for vehicles.

First, we are establishing a uniform

threshold amount of $1,500 for

determining if the value of a resource is

inaccessible. This action will eliminate

the need to distinguish between

households with a $2,000 resource limit

and those with a $3,000 limit for

calculating the threshold amount of a

resource. Second, the Department is

changing the policy for exempting the

equity value of licensed vehicles.

Currently, the regulations exempt from

the equity test one licensed vehicle per

household and additionally any

licensed vehicles used to go to work,

training or education, or to look for

work. In the final rule, we are

broadening the exclusion from the

equity test for licensed vehicles. The

regulation exempts from the equity test

one licensed vehicle per adult

household member and any licensed

vehicle a minor drives to work, school

or training, or to look for work. These

changes will simplify the resource

calculation and aid more low-income

families.

Under the final rule, these are the

provisions for handling licensed

vehicles:

(1) The rule completely excludes a

vehicle from the resource test if it is

necessary to produce income, used as a

home, necessary to transport a disabled

household member, necessary to carry

fuel for heating or water for home use,

or it is classified as an inaccessible

resource (i.e., likely to produce a return

of no more than $1,500);

(2) The rule exempts from the equity

test and requires evaluation for fair

market value only one licensed vehicle

not excluded under the previous

paragraph for each adult household

Federal Register / Vol. 65, No. 225 / Tuesday, November 21, 2000 / Rules and Regulations 70171

member regardless of use, and any

unexcluded licensed vehicle a

household member under age 18 drives

to work, school or training, or to look for

work. The State agency would count the

fair market value in excess of $4,650 for

each such vehicle.

(3) For any other vehicles the

household possesses, the rule requires

counting of the higher of the fair market

value in excess of $4,650 or the equity

value.

The following examples show how

the new policy would work: (1) A

household is making payments on a

1994 sedan with a fair market value of

$7,000. The household has no other

vehicles. The eligibility worker knows

that excess fair market value ($2,350)

would make the household ineligible. In

this instance, the eligibility worker must

determine if the vehicle is inaccessible.

It turns out that the household would

net $500 from the vehicle, if it were

sold. As the proceeds from the sale

would be no more than $1,500, the

eligibility worker would deem the entire

value of the vehicle to be an

inaccessible resource and would

exclude the vehicle from consideration

as a resource for eligibility purposes. (2)

Alternatively, assume a household has a

single vehicle which is not otherwise

excludable and has a fair market value

of $6,200. The eligibility worker could

first evaluate the vehicle according to its

excess fair market value. The countable

fair market value of the vehicle as a

resource would be $1,550 ($6,200–

$4,650). Assuming the household did

not have any other countable resources

that, combined with the $1,550, would

exceed the applicable resource limit for

the household, the household would

remain eligible for participation. In that

case, the eligibility worker did not have

to use the inaccessible resource

provision to exclude the vehicle. (3) A

household consisting of two members

has three licensed vehicles. One of the

vehicles is a specially equipped van

used for transporting a household

member who is disabled. The other two

vehicles would net the household more

than $1,500 each if sold. In this case, the

van is totally excluded and the other

two vehicles are subject only to the

excess fair market value test.

Finally, in response to comments, we

are adding a sentence to 7 CFR

273.8(e)(17) to make it clear that if an

individual receives non-cash or in-kind

services under a TANF-funded program,

the State agency must determine if the

individual or the household benefits

from the assistance provided.

7 CFR 273.9

JTPA Payments—7 CFR 273.9(b)(1)(v)

We proposed to change the references

in 7 CFR 273.9(b)(1)(v) from the Job

Training Partnership Act (JTPA) to the

Workforce Investment Act of 1998

(WIA) based on section 199A(c) of the

WIA which states that all references in

any other provision of law to a

provision of the Comprehensive

Employment and Training Act (CETA)

or JTPA, as the case may be, shall be

deemed to refer to the corresponding

provision of the WIA. Since publication

of the proposed rule, we have received

questions about the exclusion of WIA

payments. Although section 181(a)(2) of

the WIA provides that allowances,

earnings and payments to individuals

participating in programs under said

Act shall not be considered as income

for purposes of determining eligibility

for and the amount of benefits for any

Federal program based on need, section

5(l) of the Food Stamp Act provides that

notwithstanding section 181(a)(2) of the

WIA, earnings to individuals

participating in on-the-job training

under Title I of the WIA shall be

considered earned income for purposes

of the Food Stamp Program, except for

dependents less than 19 years of age.

Accordingly, we are adopting the

revision to paragraph (b)(1)(v) as

proposed.

Transitional Housing Payments—7 CFR

273.9(c)(1)(i)(E) and (c)(1)(ii)(E)

Current regulations at 7 CFR

273.9(c)(1)(i) and (ii) exclude the full

amount of any PA or GA grant made to

a third party (vendor payment) on

behalf of a household residing in

transitional housing for the homeless.

Section 811 of PRWORA amended

section 5(k)(2)(F) of the Act to remove

the exclusion for transitional housing

payments.

In accordance with section 811 of

PRWORA, we proposed to rescind 7

CFR 273.9(c)(1)(i)(E) and (c)(1)(ii)(E) to

eliminate the exclusion for PA or GA

transitional housing vendor payments.

State agencies would continue to be able

to exclude emergency housing

assistance to migrant or seasonal

farmworker households while they are

in the migrant stream and emergency

and special assistance that is above the

normal grant. GA payments from a State

or local housing authority and

assistance provided under a program in

a State in which no cash GA payments

are provided would also be excludable.

With the removal of paragraph

(c)(1)(i)(E), we proposed that current

paragraph (c)(1)(i)(F) become paragraph

(c)(1)(i)(E). Also, with the removal of

paragraph (c)(1)(ii)(E) and the removal

of paragraph (c)(1)(ii)(A), as described

under ‘‘Energy Assistance’’ below, we

proposed that current paragraphs

(c)(1)(ii)(B) through (G) would become

paragraphs (c)(1)(ii)(A) through

(c)(1)(ii)(E).

We received no comments on the

proposal to rescind 7 CFR

273.9(c)(1)(i)(E) and (c)(1)(ii)(E) to

eliminate the exclusion for PA or GA

transitional housing vendor payments

and the resulting redesignations.

Accordingly, we are adopting the

revisions and redesignations as

proposed.

Earnings of Children—7 CFR 273.9(c)(7)

Current regulations at 7 CFR

273.9(c)(7) exclude the earned income

of any household member who is under

age 22 and an elementary or secondary

school student living with a natural,

adoptive or stepparent or under the

parental control of a household member

other than a parent. Section 807 of

PRWORA amended section 5(d)(7) of

the Act (7 U.S.C. 2014(d)(7)) to exclude

the income of children age 17 and

under. Accordingly, we proposed to

amend 7 CFR 273.9(c)(7) to exclude the

earned income of any household

member who is under age 18. We

proposed to retain all the other

provisions of 7 CFR 273.9(c)(7)

regarding this exclusion which were

implemented in the rule published

October 17, 1996 (61 FR 54292). We

received no substantive comments on

this proposed change. Therefore, we are

adopting it as proposed.

Currently, 7 CFR 273.10(e)(2)(i)

provides that for prospective eligibility

and benefit determination, the earned

income of a high school or elementary

school student must be counted

beginning with the month following the

month in which the student turns 22.

Section 273.21(j)(1)(vii)(A) provides that

the student’s income must be counted

beginning with the budget month after

the month in which the student turns

22. We proposed to make conforming

amendments to these sections to change

the age from 22 to 18. We received no

substantive comments on this proposed

change. Therefore, we are adopting it as

proposed.

Nonrecurring Lump-Sum Payments—7

CFR 273.9(c)(8)

In 7 CFR 273.9(c)(8) regarding

nonrecurring lump-sum payments, we

proposed to add a sentence to allow

TANF diversion payments to be

excluded under certain conditions.

Current policy is that they may be

excluded if no more than one payment

is anticipated in any 12-month period to

70172 Federal Register / Vol. 65, No. 225 / Tuesday, November 21, 2000 / Rules and Regulations

meet needs that do not extend beyond

a 90-day period, the payment is

designed to address barriers to

achieving self-sufficiency rather than

provide assistance for normal living

expenses, and the household did not

receive a regular monthly TANF

payment in the prior month or the

current month. We proposed to include

this policy except that we changed the

90-day period to a 4-month period to

reflect that the Department of Health

and Human Services uses a 4-month

period as the regulatory framework for

its definition of short-term. (See 64 FR

17759, April 12, 1999.)

We received comments from one State

association, four State agencies, and

many advocacy groups. The

commenters supported including the

exclusion of TANF diversion payments;

the State association and two State

agencies suggested expanding the

exclusion to cover all additional or all

TANF diversion payments. The

advocacy groups suggested that the

definition be expanded to include any

TANF payments not recognized as

assistance under TANF regulations

because of the exception for nonrecurrent short-term benefits and that

the regulations incorporate a reference

to the definition of assistance in the

TANF regulations. We agree with the

commenters that the exclusion for

TANF diversion payments should be

consistent with the TANF exception for

non-recurrent short-term benefits.

Accordingly, we have modified the

provision to exclude TANF payments

not defined as assistance because of the

exception for non-recurrent, short-term

benefits in 45 CFR 261.31(b)(1).

Energy Assistance—7 CFR 273.9(c)(11)

Under current regulations at 7 CFR

273.9(c)(11), energy assistance provided

under any Federal law is excluded from

consideration as income. Energy

assistance provided under State or local

law which meets the requirements

specified in the regulations is excluded

from income if FNS has approved the

exclusion. Section 808 of PRWORA

replaced section 5(d)(11) of the Act with

a new section 5(d)(11) , 7 U.S.C.

2014(d)(11), which modifies the

exclusion for Federal and State agency

energy assistance payments. Federal

energy assistance payments are

excluded under this provision, with one

exception. Energy assistance provided

under Title IV-A of the Social Security

Act is not excluded, thereby eliminating

the exclusion of any energy assistance

provided as part of a State’s public

assistance grant. The new provision

allows an exclusion for one-time

payments or allowances made under a

Federal or State law for the costs of

weatherization or emergency repair or

replacement of an unsafe or inoperative

furnace or other heating or cooling

device.

In accordance with PRWORA

provisions, we proposed to revise 7 CFR

273.9(c)(11) in its entirety, adding

exclusions in new paragraph (c)(11)(i)

for any payments or allowances made

for the purpose of providing energy

assistance under any Federal law other

than Part A of Title IV of the Social

Security Act and new paragraph

(c)(11)(ii) for one-time payments issued

on an as-needed basis under Federal or

State law for weatherization or

emergency replacement or repair of

heating or cooling devices. All other

provisions appearing under current

paragraph (c)(11) were proposed to be

removed.

We received comments on this

proposal from a State agency and many

advocacy groups. All suggested

clarification to the proposed language.

The State agency believed that the word

‘‘and’’ between paragraph (i) and (ii)

should be replaced by ‘‘or’’ because the

‘‘and’’ could be misconstrued to

prohibit the exclusion of Title IV–A

payments for weatherization or

emergency repair. We agree with the

commenter that the word ‘‘or’’ is clearer

and accordingly have revised paragraph

(i) to end with ‘‘or’’.

The advocacy groups felt that the

language in paragraph (ii) did not make

it clear that the exclusion of Federal

energy assistance applies as long as the

program under which the payments are

being provided is federal, regardless of

whether the agency making the

payments is a federal one. Specifically,

the advocacy groups were concerned

that not citing Department of Housing

and Urban Development (HUD) and

USDA Rural Housing Service (RHS)

payments could result in future policy

changes which could result in these

payments being counted as income. In

order to alleviate any confusion we have

retained reference to specific exclusion

of HUD and RHS energy assistance

payments. Accordingly, we are adopting

the revised paragraph (c)(11)(i) and (ii),

modified as discussed above.

Shelter Costs—7 CFR 273.9(d)(5),

Standard Utility Allowance—7 CFR

273.9(d)(6), and Adjustment of Shelter

Deduction—7 CFR 273.9(d)(9)

We propose to reorganize 7 CFR

273.9(d)(5) and (6) to include all

provisions related to shelter expenses in

revised 7 CFR 273.9(d)(6). Current

paragraph (d)(5) sets forth the

requirements for allowing a deduction

from the household’s income for shelter

expenses, including a description of

allowable shelter costs and the special

provisions for homeless households.

Current paragraph (d)(6) describes the

procedures for establishing and using a

standard utility allowance as a shelter

cost deduction. We proposed to

reorganize 7 CFR 273.9(d)(5) and (6) by

moving the provisions of paragraph

(d)(5), combining them with the

provisions in paragraph (d)(6), and

retitling the revised paragraph (d)(6) as

‘‘Shelter costs.’’ We also proposed to

redesignate paragraph (d)(7) regarding

child support as (d)(5). We received no

comments on the proposed

reorganization and are adopting that

structure as proposed.

1. Homeless households. Current

regulations at 7 CFR 273.9(d)(5)(i)

provide that State agencies must use a

standard estimate of the shelter

expenses for households in which all

members are homeless and are not

receiving free shelter throughout the

month. State agencies may develop their

own standards or use an annually

adjusted standard provided by FNS,

currently $143 per month. Further,

under current regulations, the homeless

shelter estimate is used in determining

the household’s excess shelter

deduction. That is, if the household

claimed no shelter costs exceeding the

estimate, the estimate would be

considered to be the household’s total

shelter cost and the amount of the

estimate over 50 percent of the

household’s income would be the

household’s excess shelter deduction.

Section 809 of PRWORA amended

section 11(e)(3) of the Act to remove the

homeless shelter provision and added a

new paragraph (5) to section 5(d) of the

Act (7 U.S.C. 2014(d)(5)) to provide that

State agencies may develop an optional

standard homeless shelter allowance not

to exceed $143 per month. The new

paragraph provides that the State agency

may use the allowance in determining

eligibility and allotments for homeless

households and that the State agency

may make a household with extremely

low shelter costs ineligible for the

allowance.

We proposed to revise current 7 CFR

273.9(d)(5)(i) (redesignated as paragraph

(d)(6)(i)) to add an optional homeless

shelter deduction from net income.

Households claiming the homeless

shelter deduction would be entitled to

no other shelter deduction. They could,

however, be entitled to a deduction for

excess shelter expenses instead of the

homeless shelter deduction if they

verified actual costs. We received two

comments from State agencies on this

proposal. One State agency supported it;

the other State agency opposed the

Federal Register / Vol. 65, No. 225 / Tuesday, November 21, 2000 / Rules and Regulations 70173

provision. That State agency believed

the Department was interpreting the law

too literally and that many State

agencies would not adopt the optional

separate homeless deduction. The

Department does not agree with this

commenter. As discussed in the

proposed rule, the language of the law

is clear that the allowance is to be used

as a deduction in determining eligibility

and allotments. The law does not

indicate that the standard is to be used

in computing the excess shelter

expense, as is the case with the standard

utility allowance. Accordingly, we are

adopting the provision as proposed.

We also proposed a conforming

amendment to 7 CFR 273.10(e)(1)(i) to

add a new paragraph (G) to include the

standard homeless shelter deduction.

We received no comments on this

conforming amendment and are

adopting it as proposed.

2. Excess shelter deduction. Currently,

7 CFR 273.9(d)(5)(ii) provides that

households are allowed a deduction for

shelter costs in excess of 50 percent of

the household’s income after all other

deductions have been subtracted. It

provides that the shelter deduction

cannot exceed the maximum limit

established for the area, unless the

household contains a member who is

elderly or disabled. We proposed that

the provisions of current paragraph

(d)(5)(ii) concerning application of the

excess shelter expense limit in

households with and without an elderly

or disabled member would be included

in the introductory language of new 7

CFR 273.9(d)(6)(ii). We received no

comments on this reorganization and

are adopting it as proposed.

Current paragraph (d)(5)(ii) provides

that the maximum shelter deduction

limits applicable for use in the States,

District of Columbia, Guam, and the

Virgin Islands will be published as a

notice document in the Federal

Register. In 7 CFR 273.9(d)(9), the

shelter deduction amounts and

adjustments are described. Section 809

of PRWORA eliminated the annual cost

of living adjustments and set the limits

for the various areas by year. Therefore,

we proposed to remove these provisions

and provide instead that FNS will notify

State agencies when the amount of the

excess shelter limits change. We

received no comments on the proposal

to eliminate the General Notices and the

description of the adjustment

procedures. Therefore, we are deleting

the provisions as proposed.

Current paragraphs (d)(5)(ii)(A)

through (E) describe allowable shelter

expenses. We proposed to amend

paragraph (d)(5)(ii)(C) to expand the list

of allowable utility costs to include fuel

or electricity used for household

purposes other than heating or cooling

(including cooking) as an allowable

utility expense. We received comments

from one State association and four

State agencies, all supporting the

expansion. We also received comments

from many advocacy groups suggesting

that the list of allowable utility costs be

revised to include a more generic

description of telephone service that

would include all of the various

components of mandatory telephone

fees. The advocacy groups pointed out

that the current language ‘‘the basic

service fee for one telephone, including

tax on the basic fee’’ does not reflect the

way charges are now billed in the

competitive telephone marketing

environment. We agree with the

advocacy groups about the need to

update the telephone service fee

description. We are taking the

opportunity at this time to add the costs

of installing and maintaining wells and

septic tank systems as an allowable

utility cost. We have repeatedly over the

years denied the allowability of these

costs under current regulations. We

have reconsidered this and have

determined that these costs are

analogous to costs for water and sewage.

Accordingly, we are adopting the

proposed revision to 7 CFR

273.9(d)(5)(ii)(C), expanding the

description of basic telephone service,

and adding well and septic tank system

installation and maintenance to the list

of allowable utility costs.

One State association and four State

agencies requested that the regulations

at current paragraph (d)(5)(ii)(A) be

revised to include the recent policy

decision to allow condo fees as shelter

cost as a continuing charge for shelter.

We have adopted this suggestion and

are amending 7 CFR 273.9(d)(5)(ii)(A)

accordingly.

The provisions of current paragraph

(d)(5)(ii)(A) through (E), with the

modifications outlined above, were

proposed to be included in new

paragraph (d)(6)(ii)(A) through (E). In

addition, we proposed to remove an

unnecessary sentence referring to the

excess shelter deduction from 7 CFR

273.10(e)(1)(i)(E). We are adopting this

redesignation and are deleting this

sentence.

3. Standard utility allowance—7 CFR

273.9(d)(6). Under the proposed

reorganization of 7 CFR 273.9(d)(6),

provisions for utility standards would

be contained in 7 CFR 273.9(d)(6)(iii)

and would be reorganized. The reader is

referred to the proposed rule for a

detailed description and rationale of the

proposed reorganization. Discussed

below are the substantive changes we

proposed concerning the standard

utility allowances.

A. Developing Standards

Current regulations at 7 CFR

273.9(d)(6)(i) allow State agencies to

offer a single standard utility allowance

that includes the cost of heating and/or

cooling, cooking fuel, electricity not

used to heat or cool the residence, the

basic service fee for one telephone,

water, sewerage, and garbage and trash

collection to households that incur a

heating or cooling cost, receive energy

assistance under the Low-Income Home

Energy Assistance Act of 1981 (LIHEA),

or receive other energy assistance but

still incur out-of-pocket expenses. This

allowance is hereinafter called the

heating and/or cooling standard utility

allowance (HCSUA). Instead of offering

a single HCSUA, State agencies may

offer an individual standard allowance

for each utility expense, such as

electricity, water, sewerage, or trash

collection.

Section 890 of the PWORA, which

amended section 5(d) of the Act, allows

State agencies to develop one or more

standards that include the cost of

heating and cooling and one or more

standards that do not include the cost of

heating and cooling. Currently, there is

no regulatory provision for a limited

utility allowance (LUA) that includes

utility expenses other than heating or

cooling and is offered to households

that do not have a heating or cooling

expense but do incur the costs of other

utilities. We proposed to add the

authority for developing an LUA in

paragraph (d)(6)(iii)(A).

We proposed in paragraph

(d)(6)(iii)(A) that State agencies could

establish an LUA that includes at least

two utilities other than telephone. State

agencies could offer individual

standards to households that incur only

one utility expense. We also proposed

that State agencies could use different

types of standards but could not allow

households to use two standards that

include the same expense. The State

agency could vary the standards by

factors such as household size,

geographical area, or season. However,

only utility costs identified in proposed

paragraph (d)(6)(ii)(C) would be

allowable expenses. States in which the

cooling expense is minimal could

continue to include the cooling cost in

the LUA as part of the electricity

component.

We received one comment from a

State agency on the proposed structure

of the LUA. That State agency

questioned why two utilities were

required for a LUA, and why, if two

were required, a telephone could not be

70174 Federal Register / Vol. 65, No. 225 / Tuesday, November 21, 2000 / Rules and Regulations

one of the two. We continue to believe

that a household needs to have a

minimum of two utility costs to qualify

for an LUA. However, we agree with the

State agency that telephone service

should be allowed as one of the two.

Accordingly, we are adopting paragraph

(d)(6)(iii)(A), modified to allow a

telephone service as one of the two

utilities. We are also adding the

additional utilities included in modified

paragraph (d)(6)(ii)(C) as allowable

expenses.

B. Updating Standards

Current regulations at 7 CFR

273.9(d)(6)(iv) require State agencies to

submit the methodology used in

developing a standard to FNS for

approval. These current rules also

require State agencies to review and

adjust the standard annually to reflect

changes in the cost of utilities. We

proposed to remove the requirement for

annual submission of the amounts of the

standards. As proposed, in new 7 CFR

273.9(d)(6)(ii), State agencies would be

required to review standards

periodically, make adjustments, and

notify FNS if the amount changes. They

could, at their option, establish

thresholds for making adjustments. We

also proposed to require that

methodologies be submitted for

approval when a standard is developed

or changed.

We received comments from one State

agency and many advocacy groups. The

State agency believes that State agencies

should only have to submit SUAs for

approval when the methodology is

being developed or changed. The

advocacy groups suggested that State

agencies be required to submit their

SUAs for approval only once every five

years as long as an annual inflation

factor is included in the methodology.

Further, the advocacy groups are

opposed to allowing State agencies to

establish a threshold for making

adjustments based on cost increases. We

agree with the State agency that State

agencies should only have to submit

their SUAs for approval when the

methodology is being developed or

changed. We agree with the advocacy

groups that an annual review for cost

increases is important, however. The

proposed rule only required periodic

reviews. Based on the comments, we

have modified this final rule to require

State agencies to submit an SUA for our

approval whenever the methodology

changes, to require annual reviews by

State agencies to assess the need for

cost-of-living adjustments, and to

require State agencies to make

adjustments based on cost increases by

rounding to the nearest whole dollar.

State agencies will be required to advise

FNS whenever the amount of a standard

changes.

A number of State agencies have

waivers for an LUA. If the State agency’s

LUA is not consistent with paragraph

(d)(6)(iii)(A) in this final rule, it will

need to submit a revised LUA for

approval. State agencies with LUAs

consistent with paragraph (d)(6)(iii)(A)

do not need to resubmit them for

approval.

C. Entitlement

Section 5(e)(7)(iv) of the Act, as

revised by section 809 of PRWORA,

provides that recipients of LIHEA are

entitled to use an HCSUA only if they

incur out-of-pocket heating or cooling

expenses in excess of the amount of the

assistance paid on behalf of the

household to an energy provider, that a

State agency may use a separate HCSUA

for households receiving LIHEA, and

that the LIHEA must be considered to be

prorated over the heating or cooling

season. Section 2605(f)(2) of the LIHEA

(42 U.S.C. 8624(f)) provides that LIHEA

payments must be deemed to be

expended by such household for heating

or cooling expenses, without regard to

whether such payments or allowances

are provided directly to, or indirectly for

the benefit of such household.

Current regulations at 7 CFR

273.9(d)(6)(ii) provide that the standard

utility allowance which includes a

heating or cooling component must be

made available only to households

which incur heating and cooling costs

separately and apart from their rent or

mortgage. These households include

residents of rental housing who are

billed on a monthly basis by their

landlords for actual usage as determined

through individual metering, recipients

of LIHEA, or recipients of indirect

energy assistance payments other than

LIHEA who continue to incur out-ofpocket heating or cooling expenses

during any month covered by the

certification period. Households in

public or private housing with a central

meter who are billed only for excess

usage are not permitted to use the

HCSUA. (Renters must be billed on a

monthly basis by their landlords for

actual usage as determined through

individual metering to be entitled to use

the HCSUA.) A household not entitled

to the HCSUA may claim actual

expenses.

In the proposed 7 CFR 273.9(d)(6)(iii),

we clarified and simplified the rules for

determining entitlement to an HCSUA.

(For more information regarding the

background of the provisions governing

entitlement to the HCSUA, readers may

refer to the preamble to the proposed

rule.) The following requirements of the

Act and the LIHEA Act were included

in proposed 7 CFR 273.9(d)(6)(iii) for

clarity:

(1) An allowance for a heating or

cooling expense may not be used for a

household that does not incur a heating

or cooling expense.

(2) A household that incurs a heating

or cooling expense but is located in a

public housing unit which has central

utility meters and charges households

only for excess heating or cooling costs

is not entitled to a standard that

includes heating or cooling costs.

However, the State agency may use the

excess costs in developing an overall

LUA or develop a standard specifically

for households which pay excess

heating or cooling costs.

(3) For purposes of determining any

excess shelter expense deduction, the

full amount of LIHEA energy assistance

payments must be deemed to be

expended by such household for heating

or cooling expenses, without regard to

whether such payments or allowances

are provided directly or indirectly to the

household.

(4) An HCSUA must be made

available to households receiving energy

assistance (other than LIHEA) only if the

household incurs out-of-pocket heating

or cooling expenses. A State agency may

use a separate utility standard for these

households.

(5) An HCSUA may not be used for a

household that shares the heating or

cooling costs with and lives with

another individual not participating in

the Program, another participating

household, or both, unless the HCSUA

is prorated between the household and

the other individual, household, or

both.

(6) A State agency that has not made

the use of a standard mandatory (as

provided in paragraph (d)(6)(iii)(E))

must allow a household to switch

between the standard and a deduction

based on actual utility costs at the end

of any certification period.

One proposed change would have

extended use of the HCSUA to

households that live in separate

residences but share a single utility

meter. Three State agencies and one

State association supported this

proposed change. No commenters

opposed it. Accordingly, we are

adopting it as proposed.

Under another proposed change, the

HCSUA would have been made

available to households in private rental

housing who are billed by their

landlords on the basis of individual

usage or who are charged a flat rate

separately from their rent. One State

agency commenter supported this

Federal Register / Vol. 65, No. 225 / Tuesday, November 21, 2000 / Rules and Regulations 70175

proposed change, and two State agency

commenters opposed it. Although the

advocacy groups did not directly

address this proposal, we have inferred

from related comments that they

supported this change. One commenter

misunderstood the proposal and

thought that we were eliminating the

use of the HCSUA for households

residing in public housing who are

billed separately on the basis of

individual usage. This is incorrect; the

proposal provides that the HCSUA is

available to households that incur

heating or cooling expenses separately

from their rent or mortgage. We are

adopting this provision as proposed.

The State agencies opposing it were

concerned about errors and disparate

treatment between households residing

in private and public housing. Section

5(e)(7)(C)(ii)(I) of the Act does not

permit use of an HCSUA for a

household that does not incur such a

heating or cooling expense. However,

we believe that the provision simplifies

the determination of who is eligible for

the HCSUA and makes it less error

prone by making more households

eligible for the HCSUA. State agencies

concerned about errors or the disparate

treatment may include the excess

heating and cooling costs in its LUA as

discussed elsewhere in this rule.

The proposed rule in 7 CFR

273.9(d)(6)(iii) would also have allowed

State agencies the discretion to develop

and use whatever procedures they deem

appropriate regarding anticipation of

entitlement to an HCSUA so long as

they complied with the requirements of

the Act and the LIHEA regarding use of

an HCSUA. The advocacy groups

suggested that the final rules give states

the flexibility to prorate in any manner

that reasonably achieves the goal of not

providing an inappropriately large SUA

to such food stamp households. We

believe that the provision as proposed

accomplishes that goal, and therefore,

we are adopting the provision as

proposed.

As indicated above, provisions of

LIHEA control (without specifically

repealing) sections 5(e)(7)(iv)(I) through

(IV) of the Food Stamp Act which

provide that: (1) Recipients of LIHEA

are entitled to the HCSUA only if they

incur expenses that exceed the LIHEA

payments, (2) State agencies may use a

separate standard for households that

receive LIHEA, (3) State agencies using

a single allowance are not required to

reduce the allowance for households

that receive LIHEA, and (4) the LIHEA

must be prorated over the entire heating

or cooling season. Section 2704(f)(2) of

the LIHEA (42 U.S.C. 8624(f)) provides

that LIHEA payments must be treated

consistently regardless of whether the

payments are received directly or

indirectly and that the full amount of

the payments must be considered to be

expended by the household for heating

or cooling expenses. These requirements

were proposed to be included in new

paragraph (d)(6)(ii)(C). We did not

receive any comments on this provision

and are adopting it as proposed.

We also included in new paragraph

(d)(6)(iii) the basic requirements for

allowing a deduction when a household

receives direct or indirect assistance in

paying its shelter expenses. If a

household receives direct assistance

that is counted as income and incurs a

deductible cost, the entire expense is

included in the excess shelter deduction

computation. If the household’s bill is

paid by a vendor payment that is

counted as income, the household is

likewise entitled to the expense. We did

not receive any comments on this

provision and are adopting it as

proposed.

We proposed to delete the last

sentence in 7 CFR 273.2(f)(1)(iii) which

prohibits a household that wishes to

claim expenses for an unoccupied home

from using the standard utility

allowance. One State agency supported

this change; we are adopting it as

proposed. We proposed to add a

sentence to 7 CFR 273.9(d)(6)(ii)(C) to

provide that only one standard utility

allowance can be allowed if the

household has both an occupied home

and an unoccupied home. We did not

receive any comments on this provision

and are adopting it as proposed.

D. Household Options

Current regulations at 7 CFR

273.9(d)(6)(vii) provide that households

may claim verified actual costs rather

than a standard allowance (except for

the telephone standard). Under current

rules at 7 CFR 273.9(d)(6)(viii),

households have the right to switch

between the use of actual utility costs

and a standard at the time of

recertification and one additional time

during each 12-month period. Section

5(e)(7)(iii)(II) of the Act, as amended by

section 809 of PRWORA, provides that

a State agency that has not made use of

a standard mandatory must allow a

household to switch between actual

expenses and the standard or vice versa

only at recertification. Therefore, the

option to switch one additional time

during each 12-month period is being

removed. Since some households may

be certified for 24 months under the

certification period requirements of

section 3(c) of the Act, as amended by

PRWORA, we propose that these

households be allowed to switch at the

time of the mandatory interim contact.

Under the proposed reorganization of

the regulations, the ‘‘switching’’

requirements would be included in 7

CFR 273.9(d)(6)(iii)(D). Although one

State agency opposed the elimination of

the household’s right to switch one

additional time during each 12-month

period, we are adopting the provision as

proposed because the option to switch

one additional time was deleted from

the Act by PRWORA.

Current policy is that households may

choose between actual expenses and a

standard when they move. We proposed

in new paragraph (d)(6)(iii)(D) that a

household would have the opportunity

to select either the standard or actual

costs at the new address when that

household moves. The advocate groups

supported this provision. We are

adopting it as proposed.

E. Mandatory Standards

Section 809 of PRWORA amends

section 5(d) of the Act to provide in

section 5(d)(7)(C)(iii)(I) that a State

agency may, at its option, make use of

a standard utility allowance mandatory

for all households with qualifying

utility costs, provided:

(a) The State agency has developed

one or more standards that include the

cost of heating and cooling and one or

more standards that do not include the

cost of heating and cooling, and

(b) The standards will not increase

Program costs.

Households that are entitled to the

standard will not be able to claim actual

costs even if they are higher.

Households not entitled to the standard

will be able to claim actual allowable

costs. Using mandatory standards does

not bestow entitlement to a standard a

household would not otherwise be

entitled to receive. For example,

households in public housing units

which have central utility meters and

charge households only for excess

heating or cooling costs are not entitled

to a standard that includes heating or

cooling costs, but they may claim the

LUA.

We proposed to provide in paragraph

(d)(6)(iii)(E) that States using both an

HCSUA and LUA may mandate use of

a standard, provided that use of the

mandatory standard does not increase

Program costs and the standards have

been approved by FNS. Requests for

approval to use a single standard for a

utility (such as a water standard) would

be required to include the figures upon

which the standard is based. If a State

wants to mandate use of utility

standards but does not want individual

standards for each utility, the State

would be required to submit

70176 Federal Register / Vol. 65, No. 225 / Tuesday, November 21, 2000 / Rules and Regulations

information showing the approximate

number of food stamp households that

would be entitled to the nonheating and

noncooling standard and their average

utility costs before implementation of

the mandatory standards, the standards

the State proposes to use, and an

explanation of how the standards were

computed. Four State agencies and

many advocacy groups submitted

comments on the mandatory standards

provisions. Two State agencies opposed

allowing households that are not

entitled to a standard to claim actual

costs, as proposed in paragraph

(d)(6)(iii)(E). The advocacy groups

supported retaining the requirement

that households not qualifying for any

standard be permitted to claim actual

costs because without this provision,

these households would be denied any

consideration for the real utility costs

that they incur. We agree with the

advocacy groups that the Act entitles

households to claim shelter expenses

and disallowing these actual costs

would run counter to the entitlement.

Three State agencies expressed

concerns about the requirements in

proposed paragraph (d)(6)(iii)(E) for the

approval of mandatory standards by

FNS. Two State agencies suggested that

States who already have mandatory

SUAs should not have to resubmit them

for approval. One State agency felt that

the requirements were overly

proscriptive. We believe that the

provisions as proposed are the

minimum necessary to meet the

requirement of ensuring no Program

cost increase. State agencies with

approved mandatory standards do not

need to resubmit their standards for

approval, provided their standards

comply with the requirements in

paragraph (d)(6)(iii)(A).

Many advocacy groups commented

that the prohibition about increasing

Program costs because of use of a

mandatory standard did not prohibit

increasing the costs of standards to

reflect increased utility costs and

suggested that the regulation be clarified

accordingly. We agree with the

advocacy groups that a clarification is

needed. Accordingly, we are adopting

proposed paragraph (d)(6)(iii)(E) with a

clarification.

F. Sharing

Section 5(e)(7)(iii)(II) of the Act

requires proration of an HCSUA when

households live together and share the

cost. Current regulations at 7 CFR

273.9(d)(6)(viii) provide that if a

household lives with and shares utility

expenses with another household, the

State agency must prorate a standard

among the households or allow the

actual costs of each household. The

State agency determines the proration

method if a standard is used.

Although the Act requires that an

HCSUA be prorated among households

that share the heating or cooling

expense, it does not require that all

standards be prorated and does not

specify how the HCSUA should be

prorated. Therefore, we did not propose

to regulate in this area. Two State

agencies supported giving State agencies

the flexibility to determine the method

of proration. Many advocacy groups

suggested that the final regulations not

require prorating of the SUA if all of the

individuals who share utility expenses

but are not in the food stamp household

are excluded from the household only

because they are ineligible. We are

adopting this suggestion and have

modified paragraph (d)(6)(iii)(F)

accordingly.

G. Adjustment of Standard Deduction—

7 CFR 273.9(d)(8)

Current paragraph (d)(8) describes

adjustments to be made to the standard

deduction. Section 809 of PRWORA sets

the amounts by year. We proposed

removing this paragraph because the

amounts are now specified in the law.

We received no comments on this and

are adopting it as proposed.

7 CFR 273.10

How Will State Agencies Prorate

Benefits at Recertification?

Under section 827 of PRWORA, State

agencies must prorate benefits at initial

certification and at recertification if

there has been any break in certification

following the last month of certification,

except for migrant and seasonal

farmworker households. For migrant

and seasonal farmworkers, the term

initial month means the first month for

which the household is certified

following any period of more than 30

days during which the household was

not certified. We proposed to amend 7

CFR 273.10(a)(1)(ii) and 7 CFR

274.10(a)(2) to conform to the new

statutory requirement.

We received one comment on this

provision from a State agency which

suggested that for migrant and seasonal

farmworker households, the term initial

month should mean the first month for

which the household is certified

following any month during which the

household was not certified for

participation. This suggestion has merit

as food stamp households participate on

a calendar or fiscal month basis, not a

daily basis. We are adopting this change

in the final rule.

We received one comment from an

advocacy group which suggested that

language be incorporated that

prohibited proration if a State agency

rather than a household was at fault for

a gap in participation. We agree that a

household should not be penalized for

a State agency error. However, the Act

is specific that any break in

participation requires proration. In

order to ensure that households are not

penalized for State agency errors, we

have added a reference in section

273.10(a)(2) to provisions in section

273.14(e) concerning delayed processing

of recertification applications. This

issue is addressed further in the

discussion on recertification.

How Will State Agencies Determine the

Length of Certification Periods?

Section 801 of PRWORA amended

section 3(c) of the Act and eliminated

specific certification periods by type of

household. PRWORA now provides that

the certification period cannot exceed

12 months, except that the certification

period may be up to 24 months for

households in which all adult

household members are elderly or

disabled. Section 801 requires that the

State agency have at least one contact

with each certified household every 12

months.

We proposed to amend 7 CFR

273.10(f) to reflect the new certification

period requirements of PRWORA. We

proposed that State agencies may certify

households for no more than 12 months.

However, State agencies may certify

households in which all adult members

are elderly or disabled for no more than

24 months, provided the State agency

makes at least one contact every 12

months with each such household.

Therefore, if the State agency certifies a

household in which all adult members

are elderly or disabled for 18 months,

there must be at least one contact with

the household by the end of the first 12

months. State agencies may use any

method they choose for this contact,

including a change report form or a

telephone call.

We included a special condition for

treatment of one-time medical expenses

as averaging an expense over more than

12 months could result in a very small

expense each month. Therefore, we

proposed to amend 7 CFR

273.10(f)(1)(iii) as follows: Households

certified for more than 12 months that

incur a one-time medical expense in the

first 12 months of the certification

period may elect to (1) Budget the

expense in one month, (2) average the

expense over the remainder of the first

12 months of the certification period, or

(3) average it over the remainder of the

Federal Register / Vol. 65, No. 225 / Tuesday, November 21, 2000 / Rules and Regulations 70177

certification period. One-time expenses

reported after the 12th month of the

certification period would be allowed in

one month or averaged over the

remainder of the certification period, at

the household’s option. We also

proposed to add a reference to the

budgeting options to 7 CFR 273.10(d)(3)

for conformity. As we received no

adverse comments on this change, we

are adopting the language as proposed.

In addition to removing the provision

of section 3(c) of the Act that the 12-

month limit on certification periods

could be waived, section 801 of

PRWORA removed the requirement that

the certification period of households in

which all members received PA or GA

must coincide with the period of the

grant. It also removed the requirement

that State agencies certify monthly

reporting households for 6 or 12

months, unless FNS granted a waiver.

We proposed to revise 7 CFR 273.10(f)

and to remove 7 CFR 273.21(a)(3) to

reflect these changes. We also proposed

to include in the new 7 CFR

273.10(f)(2), the provision at 7 CFR

273.21(t) that State agencies must certify

for 2 years monthly reporting

households residing on reservations,

unless a waiver is approved. This

requirement is based on section

6(c)(1)(C)(iv) of the Act, which was not

affected by the amendment to section

3(c). As we received no adverse

comments on these changes, we are

adopting the language as proposed.

We proposed to include in revised 7

CFR 273.10(f)(3) the provision of current

7 CFR 273.10(f)(9) concerning the

assignment of certification periods to

households claiming a deduction for

legally obligated child support

payments. State agencies complained

about the requirement to limit the

certification periods of households

claiming the child support deduction.

Given the flexibility the Department

otherwise provided State agencies to

assign certification periods based on the

stability of household circumstances in

all other instances, they felt they were

in the best position to determine the

length of the certification period for

these households. The advocacy groups

supported more flexibility in this area.

We agree with the commenters. The

Department is dropping the current

limitation from the final rule.

However, the advocates also

commented on the proposed deletion of

certification period requirements in 7

CFR 273.10(f)(4). They felt that the

elimination of guidelines for

certification period length based on

household circumstances would

negatively affect households,

particularly the working poor. Further,

they felt that the increased use of 3-

month certification periods as an error

reduction tool has proven burdensome

and may be part of the cause of the

recent caseload reduction. The

Department has considered these

comments and has reviewed the

changes made by PRWORA concerning

mandatory certification period lengths.

While PRWORA did remove certain

mandated requirements, PRWORA did

not create any requirements or

prohibitions other than the 12 and 24

month maximums. We share the

advocates’ concerns about the

unexplained caseload reductions and

the need to reduce the burden involved

in participating in the program for lowincome working families. Therefore, in

response to the comments from the

advocates, we have decided to maintain

guidelines for assigning certification

periods in the regulations. These

guidelines are: that households should

generally be assigned certification

periods of 6 months or greater; that State

agencies may assign 3 month

certification periods for households

with unstable circumstances, such as

ABAWDs or household with zero net

income; and that certain households

may have circumstances that are so

unstable or that may only be eligible for

a very short period of time that a

certification period of one or two

months may be warranted. It is

anticipated that very few households

would be certified for one or two

months.

The Department recognizes that short

certification periods pose a particular

burden to working families by forcing

more frequent reapplications that

require more visits to the local office

and more paperwork. In particular,

many low-income workers do not enjoy

fully predictable employment situations

and their earnings fluctuate. The income

reporting options announced by the

Department in 1999—status reporting

and quarterly reporting—aimed at more

effective management of these cases.

The new option announced in this

regulation to only require reports of

changes that make working households

income-ineligible is a much bolder step.

The Department believes that

fluctuating earned income should not

force households into short certification

periods intended for households with

unstable circumstances, but rather that

States should use these new reporting

options announced in this rule and

earlier guidance to successfully manage

this portion of their caseload.

Because the Department is aware that

State agencies are reluctant to assign

working households long certification

periods because of potential

vulnerability for quality control errors

resulting from unreported changes, the

Department is adopting in this final rule

an optional reporting system for these

households. Under this option,

households with earned income

assigned a six-month or longer

certification period may be required to

report only changes in income that

result in gross monthly income

exceeding 130 percent of the monthly

poverty income guideline, in lieu of the

requirement to report changes in the

amount of gross monthly income that

exceed $25. State agencies are provided

this information by FNS each year, as it

is the gross monthly eligibility income

standard for households. State agencies

should ensure that households

understand that the reporting

requirement is based on combining all

countable sources of income, both

earned and unearned, received by

household members. This reporting

requirement is consistent with Medicaid

rules in many States which require

families only to report if their income

makes them ineligible for Medicaid.

These households would not be subject

to the remaining reporting requirements

in 7 CFR 273.12(a)(1) unless they are

certified for longer than six months.

Households with earned income that are

certified for longer than six months

shall be required to submit a report at

six months that includes all of the items

subject to reporting under paragraph

(a)(1).

State agencies are discouraged from

certifying migrant or seasonal

farmworker households or households

in which all members are homeless

individuals under this option because

these categories of households are

exempt from any type of periodic

reporting under Section 6(c)(1)(A) of the

Food Stamp Act of 1977 (7 U.S.C.

2015(c)(1)(A)) and thus cannot be

required to submit an interim report at

six months. However, if the State opts

to do so, it may not certify such

households for longer than six months.

The State agency shall act on changes

reported by the household that increase

benefits in accordance with 7 CFR

273.12(c) and on changes in public

assistance and general assistance grants

and other sources that are considered

verified upon receipt by the State

agency. For households certified for six

months, State agencies may opt to waive

every other face-to-face interview in

accordance with 7 CFR 273.2(e). This

reporting option is incorporated into 7

CFR 273.12(a).

We also proposed to make a

conforming amendment to remove 7

CFR 272.3(c)(5) from the regulations and

renumber paragraphs (c)(6) and (c)(7).

70178 Federal Register / Vol. 65, No. 225 / Tuesday, November 21, 2000 / Rules and Regulations

Paragraph (c)(5), which authorized

waivers of the certification period

requirements in section 3(c) of the Act,

is now obsolete. We also proposed to

make a conforming amendment to

remove 7 CFR 273.11(a)(5), which

addresses certification period

requirements for households with selfemployment income. This paragraph is

unnecessary because PRWORA removed

from the Act the provision regarding

certification period length for these

households. As we received no adverse

comments on these changes, we are

adopting the language as proposed.

How May State Agencies Adjust the

Length of Certification Periods?

To provide more State agency

flexibility in its day-to-day operation of

the Program, we proposed to add a new

section (7 CFR 273.10(f)(4)) allowing

State agencies to shorten a household’s

currently assigned certification period

under certain circumstances with a

notice of adverse action. Under current

policy, State agencies may shorten

certification periods (close the food

stamp case) once established when a

household leaves a PA or GA program,

when the State agency needs to adjust

the caseload to more evenly distribute

the workload, when a household reports

a change that indicates that the new

circumstances are very unstable, or

when the household fails to provide

required information regarding a change

in household circumstances. When a

household’s certification period is

shortened under these circumstances,

the State agency must send a notice of

expiration (NOE), or for households

subject to monthly reporting, the State

agency must shorten the certification

period with an adequate notice in

accordance with 7 CFR 273.21(m).

We proposed to consolidate in new

paragraph (f)(4) most situations where

shortening the certification period

would be allowed. We proposed to

eliminate the use of the NOE as a

vehicle for shortening certification

periods. In place of the NOE, State

agencies would use the notice of

adverse action (NOAA) for early case

closure. The new paragraph would

provide specific authority to shorten the

certification period when the State

agency has information indicating that

the household is not reporting income

properly, the household has become

ineligible, a household reports a change

that indicates that the new

circumstances are very unstable, or the

household fails to provide adequate

information regarding a change in

household circumstances other than

income. Only in the instances set forth

in the new paragraph could State

agencies schedule a household for early

termination of benefits.

We proposed a two-step process for

shortening certification periods. First,

the State agency must provide the

household written notice that it has

reason to believe the household’s

circumstance have changed. The notice

must clearly specify the basis for the

State agency’s belief and the actions the

State agency expects the household to

take. The notice must give the

household at least 10 days to contact the

State agency and clarify its situation.

Second, at the end of the period allowed

for responding to the notice, the State

agency may issue a notice of adverse

action to shorten the certification period

if: (1) The household does not respond;

(2) the household does not provide

sufficient information to clarify its

circumstances; or (3) the household

agrees that changes in its circumstances

warrant filing a new application. The

notice of adverse action must meet the

requirements of 7 CFR 273.13 and

explain the reason for the action. We

also proposed a conforming amendment

to 7 CFR 273.11(g)(5).

The Department’s proposal generated

much adverse commentary. State

agencies and advocacy groups objected

to the proposal for shortening

certification periods, but for different

reasons. State agencies were accustomed

to shortening certification periods with

the NOE to require the household to

clarify its circumstances with a full

recertification. Accordingly, they

complained of the complexity of the

proposed requirement to specify in

writing what issues they wanted the

household to clarify. Some State

agencies thought the two-step process

unnecessarily lengthened the time for

addressing problem cases. One State

commenter questioned the need for a

written request for clarification if the

household were reporting the change

directly to an eligibility worker. On the

other hand, advocacy groups worried

that State agencies would abuse the

procedure by requiring households to

recertify based on picayune changes in

household income or expenses, or by

applying an overly rigorous definition of

reported ‘‘unstable circumstances.’’

Moreover, they viewed the proposal as

inconsistent with the Department’s

initiatives encouraging State agencies to

assign the longest possible certification

periods to households. Some thought

that the Department should curtail

entirely or severely limit the ability of

State agencies to shorten certification

periods in the final rule.

We are not swayed by the State

agencies’ objections. The NPRM

presented a very strong legal argument

for shortening certification periods with

the NOAA instead of the NOE. We were

very concerned by what has become the

routine use of the NOE to shorten

certification periods. It appears that

eligibility workers have become

inclined simply to close cases, without

making the effort to determine if the

household could continue participation

in the Program absent a complete

recertification. We believe that use of

the proposed two-step process will

reduce the number of costly

recertifications and preclude

households from making needless trips

to the food stamp office. Finally, use of

the NOAA will bring food stamp case

closure procedures into closer

conformance with the other Federal

safety net programs and many TANF

programs.

Nor are we totally swayed by the

advocacy groups’ fears either. When

State agencies assign a certification

period to a household, there is no

absolute guarantee that benefits will

remain constant throughout the

certification period, or that the

household will remain eligible.

Recipient households have an obligation

to report changes during a certification

period as required by the regulations.

State agencies have an obligation to

question a household’s continued

eligibility or benefit amount when

eligibility workers receive reports

indicating a significant change in

household circumstances. We remain

convinced that there are times when

early closure of a household’s case

serves a legitimate purpose of

preserving Program integrity or

furthering payment accuracy. We

believe that State agencies will find it is

in their own best interest to assure that

eligibility workers explore continuing

eligibility with households before taking

steps to close the food stamp case.

Finally, the requirement to use the

NOAA prior to closing the case affords

the household the protection of

requesting a fair hearing and

continuation of benefits up to the end of

its original certification period.

The Department is retaining the basic

proposal, with some modifications

reflecting the comments received. The

final rule adds a new paragraph (4) to

section 273.10(f), which provides only

two basic instances when the State

agency may shorten a certification

period. These are: (1) When the State

agency receives information which

indicates that the household is

ineligible and (2) when the household

does not cooperate in clarifying its

circumstances. State agencies must use

the NOAA in any instance where it is

necessary to terminate benefits during

Federal Register / Vol. 65, No. 225 / Tuesday, November 21, 2000 / Rules and Regulations 70179

the certification period. A prohibition

against using the NOE to shorten

certification periods has been added to

section 273.10(f)(4). Henceforth, State

agencies will use the NOE only in the

manner originally envisioned in the Act,

that is, simply as a vehicle for notifying

households that their assigned

certification period is coming to an end,

and outlining the procedures for

continuing their participation in the

Program. The Department decided that

it would be extremely difficult, if not

impossible, to develop criteria for early

closure of cases which eligibility

workers could apply fairly and

consistently. In letter after letter,

commenters pointed out the difficulty

households have in simply contacting

local agencies, much less getting an

appointment for an interview, if their

case is closing. Case closure places

households where the adult members

are either workers or care givers

particularly at risk of becoming nonparticipants, even though they continue

to be eligible. The Department wishes

State agencies to apply a consistent

policy that a household must be

ineligible for benefits before its case is

closed, either because it no longer meets

the criteria for participation or because

it does not cooperate in clarifying its

circumstances. Loss of public assistance

benefits or a change in employment

could not be considered sufficient in

and of itself to meet the conditions for

shortening a certification period.

Accordingly, we took the approach in

the final rule that State agencies must

work with households to clarify their

circumstances and adjust benefit

amounts, in accordance with sections

273.12(c)(1) and 273.12(c)(2), without

requiring a complete recertification. If

an eligibility worker feels that a

household’s circumstances are

‘‘unstable,’’ then the worker should

emphasize reporting requirements with

the household.

We are also adopting the conforming

amendment to 7 CFR 273.11(g)(5), with

a modification to include a reference to

changes reported in accordance with the

provisions of 7 CFR 273.21.

We are addressing the procedural

aspects of processing unclear

information in a new section

273.12(c)(3). We direct readers to that

section of the preamble for further

discussion of shortening certification

periods.

Finally, in paragraph (f)(5), we

proposed to continue to prohibit

lengthening of a household’s current

certification period once it is

established. State agencies commented

that the proposal was antithetical to

other provisions in the proposed rule

which allowed greater flexibility in

setting the length of certification

periods. Advocacy groups felt that the

Department should allow State agencies

to extend certification periods. An

extension of the food stamp certification

period to align the case with review

dates of other State-administered

assistance could avoid more frequent

and possibly redundant food stamp

reviews. The final rule allows State

agencies to extend certification periods.

This authority to lengthen certification

periods gives States broad flexibility to

extend certification periods, such as to

align the food stamp certification period

with the Medicaid certification period.

However, PRWORA limits certification

periods to 24 months for households in

which all adult members are elderly or

disabled, or 12 months for other

households. The final language

stipulates that the total months of the

certification period cannot exceed the

statutory limits. We are also requiring

that the household must receive proper

notification if the State agency extends

the certification period. State agencies

must advise the household of the new

certification ending date with a notice

containing the same information as the

notice of eligibility set forth in section

273.10(g)(1)(i)(A). This will assure that

the household is aware of its extended

certification period, as well as its rights

and responsibilities during the extended

period.

Self-Employment Expenses—7 CFR

273.11(a)(4) and (b)(2)

Current regulations at 7 CFR

273.11(a)(4) contain requirements for

determining the allowable costs that can

be excluded in determining the amount

of self-employment income to be

counted. Paragraph (a)(4)(i) provides

that the allowable costs of producing

self-employment income include, but

are not limited to, certain identifiable

costs. Section 273.11(b)(1) provides that

households with income from boarders

may elect from among several methods

of determining the cost of doing

business, including a flat amount or

fixed percentage of the gross income,

provided that the method used to

determine the flat amount or fixed

percentage is objective and justifiable

and is stated in the State’s food stamp

manual. Paragraph (b)(2) provides that

households with income from day care

may choose one of the following in

determining the cost of meals provided

to the individuals: the actual

documented costs of meals, a standard

per-day amount based on estimated permeal costs, or the current

reimbursement amounts used in the

Child and Adult Care Food Program. We

proposed to consolidate allowable costs

of producing self-employment income

and include them in a revised paragraph

(b). We did not receive any comments

on the proposed reorganization and are

adopting it as proposed.

To simplify the certification process

and respond to State agency requests for

increased flexibility, we proposed to

add in new paragraph (b)(3)(iv)

(mistakenly identified as paragraph

(b)(3)(iii) in the preamble of the

proposed rule) an option for State

agencies to use the same standard selfemployment expense amounts or

percents established for households

receiving TANF benefits under Title

IV–A of the Social Security Act. We

received comments from three State

agencies and one State association

supporting this proposal. We are

adopting it as proposed.

In addition, section 812 of PRWORA

required the Department to establish by

August 22, 1997, a procedure by which

a State may submit a method for

producing a reasonable estimate of the

cost of producing self-employment

income in place of calculating actual

costs. FNS issued a guidance

memorandum in compliance with the

statutory requirement on August 1,

1997. The method proposed by the State

agency and submitted to FNS for

approval must be designed so that it

does not increase Program costs. The

method may be different for different

types of self-employment.

To implement the provisions of

section 812 of PRWORA, we proposed

to amend 7 CFR 273.11 to provide in

new paragraph (b)(3)(iv) that State

agencies may submit requests to FNS to

use a simplified method of calculating

self-employment expenses for specified

categories of businesses. The request

must include a description of the

proposed method, information

concerning the number and type of

households affected, and documentation

indicating that the proposed procedure

would not increase Program costs. We

received comments from one State

association and three State agencies

recommending that FNS develop the

standards rather than the individual

State agencies. Section 812 of PRWORA

provides that States agencies are to

submit the methods. Therefore, we are

not adopting the commenters’

suggestion.

We also received comments from

advocates that recommended that the

rules allow a State agency to include in

any standardized figure an amount that

represents the typical capital costs

associated with self-employment.

Current policy at 7 CFR 273.11(a)(4)(ii)

precludes allowing the cost of capital

70180 Federal Register / Vol. 65, No. 225 / Tuesday, November 21, 2000 / Rules and Regulations

assets in determining self-employment

income. In response to this comment,

we are taking the opportunity to revise

our policy to allow capital costs in

determining self-employment income.

We believe that this change recognizes

that capital costs are a legitimate

expense in producing self-employment

income and that the change will support

the self-employed working poor.

Accordingly we have revised the

proposal to delete proposed paragraph

(b)(2)(i) and have redesignated proposed

paragraphs (b)(2)(ii) and (iii) as

paragraph (b)(2)(i) and (ii) respectively.

We have modified paragraph (b)(1) to

include capital assets as an allowable

cost.

Current regulations allow households

to choose between a standard amount or

actual costs in claiming expenses

incurred in producing boarder and daycare income. However, section 812 of

PRWORA requires FNS to establish a

procedure whereby States may request

to use a method of producing a

reasonable estimate of excludable

expenses ‘‘in lieu of calculating the

actual cost of producing selfemployment income.’’ In accordance

with this provision, we proposed in new

paragraph (b)(3) that State agencies,

rather than households, must determine

whether to use actual costs or another

approved method to determine selfemployment expenses. We received

comments from two States agencies and

one State association supporting this

proposed change. We are adopting it as

proposed.

We also proposed to take this

opportunity to completely revise 7 CFR

273.11(a) to simplify the regulations and

increase State agency flexibility.

Currently, 7 CFR 273.11(a) contains

special procedures for determining a

household’s income from selfemployment. Current regulations

provide that income received from selfemployment is offset by the cost of

producing the self-employment income.

The remaining income is then averaged

over the number of months it is

intended to cover. We proposed to

revise and combine portions of

paragraphs (a)(1), (a)(2), and (a)(3) and

remove superfluous language and

examples without changing any policy

contained in those provisions. In

addition to the comments discussed

above concerning capital costs, we

received comments from one State

agency supporting the revision of 7 CFR

273.11(a) and one State agency

suggesting that State agencies be

allowed to determine what allowable

costs could be excluded. As discussed

above, we have changed the policy

concerning capital costs. Other than this

modification, we are adopting the

revisions as proposed.

To increase State agency flexibility,

we would eliminate some prescriptive

requirements in the current regulations

at 7 CFR 273.11(b) regarding the

treatment of shelter expenses paid by

boarders. Currently, paragraph (b)(1)(i)

specifies that contributions made by the

boarder to the household to cover its

shelter expenses are included as income

to the household. The current provision

further specifies that expenses paid by

the boarder to someone outside of the

household cannot be counted as income

to the proprietor household. In addition,

the current regulation in paragraph

(b)(1)(iii) provides requirements

addressing whether costs paid by the

boarder count in determining the

proprietor household’s entitlement to a

shelter deduction. We proposed to

eliminate these prescriptive

requirements in favor of letting State

agencies determine the appropriate way

to handle these shelter expenses. Two

State agencies and one State association

supported the proposed revision.

Accordingly we are adopting paragraph

(b)(3)(ii) as proposed.

Treatment of the Income and Resources

of Ineligible Aliens—7 CFR 273.11(c)(2)

Current regulations at 7 CFR

273.11(c)(2) provide that the benefits of

a household containing either a person

disqualified for failure to provide a

social security number or an ineligible

alien must be determined as follows: the

resources of the ineligible member

count in their entirety to the rest of the

household; all but a pro rata share of the

ineligible household member’s income

is counted; and the 20 percent earned

income deduction is applied to the

prorated income earned by the ineligible

member, and all but the ineligible

member’s pro rata share of the

household’s allowable shelter, child

support, and dependent care expenses

which are either paid by or billed to the

ineligible member is allowed as a

deductible expense for the household.

We proposed to renumber paragraph

(c)(3) as (c)(4), to remove the provisions

regarding ineligible aliens from (c)(2),

and to add a new paragraph (c)(3) for

ineligible aliens.

Section 818 of PRWORA amended

section 6(f) of the Act (7 U.S.C. 2015(f))

and grants State agencies the statutory

authority to count all or all but a pro

rata share of the income of an alien who

is in an ineligible category listed under

the alien provisions of 6(f) of the Act,

i.e., those ineligible prior to PRWORA.

They are primarily visitors, tourists,

diplomats, students, and undocumented

aliens. Proposed paragraph (c)(3) would

provide that State agencies must count

all of the resources and either all or all

but a pro rata share of the income and

deductions of these ineligible aliens.

Excluded from the provisions of (c)(3)(i)

are the categories of aliens eligible

under the Act listed in new paragraphs

(3)(i)(A) through (E).

One State agency asked if it could

count all of the alien’s income for

purposes of applying the gross income

test and only all but a pro rata share for

other purposes. The State agency was

concerned that counting a pro rata share

of the alien’s income could result in

some households with ineligible aliens

being eligible whereas a similar

household made up of citizens with the

same income would be ineligible based

on gross income. To remedy this

situation, we proposed to allow the

State agency to count all of the alien’s

income for purposes of applying the

gross income test for eligibility purposes

but only count a pro rata share for

applying the net income test and

determining the level of benefits. This

State agency option applies to aliens

who do not meet the alien eligibility

requirements in section 6(f) of the Food

Stamp Act.

PRWORA made additional categories

of aliens ineligible for food stamp

benefits, beyond those ineligible under

section 6(f) of the Act. The majority of

these aliens are refugees and asylees

who have been in this country for more

than 7 years and lawful permanent

residents except those who can be

credited with 40-quarters of work or

who were living in this country on

August 22, 1996, and were elderly on

that date or are now disabled or under

age 18. PRWORA did not address the

treatment of the income and resources

of these additional categories of

ineligible aliens. Congress did not grant

State agencies statutory authority to

count all or all but a pro rata share of

the income of PRWORA-ineligible

aliens. Further, the amended version of

subsection 6(f) of the Act is explicitly

limited by its plain language to aliens in

categories ineligible prior to the

enactment of PRWORA. In the preamble

of the NPRM, we examined various

options for counting the resources and

income of those categories of PRWORAineligible aliens and selected two

options for comment.

We proposed to allow the State

agency to pick one State-wide option for

determining the eligibility and benefit

level of households with members who

are aliens made ineligible under

PRWORA. State agencies may either: (1)

Count all of the aliens’ resources and a

pro-rated share of the aliens’ income

and deductions; or (2) count all of the

Federal Register / Vol. 65, No. 225 / Tuesday, November 21, 2000 / Rules and Regulations 70181

aliens’ resources, not count the aliens’

income and deductions, but cap the

resulting allotment for the eligible

members at the allotment amount the

household would receive were it not for

the PRWORA eligibility restrictions.

Option (1) merely continues the policy

that most State agencies are pursuing

with respect to PRWORA-ineligible

aliens. State agencies operating State

Option Programs under section 8(j) of

the Act may find option (2) attractive in

terms of simplifying administration.

This option would require two benefit

calculations. In calculation (1), the State

agency would determine eligibility and

benefit level as if all PRWORAineligible aliens could still receive

Federal benefits. In calculation (2), the

State agency would determine eligibility

and level of benefits for the eligible

members, excluding the income and

deductions of the PRWORA-ineligible

aliens; however, the benefit amount

could not exceed the amount

determined in calculation (1). In State

Option Programs, the difference

between calculation (1) and calculation

(2) would be the State’s share of benefits

payable to FNS. Funding for state-tostate technical assistance visits will be

available through our State Exchange

program for States wishing to learn

about the automation procedures

necessary for implementation of this

option. We proposed to allow a second

variance exclusion period under 7 CFR

275.12(d)(2)(vii) for States which

implement option 1, and then decide at

a later date to implement option 2. For

aliens ineligible under section 6(f) of the

Act and for those unable or unwilling to

document their alien status, the

proposed rule would reflect the statute

which permits the State agency the

option to count all or all but a pro rata

share of such an alien’s income and

require that all of such an alien’s

resources be counted.

The Department’s proposals generated

a great many comments. Many State

agencies thought the proposal to

distinguish between aliens ineligible

under the Act and those ineligible under

PRWORA was too complex. They felt

that Congress intended to allow State

agencies to apply the same options for

treatment of income and deductions to

all aliens. Several State agencies praised

the Department’s decision to allow the

‘‘option 2’’ treatment. Other State

agencies decried this option, stating that

they might feel pressure to implement

‘‘option 2,’’ should the Department offer

that option in the final rule. One State

agency stated that its State Option

Program provides benefits to all

qualified aliens, not just the categories

of aliens set forth in proposed

paragraphs (3)((i)(A) through (E).

Accordingly, the State agency suggested

that the Department adjust the proposed

language to provide simply that all

qualified aliens are excluded from the

provisions of (3)(i). On the other hand,

advocacy groups generally favored the

options offered; however, some had

reservations. One such group worried

that State agencies would find ‘‘option

2’’ complex to administer and errorprone. Thus, State agencies would be

reluctant to implement an otherwise

helpful option. The group suggested that

the Department modify ‘‘option 2’’ as

follows. The State agency would apply

the gross income test to the household,

including the PRWORA-ineligible alien

members. If the household passed the

gross income test, the State agency

would exclude the PRWORA-ineligible

alien’s income and deductions to

determine the benefit amount. At its

discretion, the State agency could add a

second calculation as in ‘‘option 2’’ to

prevent an increase in benefits.

After carefully considering the

comments on this issue, the Department

has decided to adopt the proposed

language in the final rule, with some

modifications. We are not changing the

options available to State agencies for

treatment of the income and deductions.

We believe the rationale provided in the

preamble to the NPRM for proposing

these options still remains valid. As is

always the case when the Department

offers options in the regulations, or

chooses not to regulate a certain matter,

State agencies must be prepared to

defend the decisions taken with respect

to choosing a particular option or

dealing with the unregulated matter.

The Department is not adopting the

State agency’s suggestion to exempt

only qualified aliens from the provision

allowing a State agency to count all of

the ineligible alien’s income and

deductions, but excluding that member

from the household for the eligibility

and benefit calculation. The purpose of

the provision in the proposed rule was

to give some degree of protection to

now-ineligible aliens who were eligible

prior to the PRWORA amendments. To

that end we are adding to the final rule

two groups of aliens we inadvertently

omitted from the proposed language,

aged, blind, or disabled aliens admitted

for temporary or permanent residence

under section 245A(b)(1) of the INA;

and special agricultural workers

admitted for temporary residence under

section 210(a) of the INA. Further, the

Department feels that the rulemaking

process is not the most appropriate

venue for dealing with the intricacies of

State Option Programs. FNS will work

with State agencies through the plan

approval process to give State agencies

the maximum possible latitude to craft

State Option Programs which are

responsive to each State’s unique

situation. Finally, the Department is not

adopting the advocacy group’s

suggestion for modifying ‘‘option 2.’’ We

considered and discarded similar

options in formulating the NPRM. The

Department wants to avoid creating a

regulatory scheme where similarly

situated households in which all

members are either U.S. citizens or

eligible aliens would receive less

benefits than a household in which

some members are in food stamp

eligible status and others are not.

To conform to the changes the

Department is making to the provisions

for deeming of sponsor income and

resources, we are changing paragraph

(c)(3)(v) to specify that State agencies

must not include the resources and

income of the sponsor and the sponsor’s

spouse in determining the resources and

income of an ineligible sponsored alien.

Residents of Drug and Alcohol

Treatment and Rehabilitation Centers—

7 CFR 273.11(e)

Current rules at 7 CFR 273.11(e) set

forth the procedures for certifying

residents of a drug addict or alcoholic

treatment and rehabilitation (DAA)

centers for Program participation. In the

NPRM, the Department proposed to

revise the title of paragraph (e) and

paragraphs (e)(1) through (5) to make

the procedures clearer, to add two new

provisions contained in section 830 of

PRWORA, and to take into account

electronic benefit transfer (EBT)

issuances.

Paragraph (e)(1) of current rules

provides that individuals in DAA

centers may individually apply for food

stamp benefits, but certification must be

accomplished through an authorized

representative who is an employee of

the treatment center. Section 830 of

PRWORA amended section 8 of the Act

(7 U.S.C. 2017(f)) to allow the State

agency the option of requiring

households to designate the DAA center

as their authorized representative for the

purpose of receiving allotments on

behalf of the households. In the NPRM,

we proposed that this change be

included in new paragraph (e)(1) and

that it apply only with regard to

obtaining and using benefits on behalf

of the household. The current regulatory

requirement in paragraph (e)(1) that

households residing in treatment

centers must apply and be certified

through an authorized representative

would continue to apply.

70182 Federal Register / Vol. 65, No. 225 / Tuesday, November 21, 2000 / Rules and Regulations

Paragraph (e)(5)(i) of current rules

provides that if a resident leaves the

DAA center, the center must provide the

household with its full allotment if the

allotment has been issued and no

portion of the allotment has been spent

by the center on behalf of the

household. If a resident household

leaves the center prior to the 16th of the

month and a portion of the allotment

has already been spent by the center on

behalf of the household, the center must

provide the departing household with

one-half of its monthly allotment. If the

household leaves the center on or after

the 16th of the month, the household is

not entitled to any portion of the

allotment. The center must return any

unspent benefits of a household that has

left the center to the State agency.

Section 830 of PRWORA amended

section 8 of the Act to allow State

agencies the option of providing an

allotment for the individual to: (a) The

center as an authorized representative

for a period that is less than 1 month;

and (b) the individual, if the individual

leaves the center. Since State agencies

will generally not know in advance

when a resident is going to leave the

center, we proposed to allow State

agencies to routinely issue allotments

for household’s in DAA centers on a

semi-monthly basis, e.g., half of the

allotment could be issued on the first of

the month and half could be issued on

the 16th of the month.

We also proposed to amend current

regulations at 7 CFR 273.11(e)(2) to take

into account various EBT systems being

used. We did not endorse any single

EBT design, but did require that any

design or State procedures used as part

of the design used to accommodate DAA

facilities assure that a household has

access to one-half of its allotment when

it leaves the center before the 16th of the

month.

We also proposed to delete current

paragraphs (e)(3)(i) through (iii) which

provide that the expedited and regular

processing standards apply to residents

of DAA centers as well as other

households and the requirement for the

State agency to process changes in

circumstances and recertification for

these households the same as other

households. These provisions still

apply, but it is not necessary to

specifically mention them.

We received two comments on our

proposed revisions to 7 CFR 273.11(e),

both supportive of the proposed

changes. One commenter submitted a

suggestion for a new system of issuance

for DAA centers. That suggestion is

outside the purview of this regulation

and cannot be addressed at this time.

However, we have forwarded the

suggestion to the proper area in the

Department for its consideration. We are

adopting the proposed revisions to 7

CFR 273.11(e) as final.

Reporting Changes—7 CFR 273.12

How Will State Agencies Process

Reported but Unclear Information on

Case Changes?

As stated before in the discussion of

changes to 7 CFR 273.10, we are

clarifying the circumstances under

which a State agency must send a

NOAA to shorten an assigned

certification period. To emphasize that

State agencies must determine if a

household is in fact ineligible before the

State agency may close its case, the final

rule adds a new section 273.12(c)(3),

which sets forth the procedure for acting

on unclear information. During the

certification period, the State agency

may obtain information about changes

in a household’s circumstances from

which the State agency cannot readily

determine the effect of the change on

the household’s benefit amount. The

State agency might receive such unclear

information from a third party or from

the household itself. The State agency

must pursue clarification and

verification of household circumstances

by issuing a written request for contact

(RFC) which clearly advises the

household of the verification it must

provide or the actions it must take to

clarify its circumstances. The RFC must

allow the household at least 10 days to

respond and to clarify its circumstances,

either by telephone or by

correspondence, as the State agency

directs. The RFC must also state the

consequences if the household fails to

respond to the RFC, that is, case closure.

Consistent with the existing procedure

at 7 CFR 273.2(f)(9)(v) for independent

verification of information received

from IEVS, the State agency must issue

a NOAA if the household does not

respond at all to the notice requesting

that it contact the food stamp office to

clarify its circumstances. Once the

household has contacted the State

agency, it must refuse to cooperate with

requests to clarify its circumstances

before the State agency may close its

case. When the household responds to

the RFC and provides sufficient

information, the State agency must act

on the new circumstances in accordance

with normal change processing time

frames.

One State agency suggested that we

allow a procedure it employs in its

TANF program. Instead of outright

termination of cases where families do

not respond to requests to clarify

circumstances, the State’s TANF

program suspends such cases for 1

month before termination. The TANF

case receives a NOAA stating that after

the adverse action period expires, the

State agency will suspend cash

assistance for 1 month. If the family

responds satisfactorily during the

suspension period, the State issues the

payment for the month of suspension,

and, if necessary adjusts the cash

payment with a subsequent NOAA. This

procedure fits well with the proposed

two-step procedure and has merit as the

State agency reinstates households

without their needing to file an

application, if they responded

satisfactorily during the suspension

period. The final rule allows this

procedure as a State agency option.

How Will TANF Leavers Transition to

Nonassistance Food Stamps?

We proposed to retain the longstanding procedure for adjusting the

certification periods of households

leaving the TANF rolls, with a

modification. Current 7 CFR 273.12(f)(4)

requires that State agencies adjust food

stamp participation of TANF leavers

with a NOAA when it is clear that

changes in the household’s

circumstances require a reduction or

termination of benefits. Current 7 CFR

273.12(f)(5) outlines the procedures a

State agency must follow when TANF

leavers do not fully apprise the State

agency of their new circumstances and

the State agency does not possess

enough information to make an

informed determination about their

continuing food stamp eligibility. In this

instance, the State agency closes the

food stamp case with a NOE. Despite

our concerns over the legal sufficiency

of using the NOE in lieu of the NOAA,

we provided a rationale for continuing

its use in this limited instance.

However, we recognized that in some

cases, the State agency might need only

one or two pieces of information or

documentation to determine continuing

food stamp eligibility, depending on the

level of information available in the case

file. We believed it would be preferable

to avoid requiring the household to

report for a full recertification, if a

response to a notice to the household

requesting information could clear up a

few remaining points of eligibility. Thus

adjusting the household’s participation

with a NOAA would be appropriate.

Accordingly, we proposed an option

which would allow State agencies to

close cases with a notice of adverse

action, provided the State agency has

sent the household a notice clearly

specifying the actions the household

must take to continue its eligibility.

Federal Register / Vol. 65, No. 225 / Tuesday, November 21, 2000 / Rules and Regulations 70183

The few State agencies that

commented on the proposal thought the

Department should not change the

current procedure. However, many

advocacy groups commented that, in

many cases, local agencies simply

terminate the food stamp cases of TANF

leavers without any effort to explore

their continuing eligibility for food

stamps. Advocacy groups felt that TANF

leavers have the impression that cash

assistance and food stamps are

inextricably connected and that filing an

application for food stamps after cash

assistance ends would be futile. Sadly,

a Mathematica Policy Research review

of the recent literature on access and

participation in food stamps and

Medicaid by TANF leavers study (Dion

and Pavetti, pp 14–15, 23 and 32) had

similar findings. The Department of

Health and Human Services funded this

review with financial assistance from

the Department.

Upon reviewing the public comments

on this provision, it became clear to us

that the requirements of 7 CFR

273.12(f)(4) are honored more in the

breach. With or without the sanction of

the State agency, eligibility workers

seem to issue routinely a NOE to all

TANF leavers, without exploring the

household’s continuing eligibility for

food stamps. This inappropriate use of

the provisions of 7 CFR 273.12(f)(5)

might account for at least a part of the

decline in food stamp participation in

some States. Failure to follow the

requirements of 7 CFR 273.12(f)(4)

violates a clear mandate of the Act.

Section 11(i)(2) of the Act (7 U.S.C.

2020(i)(2)), which remains unchanged

by PRWORA, stipulates that: ‘‘* * *

[N]o household shall have * * * its

benefits under the food stamp program

terminated solely on the basis that

* * * its benefits have been terminated

under any of the programs carried out

under the statutes specified in the

second sentence of section 5(a) [TANF,

SSI and AABD programs] and without a

separate determination by the State

agency that the household fails to

satisfy the eligibility requirements for

participation in the food stamp

program.’’ [Emphasis added.]

In the final rule the Department is

taking firm action to implement the

statutory mandate. As stated previously

in the discussion of the amendment to

7 CFR 273.10(f)(4), the final rule

eliminates entirely the use of the NOE

to shorten certification periods. We are

collapsing current 7 CFR 273.12(f)(4)

and 7 CFR 273.12(f)(5) into one

paragraph which sets forth the

procedures for reviewing the

participation of food stamp households

who are leaving cash assistance. There

is no change in the procedure for

adjusting food stamp participation when

the State agency is fully aware of the

household’s circumstances. However, if

circumstances are unclear, the State

agency must attempt to contact the

household to elicit enough information

to make a determination on the

household’s continuing food stamp

eligibility. Using the two-step procedure

set forth at 7 CFR 273.12(c)(3) will

assure that TANF leavers receive a

thorough review of their food stamp

case contemporaneously with the TANF

closure action and an opportunity to

present or clarify its circumstances prior

to any action to close the food stamp

case.

The revised procedure dovetails with

the Medicaid policies stipulating that

States may not deny Medicaid eligibility

to a family or family member simply

because the family is ineligible for

TANF. Nor may a State deny Medicaid

eligibility because a family member

loses eligibility under a particular

Medicaid eligibility category. Under the

Medicaid program, States are prohibited

from denying or terminating Medicaid

eligibility unless all possible avenues to

Medicaid eligibility have been

affirmatively explored and exhausted.

The final rule makes it clear that the

Federal government expects State

agencies to assure that eligibility

workers evaluate TANF leavers for

continuing eligibility in the Federal

safety net programs to which they are

entitled.

Transitional Food Stamps for TANF

Leavers

Several advocacy groups put forth a

suggestion for providing TANF leavers

‘‘transitional food stamp benefits,’’

much in the same way families receive

transitional Medicaid after leaving the

TANF rolls. Transitional food stamp

benefits would serve several purposes.

First, providing a known amount of food

stamp benefits assistance would provide

a critical work support that helps a

household meet its nutritional needs

while making the transition from TANF

cash assistance. Second, transitional

food stamp benefits provide time for

household circumstances to stabilize

before the State agency attempts to

redetermine eligibility and benefit

levels. Further, providing transitional

food stamps would reinforce with

households the fact that food stamp

participation is not dependent upon

eligibility for TANF. The Department

agrees with this suggestion. In the final

rule we are offering State agencies an

alternative procedure for issuing

transitional benefits. The details are set

forth below.

What Is the Transitional Benefits

Alternative (TBA)?

The gist of the new policy is that the

State agency would freeze food stamp

benefits of households leaving TANF

rolls for up to 3 months, depending on

the period of time since the household’s

last certification. Near the close of the

transition period, the State agency

would act on information collected from

the household, either adjusting the

benefit level, or closing the household’s

food stamp case because it is no longer

eligible or it has failed to provide

sufficient information to continue its

eligibility for the Program. In some

cases, the State agency would have to

conduct a full recertification of

eligibility, if it was not possible to

extend the household’s certification

period beyond the statutory maximum

for its circumstances. As the household

would have no reporting requirement

during the transitional period, the State

agency would incur no QC liability for

unreported changes in household

circumstances during the period of time

benefits are frozen.

Providing States the ability to offer

transitional benefits is consistent with

those provisions of the Act which give

the Secretary broad authority to

determine the most expedient way of

moving families from participating as

recipients of both TANF and food

stamps to participating in food stamps

without cash assistance. Congress

generally left it to the Secretary’s

discretion to define through regulations

the establishment of reporting systems

and action time frames.

Is TBA Mandatory or Optional?

While the Department encourages

State agencies to offer TBA to

households leaving the TANF rolls, in

order to ease the transition from PA, we

did not offer this procedure in the

NPRM. State agencies had no

opportunity to comment, either to raise

objections or to provide suggestions. For

this reason, the final rule establishes

TBA as a State agency option, not a

mandatory provision of the regulations.

As noted previously, State agencies

electing the TBA would incur no QC

liability for unreported changes in

household circumstances during the

period of time benefits are frozen.

How Would It Work?

When the State agency takes action to

close a household’s TANF case, it

would freeze the household’s food

stamp benefit amount for a maximum of

3 months. This is the household’s

transition period. The State agency

could extend the household’s

70184 Federal Register / Vol. 65, No. 225 / Tuesday, November 21, 2000 / Rules and Regulations

certification period, if necessary, to

provide the 3-month transition period.

The end of the transition period does

not require recertification, so State

agencies can also extend the

certification period beyond the 3-month

transition period. However, the State

agency must not exceed the statutory

maximum, usually 12 months since the

last certification.

Any freezing of benefits presupposes

some degree of suspending action on

reported changes. Freezing benefit

amounts could be accomplished in

several different ways. The commenters

suggested freezing benefits by switching

TANF leavers from prospective

eligibility and budgeting to retrospective

budgeting and eligibility. However, the

Department did not adopt this

suggestion. Instead, in the final rule we

adopted the approach of lengthening the

time frame State agencies have to act on

changes in household circumstances.

Families leaving TANF would receive a

‘‘Transition Notice’’ (TN) advising the

household that due to the closure of

cash assistance, food stamp

participation will need reevaluation; the

food stamp allotment is stabilized at the

pre-TANF closure amount; and the

household will not have to report

changes to the food stamp office.

However, by a date certain, the State

agency must have enough information

to keep the household’s certification in

force. In this regard, the TN would act

very much like the RFC process

described previously. Also, if the

household will lose income as a result

of the closure of its TANF case, the State

agency must notify the household the

frozen benefit amount reflects the loss of

cash assistance. In some cases, the State

agency would have to schedule the

household for a full recertification

because the household could receive no

more extensions of its certification

period. In such circumstances the TN

would look very much like a NOE. If the

household does report changes in its

circumstances during the transition

period, the State agency must adjust the

household’s benefit amount in

accordance with normal procedures if

the change would increase benefits. For

example, the household might lose a

source of income or incur a new

expense. However, if the reported

change would decrease benefits, the

State agency would defer acting on that

change until the month after the last

month of the transition period. The

Department believes that the final rule

gives State agencies maximum

flexibility to address notice

requirements for the various

circumstances under which food stamp

household leaving the TANF program

may have their food stamp participation

reevaluated and continued, if eligible.

As the transition period ends, the

State agency would close the food stamp

case or adjust the household’s benefit

level with a NOAA based on the

information collected through the TN

process during the transition period,

recertify the household after issuing a

NOE if it has reached the maximum

number of months in its certification

period during the transition period, or

close the case with a NOAA, if the

household had not provided sufficient

information through the TN process

during the transition period to

determine continuing eligibility. At the

end of the transition period, the State

agency may extend the household’s

certification period in accordance with

§ 273.10(f)(5).

What Groups of TANF Leavers Would

Get TBA?

Families generally leave TANF when

they go to work, exceed the income or

assets limits (due to employment or

other factors), fail to comply with the

behavioral or procedural requirements

of TANF, reach the Federally or Statedefined time limit, lose technical

eligibility, or leave voluntarily to

‘‘bank’’ their TANF months. For State

agencies electing the TBA, the

Department has structured the final rule

to allow maximum flexibility in

deciding which families leaving TANF

would be eligible for TBA. The final

rule requires State agencies, at a

minimum, to provide TBA to all

families with earnings who leave TANF.

If the household is losing income as a

result of leaving TANF, the State agency

must adjust the food stamp benefit

amount before freezing the benefit

amount. For example, such treatment

might be appropriate when a TANF

family leaves cash assistance because it

has reached the time limit for such

assistance and has gained no source of

income which would replace the lost

cash assistance. On the other hand,

under the final rule State agencies may

not provide TBA to households which

are leaving TANF because: A household

member has violated a TANF provision

and the State is imposing a comparable

food stamp sanction in accordance with

sections 819, 829, or 911 of PRWORA;

a household member has violated a food

stamp work requirement; a household

member has committed an intentional

Program violation; or the TANF case is

closing because the State agency is

taking action in response to information

indicating the household failed to

comply with food stamp reporting

requirements, e.g., the State agency

discovered unreported income or assets

through computer matching indicating

noncompliance with food stamp

reporting requirements. The Department

chose not to allow participation of such

households in TBA for several reasons.

First, it would not be fair to households

who have broken no food stamp rules

and are compliant with food stamp

reporting requirements to provide a

special treatment to households which

are under sanction for food stamp

noncompliance or which are not

complying with food stamp reporting

requirements. Second, the State agency

is well aware of the circumstances of

households which are noncompliant

with cash assistance requirements and

which are incurring a comparable food

stamp sanction, or have violated other

food stamp requirements, or food stamp

reporting requirements. Beyond the

groups the Department has determined

must or must not participate in TBA, the

State agency is free to specify any

additional group or groups of TANF

leavers for participation in TBA.

However, it is important to point out

that households that are ineligible for

transitional benefits based on these

restrictions may still be eligible for food

stamps. State agencies must determine

their continued eligibility based on

procedures at § 273.12(f)(3).

How Would QC Review These Cases?

QC will determine whether the State

agency correctly selected the household

for TBA. If the State agency incorrectly

assigned the household to TBA, QC will

review the case following standard QC

procedures. If the State agency

terminated a household’s benefits and

the State agency should have assigned

the household to TBA, the QC reviewer

will cite an invalid negative action. If

the State agency correctly assigned and

issued the household TBA, then the QC

reviewer will continue to determine the

appropriate benefit level according to

the following procedures:

1. The QC reviewer will cite in the

error determination any errors that exist

at the time the benefits are frozen for the

3 additional transitional months.

2. The QC reviewer will do a

comparison between the certification of

the sample month versus the actual

sample month circumstances to

determine if the case is within the $25

tolerance for citing an error.

3. The QC reviewer will focus on the

circumstances in the last month prior to

issuance of TBA to determine the

benefit amount for the sample month.

4. The QC reviewer will determine if

the State agency appropriately

processed any reported circumstances

Federal Register / Vol. 65, No. 225 / Tuesday, November 21, 2000 / Rules and Regulations 70185

that would result in an increase in

benefits.

Notice of Adverse Action—7 CFR

273.13

We proposed to amend 7 CFR

273.13(a)(1) to clarify that the Notice of

Adverse Action (NOAA) is considered

timely if the advance notice period

conforms to that period of time defined

by the State agency as an adequate

notice for its public assistance caseload,

provided that the notice period is a set

period of time which is no less than 10

days and no more than 18 days from the

date the notice is mailed to the date the

notice period expires. We did not

propose any change to current

regulations which provide that the

adverse action take effect in the month

following the month in which the notice

expires, unless the household has

requested a continuation of benefits

pending the outcome of a fair hearing.

The few State agencies that commented

on this provision opposed it. They

believe that the current rule

accommodates State flexibility in setting

advance notice periods to conform with

TANF and warrants no change. One

State agency felt that tying the food

stamp advance notice period to the

TANF period would limit access to the

program because TANF time frames are

more stringent. One State agency

commented that its current advance

notice period could be longer than 18

days because of a court-ordered

settlement. Advocate groups favored

maintaining the 10-day floor on the

minimum advance notice period, but

urged us to allow State agencies to

conform the advance notice period with

the Medicaid, even if the Medicaid

advance notice period is more than 18

days. In response to the commenters’

concerns, we have decided to retain the

current rule to maintain the current

level of flexibility for State agencies.

The rule continues to allow State

agencies to conform food stamp and

Medicaid NOAA time frames with

TANF, so long as there is a minimum

of 10 days. As we noted in the preamble

to the proposed rule, most State

agencies currently have a notice period

of 10 to 18 days. Thus the proposed

change would have little impact on

current Program costs.

Recertification—7 CFR 273.14

We proposed to amend 7 CFR 273.14

to conform the recertification

application process to the changes made

pursuant to PRWORA relative to the

initial application process (discussed

earlier in this preamble). More

specifically, we proposed to:

(1) eliminate reference to a model

notice of expiration (NOE).

(2) remove the sentence encouraging

State agencies to send a recertification

form, interview appointment letter, and

statement of required verification with

the NOE.

(3) remove certain requirements about

the application form for recertification

and replaced these with general

requirements, specifically: (a) That the

recertification process must only be

used for those households applying for

recertification prior to the end of the

current certification period; (b) that the

State agency must, at a minimum,

obtain sufficient information that, when

added to information already contained

in the casefile, will ensure an accurate

determination of eligibility; (c) that the

method of obtaining and recording

information from the applicant

household must be established by the

State agency and may include a

specially designed recertification

application or the State agency may

choose to simply annotate changes since

the last certification on an existing

application; (d) that the State agency

must issue a notice of required

verification, which would provide a

clear written statement of the acts a

household must perform to cooperate

with the application process, identify

potential sources of verification, and

offer assistance to special needs

households; and (e) that a new

signature, whether handwritten or

electronic, be obtained from the

applicant at the time of each

recertification.

(4) remove the option allowing State

agencies to request the household to

bring the recertification form to the

interview or return it by a specified date

because it is unnecessary.

(5) require only one face-to-face

interview once every 12 months,

regardless of the number of interim

certification periods. Further, if the

State agency conducts a telephone

interview, the State agency must mail

the application to the household to

obtain the necessary signature.

(6) eliminate the requirement that the

State agency conduct an annual face-toface interview at the same time as the

PA or GA interview.

(7) remove the option that the State

agency may schedule an interview prior

to the recertification application filing

date, provided that the household was

not denied for failure to attend such an

interview and remove the requirement

that the State agency schedule an

interview on or after the date the

application was filed if an interview

was not previously scheduled and that

the State agency reschedule any missed

interview scheduled prior to receipt of

an application. We proposed to retain

the requirement that the State agency

schedule interviews so that the

household has at least 10 days to

provide the required verification before

the certification period expires.

(8) remove the requirements regarding

the notice of required verification and

clarify that benefits cannot be prorated

if the time period for providing

verification extended beyond the end of

the certification period.

(9) revise and simplify the language

regarding delays in application

processing but retain the current State

agency options. For a more detailed

explanation of the proposed changes,

the reader should refer to the proposed

rule.

We received comments from one State

association, four State agencies, and

many advocacy groups. The State

association and the States generally

supported the proposed changes as

more flexible. The advocacy groups felt

that the current rules better protected

recipients, particularly the working

poor, and recommended that a number

of the current regulatory provisions be

retained, including the requirement that

the household be given at least 10 days

to provide verification, barring

procedural denials of households that

have not refused to cooperate, and

requiring the State agency to reschedule

the first missed interview.

We have considered the comments

received carefully. In response to the

comments, in recognition of the need to

carefully balance State flexibility and

recipient rights, and in recognition of

the concerns about unexplained and

excessive caseload drops, we decided to

adopt certain proposed revisions, to

keep some existing regulations, and to

modify some of the proposed changes.

We are adopting the proposed

changes to paragraph (b)(1) to eliminate

the references to the model notice of

expiration (NOE). FNS no longer has a

model NOE so the reference is outdated.

However, after due consideration of the

comments we received about the

importance of ensuring that recipients

are aware of their rights and their

responsibilities, we have decided not to

adopt the proposal to delete the

sentence encouraging State agencies to

send the recertification form, interview

appointment letter, and statement of

required verification with the NOE.

Although State agencies send out their

notices and other correspondence

consistent with their automated system

and the options they choose on waiving

interviews and scheduling

appointments, the provision is not

binding on State agencies. Further, it

70186 Federal Register / Vol. 65, No. 225 / Tuesday, November 21, 2000 / Rules and Regulations

codifies the Department’s viewpoint

that the interests of recipients are best

served by providing all the pertinent

information about recertification at one

time. Paragraph 273.14(b)(1)(iii) has

been modified to incorporate the

requirement addressed elsewhere about

advising households of their right to

request a telephone interview.

We are adopting the revisions to

paragraph (b)(2) concerning the

requirements for the recertification

form. There was general support by the

State agencies for the proposed

flexibility in design of recertification

forms. There were no negative

comments received about this

flexibility.

We proposed requiring only one faceto-face interview yearly, regardless of

the number of interim recertifications.

However, the proposal did not eliminate

the requirement for some type of

interview for the interim

recertifications. Some commenters felt

that any interim interview was

unnecessary and indicated that they

believed that the requirement for an

interview at interim recertifications

within a 12 month period was

eliminated in the proposed section

273.2(e). We agree with the commenters

that one interview within a 12 month

period is sufficient and have revised the

rule accordingly to allow State agencies

the option to require only one interview

within a 12 month period. In order to

ensure that households are aware of

their options concerning interviews, we

have revised paragraph (b)(3)(i) to

provide the same protections

incorporated into 7 CFR 273.2(e)

relating to interviews.

One commenter questioned why there

was a requirement to mail an

application to the household to obtain

its signature if a telephone interview

was conducted. We have eliminated the

proposed requirement in paragraph

(b)(3)(i) to mail the application to the

household in this instance because it is

unnecessary. Paragraph (b)(2) already

requires that each new application for

recertification be signed and dated by

the applicant household. Accordingly

we are revising paragraph (b)(3)(i) as

discussed above.

We are adopting the proposal to

eliminate the requirement in paragraph

(b)(3)(ii) to schedule the face-to-face

interview at the same time the

household receives a face-to-face

interview for PA/GA purposes.

PRWORA eliminated the requirement

for a joint interview, and certification

periods are no longer necessarily

aligned.

We proposed to delete the first two

sentences in paragraph (b)(3)(iii)

concerning scheduling of interviews.

These sentences provided: that the State

agency may schedule an interview prior

to the recertification application filing

date, as long as the household was not

denied for failure to attend such an

interview; that the State agency

schedule an interview on or after the

date the application was filed if an

interview was not previously scheduled;

and that the State agency reschedule

any missed interview scheduled prior to

receipt of an application. We proposed

to retain the requirement that the State

agency schedule interviews so that the

household has at least 10 days to

provide the required verification before

the certification period expires. One

State agency opposed keeping the

requirement to schedule interviews so

that the household has at least 10 days

to provide the required verification

before the certification period expires

because the provision is unworkable if

the household files an application very

shortly before the certification period

closes. An advocacy group

recommended that the rule provide

safeguards for scheduling and

rescheduling of office interviews,

including requiring State agencies to

reschedule a missed first interview for

working households. We believe that

flexibility has been provided to State

agencies in scheduling interviews for

recertification in those instances where

face-to-face interviews are being

required. Households are considered to

have timely applied if they apply by the

15th day of the last month of the

certification period. State agencies

should schedule interviews such that

households that timely reapply are

recertified by the end of their

certification period in accordance with

7 CFR 273.14(d)(2). State agencies are

not currently required to reschedule a

missed first interview for recertification

unless a household requests a new

interview. We are not establishing a

requirement to do so in this rule. If a

household requests that an interview be

rescheduled, the State agency is

required to schedule a second interview.

A clarification stating this has been

added to paragraph (b)(3)(iii). Also,

consistent with 7 CFR 273.2, we have

added a sentence to paragraph (b)(3)(iii)

to require that the State agency send any

household that misses its scheduled

interview a Notice of Missed Interview.

For recertification interviews the Notice

of Missed Interview may be combined

with the notice of denial.

We proposed to remove the

requirements in paragraph (b)(4)

regarding the notice of required

verification and clarify that benefits

cannot be prorated if the time period for

providing verification extended beyond

the end of the certification period. An

advocacy group recommended that we

maintain the current provisions of 7

CFR 273.14(b)(4) in order to ensure

there were no unnecessary procedural

denials. We agree with the commenter

that there may be confusion that could

result in inappropriate denials, and

therefore, have decided not to adopt the

proposed removal of the first two

sentences. We are adding the

clarification that benefits cannot be

prorated if the time period for providing

verification extended beyond the end of

the certification period.

We proposed to revise and simplify

the language in paragraph (e) regarding

delays in application processing but

retain the current State agency options.

Both State agencies and advocates

commented on the revision. States

approved of the flexibility but were

confused about some of the meaning.

The advocates felt that the revisions

were overly harsh and could result in

inappropriate denials. In response to the

comments received, we have revised

paragraph (e) to provide recipients

protection from inappropriate denials,

intrusive interviews, and excessive

verification requirements, while

continuing to provide State agencies

with flexibility in administration of its

recertification process. If a household

files an application by the end of its

certification period, attends any

required interview, and submits any

required verification timely, the

household shall be recertified and its

benefits shall not be prorated. If the

household reapplies before the end of

its certification period, but does not

attend a required interview and does not

request that it be rescheduled and then

attend the rescheduled interview, or

does not provide any required

verification timely, the household may

be denied at the time of the failure, at

the end of the certification period, or at

the end of 30 days. If the State agency

opts to deny a case at the time of the

failure, and the household completes

the missing requirements prior to the

end of its certification period, the case

shall be reopened and benefits shall be

provided for the full month. If the

household complies with the missing

requirements after the end of its

certification period, the State agency

shall determine whether the fault for the

delay was the household’s or the State

agency’s. If the delay was the fault of the

household, benefits shall be prorated

from the date of compliance. If the State

agency was at fault, benefits shall be

provided for the full month. If the

Federal Register / Vol. 65, No. 225 / Tuesday, November 21, 2000 / Rules and Regulations 70187

household applies within 30 days after

the end of its certification period, its

application would be treated as an

application for recertification; however

benefits would be prorated from the

date of the application. Further, we have

added to paragraph (e)(1) and (2) a

sentence stating that the procedures in

7 CFR 273.2(h)(1) on determining cause

of delays in processing of initial

applications also apply to delays in

processing applications for

recertification. Finally, we are also

adding a requirement in paragraph (e)(3)

that provides that if a household’s

application for recertification is delayed

beyond the first of the month of what

would have been its new certification

period thorough the fault of the State

agency, the household’s benefits for the

new certification period shall be

prorated based on the date of the new

application; however, the State agency

shall also provide restored benefits to

the household back to the date the

household’s certification period should

have begun had the State agency not

erred and the household been able to

apply timely.

Fair Hearings—7 CFR 273.15

Under section 11(e)(10) of the Act (7

U.S.C. 2020(e)(10)) and the current rules

at 7 CFR 273.15(a), the State agency

must provide a fair hearing to any

household aggrieved by any action of

the State agency which affects the

participation of the household in the

Program. Until the enactment of

PRWORA, current rules at 7 CFR

273.15(j) did not allow the State agency

to accept an oral withdrawal of a fair

hearing request from a household.

Under 7 CFR 273.15(j), State agencies

are required to accept only written

withdrawals of fair hearing requests

from the household or the household’s

representative (e.g., authorized

representative).

Section 839 of PRWORA amended

section 11(e)(10) of the Act to provide

State agencies with the option of

accepting an oral withdrawal of the fair

hearing request from the household.

However, if the withdrawal request is an

oral request, section 839 requires the

State agency to provide a written notice

to the household confirming the

withdrawal and providing the

households with an opportunity to

request a hearing. To implement section

839 of PRWORA, the proposed rule

would amend 7 CFR 273.15(j) to allow

a State agency the option of accepting

an oral request to withdraw a fair

hearing from the household, which

would be followed by the State’s written

confirmation of the withdrawal and an

offer of a hearing opportunity.

Numerous comments were received

on this proposal. The majority of

comments were from legal aid

organizations and advocacy groups

which strongly opposed the PRWORA

provision permitting State agencies the

option to accept oral withdrawals from

households. The comments from these

groups are discussed in more detail in

the following paragraphs. A few State

agencies provided comments that, in

general, support the option provided by

PRWORA to States.

Legal aid organizations and advocacy

groups requested that either the

proposal be withdrawn or that the

Department include additional

protections to ensure households are

properly notified of their right to a fair

hearing. Many of the these commenters

recommended that the final rules

prohibit State agencies from soliciting or

suggesting oral withdrawals of hearing

requests. Legal aid organizations and

advocacy groups also recommended that

the required notice from the State

agency to the household confirming its

oral withdrawal should allow the

household to reinstate the hearing

request within 10 days of receipt of the

notice.

Under current rules at 7 CFR

273.15(c)(1), within 60 days of receipt of

a request, the State agency must assure

that the hearing is conducted, a decision

is reached, and the household and local

agency are notified of the decision. If

the household advises the State agency

that its oral withdrawal was incorrect

and that it in fact wants the fair hearing

process to continue (i.e., be reinstated),

legal aid organizations and advocacy

groups suggested that State agencies be

given a modest amount of time, in

addition to the original 60 day time

frame, to schedule, conduct and render

a decision. Therefore, rather than

allowing the State agency an additional

60 days from the date the State agency

receives notice from the household to

continue the fair hearing, commenters

recommend that the initial 60 day time

frame (i.e., the date of the household’s

original request) be extended by the

time between the date the State agency

sent the confirming notice and the time

it received the request from the

household, or its representative, for

reinstatement of the fair hearing. For

instance, assume a household receives a

NOAA on May 1 and submits the

request for a fair hearing May 5. By May

15th, the State agency and household

agree that there is no basis for a fair

hearing. The household member advises

the State agency verbally of his or her

desire to withdraw the hearing request.

On May 20th, the State agency sends the

household a Notice, as required in this

final rule, advising the household of its

requested withdrawal and of its right to

request a hearing. On May 26th, the

household returns a notice to its

caseworker explaining that it still wants

the fair hearing. The State agency

receives the household’s request on May

30, ten days from the date it sent the

household the notice. As proposed by

the commenters, the initial 60-day time

frame, which, in this example would be

until July 1, would be extended by 10

days, until July 10. The legal aid

organizations and advocacy groups

argue that without these revised time

frames, some households would lose

their right to continued benefits.

As specified under 7 CFR 273.15(g), a

household shall be allowed to request a

hearing on any action by the State

agency, including loss of benefits,

which occurred in the prior 90 days.

Under 7 CFR 273.15(k), a State agency

must allow a household to continue to

participate in the FSP and receive

continued benefits at the level of

benefits being provided to the

household prior to the NOAA, when the

household requests a fair hearing within

the period provided by the NOAA,

usually 10 days. Continued benefits

must be provided unless the

household’s certification period has

expired or the continued benefits are

not allowed as specified under 7 CFR

273.15(k)(2). Continued benefits are not

provided when the State agency’s

adverse action was a termination of the

household’s participation, even though

the State agency must provide a fair

hearing of this action if requested by the

household.

Finally, some legal aid and advocacy

groups objected to allowing the State

agency to accept an oral withdrawal

from the household’s authorized

representative. To be consistent with

current rules at 7 CFR 273.15, the

Department proposed to allow a

household’s authorized representative

to make the oral withdrawal.

The Department concurs that more

guidance is necessary to ensure that, in

State agencies electing to accept an oral

withdrawal of their request to a fair

hearing, households are properly

informed of their rights and the

procedures for reinstating a fair hearing

if the household believes the State

agency misinterpreted its oral statement

or if the household reverses its decision.

The Department further agrees that

certain time frames must be identified to

ensure State agencies process fair

hearings in a timely manner. At the

same time, the Department is interested

in providing State agencies with

flexibility to better administer the

70188 Federal Register / Vol. 65, No. 225 / Tuesday, November 21, 2000 / Rules and Regulations

Program without excessive or

burdensome requirements.

Accordingly, the Department is

amending its proposal at section 273.15

to include the following. First, the

Department is amending its proposal at

section 273.15(j)(2) to specify that a

State agency may notify the household,

or its representative, about the option of

orally withdrawing the fair hearing

request when the State agency and

household reach agreement about issues

related to the fair hearing request.

However, the final rule at section

273.15(j)(2) explicitly prohibits the State

agency from coercion or actions which

would influence the household or its

representative to withdraw the

household’s fair hearing request. While

we are aware that this provision

duplicates current law prohibiting State

agencies from denying a household of

its right to a fair hearing, we believe that

an explicit statement in the fair hearing

section of Program regulations is

appropriate and necessary.

Second, the final rule amends section

273.15(j)(2) to specify that State

agencies electing to accept an oral

expression from the household or its

representative to withdraw a fair

hearing must provide written

confirmation notice to the household

within 10 days of receiving the request

for withdrawal as per the request of

commenters.

Third, 7 CFR 273.15(j)(2) is amended

in this final rule to specify that the

written notice must also advise the

household, or its representative, that it

must notify the State agency within 10

days of receiving the State agency’s

confirming notice if it wishes to

continue with the fair hearing process.

The Department is establishing this time

frame to ensure that households are

aware of what action must be taken and

to be consistent with other

programmatic time frames provided to

households.

Fourth, should a household advise the

State agency that it wishes to reinstate

its initial request for a fair hearing, the

Department is specifying at section

273.15(j)(2) that, as required under 7

CFR 273.15(c)(1) or (2), the State agency

must complete the fair hearing process

within 60 days, or 45 days, as

appropriate, of receiving notice from the

household that it wishes to continue the

fair hearing. The Department is not

structuring the time frame for

completing the hearing process in the

manner suggested by commenters

because the time frame may not provide

State agencies with sufficient time to

process and render a complete hearing

decision. State agencies, at their option,

may establish time frames designed to

expedite the fair hearing process as

proposed by commenters, but they are

not required to do so.

Fifth, to ensure that the household’s

rights to continued benefits are not

adversely affected, the Department is

amending section 273.15(k)(2) to clarify

that, once continued or reinstated,

benefits must be continued until the

expiration of the 10-day period for

advising the State agency that it wishes

to continue with the fair hearing. Thus,

unless the household is not eligible to

receive continued benefits or if

continued benefits are terminated for

another reason specified under 7 CFR

273.15(k)(2), the household is assured of

continued benefits until all opportunity

for a fair hearing has been given to the

household, or its representative.

Finally, the Department is including

an additional amendment at section

273.15(j)(2) to clarify that the household

has one opportunity to request a

reinstatement of a fair hearing after the

household withdraws its request orally.

The Department believes that one

reinstatement assures the household its

right to a fair hearing while preventing

prolonged administrative actions. The

Department wishes to clarify that this

requirement in no way prohibits the

household from requesting a fair hearing

over an adverse action unrelated to the

reinstated fair hearing. State agencies

are encouraged to design notices which

clearly advise the household of its right

to a fair hearing whenever it believes it

is aggrieved by an action of the State

agency.

The Department is not taking action

in response to commenters who

expressed concern about the State

agency accepting an oral withdrawal of

a fair hearing from a household

representative. The Department

proposed this amendment to establish

consistent procedures between State

agencies accepting either written or oral

withdrawal of a fair hearing request and

current rules under which State

agencies may accept written requests to

withdraw the household’s fair hearing

request. An authorized representative is

chosen by the household to assist the

household in matters related to the

household’s participation in the FSP.

Commenters did not offer compelling

justification to exclude the authorized

representative, who otherwise speaks

for the household in all FSP-related

matters, from this particular action.

Furthermore, should the household

disagree with its representative’s oral

request to withdraw the fair hearing, it

is assured the opportunity to reinstate

the request. Thus, the Department is

adopting the proposed provision

allowing the household’s representative

to orally withdraw the household’s

request in this final rule.

Simplified Food Stamp Program—7

CFR 273.25

In writing the proposed rule, the

Department limited the regulations to

those areas of the statute where the

Department has explicit authority to

establish rules for the operation of a

Simplified Food Stamp Program (SFSP)

or where clarification is needed. Since

the purpose of an SFSP is to simplify

the administration of the Food Stamp

Program for States while maintaining

the nutritional safety net for applicants

or recipients, the Department chose not

to regulate many features of the SFSP so

that States would have the flexibility to

design programs that best serve their

particular needs and the needs of the

low-income families they are serving.

The Department intends to maintain

these goals in final regulations.

One hundred and eighteen (118)

organizations commented on the

proposed regulations for the SFSP.

1. Clarification of Households Eligible

To Participate in an SFSP

Approximately one third of the

commenters suggested that final

regulations should make it clear that

participation in the SFSP is limited to

households in which at least one

member is receiving ‘‘assistance’’ under

a program funded through the

Temporary Assistance for Needy

Families (TANF) grant to distinguish

such households from those who are

receiving other benefits not categorized

as assistance. As the statute specifically

restricts participation in an SFSP to

households receiving ‘‘assistance’’

under a TANF program, the final rule

clarifies this point by adding the term

‘‘assistance’’ to the definition section

with a cross-reference to the definition

of assistance as provided in TANF

regulations at 45 CFR 260.31. Unless a

form of support to a household qualifies

as ‘‘assistance’’ under the TANF

program, the household is not eligible to

participate in an SFSP.

Approximately one-third of the

commenters suggested the Department

clarify that the SFSP is applicable only

to those households in which a member

is receiving TANF assistance and not to

households that are jointly applying for

TANF assistance and food stamps.

Consequently, State agencies cannot use

the SFSP to lengthen application

processing time frames for these

households. As legislation governing the

SFSP restricts participation to those

households with members receiving

TANF assistance, the final rule adds a

new paragraph (c) to clarify that State

Federal Register / Vol. 65, No. 225 / Tuesday, November 21, 2000 / Rules and Regulations 70189

agencies must use regular Food Stamp

Program procedures when a household

applies for benefits under the SFSP and

is not authorized to receive TANF

assistance.

2. Restrictions on Eligibility

Approximately one-third of the

commenters suggested the final rule

should clarify that the SFSP cannot

import new restrictions on eligibility

from its TANF program such as the

family cap policies that make certain

household members ineligible for

benefits or policies that prevent a family

from qualifying for cash assistance. The

Department believes the statute

sufficiently addresses these situations;

consequently, regulatory clarification is

not necessary. Legislation governing

SFSP operations at 7 U.S.C.

2035(f)(3)(B) stipulates that the value of

food stamp allotments issued under a

simplified program must be based on

the Thrifty Food Plan (TFP) reduced by

30 percent of net income. As the TFP is

based on household size, the

Department would not allow a State to

reduce the size of a household under the

SFSP through a family cap or other

similar policies. In addition, the

legislation requires a household to be

receiving TANF assistance to be eligible

to participate in the SFSP. If a State

agency determines that a household is

ineligible for TANF assistance, the

household would not be able to

participate in an SFSP and could not be

subject to SFSP rules. State agencies

would use regular FSP rules and

procedures to determine eligibility for

such households. In situations where an

individual member of the household is

ineligible for TANF, the household is

considered a mixed-household and

subject, therefore, to the limit on benefit

reductions for these households.

3. Households With High Shelter Costs

Approximately one-third of the

commenters suggested the final rule set

minimum standards for preserving the

effect of the excess shelter deduction.

Legislation governing the SFSP at 7

U.S.C. 2020(e)(25)(B) stipulates that

State plans for operating SFSPs must

‘‘address the needs of households that

experience high shelter costs in relation

to the incomes of the households’’.

Neither the legislative history nor the

statute itself provides further direction

in the application of this requirement.

The Department anticipates that States

can achieve the legislative mandate in

numerous ways; therefore, it is not

appropriate for the Department to

regulate this provision. To meet the

statutory requirements, a State could

use, for example, multiple standards for

households with high, medium, low and

no shelter costs or a standard for

households residing in public housing

and another for non-public housing.

Since the legislation specifically

requires differential treatment for

households with high shelter costs

versus those with low shelter costs, the

Department would not allow a State to

use a single standard based on average

shelter costs for all households

participating in an SFSP. The final rule

adds a new paragraph (d) to clarify

limitations on the use of standards for

shelter costs.

4. Opportunity for Public Comment

The majority of comments addressed

the need for public input on proposed

SFSPs prior to the Department’s

approval. 101 of the 118 organizations

commenting on the proposed SFSP

regulation suggested that the

Department allow the public an

opportunity to comment on State SFSP

plans prior to their approval either

through a comment period or public

hearings since simplified programs can

fundamentally change the food stamp

benefit calculation in ways

unanticipated by legislation or

regulations. Public input could improve

the quality of State plans and increase

the accountability of State officials

submitting simplified proposals. In

many States, changes to a State’s

Medicaid or cash assistance programs of

the magnitude allowed under the SFSP

would require public hearings or a

notice and comment prior to

implementation. Since the majority of

commenters support a process for

public input on proposed SFSP plans,

the Department has decided to require

that States provide a public comment

period or hold public hearings or

meetings with groups representing

recipients’ interests on their SFSP plans.

The Department, however, will not

regulate the process States must follow

for public comments, hearings or

meetings. The Department is requiring

that a State solicit public opinion about

its SFSP proposal—particularly the

portion that deals with changes in rules

that will affect benefits so that the

public understands how cost neutrality

requirements may result in benefit

losses to finance other benefit increases.

States are encouraged to consult with

the Department prior to seeking public

comments. While the Department is

requiring a public comment period

before final approval of its SFSP plan,

the statute governing the SFSP requires

the Department to approve plans for

pure-TANF households so long as these

plans comply with statutory

requirements. The final rule adds a new

paragraph (e) requiring that a State

allow a period for the public to

comment or hold public hearings or

meetings with groups representing

participants’ interests on SFSP plans,

and to submit a review of these

comments with its final SFSP plan for

Departmental approval.

5. Benefit Reductions for Mixed-TANF

Households

A majority of commenters believe the

operation of an SFSP for ‘‘mixed’’

households (in which at least one

member, but not all members, receive

assistance from a TANF funded

program) should not result in a

reduction of benefits for these

households. One of the statutory

requirements governing the simplified

program mandates that operation of

these programs must not increase

Federal costs for any fiscal year (7

U.S.C. 2035(d)(2)(B)). A program that

allows all participating households to

receive more benefits than they are

eligible for under the regular Food

Stamp Program would increase costs to

the Federal government and would,

therefore, violate statutory

requirements. States operating SFSPs

are not able to meet the statutory

provisions for cost containment unless

the increases in benefits to some

households are offset by decreases in

benefits to other households.

While the Department does not have

the authority to limit the amount of

benefit loss for pure-TANF households,

it does have discretion in this area with

respect to mixed-TANF households. As

discussed in the proposed rule and our

interim guidance on this issue, the

Department’s primary concern is that

mixed-TANF households do not lose

nutritional support while participating

in an SFSP. At the same time, we

recognize that States need flexibility in

program design to achieve

simplification given the constraints of

cost containment. To meet these

objectives, FNS chose not to impose

criteria for mixed-TANF households

that are overly prescriptive and

developed a single criterion that it

believes will achieve the appropriate

balance between these competing

priorities. If a State’s SFSP reduces

benefits for mixed-TANF households,

then no more than 5 percent of these

participating households can have

benefit reductions of 10 percent or more

of the amount they are eligible to

receive under the regular Food Stamp

Program and no mixed-household can

have benefit reductions of 25 percent or

more of the amount they are eligible to

receive under the regular Program

70190 Federal Register / Vol. 65, No. 225 / Tuesday, November 21, 2000 / Rules and Regulations

(commonly called the 5/10/25 percent

benefit reduction requirement).

In developing the 5/10/25 percent

benefit reduction requirement above,

the Department recognized that small

reductions in monthly allotments could

result in changes exceeding this

threshold. Consequently, the

Department proposed to disregard

benefit reductions of $10 or less from

this requirement. Several commenters

want to increase the amount of the

benefit reduction from $10 to $25. The

Department believes the $10 disregard

maintains the appropriate balance

between State flexibility and

safeguarding the nutritional needs of

participating households. Any

reduction, regardless of how small,

limits a household’s access to a

nutritious, healthy diet. Since benefit

loss under a SFSP is permanent, unless

the household becomes ineligible to

participate in a SFSP or the SFSP is

terminated, disregards above $10 could

severely impact a household’s ability to

meet its nutritional needs. To prevent

this, the Department plans to maintain

the benefit reduction disregard at the

$10 limit.

A commenter suggested that the

Department substitute the 5/10/25

percent benefit reduction for a rule that

would limit the reductions in benefits to

mixed-TANF households by no greater

percentage amount, and to no greater

proportion of households, than it

reduces benefits to pure-TANF

households. Legislation governing the

SFSP requires the Department to

approve any State plan for the operation

of an SFSP so long as the plan does not

increase costs to the Federal government

and it complies with the statutory

requirements for operating such

programs. The legislation further allows

the Department to establish guidelines

for the approval of mixed-TANF

households, but not for pure-TANF

households. As the legislation does not

limit the amount that States can reduce

benefits for pure-TANF households,

States can reduce benefit amounts for

these households by any amount. As

previously discussed, the Department

chose to use its discretionary authority

to ensure that mixed-TANF households

do not experience a reduction in

benefits severe enough to endanger their

ability to meet their nutritional needs.

Therefore, the Department has decided

to adopt the 5/10/25 rule as final.

Several commenters want to simplify

the benefit loss methodology by using a

single measurement or allow States

more flexibility in deciding the

mechanism for achieving the desired

results. The Department believes using

a standard with incremental limits on

the amount that States can reduce

provides States with greater flexibility

in program design than does a

methodology with a single standard. At

the same time, this methodology

ensures protection of the nutritional

safety-net for households. In addition, a

national standard applied across all

States ensures equitable treatment for

households participating in SFSPs.

A few commenters said the proposed

benefit loss methodology is too

complex. FNS should provide actual

methodologies to measure benefit

reduction of mixed-TANF households.

The Department believes that regulating

a specific methodology for measuring

benefit loss for mixed-TANF households

is contrary to the goals of simplification

and would result in less flexibility for

States. Rather than regulating what

measurement systems States should use,

FNS will work with States on an

individual basis to design a

measurement system that fits the scope

of individual programs.

6. Conforming Language Regarding

Benefit Reductions for Pure-TANF

Households Participating in an SFSP

The proposed rule described

guidelines for reduction of benefits for

mixed-TANF households. Conforming

language containing guidelines for

reduction of benefits for pure-TANF

households should be included in the

final rule. As previously discussed,

legislation governing the SFSP requires

the Department to approve State plans

for pure-TANF households so long as it

complies with statutory requirements

and does not increase costs for the

Federal government. Since the

legislation does not establish limits on

the amount of benefit loss for pureTANF households, the Department

would exceed its authority if it

implemented conforming guidelines

regarding benefit reductions for pureTANF households.

7. Other

Several commenters suggested States

should be given authority to develop

SFSPs that serve local needs without

being constrained by rigid and arbitrary

requirements. FNS should review SFSP

applications on a case-by-case basis

with minimal advance restriction and

should give great deference to a State’s

efforts to fulfill the simplification

objectives of the law. The Department

believes the proposed rule provides

States with flexibility in designing

SFSPs that fit their individual

administrative needs while preserving

the nutritional safety net for

participating households. To ensure

flexibility, the Department limited the

regulations to those areas of the statute

where regulatory standards are essential

to ensure that simplified programs

fulfill the mission of the FSP. The Food

and Nutrition Service reviews State

plans for operating SFSPs on a case-bycase basis and approves all plans

complying with requirements.

Issuance and Use of Coupons—Mail

Issuance 7 CFR 274.2

Prior to the enactment of PRWORA,

section 11(e)(25) of the Act (7 U.S.C.

2020(e)(25)) required State agencies to

issue food stamp benefits through a mail

issuance system in rural areas where

households generally experience

transportation difficulties in obtaining

benefits. Section 835 of PRWROA

deleted direct-mail issuance

requirements.

Current rules at 7 CFR 274.2(g)

specify the requirements that State

agencies must meet in determining the

rural areas in need of mail issuance. The

current regulations at 7 CFR 272.2(g)

also require State agencies to submit an

attachment to the State Plan of

Operation describing mail issuance

requirements.

To implement this provision, the

Department proposed to remove the

mandatory mail issuance requirements

and State plan requirements at 7 CFR

274.2(g)(1) and (g)(2) and 7 CFR

272.2(d)(1)(xi). However, to ensure fair

and timely issuance to rural households,

the proposed rule retained basic

provisions at 7 CFR 274.2(g) requiring

State agencies to issue food stamp

benefits through a direct mail issuance

system in rural areas where households

experience transportation difficulties in

obtaining benefits. These provisions

would apply unless an EBT system is in

place. In areas where direct mail

issuance would continue, the State

agency would determine if any

households or geographic areas would

be granted an exception. These

exceptions would be reported to FNS as

required at 7 CFR 272.3(a)(2) and (b)(2).

These sections require State agencies to

prepare and provide staff with operating

guidelines and to submit their operating

guidelines to FNS.

The Department did not receive

comments on its mail issuance proposal.

Thus, we are adopting the proposed

rules at 7 CFR 272.2(d)(1)(xi) and 7 CFR

274.2(g) in this final rule without

change.

Part 277—Payments of Certain

Administrative Costs of State Agencies

Section 11(e)(1) of the Food Stamp

Act and the regulations at 7 CFR

272.5(c) allow State agencies, at their

option, to conduct activities designed to

Federal Register / Vol. 65, No. 225 / Tuesday, November 21, 2000 / Rules and Regulations 70191

inform low-income households about

the availability, eligibility requirements,

application procedures, and benefits of

the FSP. States electing to conduct

Program informational activities must

submit a State plan for FNS approval as

specified in the current rule at 7 CFR

272.2(d)(1)(ix). State agencies with

approval from FNS are reimbursed at

the standard 50 percent rate under

section 16(a) of the Food Stamp Act (7

U.S.C. 2025(a)) and 7 CFR Part 277 of

the corresponding regulations.

Section 847 of PRWORA amended

section 16(a)(4) of the Food Stamp Act

to specify that Federal reimbursement

funding not include ‘‘recruitment

activities.’’ To implement section 847,

the Department proposed to amend 7

CFR 277.4(b) to prohibit Federal

reimbursement for recruitment

activities. State agencies could continue

to seek reimbursement from FNS for

Program informational and educational

activities if they provide a plan to FNS

as specified at 7 CFR 272.2(d)(1)(ix).

The Department also requested

comments about the usefulness of this

plan and ideas about how to make the

plan approval process more efficient.

Very few comments were received in

response to this proposal. One

commenter suggested that the final rule

should include a simple, narrow

definition of ‘‘recruitment’’ to eliminate

confusion that may arise during the

review and approval of a State agency’s

Outreach Plan. The commenter

suggested the definition for recruitment

as, ‘‘activities designed to persuade an

individual who has made an informed

choice not to apply for food stamps to

change his or her decision and apply.’’

The Department is adopting this

suggested definition in this final rule

because it is consistent with the policy

FNS has applied when approving State

plans for conducting Program

informational activities. The

Department intends to encourage and

support State outreach activities that

inform and encourage potentially

eligible households to apply for food

stamp benefits without improperly

recruiting applicants.

Accordingly, the Department is

amending section 277.4 in this final rule

to define recruitment activities.

Implementation

The greater part of the final rule is

effective on January 20, 2001, 60 days

after the date of publication; however,

there are some exemptions. At 7 CFR

273.2(b)(4)(iv), the final rule is

amending a provision of another final

rule which is not yet effective. The final

rule ‘‘Food Stamp Program: Recipient

Claim Establishment and Collection

Standards’’ published on July 6, 2000

(65 FR 41752) is not effective until

August 1, 2001. Accordingly, the

amendment to § 273.2(b)(2)(iv) in this

final rule is effective August 1, 2001.

Moreover, the final rule contains a

group of amendments which are not

effective until OMB approves the

associated information collection

burden. The paragraphs affected are:

§ 273.2(c)(2)(i), § 273.2(e)(1),

§ 273.2(e)(2)(i), § 273.2(e)(2)(ii),

§ 273.2(e)(3), § 273.4(c)(3)(iv);

§ 273.12(c)(3); and § 273.12(f)(4). FNS

will publish a document in the Federal

Register announcing the effective date

of these amendments after approval of

the information collection requirements

by OMB.

The final rule incorporates at 7 CFR

272.1(g), the implementation dates as

follows. State agencies may implement

the following amendments at their

discretion at any time on or after the

effective date: § 272.8; § 272.11(a);

§ 273.2(f)(10); § 273.2(j)(2)(ii);

§ 273.9(d)(6)(i); § 273.9(d)(6)(iii)(E);

§ 273.11(a)(3)(v); § 273.12(a)(1)(vii);

§ 273.25; and § 277.4(b). State agencies

may implement the amendment to

§ 273.12(f)(4) at their discretion at any

time after the effective date established

by OMB approval of the associated

information collection burden. State

agencies must implement the

amendments to § 273.2(c)(2)(i),

§ 273.2(e)(1), § 273.2(e)(2)(i),

§ 273.2(e)(2)(ii), § 273.2(e)(3),

§ 273.4(c)(3)(iv); and § 273.12(c)(3) no

later than 180 days after the effective

date established by OMB approval of the

associated information collection

burden for all households newly

applying for Program benefits. State

agencies must convert current caseloads

no later than the next recertification

following the implementation date.

State agencies must implement all

remaining amendments no later than

June 1, 2001, for all households newly

applying for Program benefits.

State agencies must convert current

caseloads no later than the next

recertification following the

implementation date. Any variances

would be excluded from quality control

analysis in accordance with 7 CFR

275.12(d)(2)(vii) and 7 U.S.C.

2025(c)(3)(A). The final rule allow a

second variance exclusion period under

7 CFR 275.12(d)(2)(vii) for States which

first implement option 1 under 7 CFR

273.11(c)(3)(ii), and then decide at a

later date to implement option 2.

List of Subjects

7 CFR Part 272

Alaska, Civil rights, Claims, Food

stamps, Grant programs, Social

programs, Reporting and recordkeeping

requirements, Unemployment

compensation, Wages.

7 CFR Part 273

Administrative practice and

procedure, Aliens, Claims, Employment,

Food stamps, Fraud, Government

employees, Grant programs, Social

programs, Income taxes, Reporting and

recordkeeping requirements, Students,

Supplemental Security Income, Wages.

7 CFR Part 274

Food stamps, Fraud, Grant programs,

Social programs, Reporting and

recordkeeping requirements.

7 CFR Part 277

Administrative practice and

procedure, Food stamps, Fraud, Grant

programs, Social programs, Penalties.

Accordingly, 7 CFR Parts 272, 273,

274, and 277 are amended as follows:

1. The authority citation for Parts 272,

273, 274, and 277 continues to read as

follows:

Authority: 7 U.S.C. 2011–2036.

PART 272—REQUIREMENTS FOR

PARTICIPATING STATE AGENCIES

2. In § 272.1, add paragraph (g)(161) to

read as follows:

§ 272.1 General terms and conditions.

* * * * *

(g) * * *

(161) Amendment No. 388 The

provisions of Amendment No. 388 are

implemented as follows:

(i) State agencies may implement the

following amendments at their

discretion at any time on or after the

effective date: § 272.8; § 272.11(a);

§ 273.2(f)(9)(i); § 273.2(f)(10);

§ 273.2(j)(2)(ii); § 273.9(d)(6)(i);

§ 273.9(d)(6)(iii)(E); § 273.11(a)(3)(v);

§ 273.12(a)(1)(vii); § 273.25; and

§ 277.4(b).

(ii) State agencies may implement the

following amendment at their discretion

at any time after the effective date

established by OMB approval of the

associated information collection

burden: § 273.12(f)(4).

(iii) State agencies must implement

the following amendments no later than

180 days after the effective date

established by OMB approval of the

associated information collection

burden for all households newly

applying for Program benefits:

§ 273.2(c)(2)(i), § 273.2(e)(1),

70192 Federal Register / Vol. 65, No. 225 / Tuesday, November 21, 2000 / Rules and Regulations

§ 273.2(e)(2)(i), § 273.2(e)(2)(ii),

§ 273.2(e)(3), § 273.4(c)(3)(iv); and

§ 273.12(c)(3). State agencies must

convert current caseloads no later than

the next recertification following the

implementation date.

(iv) State agencies must implement

the amendment to § 273.2(b)(4)(iv) no

later than August 1, 2001, for all

households newly applying for Program

benefits.

(v) State agencies must implement all

remaining amendments no later than

June 1, 2001, for all households newly

applying for Program benefits. State

agencies must convert current caseloads

no later than the next recertification

following the implementation date.

(vi) Acting under policy guidance the

Department issued previous to the

publication of this final rule, several

State agencies that have identified

programs to confer categorical eligibility

for food stamps that do not meet the

criteria established at §§ 273.2(j)(2)(i)(B),

273.2(j)(2)(i)(C), 273.2(j)(2)(ii)(A), or

273.2(j)(2)(ii)(B) of this chapter. Any

such State agency may continue to use

these programs to confer categorical

eligibility for food stamp purposes until

September 30, 2001.

(vii) A State agency which first

implements option 1 under 7 CFR

273.11(c)(3)(ii), and then decides at a

later date to implement option 2 under

that same paragraph is entitled to a

second variance exclusion period under

7 CFR 275.12(d)(2)(vii).

* * * * *

§ 272.2 [Amended]

3. In § 272.2:

a. Paragraph (a)(2) is amended by

removing the thirteenth sentence; and

b. Paragraph (d)(1)(xi) is removed and

reserved.

4. In § 272.4:

a. Paragraph (d) is removed.

b. Paragraphs (e), (f), (g), and (h) are

redesignated as paragraphs (d), (e), (f),

and (g) respectively; and

c. Newly redesignated paragraph (f) is

revised to read as follows:

§ 272.4 Program administration and

personnel requirements.

* * * * *

(f) Hours of operation. State agencies

are responsible for setting the hours of

operation for their food stamp offices. In

doing so, State agencies must take into

account the special needs of the

populations they serve including

households containing a working

person.

* * * * *

5. In § 272.5:

a. Paragraph (b)(1)(i) is redesignated

as the text of (b)(1) and is revised;

b. Paragraphs (b)(1)(ii) and (b)(1)(iii)

are removed;

c. Paragraphs (b)(2) and (b)(3) are

redesignated as paragraphs (b)(3) and

(b)(4), respectively; and

d. Paragraph (b)(1)(iv) is redesignated

as paragraph (b)(2).

The revision reads as follows:

§ 272.5 Program informational activities.

* * * * *

(b) * * *

(1) Nutrition information. FNS must

encourage State agencies to develop

Nutrition Education Plans as specified

at § 272.2(d)(2) to inform applicant and

participant households about the

importance of a nutritious diet and the

relationship between diet and health.

* * * * *

6. Section 272.8 is revised to read as

follows:

§ 272.8 State income and eligibility

verification system.

(a) General. (1) State agencies may

maintain and use an income and

eligibility verification system (IEVS), as

specified in this section. By means of

the IEVS, State agencies may request

wage and benefit information from the

agencies identified in this paragraph

(a)(1) and use that information in

verifying eligibility for and the amount

of food stamp benefits due to eligible

households. Such information may be

requested and used with respect to all

household members, including any

considered excluded household

members as specified in § 273.11(c) of

this chapter whenever the SSNs of such

excluded household members are

available to the State agency. If not

otherwise documented, State agencies

must obtain written agreements from

these information provider agencies

affirming that they must not record any

information about individual food

stamp households and that staff in those

agencies are subject to the disclosure

restrictions of the information provider

agencies and § 272.1(c). The information

provider agencies, at a minimum, are:

(i) The State Wage Information

Collection Agency (SWICA) which

maintains wage information;

(ii) The Social Security

Administration (SSA) which maintains

information about net earnings from

self-employment, wages, and payments

of retirement income, which is available

pursuant to section 6103(1)(7)(A) of the

Internal Revenue Service (IRS) Code;

and information which is available from

SSA regarding Federal retirement, and

survivors, disability, SSI and related

benefits;

(iii) The IRS from which unearned

income information is available

pursuant to section 6103(1)(7)(B) of the

IRS Code; and

(iv) The agency administering

Unemployment Insurance Benefits (UIB)

which maintains claim information and

any information in addition to

information about wages and UIB

available from the agency which is

useful for verifying eligibility and

benefits, subject to the provisions and

limitations of section 303(d) of the

Social Security Act.

(2) State agencies may exchange with

State agencies administering certain

other programs in the IEVS information

about food stamp households’

circumstances which may be of use in

establishing or verifying eligibility or

benefit amounts under the Food Stamp

Program and those programs. State

agencies may exchange such

information with these agencies in other

States when they determine that the

same objectives are likely to be met.

These programs are:

(i) Temporary Assistance for Needy

Families;

(ii) Medicaid;

(iii) Unemployment Compensation

(UC);

(iv) Food Stamps; and

(v) Any State program administered

under a plan approved under title I, X,

or XIV (the adult categories), or title XVI

of the Social Security Act.

(3) State agencies must provide

information to those administering the

Child Support Program (title IV–D of the

Social Security Act) and titles II

(Federal Old Age, Survivors, and

Disability Insurance Benefits) and XVI

(Supplemental Security Income for the

Aged, Blind, and Disabled) of the Social

Security Act.

(4) Prior to requesting or exchanging

information with other agencies, State

agencies must execute data exchange

agreements with those agencies. The

agreements must specify the

information to be exchanged and the

procedures which will be used in the

exchange of information. These

agreements are not part of the State

agency’s Plan of Operation.

(b) Alternate data sources. A State

agency may continue to use income

information from an alternate source or

sources to meet any requirement under

paragraph (a) of this section.

(c) Actions on recipient households.

(1) State agency action on information

items about recipient households shall

include:

(i) Review of the information and

comparison of it to case record

information;

(ii) For all new or previously

unverified information received, contact

with the households and/or collateral

Federal Register / Vol. 65, No. 225 / Tuesday, November 21, 2000 / Rules and Regulations 70193

contacts to resolve discrepancies as

specified in §§ 273.2(f)(4)(iv) and 273.2

(f)(9)(iii) and (f)(9)(iv); and

(iii) If discrepancies warrant reducing

benefits or terminating eligibility,

notices of adverse action.

(2) State agencies must initiate and

pursue the actions on recipient

households specified in paragraph (c)(1)

of this section so that the actions are

completed within 45 days of receipt of

the information items. Actions may be

completed later than 45 days from the

receipt of information if:

(i) The only reason that the actions

cannot be completed is the nonreceipt

of verification requested from collateral

contacts; and

(ii) The actions are completed as

specified in § 273.12 of this chapter

when verification from a collateral

contact is received or in conjunction

with the next case action when such

verification is not received, whichever

is earlier.

(3) When the actions specified in

paragraph (c)(1) of this section

substantiate an overissuance, State

agencies must establish and take actions

on claims as specified in § 273.18 of this

chapter.

(4) State agencies must use

appropriate procedures to monitor the

timeliness requirements in paragraph

(c)(2) of this section.

(5) Except for the claims actions

specified in paragraph (c)(3) of this

section, State agencies may exclude

from the actions required in paragraph

(c) of this section information items

pertaining to household members who

are participating in one of the other

programs listed in paragraph (a)(2) of

this section.

(d) IEVS information and quality

control. The requirements of this section

do not relieve the State agency of its

responsibility for determining erroneous

payments and/or its liability for such

payments as specified in part 275 of this

chapter (which pertains to quality

control) and in guidelines on quality

control established under that part.

(e) Documentation. The State agency

must document, as required by

§ 273.2(f)(6) of this chapter, information

obtained through the IEVS both when

an adverse action is and is not

instituted.

§ 272.11 [Amended]

7. In 272.11:

a. Paragraph (a) is amended by

removing the word, ‘‘shall’’ and adding

the word ‘‘may’’ in its place;

b. Paragraphs (b)(2)(iii), (b)(2)(iv), and

(d) are revised; and

c. Paragraph (e)(2) is removed, and

paragraph (e)(1) is redesignated as the

text of paragraph (e).

The revisions read as follows:

§ 272.11 Systematic Alien Verification for

Entitlements (SAVE) Program.

* * * * *

(b) * * *

(2) * * *

(iii) For automated SAVE verification

through access to the Alien Status

Verification Index (ASVI), a description

of the access method and procedures;

(iv) For secondary verification as

described in paragraph (d) of this

section, the locations of INS District

Offices to which verification requests

will be directed;

* * * * *

(d) Method of verification. The State

agency may verify the documentation

presented by an alien applicant by

completing INS Form G–845 and

submitting photocopies of such

documentation to the INS for

verification as described in

§ 273.2(f)(10) of this chapter. In States

that participate in SAVE, the State

agency must use this secondary

verification procedure whenever the

applicant-individual’s documented

alien status has not been verified

through automated access to the ASVI

or significant discrepancies exist

between the data on the ASVI and the

information provided by the alien

applicant.

* * * * *

PART 273—CERTIFICATION OF

ELIGIBLE HOUSEHOLDS

§ 273.1 [Amended]

8. In § 273.1, paragraph (f) is removed.

9. In § 273.2:

a. The section heading is revised, and

paragraphs (a), (b)(1), (b)(2), and (b)(3)

are revised.

b. Paragraph (b)(4)(iv), added at 65 FR

41775 on July 6, 2000, and effective

August 1, 2001, is revised.

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

revising the first sentence and by adding

four new sentences after the first

sentence.

d. Paragraphs (c)(2)(i), (c)(2)(ii), and

(c)(3) are revised.

e. Paragraph (d)(1) is amended by

revising the fifth sentence.

f. Paragraph (e), paragraph (f)

introductory text and paragraph (f)(1)(ii)

are revised.

g. Paragraph (f)(1)(xi) is removed, and

paragraphs (f)(1)(xii) and (f)(1)(xiii) are

redesignated as paragraphs (f)(1)(xi) and

(f)(1)(xii), respectively.

h. Paragraph (f)(2)(ii) is revised.

i. Paragraph (f)(2)(iii) is added.

j. Paragraphs (f)(4)(ii), (f)(4)(iii), and

(f)(5)(i) are revised.

k. Paragraph (f)(5)(ii) is amended by

adding the words ‘‘in accordance with

paragraph (f)(4) of this section’’ after the

word ‘‘visit’’ in the first sentence.

l. Paragraph (f)(9) heading and

paragraph (f)(9)(i) are revised.

m. Paragraph (f)(10) heading and

introductory text are revised.

n. Paragraph (g)(3) is amended by

removing the words ‘‘two scheduled

interviews’’ in the second sentence and

adding in their place the words ‘‘a

scheduled interview.’’

o. Paragraphs (h)(1)(i)(B) and

(h)(1)(i)(D) are revised.

p. Paragraph (i)(4)(i) is amended by

adding, in the third sentence of the

undesignated text following paragraph

(i)(4)(i)(B), the words ‘‘applying for

benefits’’ after the word ‘‘person’’ both

times it appears in that sentence.

q. Paragraph (j) introductory text, and

paragraphs (j)(1)(i), (j)(1)(ii),(j)(1)(iii),

and (j)(1)(v) are revised.

r. Paragraph (j)(1)(iv) is amended by

adding the words ‘‘ in accordance with

§ 273.12(c)’’ after the word ‘‘eligible’’ in

the eighth sentence.

s. Paragraph (j)(2) is amended by

revising paragraph (j)(2)(i),

redesignating paragraphs (j)(2)(ii)

through (j)(2)(vii) as (j)(2)(vi) through

(j)(2)(xi), respectively, and adding new

paragraphs (j)(2)(ii), (j)(2)(iii), (j)(2)(iv),

and (j)(2)(v).

t. Newly redesignated paragraph

(j)(2)(xi)(F) is removed.

u. Paragraph (j)(3)(i) is amended by

removing the word ‘‘shall’’ in the first

sentence and adding in its place the

word ‘‘may.’’

v. Paragraph (j)(3)(iii) is removed.

w. Paragraph (j)(4)(iii)(C) is amended

by removing the first sentence.

x. A new paragraph (n) is added.

The revisions and additions read as

follows:

§ 273.2 Office operations and application

processing.

(a) Operation of food stamp offices

and processing of applications—(1)

Office operations. State agencies must

establish procedures governing the

operation of food stamp offices that the

State agency determines best serve

households in the State, including

households with special needs, such as,

but not limited to, households with

elderly or disabled members,

households in rural areas with lowincome members, homeless individuals,

households residing on reservations,

households with adult members who

are not proficient in English, and

households with earned income

(working households). The State agency

must provide timely, accurate, and fair

service to applicants for, and

participants in, the Food Stamp

Program. The State agency cannot, as a

70194 Federal Register / Vol. 65, No. 225 / Tuesday, November 21, 2000 / Rules and Regulations

condition of eligibility, impose

additional application or application

processing requirements. The State

agency must have a procedure for

informing persons who wish to apply

for food stamps about the application

process and their rights and

responsibilities. The State agency must

base food stamp eligibility solely on the

criteria contained in the Act and this

part.

(2) Application processing. The

application process includes filing and

completing an application form, being

interviewed, and having certain

information verified. The State agency

must act promptly on all applications

and provide food stamp benefits

retroactive to the month of application

to those households that have

completed the application process and

have been determined eligible. The

State agency must make expedited

service available to households in

immediate need. Specific

responsibilities of households and State

agencies in the application process are

detailed below.

(b) * * * (1) Content. Each

application form shall contain:

(i) In prominent and boldface lettering

and understandable terms a statement

that the information provided by the

applicant in connection with the

application for food stamp benefits will

be subject to verification by Federal,

State and local officials to determine if

such information is factual; that if any

information is incorrect, food stamps

may be denied to the applicant; and that

the applicant may be subject to criminal

prosecution for knowingly providing

incorrect information;

(ii) In prominent and boldface

lettering and understandable terms a

description of the civil and criminal

provisions and penalties for violations

of the Food Stamp Act;

(iii) A statement to be signed by one

adult household member which

certifies, under penalty of perjury, the

truth of the information contained in the

application, including the information

concerning citizenship and alien status

of the members applying for benefits;

(iv) A place on the front page of the

application where the applicant can

write his/her name, address, and

signature.

(v) In plain and prominent language

on or near the front page of the

application, notification of the

household’s right to immediately file

the application as long as it contains the

applicant’s name and address and the

signature of a responsible household

member or the household’s authorized

representative. Regardless of the type of

system the State agency uses (paper or

electronic), it must provide a means for

households to immediately begin the

application process with name, address

and signature;

(vi) In plain and prominent language

on or near the front page of the

application, a description of the

expedited service provisions described

in paragraph (i) of this section;

(vii) In plain and prominent language

on or near the front page of the

application, notification that benefits

are provided from the date of

application; and

(viii) The following

nondiscrimination statement on the

application itself even if the State

agency uses a joint application form:

‘‘In accordance with Federal law and U.S.

Department of Agriculture policy, this

institution is prohibited from discriminating

on the basis of race, color, national origin,

sex, age, religion, political beliefs, or

disability.

‘‘To file a complaint of discrimination,

write USDA, Director, Office of Civil Rights,

Room 326-W, Whitten Building, 1400

Independence Avenue, S.W., Washington,

D.C. 20250–9410 or call (202) 720–5964

(voice and TDD). USDA is an equal

opportunity provider and employer.’’; and

(ix) For multi-program applications,

contain language which clearly affords

applicants the option of answering only

those questions relevant to the program

or programs for which they are

applying.

(2) Income and eligibility verification

system (IEVS). If the State agency

chooses to use IEVS in accordance with

paragraph (f)(9) of this section, it must

notify all applicants for food stamp

benefits at the time of application and

at each recertification through a written

statement on or provided with the

application form that information

available through IEVS will be

requested, used and may be verified

through collateral contact when

discrepancies are found by the State

agency, and that such information may

affect the household’s eligibility and

level of benefits. The regulations at

§ 273.2(f)(4)(ii) govern the use of

collateral contacts. The State agency

must also notify all applicants on the

application form that the alien status of

applicant household members may be

subject to verification by INS through

the submission of information from the

application to INS, and that the

submitted information received from

INS may affect the household’s

eligibility and level of benefits.

(3) Jointly processed cases. If a State

agency has a procedure that allows

applicants to apply for the food stamp

program and another program at the

same time, the State agency shall notify

applicants that they may file a joint

application for more than one program

or they may file a separate application

for food stamps independent of their

application for benefits from any other

program. All food stamp applications,

regardless of whether they are joint

applications or separate applications,

must be processed for food stamp

purposes in accordance with food stamp

procedural, timeliness, notice, and fair

hearing requirements. No household

shall have its food stamp benefits

denied solely on the basis that its

application to participate in another

program has been denied or its benefits

under another program have been

terminated without a separate

determination by the State agency that

the household failed to satisfy a food

stamp eligibility requirement.

Households that file a joint application

for food stamps and another program

and are denied benefits for the other

program shall not be required to

resubmit the joint application or to file

another application for food stamps but

shall have its food stamp eligibility

determined based on the joint

application in accordance with the food

stamp processing time frames from the

date the joint application was initially

accepted by the State agency.

(4) * * *

(iv) Providing the requested

information, including the SSN of each

household member, is voluntary.

However, failure to provide an SSN will

result in the denial of food stamp

benefits to each individual failing to

provide an SSN. Any SSNs provided

will be used and disclosed in the same

manner as SSNs of eligible household

members.

(c) * * * (1) Household’s right to file.

Households must file food stamp

applications by submitting the forms to

the food stamp office either in person,

through an authorized representative, by

fax or other electronic transmission, by

mail, or by completing an on-line

electronic application. The State agency

must provide households that complete

an on-line electronic application in

person at the food stamp office the

opportunity to review the information

that has been recorded electronically

and must provide them with a copy of

that information for their records.

Applications signed through the use of

electronic signature techniques or

applications containing a handwritten

signature and then transmitted by fax or

other electronic transmission are

acceptable. State agencies must

document the date the application was

filed by recording the date of receipt at

the food stamp office. When a resident

of an institution is jointly applying for

Federal Register / Vol. 65, No. 225 / Tuesday, November 21, 2000 / Rules and Regulations 70195

SSI and food stamps prior to leaving the

institution, the filing date of the

application that the State agency must

record is the date of release of the

applicant from the institution. * * *

(2) * * *

(i) State agencies shall encourage

households to file an application form

the same day the household or its

representative contacts the food stamp

office in person or by telephone and

expresses interest in obtaining food

stamp assistance or expresses concerns

which indicate food insecurity. If the

State agency attempts to discourage

households from applying for cash

assistance, it shall make clear that the

disadvantages and requirements of

applying for cash assistance do not

apply to food stamps. In addition, it

shall encourage applicants to continue

with their application for food stamps.

The State agency shall inform

households that receiving food stamps

will have no bearing on any other

program’s time limits that may apply to

the household. If a household

contacting the food stamp office by

telephone does not wish to come to the

appropriate office to file the application

that same day and instead prefers

receiving an application through the

mail, the State agency shall mail an

application form to the household on

the same day the telephone request is

received. An application shall also be

mailed on the same day a written

request for food assistance is received.

(ii) Where a project area has

designated certification offices to serve

specific geographic areas, households

may contact an office other than the one

designated to service the area in which

they reside. When a household contacts

the wrong certification office within a

project area in person or by telephone,

the certification office shall, in addition

to meeting other requirements in

paragraph (c)(2)(i) of this section, give

the household the address and

telephone number of the appropriate

office. The certification office shall also

offer to forward the household’s

application to the appropriate office that

same day if the household has

completed enough information on the

application to file or forward it the next

day by any means that ensures the

application arrives at the application

office the day it is forwarded. The

household shall be informed that its

application will not be considered filed

and the processing standards shall not

begin until the application is received

by the appropriate office. If the

household has mailed its application to

the wrong office within a project area,

the certification office shall mail the

application to the appropriate office on

the same day, or forward it the next day

by any means that ensures the

application arrives at the application

office the day it is forwarded.

* * * * *

(3) Availability of the application

form. The State agency shall make

application forms readily accessible to

potentially eligible households. The

State agency shall also provide an

application form to anyone who

requests the form. Regardless of the type

of system the State agency uses (paper

or electronic), the State agency must

provide a means for applicants to

immediately begin the application

process with name, address and

signature.

* * * * *

(d) * * *

(1) * * * If there is any question as

to whether the household has merely

failed to cooperate, as opposed to

refused to cooperate, the household

shall not be denied, and the agency

shall provide assistance required by

paragraph (c)(5) of this section. * * *

* * * * *

(e) Interviews. (1) Except for

households certified for longer than 12

months, and except as provided in

paragraph (e)(2) of this section,

households must have a face-to-face

interview with an eligibility worker at

initial certification and at least once

every 12 months thereafter. State

agencies may not require households to

report for an in-office interview during

their certification period, though they

may request households to do so. For

example, State agencies may not require

households to report en masse for an inoffice interview during their

certification periods simply to review

their case files, or for any other reason.

Interviews may be conducted at the food

stamp office or other mutually

acceptable location, including a

household’s residence. If the interview

will be conducted at the household’s

residence, it must be scheduled in

advance with the household. If a

household in which all adult members

are elderly or disabled is certified for 24

months in accordance with

§ 273.10(f)(1), or a household residing

on a reservation is required to submit

monthly reports and is certified for 24

months in accordance with

§ 273.10(f)(2), a face-to-face interview is

not required during the certification

period. The individual interviewed may

be the head of household, spouse, any

other responsible member of the

household, or an authorized

representative. The applicant may bring

any person he or she chooses to the

interview. The interviewer must not

simply review the information that

appears on the application, but must

explore and resolve with the household

unclear and incomplete information.

The interviewer must advise households

of their rights and responsibilities

during the interview, including the

appropriate application processing

standard and the households’

responsibility to report changes. The

interviewer must advise households that

are also applying for or receiving PA

benefits that time limits and other

requirements that apply to the receipt of

PA benefits do not apply to the receipt

of food stamp benefits, and that

households which cease receiving PA

benefits because they have reached a

time limit, have begun working, or for

other reasons, may still qualify for food

stamp benefits. The interviewer must

conduct the interview as an official and

confidential discussion of household

circumstances. The State agency must

protect the applicant’s right to privacy

during the interview. Facilities must be

adequate to preserve the privacy and

confidentiality of the interview.

(2) The State agency must notify the

applicant that it will waive the face-toface interview required in paragraph

(e)(1) of this section in favor of a

telephone interview on a case-by-case

basis because of household hardship

situations as determined by the State

agency. These hardship conditions

include, but are not limited to: Illness,

transportation difficulties, care of a

household member, hardships due to

residency in a rural area, prolonged

severe weather, or work or training

hours which prevent the household

from participating in an in-office

interview. The State agency must

document the case file to show when a

waiver was granted because of a

hardship. The State agency may opt to

waive the face-to-face interview in favor

of a telephone interview for all

households which have no earned

income and all members of the

household are elderly or disabled.

Regardless of any approved waivers, the

State agency must grant a face-to-face

interview to any household which

requests one. The State agency has the

option of conducting a telephone

interview or a home visit that is

scheduled in advance with the

household if the office interview is

waived.

(i) Waiver of the face-to-face interview

does not exempt the household from the

verification requirements, although

special procedures may be used to

permit the household to provide

verification and thus obtain its benefits

in a timely manner, such as substituting

a collateral contact in cases where

70196 Federal Register / Vol. 65, No. 225 / Tuesday, November 21, 2000 / Rules and Regulations

documentary verification would

normally be provided.

(ii) Waiver of the face-to-face

interview may not affect the length of

the household’s certification period.

(3) The State agency must schedule an

interview for all applicant households

who are not interviewed on the day they

submit their applications. To the extent

practicable, the State agency must

schedule the interview to accommodate

the needs of groups with special

circumstances, including working

households. The State agency must

schedule all interviews as promptly as

possible to insure eligible households

receive an opportunity to participate

within 30 days after the application is

filed. The State agency must notify each

household that misses its interview

appointment that it missed the

scheduled interview and that the

household is responsible for

rescheduling a missed interview. If the

household contacts the State agency

within the 30 day application

processing period, the State agency

must schedule a second interview. The

State agency may not deny a

household’s application prior to the

30th day after application if the

household fails to appear for the first

scheduled interview. If the household

requests a second interview during the

30-day application processing period

and is determined eligible, the State

agency must issue prorated benefits

from the date of application.

(f) Verification. Verification is the use

of documentation or a contact with a

third party to confirm the accuracy of

statements or information. The State

agency must give households at least 10

days to provide required verification.

Paragraph (i)(4) of this section contains

verification procedures for expedited

service cases.

(1) * * *

(ii) Alien eligibility. (A) The State

agency must verify the eligible status of

applicant aliens. If an alien does not

wish the State agency to contact INS to

verify his or her immigration status, the

State agency must give the household

the option of withdrawing its

application or participating without that

member. The Department of Justice

(DOJ) Interim Guidance On Verification

of Citizenship, Qualified Alien Status

and Eligibility Under Title IV of the

Personal Responsibility and Work

Opportunity Reconciliation Act of 1996

(Interim Guidance) (62 FR 61344,

November 17, 1997) contains

information on acceptable documents

and INS codes. State agencies should

use the Interim Guidance until DOJ

publishes a final rule on this issue.

Thereafter, State agencies should

consult both the Interim Guidance and

the DOJ final rule. Where the Interim

Guidance and the DOJ final rule

conflict, the latter should control the

verification of alien eligibility. As

provided in § 273.4, the following

information may also be relevant to the

eligibility of some aliens: date of

admission or date status was granted;

military connection; battered status; if

the alien was lawfully residing in the

United States on August 22, 1996;

membership in certain Indian tribes; if

the person was age 65 or older on

August 22, 1996; if a lawful permanent

resident can be credited with 40

qualifying quarters of covered work and

if any Federal means-tested public

benefits were received in any quarter

after December 31, 1996; or if the alien

was a member of certain Hmong or

Highland Laotian tribes during a certain

period of time or is the spouse or

unmarried dependent of such a person.

The State agency must also verify these

factors, if applicable to the alien’s

eligibility. The SSA Quarters of

Coverage History System (QCHS) is

available for purposes of verifying

whether a lawful permanent resident

has earned or can receive credit for a

total of 40 qualifying quarters. However,

the QCHS may not show all qualifying

quarters. For instance, SSA records do

not show current year earnings and in

some cases the last year’s earnings,

depending on the time of request. Also,

in some cases, an applicant may have

work from uncovered employment that

is not documented by SSA, but is

countable toward the 40 quarters test. In

both these cases, the individual, rather

than SSA, would need to provide the

evidence needed to verify the quarters.

(B) An alien is ineligible until

acceptable documentation is provided

unless:

(1) The State agency has submitted a

copy of a document provided by the

household to INS for verification.

Pending such verification, the State

agency cannot delay, deny, reduce or

terminate the individual’s eligibility for

benefits on the basis of the individual’s

immigration status; or

(2) The applicant or the State agency

has submitted a request to SSA for

information regarding the number of

quarters of work that can be credited to

the individual, SSA has responded that

the individual has fewer than 40

quarters, and the individual provides

documentation from SSA that SSA is

conducting an investigation to

determine if more quarters can be

credited. If SSA indicates that the

number of qualifying quarters that can

be credited is under investigation, the

State agency must certify the individual

pending the results of the investigation

for up to 6 months from the date of the

original determination of insufficient

quarters; or

(3) The applicant or the State agency

has submitted a request to a Federal

agency for verification of information

which bears on the individual’s eligible

alien status. The State agency must

certify the individual pending the

results of the investigation for up to 6

months from the date of the original

request for verification.

(C) The State agency must provide

alien applicants with a reasonable

opportunity to submit acceptable

documentation of their eligible alien

status as of the 30th day following the

date of application. A reasonable

opportunity must be at least 10 days

from the date of the State agency’s

request for an acceptable document.

When the State agency fails to provide

an alien applicant with a reasonable

opportunity as of the 30th day following

the date of application, the State agency

must provide the household with

benefits no later than 30 days following

the date of application, provided the

household is otherwise eligible.

* * * * *

(2) * * *

(ii) If a member’s citizenship or status

as a non-citizen national is

questionable, the State agency must

verify the member’s citizenship or noncitizen national status in accordance

with attachment 4 of the DOJ Interim

Guidance. After DOJ issues final rules,

State agencies should consult both the

Interim Guidance and the final rule.

Where the Interim Guidance and the

DOJ final rule conflict, the latter should

control the eligibility determination.

The State agency must accept

participation in another program as

acceptable verification if verification of

citizenship or non-citizen national

status was obtained for that program. If

the household cannot obtain the forms

of verification suggested in attachment 4

of the DOJ Interim Guidance and the

household can provide a reasonable

explanation as to why verification is not

available, the State agency must accept

a signed statement, under penalty of

perjury, from a third party indicating a

reasonable basis for personal knowledge

that the member in question is a U.S.

citizen or non-citizen national. The

signed statement must contain a

warning of the penalties for helping

someone commit fraud. Absent

verification or third party attestation of

U.S. citizenship or non-citizen national

status, the member whose citizenship or

non-citizen national status is in

question is ineligible to participate until

Federal Register / Vol. 65, No. 225 / Tuesday, November 21, 2000 / Rules and Regulations 70197

the issue is resolved. The member

whose citizenship or non-citizen

national status is in question will have

his or her income and resources

considered available to any remaining

household members as set forth in

§ 273.11(c).

(iii) Homeless households claiming

shelter expenses may provide

verification of their shelter expenses to

qualify for the homeless shelter

deduction if the State agency has such

a deduction. If a homeless household

has difficulty in obtaining traditional

types of verification of shelter costs, the

caseworker shall use prudent judgment

in determining if the verification

obtained is adequate. For example, if a

homeless individual claims to have

incurred shelter costs for several nights

and the costs are comparable to costs

typically incurred by homeless people,

for shelter, the caseworker may decide

to accept this information as adequate

information and not require further

verification.

* * * * *

(4) * * *

(ii) Collateral contacts. A collateral

contact is an oral confirmation of a

household’s circumstances by a person

outside of the household. The collateral

contact may be made either in person or

over the telephone. The State agency

may select a collateral contact if the

household fails to designate one or

designates one which is unacceptable to

the State agency. Examples of

acceptable collateral contacts may

include employers, landlords, social

service agencies, migrant service

agencies, and neighbors of the

household who can be expected to

provide accurate third-party

verification. When talking with

collateral contacts, State agencies

should disclose only the information

that is absolutely necessary to get the

information being sought. State agencies

should avoid disclosing that the

household has applied for food stamps,

nor should they disclose any

information supplied by the household,

especially information that is protected

by § 273.1(c), or suggest that the

household is suspected of any wrong

doing.

(iii) Home visits. Home visits may be

used as verification only when

documentary evidence is insufficient to

make a firm determination of eligibility

or benefit level, or cannot be obtained,

and the home visit is scheduled in

advance with the household. Home

visits are to be used on a case-by-case

basis where the supplied documentation

is insufficient. Simply because a

household fits a profile of an errorprone household does not constitute

lack of verification. State agencies shall

assist households in obtaining sufficient

verification in accordance with

paragraph (c)(5) of this section.

* * * * *

(5) * * *

(i) The household has primary

responsibility for providing

documentary evidence to support

statements on the application and to

resolve any questionable information.

The State agency must assist the

household in obtaining this verification

provided the household is cooperating

with the State agency as specified under

paragraph (d)(1) of this section.

Households may supply documentary

evidence in person, through the mail, by

facsimile or other electronic device, or

through an authorized representative.

The State agency must not require the

household to present verification in

person at the food stamp office. The

State agency must accept any reasonable

documentary evidence provided by the

household and must be primarily

concerned with how adequately the

verification proves the statements on the

application.

* * * * *

(9) Optional use of IEVS. (i) The State

agency may obtain information through

IEVS in accordance with procedures

specified in § 272.8 of this chapter and

use it to verify the eligibility and benefit

levels of applicants and participating

households.

* * * * *

(10) Optional use of SAVE.

Households are required to submit

documents to verify the immigration

status of applicant aliens. State agencies

that verify the validity of such

documents through the INS SAVE

system in accordance with § 272.11 of

this chapter must use the following

procedures:

* * * * *

(h) * * *

(1) * * *

(i) * * *

(B) If one or more members of the

household have failed to register for

work, as required in § 273.7, the State

agency must have informed the

household of the need to register for

work, determined if the household

members are exempt from work

registration, and given the household at

least 10 days from the date of

notification to register these members.

* * * * *

(D) For households that have failed to

appear for an interview, the State

agency must notify the household that

it missed the scheduled interview and

that the household is responsible for

rescheduling a missed interview. If the

household contacts the State agency

within the 30 day processing period, the

State agency must schedule a second

interview. If the household fails to

schedule a second interview, or the

subsequent interview is postponed at

the household’s request or cannot

otherwise be rescheduled until after the

20th day but before the 30th day

following the date the application was

filed, the household must appear for the

interview, bring verification, and

register members for work by the 30th

day; otherwise, the delay shall be the

fault of the household. If the household

has failed to appear for the first

interview, fails to schedule a second

interview, and/or the subsequent

interview is postponed at the

household’s request until after the 30th

day following the date the application

was filed, the delay shall be the fault of

the household. If the household has

missed both scheduled interviews and

requests another interview, any delay

shall be the fault of the household.

* * * * *

(j) PA, GA and categorically eligible

households. The State agency must

notify households applying for public

assistance (PA) of their right to apply for

food stamp benefits at the same time

and must allow them to apply for food

stamp benefits at the same time they

apply for PA benefits. The State agency

must also notify such households that

time limits or other requirements that

apply to the receipt of PA benefits do

not apply to the receipt of food stamp

benefits, and that households which

cease receiving PA benefits because they

have reached a time limit, have begun

working, or for other reasons, may still

qualify for food stamp benefits. If the

State agency attempts to discourage

households from applying for cash

assistance, it shall make clear that the

disadvantages and requirements of

applying for cash assistance do not

apply to food stamps. In addition, it

shall encourage applicants to continue

with their application for food stamps.

The State agency shall inform

households that receiving food stamps

will have no bearing on any other

program’s time limits that may apply to

the household. The State agency may

process the applications of such

households in accordance with the

requirements of paragraph (j)(1) of this

section, and the State agency must base

their eligibility solely on food stamp

eligibility criteria unless the household

is categorically eligible, as provided in

paragraph (j)(2) of this section. If a State

has a single Statewide GA application

form, households in which all members

70198 Federal Register / Vol. 65, No. 225 / Tuesday, November 21, 2000 / Rules and Regulations

are included in a State or local GA grant

may have their application for food

stamps included in the GA application

form. State agencies may use the joint

application processing procedures

described in paragraph (j)(1) of this

section for GA recipients in accordance

with paragraph (j)(3) of this section. The

State agency must base eligibility of

jointly processed GA households solely

on food stamp eligibility criteria unless

the household is categorically eligible as

provided in paragraph (j)(4) of this

section. The State agency must base the

benefit levels of all households solely

on food stamp criteria. The State agency

must certify jointly processed and

categorically eligible households in

accordance with food stamp procedural,

timeliness, and notice requirements,

including the 7-day expedited service

provisions of paragraph (i) of this

section and normal 30-day application

processing standards of paragraph (g) of

this section. Individuals authorized to

receive PA, SSI, or GA benefits but who

have not yet received payment are

considered recipients of benefits from

those programs. In addition, individuals

are considered recipients of PA, SSI, or

GA if their PA, SSI, or GA benefits are

suspended or recouped. Individuals

entitled to PA, SSI, or GA benefits but

who are not paid such benefits because

the grant is less than a minimum benefit

are also considered recipients. The State

agency may not consider as recipients

those individuals not receiving GA, PA,

or SSI benefits who are entitled to

Medicaid only.

(1) * * * (i) If a joint PA/food stamp

application is used, the application may

contain all the information necessary to

determine a household’s food stamp

eligibility and level of benefits.

Information relevant only to food stamp

eligibility must be contained in the PA

form or must be an attachment to it. The

joint PA/food stamp application must

clearly indicate that the household is

providing information for both

programs, is subject to the criminal

penalties of both programs for making

false statements, and waives the notice

of adverse action as specified in

paragraph (j)(1)(iv) of this section.

(ii) The State agency may conduct a

single interview at initial application for

both public assistance and food stamp

purposes. A household’s eligibility for

food stamp out-of-office interview

provisions in paragraph (e)(2) of this

section does not relieve the household

of any responsibility for a face-to-face

interview to be certified for PA.

(iii) For households applying for both

PA and food stamps, the State agency

must follow the verification procedures

described in paragraphs (f)(1) through

(f)(8) of this section for those factors of

eligibility which are needed solely for

purposes of determining the

household’s eligibility for food stamps.

For those factors of eligibility which are

needed to determine both PA eligibility

and food stamp eligibility, the State

agency may use the PA verification

rules. However, if the household has

provided the State agency sufficient

verification to meet the verification

requirements of paragraphs (f)(1)

through (f)(8) of this section, but has

failed to provide sufficient verification

to meet the PA verification rules, the

State agency may not use such failure as

a basis for denying the household’s food

stamp application or failing to comply

with processing requirements of

paragraph (g) of this section. Under

these circumstances, the State agency

must process the household’s food

stamp application and determine

eligibility based on its compliance with

the requirements of paragraphs (f)(1)

through (f)(8) of this section.

* * * * *

(v) The State agency may not require

households which file a joint PA/food

stamp application and whose PA

applications are denied to file new food

stamp applications. Rather, the State

agency must determine or continue their

food stamp eligibility on the basis of the

original applications filed jointly for PA

and food stamp purposes. In addition,

the State agency must use any other

documented information obtained

subsequent to the application which

may have been used in the PA

determination and which is relevant to

food stamp eligibility or level of

benefits.

(2) * * *

(i) The following households are

categorically eligible for food stamps

unless the entire household is

institutionalized as defined in § 273.1(e)

or disqualified for any reason from

receiving food stamps.

(A) Any household (except those

listed in paragraph (j)(2)(vii) of this

section) in which all members receive or

are authorized to receive cash through a

PA program funded in full or in part

with Federal money under Title IV–A or

with State money counted for

maintenance of effort (MOE) purposes

under Title IV–A;

(B) Any household (except those

listed in paragraph (j)(2)(vii) of this

section) in which all members receive or

are authorized to receive non-cash or inkind benefits or services from a program

that is more than 50 percent funded

with State money counted for MOE

purposes under Title IV–A or Federal

money under Title IV–A and that is

designed to forward purposes one and

two of the TANF block grant, as set forth

in Section 401 of P.L. 104–193.

(C) Any household (except those

listed in paragraph (j)(2)(vii) of this

section) in which all members receive or

are authorized to receive non-cash or inkind benefits or services from a program

that is more than 50 percent funded

with State money counted for MOE

purposes under Title IV–A or Federal

money under Title IV–A and that is

designed to further purposes three and

four of the TANF block grant, as set

forth in Section 401 of P.L. 104–193,

and requires participants to have a gross

monthly income at or below 200 percent

of the Federal poverty level.

(D) Any household in which all

members receive or are authorized to

receive SSI benefits, except that

residents of public institutions who

apply jointly for SSI and food stamp

benefits prior to their release from the

institution in accordance with

§ 273.1(e)(2), are not categorically

eligible upon a finding by SSA of

potential SSI eligibility prior to such

release. The State agency must consider

the individuals categorically eligible at

such time as SSA makes a final SSI

eligibility and the institution has

released the individual.

(E) Any household in which all

members receive or are authorized to

receive PA and/or SSI benefits in

accordance with paragraphs (j)(2)(i)(A)

through (j)(2)(i)(D) of this section.

(ii) The State agency, at its option,

may extend categorical eligibility to the

following households only if doing so

will further the purposes of the Food

Stamp Act:

(A) Any household (except those

listed in paragraph (j)(2)(vii) of this

section) in which all members receive or

are authorized to receive non-cash or inkind services from a program that is less

than 50 percent funded with State

money counted for MOE purposes

under Title IV–A or Federal money

under Title IV–A and that is designed to

further purposes one and two of the

TANF block grant, as set forth in

Section 401 of P.L. 104–193. States must

inform FNS of the TANF services under

this paragraph that they are determining

to confer categorical eligibility.

(B) Subject to FNS approval, any

household (except those listed in

paragraph (j)(2)(vii) of this section) in

which all members receive or are

authorized to receive non-cash or inkind services from a program that is less

than 50 percent funded with State

money counted for MOE purposes

under Title IV–A or Federal money

under Title IV–A and that is designed to

further purposes three and four of the

Federal Register / Vol. 65, No. 225 / Tuesday, November 21, 2000 / Rules and Regulations 70199

TANF block grant, as set forth in

Section 401 of P.L 104–193, and

requires participants to have a gross

monthly income at or below 200 percent

of the Federal poverty level.

(iii) Any household in which one

member receives or is authorized to

receive benefits according to paragraphs

(j)(2)(i)(B), (j)(2)(i)(C), (j)(2)(ii)(A) and

(j)(2)(ii)(B), of this section and the State

agency determines that the whole

household benefits.

(iv) For purposes of paragraphs

(j)(2)(i), (j)(2)(ii),and (j)(2)(iii) of this

section, ‘‘authorized to receive’’ means

that an individual has been determined

eligible for benefits and has been

notified of this determination, even if

the benefits have been authorized but

not received, authorized but not

accessed, suspended or recouped, or not

paid because they are less than a

minimum amount.

(v) The eligibility factors which are

deemed for food stamp eligibility

without the verification required in

paragraph (f) of this section because of

PA/SSI status are the resource, gross

and net income limits; social security

number information, sponsored alien

information, and residency. However,

the State agency must collect and verify

factors relating to benefit determination

that are not collected and verified by the

other program if these factors are

required to be verified under paragraph

(f) of this section. If any of the following

factors are questionable, the State

agency must verify, in accordance with

paragraph (f) of this section, that the

household which is considered

categorically eligible:

(A) Contains only members that are

PA or SSI recipients as defined in the

introductory paragraph (j) of this

section;

(B) Meets the household definition in

§ 273.1(a);

(C) Includes all persons who purchase

and prepare food together in one food

stamp household regardless of whether

or not they are separate units for PA or

SSI purposes; and

(D) Includes no persons who have

been disqualified as provided for in

paragraph (j)(2)(vi) of this section.

* * * * *

(n) Authorized representatives.

Representatives may be authorized to

act on behalf of a household in the

application process, in obtaining food

stamp benefits, and in using food stamp

benefits.

(1) Application processing and

reporting. The State agency shall inform

applicants and prospective applicants

that indicate that they may have

difficulty completing the application

process, that a nonhousehold member

may be designated as the authorized

representative for application

processing purposes. The household

member or the authorized representative

may complete work registration forms

for those household members required

to register for work. The authorized

representative designated for

application processing purposes may

also carry out household responsibilities

during the certification period, such as

reporting changes in the household’s

income or other household

circumstances in accordance with

§ 273.12(a) and § 273.21. Except for

those situations in which a drug and

alcohol treatment center or other group

living arrangement acts as the

authorized representative, the State

agency must inform the household that

the household will be held liable for any

overissuance that results from erroneous

information given by the authorized

representative.

(i) A nonhousehold member may be

designated as an authorized

representative for the application

process provided that the person is an

adult who is sufficiently aware of

relevant household circumstances and

the authorized representative

designation has been made in writing by

the head of the household, the spouse,

or another responsible member of the

household. Paragraph (n)(4) of this

section contains further restrictions on

who can be designated an authorized

representative.

(ii) Residents of drug or alcohol

treatment centers must apply and be

certified through the use of authorized

representatives in accordance with

§ 273.11(e). Residents of group living

arrangements have the option to apply

and be certified through the use of

authorized representatives in

accordance with § 273.11(f).

(2) Obtaining food stamp benefits. An

authorized representative may be

designated to obtain benefits. Even if the

household is able to obtain benefits, it

should be encouraged to name an

authorized representative for obtaining

benefits in case of illness or other

circumstances which might result in an

inability to obtain benefits. The name of

the authorized representative must be

recorded in the household’s case record

and on the food stamp identification

(ID) card, as provided in § 274.10(a)(1)

of this chapter. The authorized

representative for obtaining benefits

may or may not be the same individual

designated as an authorized

representative for the application

process or for meeting reporting

requirements during the certification

period. The State agency must develop

a system by which a household may

designate an emergency authorized

representative in accordance with

§ 274.10(c) of this chapter to obtain the

household’s benefits for a particular

month.

(3) Using benefits. A household may

allow any household member or

nonmember to use its ID card and

benefits to purchase food or meals, if

authorized, for the household. Drug or

alcohol treatment centers and group

living arrangements which act as

authorized representatives for residents

of the facilities must use food stamp

benefits for food prepared and served to

those residents participating in the Food

Stamp Program (except when residents

leave the facility as provided in

§ 273.11(e) and (f)).

(4) Restrictions on designations of

authorized representatives. (i) The State

agency must restrict the use of

authorized representatives for purposes

of application processing and obtaining

food stamp benefits as follows:

(A) State agency employees who are

involved in the certification or issuance

processes and retailers who are

authorized to accept food stamp benefits

may not act as authorized

representatives without the specific

written approval of a designated State

agency official and only if that official

determines that no one else is available

to serve as an authorized representative.

(B) An individual disqualified for an

intentional Program violation cannot act

as an authorized representative during

the disqualification period, unless the

State agency has determined that no one

else is available to serve as an

authorized representative. The State

agency must separately determine

whether the individual is needed to

apply on behalf of the household, or to

obtain benefits on behalf of the

household.

(C) If a State agency has determined

that an authorized representative has

knowingly provided false information

about household circumstances or has

made improper use of coupons, it may

disqualify that person from being an

authorized representative for up to one

year. The State agency must send

written notification to the affected

household(s) and the authorized

representative 30 days prior to the date

of disqualification. The notification

must specify the reason for the proposed

action and the household’s right to

request a fair hearing. This provision is

not applicable in the case of drug and

alcoholic treatment centers and those

group homes which act as authorized

representatives for their residents.

However, drug and alcohol treatment

centers and the heads of group living

70200 Federal Register / Vol. 65, No. 225 / Tuesday, November 21, 2000 / Rules and Regulations

1For guidance, see the DOJ Interim Guidance

published November 17, 1997 (62 FR 61344).

2For guidance, see Exhibit B to Attachment 5 of

the DOJ Interim Guidance published on November

17, 1997 (62 FR 61344).

arrangements that act as authorized

representatives for their residents, and

which intentionally misrepresent

households circumstances, may be

prosecuted under applicable Federal

and State statutes for their acts.

(D) Homeless meal providers, as

defined in § 271.2 of this chapter, may

not act as authorized representatives for

homeless food stamp recipients.

(ii) In order to prevent abuse of the

program, the State agency may set a

limit on the number of households an

authorized representative may

represent.

(iii) In the event employers, such as

those that employ migrant or seasonal

farmworkers, are designated as

authorized representatives or that a

single authorized representative has

access to a large number of

authorization documents or coupons,

the State agency should exercise caution

to assure that each household has freely

requested the assistance of the

authorized representative, the

household’s circumstances are correctly

represented, the household is receiving

the correct amount of benefits and that

the authorized representative is

properly using the benefits.

10. § 273.4 is revised to read as

follows:

§ 273.4 Citizenship and alien status.

(a) Household members meeting

citizenship or alien status requirements.

No person is eligible to participate in

the Program unless that person is:

(1) A U.S. citizen 1;

(2) A U.S. non-citizen national 1

(3) An individual who is:

(i) An American Indian born in

Canada who possesses at least 50 per

centum of blood of the American Indian

race to whom the provisions of section

289 of the Immigration and Nationality

Act (INA) (8 U.S.C. 1359) apply; or

(ii) A member of an Indian tribe as

defined in section 4(e) of the Indian

Self-Determination and Education

Assistance Act (25 U.S.C. 450b(e))

which is recognized as eligible for the

special programs and services provided

by the U.S. to Indians because of their

status as Indians;

(4) An individual who is:

(i) Lawfully residing in the U.S. and

was a member of a Hmong or Highland

Laotian tribe at the time that the tribe

rendered assistance to U.S. personnel by

taking part in a military or rescue

operation during the Vietnam era

beginning August 5, 1964, and ending

May 7, 1975;

(ii) The spouse, or surviving spouse of

such Hmong or Highland Laotian who is

deceased, or

(iii) An unmarried dependent child of

such Hmong or Highland Laotian who is

under the age of 18 or if a full-time

student under the age of 22; an

unmarried child under the age of 18 or

if a full time student under the age of

22 of such a deceased Hmong or

Highland Laotian provided the child

was dependent upon him or her at the

time of his or her death; or an

unmarried disabled child age 18 or

older if the child was disabled and

dependent on the person prior to the

child’s 18th birthday. For purposes of

this paragraph (a)(4)(iii), child means

the legally adopted or biological child of

the person described in paragraph

(a)(4)(i) of this section, or

(5) An individual who is both a

qualified alien as defined in paragraph

(a)(5)(i) of this section and an eligible

alien as defined in paragraph (a)(5)(ii) of

this section.

(i) A qualified alien is:

(A) An alien who is lawfully admitted

for permanent residence under the INA;

(B) An alien who is granted asylum

under section 208 of the INA;

(C) A refugee who is admitted to the

United States under section 207 of the

INA;

(D) An alien who is paroled into the

U.S. under section 212(d)(5) of the INA

for a period of at least 1 year;

(E) An alien whose deportation is

being withheld under section 243(h) of

the INA as in effect prior to April 1,

1997, or whose removal is withheld

under section 241(b)(3) of the INA;

(F) an alien who is granted

conditional entry pursuant to section

203(a)(7) of the INA as in effect prior to

April 1, 1980;

(G) an alien who has been battered or

subjected to extreme cruelty in the U.S.

by a spouse or a parent or by a member

of the spouse or parent’s family residing

in the same household as the alien at the

time of the abuse, an alien whose child

has been battered or subjected to battery

or cruelty, or an alien child whose

parent has been battered 2; or

(H) an alien who is a Cuban or Haitian

entrant, as defined in section 501(e) of

the Refugee Education Assistance Act of

1980.

(ii) A qualified alien, as defined in

paragraph (a)(5)(i) of this section, must

also be at least one of the following to

be eligible to receive food stamps:

(A) An alien lawfully admitted for

permanent residence under the INA

who has 40 qualifying quarters as

determined under title II of the Social

Security Act, including qualifying

quarters of work not covered by Title II

of the Social Security Act, based on the

sum of: quarters the alien worked;

quarters credited from the work of a

parent of the alien before the alien

became 18 (including quarters worked

before the alien was born or adopted);

and quarters credited from the work of

a spouse of the alien during their

marriage if they are still married or the

spouse is deceased.

(1) A spouse may not get credit for

quarters of a spouse when the couple

divorces prior to a determination of food

stamp eligibility. However, if the State

agency determines eligibility of an alien

based on the quarters of coverage of the

spouse, and then the couple divorces,

the alien’s eligibility continues until the

next recertification. At that time, the

State agency must determine the alien’s

eligibility without crediting the alien

with the former spouse’s quarters of

coverage.

(2) After December 31, 1996, a quarter

in which the alien actually received any

Federal means-tested public benefit, as

defined by the agency providing the

benefit, or actually received food stamps

is not creditable toward the 40-quarter

total. Likewise, a parent’s or spouse’s

quarter is not creditable if the parent or

spouse actually received any Federal

means-tested public benefit or actually

received food stamps in that quarter.

The State agency must evaluate quarters

of coverage and receipt of Federal

means-tested public benefits on a

calendar year basis. The State agency

must first determine the number of

quarters creditable in a calendar year,

then identify those quarters in which

the alien (or the parent(s) or spouse of

the alien) received Federal means-tested

public benefits and then remove those

quarters from the number of quarters of

coverage earned or credited to the alien

in that calendar year. However, if the

alien earns the 40th quarter of coverage

prior to applying for food stamps or any

other Federal means-tested public

benefit in that same quarter, the State

agency must allow that quarter toward

the 40 qualifying quarters total.

(B) An alien admitted as a refugee

under section 207 of the INA. Eligibility

is limited to 7 years from the date of the

alien’s entry into the U.S.

(C) An alien granted asylum under

section 208 of the INA. Eligibility is

limited to 7 years from the date asylum

was granted.

(D) An alien whose deportation is

withheld under section 243(h) of the

INA as in effect prior to April 1, 1997,

or whose removal is withheld under

Federal Register / Vol. 65, No. 225 / Tuesday, November 21, 2000 / Rules and Regulations 70201

section 241(b)(3) or the INA. Eligibility

is limited to 7 years from the date

deportation or removal was withheld.

(E) An alien granted status as a Cuban

or Haitian entrant (as defined in section

501(e) of the Refugee Education

Assistance Act of 1980). Eligibility is

limited to 7 years from the date the

status as a Cuban or Haitian entrant was

granted.

(F) An Amerasian admitted pursuant

to section 584 of Public Law 100–202,

as amended by Public Law 100–461.

Eligibility is limited to 7 years from the

date admitted as an Amerasian.

(G) An alien with one of the following

military connections:

(1) A veteran who was honorably

discharged for reasons other than alien

status, who fulfills the minimum activeduty service requirements of 38 U.S.C.

5303A(d), including an individual who

died in active military, naval or air

service. The definition of veteran

includes an individual who served

before July 1, 1946, in the organized

military forces of the Government of the

Commonwealth of the Philippines while

such forces were in the service of the

Armed Forces of the U.S. or in the

Philippine Scouts, as described in 38

U.S.C. 107;

(2) An individual on active duty in

the Armed Forces of the U.S. (other than

for training); or

(3) The spouse and unmarried

dependent children of a person

described in paragraphs (a)(5)(ii)(G)(1)

or (G)(2) of this section, including the

spouse of a deceased veteran, provided

the marriage fulfilled the requirements

of 38 U.S.C. 1304, and the spouse has

not remarried. An unmarried dependent

child for purposes of this paragraph

(a)(5)(ii)(G)(3) is: a child who is under

the age of 18 or, if a full-time student,

under the age of 22; such unmarried

dependent child of a deceased veteran

provided such child was dependent

upon the veteran at the time of the

veteran’s death; or an unmarried

disabled child age 18 or older if the

child was disabled and dependent on

the veteran prior to the child’s 18th

birthday. For purposes of this paragraph

(a)(5)(ii)(G)(3), child means the legally

adopted or biological child of the person

described in paragraph (a)(5)(ii)(G)(1) or

(G)(2) of this section.

(H) An individual who on August 22,

1996, was lawfully residing in the U.S.,

and is now receiving benefits or

assistance for blindness or disability (as

specified in § 271.2 of this chapter).

(I) An individual who on August 22,

1996, was lawfully residing in the U.S.,

and was born on or before August 22,

1931; or

(J) An individual who on August 22,

1996, was lawfully residing in the U.S.

and is now under 18 years of age.

(iii) Each category of eligible alien

status stands alone for purposes of

determining eligibility. Subsequent

adjustment to a more limited status does

not override eligibility based on an

earlier less rigorous status. Likewise, if

eligibility expires under one eligible

status, the State agency must determine

if eligibility exists under another status.

(6) For purposes of determining

eligible alien status in accordance with

paragraphs (a)(4) and (a)(5)(ii)(H)

through (a)(5)(ii)(J) of this section

‘‘lawfully residing in the U.S.’’ means

that the alien is lawfully present as

defined at 8 CFR 103.12(a).

(b) Reporting illegal aliens. (1) The

State agency must inform the local INS

office immediately whenever personnel

responsible for the certification or

recertification of households determine

that any member of a household is

ineligible to receive food stamps

because the member is present in the

U.S. in violation of the INA. The State

agency may meet this requirement by

conforming with the Interagency Notice

providing guidance for compliance with

PRWORA section 404 published on

September 28, 2000 (65 FR 58301).

(2) When a household indicates

inability or unwillingness to provide

documentation of alien status for any

household member, the State agency

must classify that member as an

ineligible alien. When a person

indicates inability or unwillingness to

provide documentation of alien status,

the State agency must classify that

person as an ineligible alien. In such

cases the State agency must not

continue efforts to obtain that

documentation.

(c) Households containing sponsored

alien members—(1) Definition. A

sponsored alien is an alien for whom a

person (the sponsor) has executed an

affidavit of support (INS Form I–864 or

I–864A) on behalf of the alien pursuant

to section 213A of the INA.

(2) Deeming of sponsor’s income and

resources. For purposes of this

paragraph (c)(2), only in the event a

sponsored alien is an eligible alien in

accordance with paragraph (a) of this

section will the State agency consider

available to the household the income

and resources of the sponsor and

spouse. For purposes of determining the

eligibility and benefit level of a

household of which an eligible

sponsored alien is a member, the State

agency must deem the income and

resources of sponsor and the sponsor’s

spouse, if he or she has executed INS

Form I–864 or I–864A, as the unearned

income and resources of the sponsored

alien. The State agency must deem the

sponsor’s income and resources until

the alien gains U. S. citizenship, has

worked or can receive credit for 40

qualifying quarters of work as described

in paragraph (a)(5)(ii)(A) of this section,

or the sponsor dies.

(i) The monthly income of the sponsor

and sponsor’s spouse (if he or she has

executed INS Form I–864 or I–864A)

deemed as that of the eligible sponsored

alien must be the total monthly earned

and unearned income, as defined in

§ 273.9(b) with the exclusions provided

in § 273.9(c) of the sponsor and

sponsor’s spouse at the time the

household containing the sponsored

alien member applies or is recertified

for participation, reduced by:

(A) A 20 percent earned income

amount for that portion of the income

determined as earned income of the

sponsor and the sponsor’s spouse; and

(B) An amount equal to the Program’s

monthly gross income eligibility limit

for a household equal in size to the

sponsor, the sponsor’s spouse, and any

other person who is claimed or could be

claimed by the sponsor or the sponsor’s

spouse as a dependent for Federal

income tax purposes.

(ii) If the alien has already reported

gross income information on his or her

sponsor in compliance with the

sponsored alien rules of another State

agency administered assistance

program, the State agency may use that

income amount for Food Stamp Program

deeming purposes. However, the State

agency must limit allowable reductions

to the total gross income of the sponsor

and the sponsor’s spouse prior to

attributing an income amount to the

alien to amounts specified in paragraphs

(c)(2)(i)(A) and (c)(2)(i)(B) of this

section.

(iii) The State agency must consider

as income to the alien any money the

sponsor or the sponsor’s spouse pays to

the eligible sponsored alien, but only to

the extent that the money exceeds the

amount deemed to the eligible

sponsored alien in accordance with

paragraph (c)(2)(i) of this section.

(iv) The State agency must deem as

available to the eligible sponsored alien

the total amount of the resources of the

sponsor and sponsor’s spouse as

determined in accordance with § 273.8,

reduced by $1,500.

(v) If a sponsored alien can

demonstrate to the State agency’s

satisfaction that his or her sponsor is the

sponsor of other aliens, the State agency

must divide the income and resources

deemed under the provisions of

paragraphs (c)(2)(i) and (c)(2)(iii) of this

70202 Federal Register / Vol. 65, No. 225 / Tuesday, November 21, 2000 / Rules and Regulations

3For guidance, see Exhibit B to Attachment 5 of

the DOJ Interim Guidance published November 17,

1997 (62 FR 61344).

section by the number of such

sponsored aliens.

(3) Exempt aliens. The provisions of

paragraph (c)(2) of this section do not

apply to:

(i) An alien who is a member of his

or her sponsor’s food stamp household;

(ii) An alien who is sponsored by an

organization or group as opposed to an

individual;

(iii) An alien who is not required to

have a sponsor under the Immigration

and Nationality Act, such as a refugee,

a parolee, an asylee, or a Cuban or

Haitian entrant;

(iv) An indigent alien that the State

agency has determined is unable to

obtain food and shelter taking into

account the alien’s own income plus

any cash, food, housing, or other

assistance provided by other

individuals, including the sponsor(s).

For purposes of this paragraph (c)(3)(iv),

the phrase ‘‘is unable to obtain food and

shelter’’ means that the sum of the

eligible sponsored alien’s household’s

own income, the cash contributions of

the sponsor and others, and the value of

any in-kind assistance the sponsor and

others provide, does not exceed 130

percent of the poverty income guideline

for the household’s size. The State

agency must determine the amount of

income and other assistance provided in

the month of application. If the alien is

indigent, the only amount that the State

agency must deem to such an alien will

be the amount actually provided for a

period beginning on the date of such

determination and ending 12 months

after such date. Each indigence

determination is renewable for

additional 12-month periods. The State

agency must notify the Attorney General

of each such determination, including

the names of the sponsor and the

sponsored alien involved;

(v) A battered alien spouse, alien

parent of a battered child, or child of a

battered alien, for 12 months after the

State agency determines that the

battering is substantially connected to

the need for benefits, and the battered

individual does not live with the

batterer.3 After 12 months, the State

agency must not deem the batterer’s

income and resources if the battery is

recognized by a court or the INS and has

a substantial connection to the need for

benefits, and the alien does not live

with the batterer.

(4) Eligible sponsored alien’s

responsibilities. During the period the

alien is subject to deeming, the eligible

sponsored alien is responsible for

obtaining the cooperation of the sponsor

and for providing the State agency at the

time of application and at the time of

recertification with the information and

documentation necessary to calculate

deemed income and resources in

accordance with paragraphs (c)(2)(i)

through (c)(2)(v) of this section. The

eligible sponsored alien is responsible

for providing the names and other

identifying factors of other aliens for

whom the alien’s sponsor has signed an

affidavit of support. The State agency

must attribute the entire amount of

income and resources to the applicant

eligible sponsored alien until he or she

provides the information specified

under this paragraph (c)(4). The eligible

sponsored alien is also responsible for

reporting the required information about

the sponsor and sponsor’s spouse

should the alien obtain a different

sponsor during the certification period

and for reporting a change in income

should the sponsor or the sponsor’s

spouse change or lose employment or

die during the certification period. The

State agency must handle such changes

in accordance with the timeliness

standards described in § 273.12 or

§ 273.21, as appropriate.

(5) Awaiting verification. Until the

alien provides information or

verification necessary to carry out the

provisions of paragraph (c)(2) of this

section, the sponsored alien is

ineligible. The State agency must

determine the eligibility of any

remaining household members. The

State agency must consider available to

the remaining household members the

income and resources of the ineligible

alien (excluding the deemed income

and resources of the alien’s sponsor and

sponsor’s spouse) in determining the

eligibility and benefit level of the

remaining household members in

accordance with § 273.11(c). If the

sponsored alien refuses to cooperate in

providing information or verification,

other adult members of the alien’s

household are responsible for providing

the information or verification required

in accordance with the provisions of

§ 273.2(d). If the State agency

subsequently receives information or

verification, it must act on the

information as a reported change in

household membership in accordance

with the timeliness standards in

§ 273.12 or § 273.21, as appropriate. If

the same sponsor is responsible for the

entire household, the entire household

is ineligible until such time as the

household provides the needed sponsor

information or verification. The State

agency must assist aliens in obtaining

verification in accordance with the

provisions of § 273.2(f)(5).

(6) Demands for restitution. The State

agency must exclude any sponsor who

is participating in the Program from any

demand made under 8 CFR 213a.4(a) for

the value of food stamp benefits issued

to an eligible sponsored alien he or she

sponsors.

11. In § 273.8:

a. A new paragraph (e)(3)(i)(G) is

added.

b. Paragraphs (c)(3), (e)(17), (e)(18),

and (f)(2) are revised.

The addition and revisions read as

follows:

§ 273.8 Resource eligibility standards.

* * * * *

(c) * * *

(3) For a household containing a

sponsored alien, the State agency must

deem the resources of the sponsor and

the sponsor’s spouse in accordance with

§ 273.4(c)(2).

* * * * *

(e) * * *

(3) * * *

(i) * * *

(G) The value of the vehicle is

inaccessible, in accordance with

paragraph (e)(18) of this section,

because its sale would produce an

estimated return of not more than

$1,500.

* * * * *

(17) The resources of a household

member who receives SSI or PA

benefits. A household member is

considered a recipient of these benefits

if the benefits have been authorized but

not received, if the benefits are

suspended or recouped, or if the

benefits are not paid because they are

less than a minimum amount. For

purposes of this paragraph (e)(17), if an

individual receives non-cash or in-kind

services from a program specified in

§§ 273.2(j)(2)(i)(B), 273.2(j)(2)(i)(C),

273.2(j)(2)(ii)(A), or 273.2(j)(2)(ii)(B), the

State agency must determine whether

the individual or the household benefits

from the assistance provided, in

accordance with § 273.2(j)(2)(iii).

Individuals entitled to Medicaid

benefits only are not considered

recipients of SSI or PA.

(18) The State agency must develop

clear and uniform standards for

identifying kinds of resources that, as a

practical matter, the household is

unable to sell for any significant return

because the household’s interest is

relatively slight or the costs of selling

the household’s interest would be

relatively great. The State agency must

so identify a resource if its sale or other

disposition is unlikely to produce any

Federal Register / Vol. 65, No. 225 / Tuesday, November 21, 2000 / Rules and Regulations 70203

significant amount of funds for the

support of the household or the cost of

selling the resource would be relatively

great. This provision does not apply to

financial instruments such as stocks,

bonds, and negotiable financial

instruments. The determination of

whether any part of the value of a

vehicle is included as a resource must

be made in accordance with the

provisions of paragraphs (e)(3) and (f) of

this section. The State agency may

require verification of the value of a

resource to be excluded if the

information provided by the household

is questionable. The State agencies must

use the following definitions in

developing these standards:

(i) ‘‘Significant return’’ means any

return, after estimating costs of sale or

disposition, and taking into account the

ownership interest of the household,

that the State agency determines are

more than $1,500; and

(ii) ‘‘Any significant amount of funds’’

means funds amounting to more than

$1,500.

(f) * * *

(2) Only the following vehicles are

exempt from the equity value test

outlined in paragraph (f)(1)(iii) of this

section:

(i) Vehicles excluded under paragraph

(e)(3)(i) of this section;

(ii) One licensed vehicle per adult

household member (or an ineligible

alien or disqualified household member

whose resources are being considered

available to household), regardless of

the use of the vehicle; and

(iii) Any other vehicle a household

member under age 18 (or an ineligible

alien or disqualified household member

under age 18 whose resources are being

considered available to household)

drives to commute to and from

employment, or to and from training or

education which is preparatory to

employment, or to seek employment.

This equity exclusion applies during

temporary periods of unemployment to

a vehicle which a household member

under age 18 customarily drives to

commute to and from employment.

* * * * *

12. In § 273.9:

a. Paragraphs (b)(1)(v) and (b)(4) are

revised.

b. Paragraph (c)(1)(i)(E) is removed

and paragraphs (c)(1)(i)(F) and

(c)(1)(i)(G) are redesignated as

paragraphs (c)(1)(i)(E) and (c)(1)(i)(F),

respectively.

c. Paragraphs (c)(1)(ii)(A) and

(c)(1)(ii)(E) are removed and paragraphs

(c)(1)(ii)(B), (c)(1)(ii)(C), (c)(1)(ii)(D),

(c)(1)(ii)(F) and (c)(1)(ii)(G) are

redesignated as paragraphs (c)(1)(ii)(A),

(c)(1)(ii)(B), (c)(1)(ii)(C), (c)(1)(ii)(D) and

(c)(1)(ii)(E), respectively.

d. The first sentence of paragraph

(c)(7) is amended by removing the

number ‘‘22’’ and adding the number

‘‘18’’ in its place.

e. A new sentence is added before the

last sentence in paragraph (c)(8).

f. Paragraph (c)(11) is revised.

g. Paragraphs (d)(6) and (d)(8) are

removed.

h. Paragraph (d)(5) is redesignated as

paragraph (d)(6) and paragraph (d)(7) is

redesignated as paragraph (d)(5).

i. Newly redesignated paragraph (d)(6)

is revised in its entirety.

The additions and revisions read as

follows:

§ 273.9 Income and deductions.

* * * * *

(b) * * *

(1) * * *

(v) Earnings to individuals who are

participating in on-the-job training

programs under section 204(b)(1)(C) or

section 264(c)(1)(A) of the Workforce

Investment Act. This provision does not

apply to household members under 19

years of age who are under the parental

control of another adult member,

regardless of school attendance and/or

enrollment as discussed in paragraph

(c)(7) of this section. For the purpose of

this provision, earnings include monies

paid under the Workforce Investment

Act and monies paid by the employer.

* * * * *

(4) For a household containing a

sponsored alien, the income of the

sponsor and the sponsor’s spouse must

be deemed in accordance with

§ 273.4(c)(2).

* * * * *

(c) * * *

(8) * * * TANF payments made to

divert a family from becoming

dependent on welfare may be excluded

as a nonrecurring lump-sum payment if

the payment is not defined as assistance

because of the exception for nonrecurrent, short-term benefits in 45 CFR

261.31(b)(1).* * *

* * * * *

(11) Energy assistance as follows:

(i) Any payments or allowances made

for the purpose of providing energy

assistance under any Federal law other

than part A of Title IV of the Social

Security Act (42 U.S.C. 601 et seq.),

including utility reimbursements made

by the Department of Housing and

Urban Development and the Rural

Housing Service, or

(ii) A one-time payment or allowance

applied for on an as-needed basis and

made under a Federal or State law for

the costs of weatherization or

emergency repair or replacement of an

unsafe or inoperative furnace or other

heating or cooling device. A downpayment followed by a final payment

upon completion of the work will be

considered a one-time payment for

purposes of this provision.

* * * * *

(d) * * *

(6) Standard utility allowance.

(i) Homeless shelter deduction. A

State agency may develop a standard

homeless shelter deduction up to a

maximum of $143 a month for shelter

expenses specified in paragraphs

(d)(6)(ii)(A), (d)(6)(ii)(B) and (d)(6)(ii)(C)

of this section that may reasonably be

expected to be incurred by households

in which all members are homeless

individuals but are not receiving free

shelter throughout the month. The

deduction must be subtracted from net

income in determining eligibility and

allotments for the households. The State

agency may make a household with

extremely low shelter costs ineligible for

the deduction. A household receiving

the homeless shelter deduction cannot

have its shelter expenses considered

under paragraphs (d)(6)(ii) or (d)(6)(iii)

of this section. However, a homeless

household may choose to claim actual

costs under paragraph (d)(6)(ii) of this

section instead of the homeless shelter

deduction if actual costs are higher and

verified.

(ii) Excess shelter deduction. Monthly

shelter expenses in excess of 50 percent

of the household’s income after all other

deductions in paragraphs (d)(1) through

(d)(5) of this section have been allowed.

If the household does not contain an

elderly or disabled member, as defined

in § 271.2 of this chapter, the shelter

deduction cannot exceed the maximum

shelter deduction limit established for

the area. FNS will notify State agencies

of the amount of the limit. Only the

following expenses are allowable shelter

expenses:

(A) Continuing charges for the shelter

occupied by the household, including

rent, mortgage, condo and association

fees, or other continuing charges leading

to the ownership of the shelter such as

loan repayments for the purchase of a

mobile home, including interest on such

payments.

(B) Property taxes, State and local

assessments, and insurance on the

structure itself, but not separate costs for

insuring furniture or personal

belongings.

(C) The cost of fuel for heating;

cooling (i.e., the operation of air

conditioning systems or room air

conditioners); electricity or fuel used for

purposes other than heating or cooling;

70204 Federal Register / Vol. 65, No. 225 / Tuesday, November 21, 2000 / Rules and Regulations

water; sewerage; well installation and

maintenance; septic tank system

installation and maintenance; garbage

and trash collection; all service fees

required to provide service for one

telephone, including, but not limited to,

basic service fees, wire maintenance

fees, subscriber line charges, relay

center surcharges, 911 fees, and taxes;

and fees charged by the utility provider

for initial installation of the utility. Onetime deposits cannot be included.

(D) The shelter costs for the home if

temporarily not occupied by the

household because of employment or

training away from home, illness, or

abandonment caused by a natural

disaster or casualty loss. For costs of a

home vacated by the household to be

included in the household’s shelter

costs, the household must intend to

return to the home; the current

occupants of the home, if any, must not

be claiming the shelter costs for food

stamp purposes; and the home must not

be leased or rented during the absence

of the household.

(E) Charges for the repair of the home

which was substantially damaged or

destroyed due to a natural disaster such

as a fire or flood. Shelter costs shall not

include charges for repair of the home

that have been or will be reimbursed by

private or public relief agencies,

insurance companies, or from any other

source.

(iii) Standard utility allowances.

(A) With FNS approval, a State agency

may develop the following standard

utility allowances (standards) to be used

in place of actual costs in determining

a household’s excess shelter deduction:

an individual standard for each type of

utility expense; a standard utility

allowance for all utilities that includes

heating or cooling costs (HCSUA); and,

a limited utility allowance (LUA) that

includes electricity and fuel for

purposes other than heating or cooling,

water, sewerage, well and septic tank

installation and maintenance,

telephone, and garbage or trash

collection. The LUA must include

expenses for at least two utilities.

However, at its option, the State agency

may include the excess heating and

cooling costs of public housing

residents in the LUA if it wishes to offer

the lower standard to such households.

The State agency may use different

types of standards but cannot allow

households the use of two standards

that include the same expense. In States

in which the cooling expense is

minimal, the State agency may include

the cooling expense in the electricity

component. The State agency may vary

the allowance by factors such as

household size, geographical area, or

season. Only utility costs identified in

paragraph (d)(6)(ii)(C) of this section

must be used in developing standards.

(B) The State agency must review the

standards annually and make

adjustments to reflect changes in costs,

rounded to the nearest whole dollar.

State agencies must provide the

amounts of standards to FNS when they

are changed and submit methodologies

used in developing and updating

standards to FNS for approval when the

methodologies are developed or

changed.

(C) A standard with a heating or

cooling component must be made

available to households that incur

heating or cooling expenses separately

from their rent or mortgage and to

households that receive direct or

indirect assistance under the Low

Income Home Energy Assistance Act of

1981 (LIHEAA). A heating or cooling

standard is available to households in

private rental housing who are billed by

their landlords on the basis of

individual usage or who are charged a

flat rate separately from their rent.

However, households in public housing

units which have central utility meters

and which charge households only for

excess heating or cooling costs are not

entitled to a standard that includes

heating or cooling costs based only on

the charge for excess usage. Households

that receive direct or indirect energy

assistance that is excluded from income

consideration (other than that provided

under the LIHEAA) are entitled to a

standard that includes heating or

cooling only if the amount of the

expense exceeds the amount of the

assistance. Households that receive

direct or indirect energy assistance that

is counted as income and incur a

heating or cooling expense are entitled

to use a standard that includes heating

or cooling costs. A household that has

both an occupied home and an

unoccupied home is only entitled to one

standard.

(D) At initial certification,

recertification, and when a household

moves, the household may choose

between a standard or verified actual

utility costs for any allowable expense

identified in paragraph (d)(6)(ii)(C) of

this section (except the telephone

standard), unless the State agency has

opted, with FNS approval, to mandate

use of a standard. The State agency may

require use of the telephone standard for

the cost of basic telephone service even

if actual costs are higher. Households

certified for 24 months may also choose

to switch between a standard and actual

costs at the time of the mandatory

interim contact required by

§ 273.10(f)(1)(i), if the State agency has

not mandated use of the standard.

(E) A State agency may mandate use

of standard utility allowances for all

households with qualifying expenses if

the State has developed one or more

standards that include the costs of

heating and cooling and one or more

standards that do not include the costs

of heating and cooling, the standards

will not result in increased program

costs, and FNS approves the standard.

The prohibition on increasing Program

costs does not apply to necessary

increases to standards resulting from

utility cost increases. Under this option

households entitled to the standard may

not claim actual expenses, even if the

expenses are higher than the standard.

Households not entitled to the standard

may claim actual allowable expenses.

Households in public housing units that

have central utility meters and charge

households only for excess heating or

cooling costs are not entitled to the

HCSUA but, at State agency option, may

claim the LUA. Requests for approval to

use a standard for a single utility must

include the cost figures upon which the

standard is based. Requests to use an

LUA should include the approximate

number of food stamp households that

would be entitled to the nonheating and

noncooling standard, the average utility

costs prior to use of the mandatory

standard, the proposed standards, and

an explanation of how the standards

were computed.

(F) If a household lives with and

shares heating or cooling expenses with

another individual, another household,

or both, the State agency must prorate

a standard that includes heating or

cooling expenses among the household

and the other individual, household, or

both. However, the State agency may

not prorate the SUA if all the

individuals who share utility expenses

but are not in the food stamp household

are excluded from the household only

because they are ineligible.

13. In § 273.10,

a. The third and fourth sentences of

paragraph (a)(1)(ii) are revised.

b. Paragraph (a)(1)(iv) is removed.

c. The third sentence of paragraph

(a)(2) is amended by removing the

words ‘‘an application for recertification

is submitted more than one month’’ and

adding in their place, ‘‘a household,

other than a migrant or seasonal

farmworker household, submits an

application’’ and by adding a new

sentence after the third sentence.

d. Three sentences are added to the

end of paragraph (d)(3).

e. The second sentence of paragraph

(e)(1)(i)(E) is removed.

Federal Register / Vol. 65, No. 225 / Tuesday, November 21, 2000 / Rules and Regulations 70205

f. Paragraphs (e)(1)(i)(G) and

(e)(1)(i)(H) are redesignated as

paragraphs (e)(1)(i)(H) and (e)(1)(i)(I),

respectively, and a new paragraph

(e)(1)(i)(G) is added.

g. Newly redesignated paragraph

(e)(1)(i)(H) is revised.

h. Paragraph (e)(2)(i)(E) is amended by

removing the number ‘‘22’’ wherever it

appears and adding in its place the

number ‘‘18’’.

i. Paragraph (f) is revised.

The additions and revisions read as

follows:

§ 273.10 Determining household eligibility

and benefit levels.

(a) * * *

(1) * * *

(ii) * * * As used in this section, the

term ‘‘initial month’’ means the first

month for which the household is

certified for participation in the Food

Stamp Program following any period

during which the household was not

certified for participation, except for

migrant and seasonal farmworker

households. In the case of migrant and

seasonal farmworker households, the

term ‘‘initial month’’ means the first

month for which the household is

certified for participation in the Food

Stamp Program following any period of

more than 1 month during which the

household was not certified for

participation. * * *

* * * * *

(2) * * * If a household’s failure to

timely apply for recertification was due

to an error of the State agency and

therefore there was a break in

participation, the State agency shall

follow the procedures in § 273.14(e).

***

* * * * *

(d) * * *

(3) * * * For households certified for

24 months that have one-time medical

expenses, the State agency must use the

following procedure. In averaging any

one-time medical expense incurred by a

household during the first 12 months,

the State agency must give the

household the option of deducting the

expense for one month, averaging the

expense over the remainder of the first

12 months of the certification period, or

averaging the expense over the

remaining months in the certification

period. One-time expenses reported

after the 12th month of the certification

period will be deducted in one month

or averaged over the remaining months

in the certification period, at the

household’s option.

* * * * *

(e) * * *

(1) * * *

(i) * * *

(G) Subtract the homeless shelter

deduction, if any, up to the maximum

of $143.

(H) Total the allowable shelter

expenses to determine shelter costs,

unless a deduction has been subtracted

in accordance with paragraph

(e)(1)(i)(G) of this section. Subtract from

total shelter costs 50 percent of the

household’s monthly income after all

the above deductions have been

subtracted. The remaining amount, if

any, is the excess shelter cost. If there

is no excess shelter cost, the net

monthly income has been determined. If

there is excess shelter cost, compute the

shelter deduction according to

paragraph (e)(1)(i)(I) of this section.

* * * * *

(f) Certification periods. The State

agency must certify each eligible

household for a definite period of time.

State agencies must assign the longest

certification period possible based on

the predictability of the household’s

circumstances. The first month of the

certification period will be the first

month for which the household is

eligible to participate. The certification

period cannot exceed 12 months, except

as specified in paragraphs (f)(1) and

(f)(2) of this section:

(1) Households in which all adult

members are elderly or disabled. The

State agency may certify for up to 24

months households in which all adult

members are elderly or disabled. The

State agency must have at least one

contact with each household every 12

months. The State agency may use any

method it chooses for this contact.

(2) Households residing on a

reservation. The State agency must

certify for 24 months those households

residing on a reservation which it

requires to submit monthly reports in

accordance with § 273.21, unless the

State agency obtains a waiver from FNS.

In the waiver request the State agency

must include justification for a shorter

period and input from the affected

Indian tribal organization(s). When

households move off the reservation, the

State agency must either continue their

certification periods until they would

normally expire or shorten the

certification periods in accordance with

paragraph (f)(4) of this section.

(3) Certification period length. The

State agency should assign each

household the longest certification

period possible, consistent with its

circumstances.

(i) Households should be assigned

certification periods of at least 6

months, unless the household’s

circumstances are unstable or the

household contains an ABAWD.

(ii) Households with unstable

circumstances, such as households with

zero net income, and households with

an ABAWD member should be assigned

certification periods consistent with

their circumstances, but generally no

less than 3 months.

(iii) Households may be assigned 1- or

2-month certification periods when it

appears likely that the household will

become ineligible for food stamps in the

near future.

(4) Shortening certification periods.

The State agency may not end a

household’s certification period earlier

than its assigned termination date,

unless the State agency receives

information that the household has

become ineligible, or the household has

not complied with the requirements of

§ 273.12(c)(3). Loss of public assistance

or a change in employment status is not

sufficient in and of itself to meet the

criteria necessary for shortening the

certification period. The State agency

must close the household’s case or

adjust the household’s benefit amount

in accordance with § 273.12(c)(1) or

(c)(2) in response to reported changes.

The State agency may not use the Notice

of Expiration to shorten a certification

period.

(5) Lengthening certification periods.

State agencies may lengthen a

household’s current certification period

once it is established, as long as the total

months of the certification period do not

exceed 24 months for households in

which all adult members are elderly or

disabled, or 12 months for other

households. If the State agency extends

a household’s certification period, it

must advise the household of the new

certification ending date with a notice

containing the same information as the

notice of eligibility set forth in

paragraph (g)(1)(i)(A) of this section.

* * * * *

14. In § 273.11,

a. Paragraphs (a) and (b) are revised.

b. The heading and introductory text

of paragraph (c)(2) are revised,

paragraph (c)(3) is redesignated as

paragraph (c)(4) and a new paragraph

(c)(3) is added.

c. The heading of paragraph (e) and

paragraphs (e)(1) through (e)(5) are

revised.

d. Paragraphs (f)(1) and (f)(7) are

revised.

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

f. Paragraph (j) is removed and

paragraph (k) is redesignated as

paragraph (j).

The revisions and additions read as

follows:

70206 Federal Register / Vol. 65, No. 225 / Tuesday, November 21, 2000 / Rules and Regulations

§ 273.11 Action on households with

special circumstances.

(a) Self-employment income. The

State agency must calculate a

household’s self-employment income as

follows:

(1) Averaging self-employment

income. (i) Self-employment income

must be averaged over the period the

income is intended to cover, even if the

household receives income from other

sources. If the averaged amount does not

accurately reflect the household’s actual

circumstances because the household

has experienced a substantial increase

or decrease in business, the State agency

must calculate the self-employment

income on the basis of anticipated, not

prior, earnings.

(ii) If a household’s self-employment

enterprise has been in existence for less

than a year, the income from that selfemployment enterprise must be

averaged over the period of time the

business has been in operation and the

monthly amount projected for the

coming year.

(iii) Notwithstanding the provisions of

paragraphs (a)(1)(i) and (a)(1)(ii) of this

section, households subject to monthly

reporting and retrospective budgeting

who derive their self-employment

income from a farming operation and

who incur irregular expenses to produce

such income have the option to

annualize the allowable costs of

producing self-employment income

from farming when the self-employment

farm income is annualized.

(2) Determining monthly income from

self-employment. (i) For the period of

time over which self-employment

income is determined, the State agency

must add all gross self-employment

income (either actual or anticipated, as

provided in paragraph (a)(1)(i) of this

section) and capital gains (according to

paragraph (a)(3) of this section), exclude

the costs of producing the selfemployment income (as determined in

paragraph (a)(4) of this section), and

divide the remaining amount of selfemployment income by the number of

months over which the income will be

averaged. This amount is the monthly

net self-employment income. The

monthly net self-employment income

must be added to any other earned

income received by the household to

determine total monthly earned income.

(ii) If the cost of producing selfemployment income exceeds the

income derived from self-employment

as a farmer (defined for the purposes of

this paragraph (a)(2)(ii) as a selfemployed farmer who receives or

anticipates receiving annual gross

proceeds of $1,000 or more from the

farming enterprise), such losses must be

prorated in accordance with paragraph

(a)(1) of this section, and then offset

against countable income to the

household as follows:

(A) Offset farm self-employment

losses first against other selfemployment income.

(B) Offset any remaining farm selfemployment losses against the total

amount of earned and unearned income

after the earned income deduction has

been applied.

(iii) If a State agency determines that

a household is eligible based on its

monthly net income, the State may elect

to offer the household an option to

determine the benefit level by using

either the same net income which was

used to determine eligibility, or by

unevenly prorating the household’s total

net income over the period for which

the household’s self-employment

income was averaged to more closely

approximate the time when the income

is actually received. If income is

prorated, the net income assigned in any

month cannot exceed the maximum

monthly income eligibility standards for

the household’s size.

(3) Capital gains. The proceeds from

the sale of capital goods or equipment

must be calculated in the same manner

as a capital gain for Federal income tax

purposes. Even if only 50 percent of the

proceeds from the sale of capital goods

or equipment is taxed for Federal

income tax purposes, the State agency

must count the full amount of the

capital gain as income for food stamp

purposes. For households whose selfemployment income is calculated on an

anticipated (rather than averaged) basis

in accordance with paragraph (a)(1) of

this section, the State agency must

count the amount of capital gains the

household anticipates receiving during

the months over which the income is

being averaged.

(b) Allowable costs of producing selfemployment income. (1) Allowable

costs of producing self-employment

income include, but are not limited to,

the identifiable costs of labor; stock; raw

material; seed and fertilizer; payments

on the principal of the purchase price of

income-producing real estate and

capital assets, equipment, machinery,

and other durable goods; interest paid to

purchase income-producing property;

insurance premiums; and taxes paid on

income-producing property.

(2) In determining net selfemployment income, the following

items are not allowable costs of doing

business:

(i) Net losses from previous periods;

(ii) Federal, State, and local income

taxes, money set aside for retirement

purposes, and other work-related

personal expenses (such as

transportation to and from work), as

these expenses are accounted for by the

20 percent earned income deduction

specified in § 273.9(d)(2);

(iii) Depreciation; and

(iv) Any amount that exceeds the

payment a household receives from a

boarder for lodging and meals.

(3) When calculating the costs of

producing self-employment income,

State agencies may elect to use actual

costs for allowable expenses in

accordance with paragraphs (b)(1) and

(b)(2) of this section or determine selfemployment expenses as follows:

(i) For income from day care, use the

current reimbursement amounts used in

the Child and Adult Care Food Program

or a standard amount based on

estimated per-meal costs.

(ii) For income from boarders, other

than those in commercial boarding

houses or from foster care boarders, use:

(A) The maximum food stamp

allotment for a household size that is

equal to the number of boarders; or

(B) A flat amount or fixed percentage

of the gross income, provided that the

method used to determine the flat

amount or fixed percentage is objective

and justifiable and is stated in the

State’s food stamp manual.

(iii) For income from foster care

boarders, refer to § 273.1(c)(6).

(iv) Use the standard amount the State

uses for its TANF program.

(v) Use an amount approved by FNS.

State agencies may submit a proposal to

FNS for approval to use a simplified

self-employment expense calculation

method that does not result in increased

Program costs. Different methods may

be proposed for different types of selfemployment. The proposal must

include a description of the proposed

method, the number and type of

households and percent of the caseload

affected, and documentation indicating

that the proposed procedure will not

increase Program costs.

(c) * * *

(2) SSN disqualification. The

eligibility and benefit level of any

remaining household members of a

household containing individuals who

are disqualified for refusal to obtain or

provide an SSN must be determined as

follows:

* * * * *

(3) Ineligible alien. The State agency

must determine the eligibility and

benefit level of any remaining

household members of a household

containing an ineligible alien as follows:

(i) The State agency must count all or,

at the discretion of the State agency, all

but a pro rata share, of the ineligible

Federal Register / Vol. 65, No. 225 / Tuesday, November 21, 2000 / Rules and Regulations 70207

alien’s income and deductible expenses

and all of the ineligible alien’s resources

in accordance with paragraphs (c)(1) or

(c)(2) of this section. In exercising its

discretion under this paragraph (c)(3)(i),

the State agency may count all of the

alien’s income for purposes of applying

the gross income test for eligibility

purposes while only counting all but a

pro rata share to apply the net income

test and determine level of benefits.

This paragraph (c)(3)(i) does not apply

to an alien:

(A) Who is lawfully admitted for

permanent residence under the INA;

(B) Who is granted asylum under

section 208 of the INA;

(C) Who is admitted as a refugee

under section 207 of the INA;

(D) Who is paroled in accordance

with section 212(d)(5) of the INA;

(E) Whose deportation or removal has

been withheld in accordance with

section 243 of the INA;

(F) Who is aged, blind, or disabled in

accordance with section 1614(a)(1) of

the Social Security Act and is admitted

for temporary or permanent residence

under section 245A(b)(1) of the INA; or

(G) Who is a special agricultural

worker admitted for temporary

residence under section 210(a) of the

INA.

(ii) For an ineligible alien within a

category described in paragraphs

(c)(3)(i)(A) through (c)(3)(i)(G) of this

section, State agencies may either:

(A) Count all of the ineligible alien’s

resources and all but a pro rata share of

the ineligible alien’s income and

deductible expenses; or

(B) Count all of the ineligible alien’s

resources, count none of the ineligible

alien’s income and deductible expenses,

count any money payment (including

payments in currency, by check, or

electronic transfer) made by the

ineligible alien to at least one eligible

household member, not deduct as a

household expense any otherwise

deductible expenses paid by the

ineligible alien, but cap the resulting

benefit amount for the eligible members

at the allotment amount the household

would receive if the household member

within the one of the categories

described in paragraphs (c)(3)(i)(A)

through (c)(3)(i)(G) of this section were

still an eligible alien. The State agency

must elect one State-wide option for

determining the eligibility and benefit

level of households with members who

are aliens within the categories

described paragraphs (c)(3)(i)(A)

through (c)(3)(i)(G) of this section.

(iii) For an alien who is ineligible

under § 273.4(a) because the alien’s

household indicates inability or

unwillingness to provide

documentation of the alien’s

immigration status, the State agency

must count all or, at the discretion of

the State agency, all but a pro rata share

of the ineligible alien’s income and

deductible expenses and all of the

ineligible alien’s resources in

accordance with paragraphs (c)(1) or

(c)(2) of this section. In exercising its

discretion under this paragraph

(c)(3)(iii), the State agency may count all

of the alien’s income for purposes of

applying the gross income test for

eligibility purposes while only counting

all but a pro rata to apply the net

income test and determine level of

benefits.

(iv) The State agency must compute

the income of the ineligible aliens using

the income definition in § 273.9(b) and

the income exclusions in § 273.9(c).

(v) For purposes of this paragraph

(c)(3), the State agency must not include

the resources and income of the sponsor

and the sponsor’s spouse in determining

the resources and income of an

ineligible sponsored alien.

* * * * *

(e) Residents of drug and alcohol

treatment and rehabilitation programs.

(1) Narcotic addicts or alcoholics who

regularly participate in publicly

operated or private non-profit drug

addict or alcoholic (DAA) treatment and

rehabilitation programs on a resident

basis may voluntarily apply for the Food

Stamp Program. Applications must be

made through an authorized

representative who is employed by the

DAA center and designated by the

center for that purpose. The State

agency may require the household to

designate the DAA center as its

authorized representative for the

purpose of receiving and using an

allotment on behalf of the household.

Residents must be certified as oneperson households unless their children

are living with them, in which case their

children must be included in the

household with the parent.

(2)(i) Prior to certifying any residents

for food stamps, the State agency must

verify that the DAA center is authorized

by FNS as a retailer in accordance with

§ 278.1(e) of this chapter or that it comes

under part B of title XIX of the Public

Health Service Act, 42 U.S.C. 300x et

seq., (as defined in ‘‘Drug addiction or

alcoholic treatment and rehabilitation

program’’ in § 271.2 of this chapter).

(ii) Except as otherwise provided in

this paragraph (e)(2), the State agency

must certify residents of DAA centers by

using the same provisions that apply to

all other households, including, but not

limited to, the same rights to notices of

adverse action and fair hearings.

(iii) DAA centers in areas without

EBT systems may redeem the

households’ paper coupons through

authorized food stores. DAA centers in

areas with EBT systems may redeem

benefits in various ways depending on

the State’s EBT system design. The

designs may include DAA use of

individual household EBT cards at

authorized stores, authorization of DAA

centers as retailers with EBT access via

POS at the center, DAA use of a center

EBT card that is an aggregate of

individual household benefits, and

other designs. Guidelines for approval

of EBT systems are contained in

§ 274.12 of this chapter.

(iv) The treatment center must notify

the State agency of changes in the

household’s circumstances as provided

in § 273.12(a).

(3) The DAA center must provide the

State agency a list of currently

participating residents that includes a

statement signed by a responsible center

official attesting to the validity of the

list. The State agency must require

submission of the list on either a

monthly or semimonthly basis. In

addition, the State agency must conduct

periodic random on-site visits to the

center to assure the accuracy of the list

and that the State agency’s records are

consistent and up to date.

(4) The State agency may issue

allotments on a semimonthly basis to

households in DAA centers.

(5) When a household leaves the

center, the center must notify the State

agency and the center must provide the

household with its ID card. If possible,

the center must provide the household

with a change report form to report to

the State agency the household’s new

address and other circumstances after

leaving the center and must advise the

household to return the form to the

appropriate office of the State agency

within 10 days. After the household

leaves the center, the center can no

longer act as the household’s authorized

representative for certification purposes

or for obtaining or using benefits.

(i) The center must provide the

household with its EBT card if it was in

the possession of the center, any

untransacted ATP, or the household’s

full allotment if already issued and if no

coupons have been spent on behalf of

that individual household. If the

household has already left the center,

the center must return them to the State

agency. These procedures are applicable

at any time during the month.

(ii) If the coupons have already been

issued and any portion spent on behalf

of the household, the following

procedures must be followed.

70208 Federal Register / Vol. 65, No. 225 / Tuesday, November 21, 2000 / Rules and Regulations

(A) If the household leaves prior to

the 16th of the month and benefits are

not issued under an EBT system, the

center must provide the household with

one-half of its monthly coupon

allotment unless the State agency issues

semi-monthly allotments and the

second half has not been turned over to

the center. If benefits are issued under

an EBT system, the State must ensure

that the EBT design or procedures for

DAAs prohibit the DAA from obtaining

more than one-half of the household’s

allotment prior to the 16th of the month

or permit the return of one-half of the

allotment to the household’s EBT

account through a refund, transfer, or

other means if the household leaves

prior to the 16th of the month.

(B) If the household leaves on or after

the 16th day of the month, the State

agency, at its option, may require the

center to give the household a portion

of its allotment. Under an EBT system

where the center has an aggregate EBT

card, the State agency may, but is not

required to transfer a portion of the

household’s monthly allotment from a

center’s EBT account back to the

household’s EBT account. However, the

household, not the center, must be

allowed to receive any remaining

benefits authorized by the household’s

HIR or ATP or posted to the EBT

account at the time the household

leaves the center.

(iii) The center must return to the

State agency any EBT card or coupons

not provided to departing residents by

the end of each month. These coupons

include those not provided to departing

residents because they left either prior

to the 16th and the center was unable

to provide the household with the

coupons or the household left on or

after the 16th of the month and the

coupons were not returned to the

household.

* * * * *

(f) * * *

(1) Disabled or blind residents of a

group living arrangement (GLA) (as

defined in § 271.2 of this chapter) may

apply either through use of an

authorized representative employed and

designated by the group living

arrangement or on their own behalf or

through an authorized representative of

their choice. The GLA must determine

if a resident may apply on his or her

own behalf based on the resident’s

physical and mental ability to handle

his or her own affairs. Some residents of

the GLA may apply on their own behalf

while other residents of the same GLA

may apply through the GLA’s

representative. Prior to certifying any

residents, the State agency must verify

that the GLA is authorized by FNS or is

certified by the appropriate agency of

the State (as defined in § 271.2 of this

chapter) including the agency’s

determination that the center is a

nonprofit organization.

(i) If the residents apply on their own

behalf, the household size must be in

accordance with the definition in

§ 273.1. The State agency must certify

these residents using the same

provisions that apply to all other

households. If FNS disqualifies the GLA

as an authorized retail food store, the

State agency must suspend its

authorized representative status for the

same time; but residents applying on

their own behalf will still be able to

participate if otherwise eligible.

(ii) If the residents apply through the

use of the GLA’s authorized

representative, their eligibility must be

determined as a one-person household.

* * * * *

(7) If the residents are certified on

their own behalf, the food stamp

benefits may either be returned to the

GLA to be used to purchase meals

served either communally or

individually to eligible residents or

retained and used to purchase and

prepare food for their own

consumption. The GLA may purchase

and prepare food to be consumed by

eligible residents on a group basis if

residents normally obtain their meals at

a central location as part of the GLA’s

service or if meals are prepared at a

central location for delivery to the

individual residents. If personalized

meals are prepared and paid for with

food stamps, the GLA must ensure that

the resident’s food stamp benefits are

used for meals intended for that

resident.

(g) * * *

(5) State agencies must take prompt

action to ensure that the former

household’s eligibility or allotment

reflects the change in the household’s

composition. Such action must include

acting on the reported change in

accordance with § 273.12 or § 273.21, as

appropriate, by issuing a notice of

adverse action in accordance with

§ 273.13.

* * * * *

15. In § 273.12:

a. New paragraphs (a)(1)(vii) and

(c)(3) are added.

b. Paragraphs (f)(3) and (f)(4) are

revised, and paragraph (f)(5) is removed.

The additions and revisions read as

follows:

§ 273.12 Reporting changes.

(a) * * *

(1) * * *

(vii) State agencies may opt to require

households with earned income that are

assigned 6-month or longer certification

periods to report only changes in the

amount of gross monthly income that

result in their gross monthly income

exceeding 130 percent of the monthly

poverty income guideline for their

household size.

(A) Households with earned income

certified for 6 months in accordance

with paragraph (a)(1)(vii) of this section

must not be required to report changes

in accordance with paragraphs (a)(1)(ii)

through (a)(1)(vi) of this section. The

State agency must act on any change

reported by such households that would

increase their benefits in accordance

with paragraph (c)(1) of this section.

The State agency must not act on

changes that would result in a decrease

in benefits unless:

(1) The household has voluntarily

requested that its case be closed in

accordance with § 273.13(b)(12);

(2) The State agency has information

about the household’s circumstances

considered verified upon receipt; or

(3) There has been a change in the

household’s PA grant, or GA grant in

project areas where GA and food stamp

cases are jointly processed in accord

with § 273.2(j)(2).

(B) Households with earned income

certified for longer than 6 months under

this option shall be required to submit

an interim report at 6 months in

accordance with paragraphs (a)(1)(i)

through (a)(1)(vi) of this section. The

State agency must act on any change

reported by such households on the

interim report in accordance with

paragraph (c) of this section. If the

household files a complete report

resulting in reduction or termination of

benefits, the State agency shall send an

adequate notice, as defined in § 271.2 of

this chapter. The notice must be issued

so that it will be received by the

household no later than the time that its

benefits are normally received. If the

household fails to provide sufficient

information or verification regarding a

deductible expense, the State agency

will not terminate the household, but

will instead determine the household’s

benefits without regard to the

deduction.

* * * * *

(c) * * *

(3) Unclear information. During the

certification period, the State agency

may obtain information about changes

in a household’s circumstances from

which the State agency cannot readily

determine the effect of the change on

the household’s benefit amount. The

State agency might receive such unclear

Federal Register / Vol. 65, No. 225 / Tuesday, November 21, 2000 / Rules and Regulations 70209

information from a third party or from

the household itself. The State agency

must pursue clarification and

verification of household circumstances

using the following procedure:

(i) The State agency must issue a

written request for contact (RFC) which

clearly advises the household of the

verification it must provide or the

actions it must take to clarify its

circumstances, which affords the

household at least 10 days to respond

and to clarify its circumstances, either

by telephone or by correspondence, as

the State agency directs, and which

states the consequences if the household

fails to respond to the RFC.

(ii) If the household does not respond

to the RFC, or does respond but refuses

to provide sufficient information to

clarify its circumstances, the State

agency must issue a notice of adverse

action as described in § 273.13 which

terminates the case, explains the reasons

for the action, and advises the

household of the need to submit a new

application if it wishes to continue

participating in the program. When the

household responds to the RFC and

provides sufficient information, the

State agency must act on the new

circumstances in accordance with

paragraphs (c)(1) or (c)(2 ) of this

section.

(iii) If the household does not respond

to the RFC, or does respond but refuses

to provide sufficient information to

clarify its circumstances, the State

agency may elect to issue a notice of

adverse action as described in § 273.13

which suspends the household for 1

month before the termination becomes

effective, explains the reasons for the

action, and advises the household of the

need to submit a new application if it

wishes to continue participating in the

program. If a household responds

satisfactorily to the RFC during the

period of suspension, the State agency

must reinstate the household without

requiring a new application, issue the

allotment for the month of suspension,

and if necessary, adjust the household’s

participation with a new notice of

adverse action.

* * * * *

(f) * * *

(3) The State agency may not

terminate a household’s food stamp

benefits solely because it has terminated

the household’s PA benefits without a

separate determination that the

household fails to satisfy the eligibility

requirements for participation in the

Program. Whenever a change results in

the reduction or termination of a

household’s PA benefits within its food

stamp certification period, the State

agency must follow the procedures set

forth below:

(i) If a change in household

circumstances requires a reduction or

termination in the PA payment and the

State agency has sufficient information

to determine how the change affects the

household’s food stamp eligibility and

benefit level, the State agency must take

the following actions:

(A) If the change requires a reduction

or termination of food stamp benefits,

the State agency must issue a single

notice of adverse action for both the PA

and food stamp actions. If the

household requests a fair hearing within

the period provided by the notice of

adverse action, the State agency must

continue the household’s food stamp

benefits on the basis authorized

immediately prior to sending the notice.

If the fair hearing is requested for both

programs’ benefits, the State agency

must conduct the hearing according to

PA procedures and timeliness

standards. However, the household

must reapply for food stamp benefits if

the food stamp certification period

expires before the fair hearing process is

completed. If the household does not

appeal, the State agency must make the

change effective in accordance with the

procedures specified in paragraph (c) of

this section.

(B) If the household’s food stamp

benefits will increase as a result of the

reduction or termination of PA benefits,

the State agency must issue the PA

notice of adverse action, but must not

take any action to increase the

household’s food stamp benefits until

the household decides whether it will

appeal the PA adverse action. If the

household decides to appeal and its PA

benefits are continued, the household’s

food stamp benefits must continue at

the previous level. If the household does

not appeal, the State agency must make

the change effective in accordance with

the procedures specified in paragraph

(c) of this section, except that the time

limits for the State agency to act on

changes which increase a household’s

benefits must be calculated from the

date the PA notice of adverse action

period expires.

(ii) Whenever a change results in the

termination of a household’s PA

benefits within its food stamp

certification period, and the State

agency does not have sufficient

information to determine how the

change affects the household’s food

stamp eligibility and benefit level (such

as when an absent parent returns to a

household, and the household asks to

have its TANF case closed without

providing any information on the

income of the new household member),

the State agency must take the following

action:

(A) If the situation requires a

reduction or termination of PA benefits,

the State agency must issue a request for

contact (RFC) in accordance with

paragraph (c)(3)(i) of this section at the

same time it sends a PA notice of

adverse action. Before taking further

action, the State agency must wait until

the household’s PA notice of adverse

action period expires or until the

household requests a fair hearing,

whichever occurs first. If the household

requests a fair hearing and elects to have

its PA benefits continued pending the

appeal, the State agency must continue

the household’s food stamp benefits at

the same level. If the household decides

not to request a fair hearing and

continuation of its PA benefits, the State

agency must resume action on the

changes as required in paragraph (c)(3)

of this section.

(B) If the situation does not require a

PA notice of adverse action, the State

agency must issue a RFC and take action

in accordance with paragraph (c)(3) of

this section.

(iii) Depending on the household’s

response to the RFC, the State agency

must take appropriate action, if

necessary, to close the household’s case

or adjust the household’s benefit

amount.

(4) Transitional Benefits Alternative.

The State agency may elect to provide

households leaving TANF with

transitional food stamp benefits as

provided in this paragraph (f)(4). A State

agency electing the Transitional Benefits

Alternative (TBA) must provide

transitional benefits, at a minimum, to

all families with earnings who leave

TANF. The State agency may not

provide transitional benefits to a

household which is leaving TANF

when: the State agency has determined

that the household is noncompliant

with TANF requirements and the State

agency is imposing a comparable food

stamp sanction in accordance with

§ 273.11; the State agency has

determined that the household has

violated a food stamp work requirement

in accordance with § 273.7; the State

agency has determined that a household

member has committed an intentional

Program violation in accordance with

§ 273.16, or the State agency is closing

the household’s TANF case in response

to information indicating the household

failed to comply with food stamp

reporting requirements. The State

agency must use procedures at

paragraph (f)(3) of this section to

determine the continued eligibility and

benefit level of households denied

70210 Federal Register / Vol. 65, No. 225 / Tuesday, November 21, 2000 / Rules and Regulations

transitional benefits under this

paragraph (f)(4).

(i) When a household leaves TANF,

the State agency may freeze for up to 3

months the household’s benefit amount

at the level the household received

when it was receiving TANF. This is the

household’s transition period. If the

household is losing income as a result

of leaving TANF, the State agency must

adjust the food stamp benefit amount

before initiating the transition period.

To provide the transition period, the

State agency may extend the

certification period for up to 3 months,

not to exceed the maximum periods

specified in § 273.10(f)(1) and (f)(2).

(ii) The State agency must issue a

transition notice (TN) advising the

household of the following: that the

State agency must reevaluate its food

stamp case no more than 3 months from

the effective date of the TANF case

closing; that its benefit amount will

remain the same as when it was

receiving cash assistance (or that the

State agency has adjusted the food

stamp benefit amount if the household’s

income is decreasing as the result of

leaving cash assistance); that it is not

required to report and provide

verification for any changes in

household circumstances until the

deadline established in accordance with

paragraph (c)(3) of this section (or its

recertification interview, if the

certification period is expiring); and that

it may report changes if income

decreases or expenses or household size

increase.

(iii) If the household does report

changes in its circumstances during the

transition period, the State agency must

adjust the household’s benefit amount

in accordance with paragraph (c) of this

section, except that, if the reported

change would cause a reduction in the

household’s benefit amount, the State

agency must make the change effective

the month following the last month of

the transition period.

(iv) Before the end of the transition

period, the State agency must issue the

RFC specified in paragraph (c)(3) of this

section and act on any information it

has about the household’s new

circumstances in accordance with

paragraph (c)(3) of this section, or

recertify the household in accordance

with § 273.14. At the end of the

transition period, the State agency may

extend the household’s certification

period in accordance with § 273.10(f)(5).

16. In § 273.14:

a. Paragraph (b)(1) is amended by

removing the second sentence of the

introductory text of paragraph

(b)(1)(ii)and revising paragraph

(b)(1)(iii).

b. Paragraph (b)(2) is revised.

c. Paragraph (b)(3) is amended by

revising paragraph (b)(3)(i), removing

the second sentence of paragraph

(b)(3)(ii), and revising paragraph

(b)(3)(iii).

d. Paragraph (b)(4) is amended by

adding the words ‘‘and benefits cannot

be prorated’’ at the end of the paragraph.

e. Paragraph (e) is revised.

The revisions read as follows:

§ 273.14 Recertification.

* * * * *

(b) * * *

(1) * * *

(iii) To expedite the recertification

process, State agencies are encouraged

to send a recertification form, an

interview appointment letter that allows

for either in-person or telephone

interviews, and a statement of needed

verification required by § 273.2(c)(5)

with the NOE.

(2) Application. The State agency

must develop an application to be used

by households when applying for

recertification. It may be the same as the

initial application, a simplified version,

a monthly reporting form, or other

method such as annotating changes on

the initial application form. A new

household signature and date is

required at the time of application for

recertification. The recertification

process can only be used for those

households which apply for

recertification prior to the end of their

current certification period, except for

delayed applications as specified in

paragraph (e)(3) of this section. The

process, at a minimum, must elicit from

the household sufficient information

that, when added to information already

contained in the casefile, will ensure an

accurate determination of eligibility and

benefits. The State agency must notify

the applicant of information which is

specified in § 273.2(b)(2), and provide

the household with a notice of required

verification as specified in § 273.2(c)(5).

(3) * * *

(i) As part of the recertification

process, the State agency must conduct

a face-to-face interview with a member

of the household or its authorized

representative at least once every 12

months for households certified for 12

months or less. The provisions of

§ 273.2(e) also apply to interviews for

recertification. The State agency may

choose not to interview the household

at interim recertifications within the 12-

month period. The requirement for a

face-to-face interview once every 12

months may be waived in accordance

with § 273.2(e)(2).

* * * * *

(iii) State agencies shall schedule

interviews so that the household has at

least 10 days after the interview in

which to provide verification before the

certification period expires. If a

household misses its scheduled

interview, the State agency shall send

the household a Notice of Missed

Interview that may be combined with

the notice of denial. If a household

misses its scheduled interview and

requests another interview, the State

agency shall schedule a second

interview.

* * * * *

(e) Delayed processing. (1) If an

eligible household files an application

before the end of the certification period

but the recertification process cannot be

completed within 30 days after the date

of application because of State agency

fault, the State agency must continue to

process the case and provide a full

month’s allotment for the first month of

the new certification period. The State

agency shall determine cause for any

delay in processing a recertification

application in accordance with the

provisions of § 273.3(h)(1).

(2) If a household files an application

before the end of the certification

period, but fails to take a required

action, the State agency may deny the

case at that time, at the end of the

certification period, or at the end of 30

days. Notwithstanding the State’s right

to issue a denial prior to the end of the

certification period, the household has

30 days after the end of the certification

period to complete the process and have

its application be treated as an

application for recertification. If the

household takes the required action

before the end of the certification

period, the State agency must reopen

the case and provide a full month’s

benefits for the initial month of the new

certification period. If the household

takes the required action after the end

of the certification period but within 30

days after the end of the certification

period, the State agency shall reopen the

case and provide benefits retroactive to

the date the household takes the

required action. The State agency shall

determine cause for any delay in

processing a recertification application

in accordance with the provisions of

§ 273.3(h)(1).

(3) If a household files an application

within 30 days after the end of the

certification period, the application

shall be considered an application for

recertification; however, benefits must

be prorated in accordance with

§ 273.10(a). If a household’s application

for recertification is delayed beyond the

first of the month of what would have

Federal Register / Vol. 65, No. 225 / Tuesday, November 21, 2000 / Rules and Regulations 70211

been its new certification period

through the fault of the State agency, the

household’s benefits for the new

certification period shall be prorated

based on the date of the new

application, and the State agency shall

provide restored benefits to the

household back to the date the

household’s certification period should

have begun had the State agency not

erred and the household been able to

apply timely.

* * * * *

17. In § 273.15 paragraphs (j) and

(k)(2) are revised to read as follows:

§ 273.15 Fair hearings.

* * * * *

(j) Denial or dismissal of request for

hearing. (1) The State agency must not

deny or dismiss a request for a hearing

unless:

(i) The State agency does not receive

the request within the appropriate time

frame specified in paragraph (g) of this

section, provided that the State agency

considers untimely requests for hearings

as requests for restoration of lost

benefits in accordance with § 273.17;

(ii) The household or its

representative fails, without good cause,

to appear at the scheduled hearing;

(iii) The household or its

representative withdraws the request in

writing; or

(iv) The household or its

representative orally withdraws the

request and the State agency has elected

to allow such oral requests.

(2) The State agency electing to accept

an oral expression from the household

or its representative to withdraw a fair

hearing may discuss the option with the

household when it appears that the

State agency and household have

resolved issues related to the fair

hearing. However, the State agency is

prohibited from coercion or actions

which would influence the household

or its representative to withdraw the

household’s fair hearing request. The

State agency must provide a written

notice to the household within 10 days

of the household’s request confirming

the withdrawal request and providing

the household with an opportunity to

request a hearing. The written notice

must advise the household it has 10

days from the date it receives the notice

to advise the State agency of its desire

to request, or reinstate, the hearing. If

the household timely advises the State

agency that it wishes to reinstate the fair

hearing, the State agency must provide

the household with a fair hearing,

within the time frames specified in

paragraph (c) of this section and

beginning the date the household

advises the State agency that it wishes

to reinstate its request. The State agency

must reinstate a fair hearing as

requested from a household at least

once. The State agency must not deny

a household’s request for a fair hearing

if the household is aggrieved by a State

agency action that differs from the

reinstated action.

(k) * * *

(2) Once continued or reinstated, the

State agency must not reduce or

terminate benefits prior to the receipt of

the official hearing decision unless:

(i) The certification period expires.

The household may reapply and may be

determined eligible for a new

certification period with a benefit

amount as determined by the State

agency;

(ii) The hearing official makes a

preliminary determination, in writing

and at the hearing, that the sole issue is

one of Federal law or regulation and

that the household’s claim that the State

agency improperly computed the

benefits or misinterpreted or misapplied

such law or regulation is invalid;

(iii) A change affecting the

household’s eligibility or basis of

issuance occurs while the hearing

decision is pending and the household

fails to request a hearing after the

subsequent notice of adverse action;

(iv) A mass change affecting the

household’s eligibility or basis of

issuance occurs while the hearing

decision is pending; or

(v) The household, or its

representative, orally withdrew its

request for a fair hearing and did not

advise the State agency of its desire to

reinstate the fair hearing within the time

frame specified in paragraph (j)(2) of

this section.

* * * * *

§ 273.21 [Amended]

18. In § 273.21:

a. Paragraph (a)(3) is removed and

paragraph (a)(4) is redesignated as

paragraph (a)(3).

b. Paragraph (j)(1)(vii)(A) is amended

by removing the number ‘‘22’’ at the end

of the second sentence and adding in its

place the number ‘‘18’’.

c. Paragraph (t)(2) is removed and

paragraphs (t)(3) through (t)(6) are

redesignated as paragraphs (t)(2)

through (t)(5).

19. § 273.25 is added to read as

follows:

§ 273.25 Simplified Food Stamp Program.

(a) Definitions. For purposes of this

section:

(1) Simplified Food Stamp Program

(SFSP) means a program authorized

under 7 U.S.C. 2035.

(2) Temporary Assistance for Needy

Families (TANF) means a State program

of family assistance operated by an

eligible State under its TANF plan as

defined at 45 CFR 260.30.

(3) Pure-TANF household means a

household in which all members receive

assistance under a State program funded

under part A of title IV of the Social

Security Act (42 U.S.C. 601 et seq.).

(4) Mixed-TANF household means a

household in which 1 or more members,

but not all members, receive assistance

under a State program funded under

part A of title IV of the Social Security

Act (42 U.S.C. 601 et seq.).

(5) Assistance under a State program

funded under part A of title IV of the

Social Security Act (42 U.S.C. 601 et

seq.) means ‘‘assistance’’ as defined in

regulations at 45 CFR 260.31.

(b) Limit on benefit reduction for

mixed-TANF households under the

SFSP. If a State agency chooses to

operate an SFSP and includes mixedTANF households in its program, the

following requirements apply in

addition to the statutory requirements

governing the SFSP.

(1) If a State’s SFSP reduces benefits

for mixed-TANF households, then no

more than 5 percent of these

participating households can have

benefits reduced by 10 percent of the

amount they are eligible to receive

under the regular FSP and no mixedTANF household can have benefits

reduced by 25 percent or more of the

amount it is eligible to receive under the

regular FSP. Reductions of $10 or less

will be disregarded when applying this

requirement.

(2) The State must include in its State

SFSP plan an analysis showing the

impact its program has on benefit levels

for mixed-TANF households by

comparing the allotment amount such

households would receive using the

rules and procedures of the State’s SFSP

with the allotment amount these

households would receive if certified

under regular Food Stamp Program

rules and showing the number of

households whose allotment amount

would be reduced by 9.99 percent or

less, by 10 to 24.99 percent, and by 25

percent or more, excluding those

households with reductions of $10 or

less. In order for FNS to accurately

evaluate the program’s impact, States

must describe in detail the methodology

used as the basis for this analysis.

(3) To ensure compliance with the

benefit reduction requirement once an

SFSP is operational, States must

describe in their plan and have

approved by FNS a methodology for

measuring benefit reductions for mixedTANF households on an on-going basis

70212 Federal Register / Vol. 65, No. 225 / Tuesday, November 21, 2000 / Rules and Regulations

throughout the duration of the SFSP. In

addition, States must report to FNS on

a periodic basis the amount of benefit

loss experienced by mixed-TANF

households participating in the State’s

SFSP. The frequency of such reports

will be determined by FNS taking into

consideration such factors as the

number of mixed-TANF households

participating in the SFSP and the

amount of benefit loss attributed to

these households through initial or ongoing analyses.

(c) Application processing standards.

Under statutory requirements, a

household is not eligible to participate

in an SFSP unless it is receiving TANF

assistance. If a household is not

receiving TANF assistance (payments

have not been authorized) at the time of

its application for the SFSP, the State

agency must process the application

using the regular Food Stamp Program

requirements of § 273.2, including

processing within the 30-day regular or

7-day expedited time frame, and

screening for and provision of expedited

service if eligible. The State agency

must determine under regular food

stamp rules the eligibility and benefits

of any household that it has found

ineligible for TANF assistance because

of time limits, more restrictive resource

standards, or other rules that do not

apply to food stamps.

(d) Standards for shelter costs.

Legislation governing the SFSP requires

that State plans must address the needs

of households with high shelter costs

relative to their income. If a State

chooses to standardize shelter costs

under the SFSP, it must, therefore, use

multiple standards that take into

consideration households with high

shelter costs versus those with low

shelter costs. A State is prohibited from

using a single standard based on average

shelter costs for all households

participating in an SFSP.

(e) Opportunity for public comment.

States must provide an opportunity for

public input on proposed SFSP plans

(with special attention to changes in

benefit amounts that are necessary in

order to ensure that the overall proposal

not increase Federal costs) through a

public comment period, public

hearings, or meetings with groups

representing participants’ interests.

Final approval will be given after the

State informs the Department about the

comments received from the public.

After the public comment period, the

State agency must inform the

Department about the comments

received from the public and submit its

final SFSP plan for Departmental

approval.

PART 274—ISSUANCE AND USE OF

COUPONS

19. In § 274.2:

a. The last sentence in paragraph (a)

is removed; and

b. Paragraph (g) is revised to read as

follows:

§ 274.2 Providing benefits to participants.

* * * * *

(g) Issuance in rural areas. Unless the

area is served by an electronic benefit

transfer system, State agencies must use

direct-mail issuance in any rural areas

where the State agency determines that

recipients face substantial difficulties in

obtaining transportation in order to

obtain their food stamp benefits by

methods other than direct-mail

issuance. State agencies must report any

exceptions to direct-mail issuance as

specified under § 272.3(a)(2) and (b)(2)

of this chapter.

§ 274.5 [Removed and Reserved]

20. Section 274.5 is removed and

reserved.

PART 277—PAYMENTS OF CERTAIN

ADMINISTRATIVE COSTS OF STATE

AGENCIES

21. In § 277.4, two sentences are

added to the end of paragraph (b)

introductory text to read as follows:

§ 277.4 Funding.

* * * * *

(b) Federal reimbursement rate. * * *

This rate includes reimbursement for

food stamp informational activities but

not for recruitment activities.

Recruitment activities are those

activities designed to persuade an

individual who has made an informed

choice not to apply for food stamps to

change his or her decision and apply.

* * * * *

Dated: November 9, 2000.

Shirley R. Watkins,

Under Secretary, Food, Nutrition and

Consumer Services.

[FR Doc. 00–29355 Filed 11–20–00; 8:45 am]

BILLING CODE 3410–30–P