[Federal Register Volume 60, Number 79 (Tuesday, April 25, 1995)]
[Rules and Regulations]
[Pages 20178-20183]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-10091]



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DEPARTMENT OF AGRICULTURE
Food and Consumer Service

7 CFR Parts 272 and 274

[Amendment No. 333]
RIN 0584-AB32


Food Stamp Program: Benefit Delivery Rule

AGENCY: Food and Consumer Service, USDA.

ACTION: Final rule.

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SUMMARY: This rulemaking finalizes three Food Stamp Program provisions 
relating to benefit delivery. These regulations relate to the staggered 
issuance of benefits on Indian reservations, combined or aggregate 
allotments, and the issuance of benefits in rural areas where 
households may experience difficulty in obtaining program benefits.
    In addition to the regulatory changes described above, this rule 
makes final three minor technical changes in current regulatory 
issuance provisions which are deemed appropriate by the Department to 
improve benefit issuance.

DATES: The amendments to Secs. 272.2(a)(2) and (d)(1)(xi), and 
Secs. 274.2(a), (c), and (g) are effective February 1, 1992. State 
agencies were instructed through an agency directive dated May 20, 
1992, to implement these provisions on that date. The amendment to 
Sec. 274.2(d)(2) is effective March 25, 1994. State agencies were 
instructed through an agency directive dated March 31, 1994, to 
implement this provision on that date. All remaining amendments are 
effective September 1, 1995.

FOR FURTHER INFORMATION CONTACT: James I. Porter, Supervisor, Issuance 
and Accountability Section, State Administration Branch, Program 
Accountability Division, Food Stamp Program, Food and Consumer Service, 
USDA, 3101 Park Center Drive, Room 904, Alexandria, Virginia 22302, 
telephone (703) 305-2383.

SUPPLEMENTARY INFORMATION:

Executive Order 12866

    This rule has been determined to be not significant for purposes of 
Executive Order 12866 and, therefore, has not been reviewed by the 
Office of Management and Budget.

Regulatory Flexibility Act

    This action has also been reviewed with regard to the requirements 
of the Regulatory Flexibility Act of 1980 (5 U.S.C. 601-612). Ellen 
Haas, Under Secretary for Food, Nutrition, and Consumer Services, has 
certified that this final rule will not have a significant impact on a 
substantial number of small entities. The requirements of the rule will 
affect State and local agencies which administer the Food Stamp 
Program, as well as food stamp applicants and recipients.

Paperwork Reduction Act

    The provisions of this final rule do not contain record-keeping or 
reporting requirements subject to approval by the Office of Management 
and Budget under the Paperwork Reduction Act of 1980 (44 U.S.C. 3507).

Executive Order 12778

    This final rule has been reviewed under Executive Order 12778, 
Civil Justice Reform. This rule is intended to have preemptive effect 
with respect to any State or local laws, regulations, or policies which 
conflict with its provisions or which would otherwise impede its full 
implementation. This rule is not intended to have retroactive effect 
unless so specified in the ``Effective Date'' section of this preamble. 
Prior to any judicial challenge to the provisions of this rule or the 
application of its provisions, all applicable administrative procedures 
must be exhausted. In the Food Stamp Program the administrative 
procedures are as follows: (1) for program benefit recipients--State 
administrative procedures issued pursuant to 7 U.S.C. 2020(e)(10) and 
set out at 7 CFR 273.15; (2) for State agencies--administrative 
procedures issued pursuant to 7 U.S.C. 2023 and set out at 7 CFR 276.7; 
and (3) for program retailers and wholesalers--administrative 
procedures issued pursuant to 7 U.S.C. 2023 and set out at 7 CFR 278.8.
[[Page 20179]]

Executive Order 12372

    The Food Stamp Program is listed in the Catalog of Federal Domestic 
Assistance under No. 10.551. For the reasons set forth in the final 
rule at 7 CFR part 3015, subpart V, and related Notice (48 FR 29115, 
June 24, 1983), this Program is excluded from the scope of Executive 
Order 12372 which requires intergovernmental consultation with State 
and local officials.

Public Participation

    Section 274.2(c) is simply a restatement of existing Food Stamp 
Program regulations regarding the obligation of State agencies to 
provide combined or aggregate allotments in certain circumstances and 
makes no changes in existing policy. Section 274.2(d)(2) is the 
regulatory adoption of Section 102 of Pub. L. 103-225 regarding the 
availability of staggered issuance of benefits on Indian reservations. 
Therefore, the amendments to 7 CFR 274.2(c) and (d)(2) are being issued 
as final rules without prior notice and public comment. The language of 
Sec. 274.2(d)(2) is the same as that employed in Pub. L. 103-225. 
Section 102 of Pub. L. 103-225 is non-discretionary in that it makes an 
existing policy, staggered issuance, available to Indian reservations 
for at least 15 days per month at the request of the tribal governing 
authority. Because of the non-discretionary nature of the amendments to 
7 CFR 274.2(c) and (d)(2), the Department has determined, pursuant to 5 
U.S.C. 553, that public comment on these provisions prior to 
implementation is unnecessary as it would serve no practical purpose.

Background

    The Mickey Leland Memorial Domestic Hunger Relief Act (Title XVII 
of Pub. L. 101-624, enacted November 28, 1990) amended three provisions 
of the Food Stamp Act of 1977, as amended, (7 U.S.C. 2011 et seq.) (the 
Act), relating to the timing and method of benefit delivery (issuance). 
These amendments related to staggered issuance of benefits on Indian 
reservations, aggregate (combined) allotments to households applying 
after the 15th of the month, and mail issuance in rural areas where 
households experience transportation difficulties in obtaining 
benefits.
    The Department issued a proposed rulemaking and sought comments on 
these three provisions of Pub. L. 101-624 on May 20, 1991, at 56 FR 
23027. In the same publication, the Department also announced its 
intent to make three minor technical changes to existing issuance 
provisions deemed appropriate to improve benefit issuance. Comments 
were sought on these changes as well. Each of the six regulatory 
changes proposed on May 20, 1991, will be separately discussed in this 
rulemaking.

The 1990 Amendments (Pub. L. 101-624): Comments and Analyses

    1. Section 1728 of Pub. L. 101-624 amended Section 7(h)(1) of the 
Act, 7 U.S.C. 2016(h)(1) to mandate the use of staggered issuance 
throughout the month on Indian reservations. This provision reflected 
the findings of a GAO audit (Recipient and Expert Views on Food 
Assistance at Four Indian Reservations, GAO/RCED 90-152, dated June 28, 
1990) in which auditors were told by recipients that each month certain 
retail food stores authorized to accept food stamps on or near 
reservations were increasing the prices of eligible food during the 
week containing the one or more issuance days.
    Subsequent to the publication of the proposed rule on this issue, 
Congress enacted Section 908 of Pub. L. 102-237, delaying the 
implementation of Section 1728 of Pub. L. 101-624 until April 1, 1993. 
Section 908 of Pub. L. 102-237 directed GAO to report to Congress by 
June 13, 1992, on the difficulties that residents on Indian 
reservations experience in obtaining benefits. The study was to examine 
prices at food stores, determine issuance-period preferences of 
households, analyze any transportation problems that may exist, and 
examine monthly reporting requirements.
    On November 25, 1992, GAO released Letter Report RCED-93-70R 
concerning the need for staggered issuance on Indian reservations. This 
report summarized comments from 13 State agencies and two national 
Indian organizations, but arrived at no conclusive recommendation.
    Due in significant part to the inconclusive nature of the GAO 
Report, Congress, on April 1, 1993, in Pub. L. 103-11, ``Food Stamp 
Requirements on Indian Reservations: Delay,'' delayed implementation of 
the mandatory staggered issuance requirement of Section 1728 of Pub. L. 
101-624, until January 24, 1994. Implementation of Section 1728 was 
further delayed until March 15, 1994, by section 1 of Pub. L. 103-205, 
``Food Stamp Program on Indian Reservations,'' on December 17, 1993.
    With section 102 of the Food Stamp Improvements Act of 1994, Pub. 
L. 103-225, enacted on March 25, 1994, Congress amended Section 7(h)(1) 
of the Act by deleting the mandatory requirement for staggered issuance 
on Indian reservations, which had been provided for in Section 1728 of 
Pub. L. 101-624, and making staggered issuance on Indian reservations 
discretionary with each tribal organization. Section 7(h)(1) of the 
Act, 7 U.S.C. 2016(h)(1), now provides that staggered issuance shall be 
provided to tribal organizations by State agencies over a period of at 
least 15 days each month if so requested by the organization exercising 
governmental jurisdiction over the reservation.
    In light of the amendment to section 7(h)(1) of the Act by section 
102 of Pub. L. 103-225, making staggered issuance an Indian tribal 
organization option, the Department believes that a lengthy discussion 
of the public comments on the proposed rule, pertaining to the parts of 
the statutory provision which were amended, is no longer necessary, 
since the comments, while appreciated, are no longer relevant. The 
Department also believes that the implementation of section 102 of Pub. 
L. 103-225 does not require public comment. Congress has given the 
Department and State agencies no discretion and no options with regard 
to the use of staggered issuance on Indian reservations; the sole 
discretion to be exercised is with Indian tribal organizations. Under 
the notice and comment provisions of the Administrative Procedure Act, 
5 U.S.C. 553, public comment on a regulatory change is not required if 
that comment would serve no practical purpose. As a reflection of the 
Department's absence of discretion in this matter, the Department 
hereby implements as a final rule without prior notice and comment 
section 102 of Pub. L. 103-225 in regulatory language identical to that 
employed by Congress in the legislation. This provision will be located 
at Sec. 274.2(d)(2).
    2. In the May 20, 1991, rulemaking published at 56 FR 23027, the 
Department sought comments on its proposal to implement section 1732 of 
Pub. L. 101-624. That provision amended section 8(c)(3) of the Act, 7 
U.S.C. 2017(c)(3), to change program requirements concerning aggregate 
benefits (combined benefits for the month of application and the first 
full month of benefit receipt) for eligible households applying after 
the 15th of the month. Prior to the amendment, section 8(c)(3) required 
that an initial allotment reflecting an aggregate of prorated benefits 
for the application month and benefits for the first full month was 
required if the application was made after the 15th day of the month. 
Amended section 8(c)(3) made [[Page 20180]] the combined allotment a 
State agency option for eligible households applying under normal 
processing standards. Despite the amendment to section 8(c)(3), 
combined allotments, however, remained mandatory for eligible 
households that met the requirements for expedited service. This 
program change was implemented by State agencies retroactively to 
February 1, 1992, pursuant to an FNS directive dated May 20, 1992.
    To implement section 1732 of Pub. L. 101-624 in the Code of Federal 
Regulations, the Department proposed amendments to several paragraphs 
of Sec. 274.2(b). Subsequently, it was determined that program 
regulatory provisions regarding eligibility for combined allotments 
would more appropriately be located in Sec. 273.2(i) of program 
regulations, which deals with household application requirements. A 
rule reflecting this redesignation, including the adoption as final of 
the changes previously proposed for Sec. 274.2(b), will be published in 
the near future. Comments received on this program change in response 
to the May 20, 1991, proposed rule will be discussed in that 
rulemaking.
    The effect of the above-described modification will be to locate in 
part 273 of the program regulations all provisions regarding 
eligibility for combined or aggregate allotments. Section 274.2 will 
contain only program provisions regarding State agency benefit issuance 
requirements. To reflect this redesignation, the Department adopts as a 
final rule an amendment to Sec. 274.2, paragraph (c), which simply 
restates existing program policy with regard to State agency 
obligations concerning combined allotments. As Sec. 274.2(c) summarizes 
existing regulations and makes no changes to those regulations, the 
Department, pursuant to 5 U.S.C. 553, deems prior notice and public 
comment on this regulatory provision to be unnecessary.
    3. Section 1738 of Pub. L. 101-624 amended section 11(e) of the 
Act, 7 U.S.C. 2020(e), to require State agencies to use mail issuance 
in rural areas where State agencies determine that recipients face 
substantial difficulties in obtaining transportation to issuance 
points. Amended section 11(e) provides an exception to mandatory mail 
issuance for households which have experienced excessive mail issuance 
losses. In addition, mail issuance is not required in localities where 
the mail loss rates exceed standards set by the Secretary. This 
amendment was prompted by concern that some eligible households in 
rural areas have difficulty getting to issuance sites because they lack 
cars or sufficient funds to hire someone to drive them (House Report 
No. 101-569, pages 433-34).
    Under the proposed rule, a State agency which is not currently 
using mail issuance throughout the State must engage in an assessment 
of transportation barriers which rural recipients may experience in 
getting to issuance offices, and report both the assessment process and 
its results as an attachment to its State Plan of Operation. Section 
272.2 of the regulations is revised to add this requirement to the 
State Plan of Operation. Section 274.2 is also revised to add a new 
subsection describing the required content of this new attachment to 
the State Plan of Operation.
    In enacting Section 1738 of Pub. L. 101-624, Congress was concerned 
with transportation problems that make it difficult for recipients to 
obtain their benefits at issuance offices (House Report No. 101-569, 
pages 433-34). These problems, rather than transportation problems in 
general, should be the focus of the State agency's assessment of the 
need for mail issuance. For example, mail issuance is not required 
where electronic benefits transfer (EBT) removes the need for 
transportation to an issuance office. As an alternative to mail 
issuance, State agencies finding substantial transportation 
difficulties could reduce or eliminate them by a variety of methods, 
such as through the use of authorized representatives as provided for 
in 7 CFR 274.5.
    To implement the exception to mail issuance for individual 
households that experience excessive mail losses, the Department 
proposed to use the current standard at 7 CFR 274.6(c)(3)(ii), which 
provides that households experiencing two losses or thefts of benefits 
from the mail within a six-month period shall be placed on an 
alternative delivery system.
    To implement the exception to mail issuance in amended Section 
11(e)(25) of the Act for localities with excessive mail losses, the 
Department proposed to utilize the standards set by the mail issuance 
loss tolerance levels provided at 7 CFR 276.2(b)(4). State agencies 
would not have to use mail issuance where mail losses exceed, or could 
reasonably be expected to exceed, the mail loss tolerance levels for 
the reporting unit within which the particular rural area is located. 
Section 276.2(b)(4) provides three separate mail issuance tolerance 
levels. The applicable mail loss tolerance level depends on the size of 
the reporting unit. In determining whether mail losses in a given rural 
area would be excessive, State agencies without mail issuance in that 
area may use the tolerance level associated with a hypothetical 
reporting unit. Tolerance levels applied to any hypothetical reporting 
area would have to be consistent with existing rules and any existing 
reporting units. For example, States with some mail issuance in place, 
and currently reporting issuance losses by project areas, could not 
exempt a rural area without mail issuance from the mail issuance 
requirements of amended Section 11(e)(25) on the basis of its losses 
exceeding a State-wide tolerance. Similarly, a State agency that does 
not have mail issuance would have to use the same tolerance levels in 
assessing any rural areas subject to this rule; the State could not 
exempt some areas because they would exceed the State-wide tolerance 
level and other areas because they would exceed the project area 
tolerance level. States which choose not to introduce mail issuance 
based upon findings that losses would exceed tolerance levels will be 
required to provide evidence to support such findings.
    Three comments were received on these proposals. One State agency 
was concerned that the provision requiring mail issuance would 
eliminate the State's current practice of offering recipients either 
mail issuance or direct delivery of benefits. This is not the case. 
State agencies may accommodate individual household requests; the 
requirement is to provide or offer mail issuance as a means of 
overcoming transportation difficulties. Another commenter was concerned 
that the proposed provisions might overturn established efforts and 
procedures geared to reduce mail losses. It would subvert the purpose 
of the legislation, namely to encourage mail issuance, if the 
implementing rules prevented reductions in mail losses that in turn 
created pressures to abandon mail issuance altogether. Therefore, the 
Department will not require mail issuance in situations in which State 
agencies can demonstrate that losses incurred in attempts to issue 
benefits by mail in rural areas would be excessive. The third comment 
came from a State agency which stated that it would not be affected by 
the provision because the State currently has statewide direct-mail 
issuance.
    The wording in the first sentence of the proposed paragraph has 
been revised slightly for conformity with the description of other 
planning documents listed in 7 CFR 272.2(d). This minor change does not 
alter the intent of the provision. [[Page 20181]] 
    Accordingly, with this final rule, the wording of the proposed 
rule, with the exception noted above, is adopted.

Changes to Current Regulations

    On February 15, 1989, at 54 FR 6990, the Department issued a final 
rule constituting the first comprehensive review and modification of 
food stamp issuance regulations since their adoption pursuant to the 
Food Stamp Act of 1977 (Pub. L. 95-113).
    This final rule makes changes to three of those provisions, in an 
effort to clarify interpretive problems brought to the Department's 
attention over the past three years. These changes were proposed on May 
20, 1991, at 56 FR 23028-29.
    4. In the May 20, 1991, proposed rule the Department suggested 
changes to make clear that staggering may be used in any issuance 
system and that the 40-day limit on intervals between issuances applies 
to all issuance systems. Current rules at Sec. 274.2(c)(1) refer to a 
40-day limit between ``mail issuances'' because, in the past, State 
agencies staggered only mail issuance. The word ``mail'' is being 
removed to make it clear that the 40-day limit applies to all staggered 
issuance situations, and to remove any implication that staggering is 
relevant only to mail issuance.
    Whenever staggered issuance is utilized, the State agency must 
ensure that the interval between any two issuances after the first full 
month of participation is not longer than 40 days as required by 
Section 7(h) of the Act, 7 U.S.C. 2016(h)(2). This applies to instances 
in which a State agency changes its issuance system, is starting to 
stagger within any issuance system, decides to no longer stagger within 
a system, or is fluctuating the issuance schedule by a day or two 
within a current staggered system. The only exception to the 40-day 
limit occurs for some households which apply after the 15th of the 
month and receive their first and second month's benefit as a combined 
allotment. Since they may receive their benefits for the first and 
second months of participation in the first month, more than 40 days 
may elapse before they are put on a regular issuance schedule, 
beginning with benefits issued for the third month.
    Three commenters addressed this proposal. One stated that 
households which are required to submit monthly reports may have to 
wait as long as 50 days between issuances. Such an interval would only 
be permissible in situations in which the State agency is required to 
wait for the household to meet its monthly reporting requirement. The 
40-day rule pertains to on-going households which have complied with 
all reporting requirements and expect their benefits at about the same 
time every month.
    Another commenter was concerned that the Department is reading 
something into the law which established the 40-day requirement that 
Congress did not intend, and that more than 40 days should be allowed 
under normal fluctuations within an established staggered issuance 
system. The Department disagrees; intervals beyond 40 days between 
normal issuances do not meet the requirement of the law and its 
legislative history. The 40-day requirement is an extension of the 
requirement at 7 CFR 274.2(c), which states that issuance schedules 
shall be established so that households receive benefits on or about 
the same time each month. The amendment gives State agencies room to 
adjust issuance schedules when issuance systems are being changed, 
rather than holding the State agency to the requirement that households 
receive benefits on or about the same day each month. The Department 
considers the amendment less restrictive, not more so.
    The provision in this rule has been reworded to state more clearly 
the situations to which it applies. This also addresses a third 
commenter who said the 40-day rule is simply burdensome.
    With this final rule, the Department adopts as final 7 CFR 
274.2(c)(1) as proposed to indicate that the requirements of staggered 
issuance are applicable to all issuance systems.
    5. The regulations at 7 CFR 274.3(e) currently provide for validity 
periods for issuances made in authorization document, direct access, 
and direct delivery issuance systems. A validity period is the time-
frame during which a household may obtain benefits by transacting an 
authorization document or receiving benefits at an issuance point. The 
validity period begins the day a household is issued an authorization 
document or is authorized to obtain its issuance at an issuance point. 
The validity period for issuances ends on the last day of the month in 
which authorization to receive benefits is made, with two exceptions. 
First, for normal issuances made on or after the 20th day of the month, 
the State agency must extend the validity or availability period at 
least 20 days into the following month and may extend the validity or 
availability period until the end of the following month; second, for 
combined issuances for households applying after the 15th of the month, 
the validity period must continue until the end of the month following 
application since benefits for which the household is eligible are 
intended for use during both months. States have pointed out that 
Program administration would be simplified if normal issuances made 
after the 15th of the month could have the same validity period as the 
validity period for combined issuance made in the month of application. 
The proposed rule addressed that concern by changing the issuance date 
that initiates an extension for validity periods for normal issuances 
from ``on or after the 20th'' to ``after the 15th'' of the month.
    Three commenters addressed this provision. One simply stated the 
amount of time (3 months) that would be required to make the necessary 
computer changes, but made no statement for or against the provision. 
Another commenter questioned whether the new trigger date would allow 
State agencies to retain the option to extend the validity period for 
normal issuances for 20 days or until the end of the following issuance 
month. The answer to this question is that, as stated in the proposed 
rule, State agencies will retain the option. The third commenter 
suggested that the provision of having the validity dates coincide be 
optional because of the time and expense required in modifying the 
State agency's on-line issuance computer. Because this provision was 
adopted in response to State agency requests as a means of easing the 
Program's administrative burden, the Department is making this date 
change an option for State agencies. The Department would also like to 
clarify that when a combined allotment is issued with the use of two 
documents in authorization document systems during the month of 
application, the validity period for both documents must continue until 
the end of the second month, as that is the period of intended use for 
the combined benefits.
    With this final rule, the Department adopts as final 7 CFR 274.3(e) 
as previously proposed by making the proposed modification of the 
validity period for normal issuances a State agency option.
    6. In 7 CFR 274.11(a) a change was proposed by the Department to 
clarify which issuance documents, including signature cards used by 
direct-delivery agents, are required to be retained for three years in 
order to provide an audit trail for accountability. The current 
regulation at 7 CFR 274.11(a)(1) lists specific forms required to be 
retained. However, as established issuance systems have changed and 
newer ones have been implemented, the list has not been revised. The 
Department proposed to replace the listing of specific forms with a 
general retention requirement covering all issuance system documents 
[[Page 20182]] which provide an audit record for accountability. An 
additional change made the wording about the period of retention 
conform to 7 CFR 272.1(f).
    The one commenter responding to the Department's proposal stated 
that the provision would not affect the program operations of that 
State. Wording and punctuation within the first ten words in paragraphs 
(a) and (a)(1) of 7 CFR 274.11 are revised slightly from the proposed 
rule to make clearer the fact that the provision addresses four 
separate groups of documents to be retained--issuance records, 
inventory records, reconciliation records, and other records. These 
latter changes do not affect the meaning or intent of the proposed 
rule.
    Therefore, the wording of the proposed rule, regarding sections 7 
CFR 274.11(a) and (a)(1) with the exception noted above, is adopted as 
final.

Dates

    1. Effective. Section 1738 of Pub. L. 101-624 was effective 
February 1, 1992. Section 102 of Pub. L. 103-225 was effective March 
25, 1994. The effective date for the amendments to 274.2(d)(1), 
274.3(e), and 274.11(a) is September 1, 1995.
    2. Implementation. The implementation date for Section 102 of Pub. 
L. 103-225 was March 25, 1994. The implementation date for Section 1738 
of Pub. L. 101-624 was February 1, 1992. By that date, or soon 
thereafter, States should have submitted to FCS, an approvable 
amendment to the State Plan of Operation, for direct-mail issuance in 
rural areas. The timetable for actual implementation of any new direct-
mail issuance system will be set by the State agency, with FCS 
approval. The implementation date for the amendments to 274.2(d)(1), 
274.3(e), and 274.11(a) is September 1, 1995.

List of Subjects

7 CFR Part 272

    Alaska, Civil rights, Food stamps, Grant programs--social programs, 
Reporting and recordkeeping requirements.

7 CFR Part 274

    Administrative practice and procedure, Food stamps, Grant 
programs--social programs, Reporting and recordkeeping requirements.

    As stated in the Preamble, parts 272 and 274 of chapter II of Title 
7, Code of Federal Regulations, are amended as follows:
    1. The authority citation for parts 272 and 274 continues to read 
as follows:

    Authority: 7 U.S.C. 2011-2032.

PART 272--REQUIREMENTS FOR PARTICIPATING STATE AGENCIES

    2. In Sec. 272.1, a new paragraph (g)(140) is added to read as 
follows:


Sec. 272.1  General terms and conditions.

* * * * *
    (g) Implementation. * * *
    (140) Amendment No. 333. The provisions of Amendment No. 333 are 
effective and must be implemented as follows:
    (i) The provisions relating to aggregated (combined) allotments to 
households applying after the 15th of the month and mail issuance in 
rural areas where households experience transportation difficulties in 
obtaining benefits are effective and must be implemented by statute 
retroactive to February 1, 1992.
    (ii) The provision relating to staggered issuance on Indian 
reservations was in place on March 25, 1994, is effective and must be 
implemented according to statute retroactive to March 25, 1994.
    (iii) The remaining provisions are effective and must be 
implemented September 1, 1995.
    3. In Sec. 272.2, a new sentence is added to the end of paragraph 
(a)(2), and a new paragraph (d)(1)(xi) is added, to read as follows:


Sec. 272.2  Plan of operation.

    (a) General purpose and content. * * *
    (2) Content. * * * The Plan's attachments shall describe the State 
agency's review of direct-mail issuance requirements in rural areas.
* * * * *
    (d) Planning Documents.
    (1) * * *
    (xi) A plan to review direct-mail issuance requirements in rural 
areas. State agencies using direct-mail issuance throughout the State 
with exceptions only for individual households, shall simply state this 
fact. State agencies which use methods of benefit issuance other than 
direct-mail issuance in any part of the State shall submit an 
attachment to their State Plan of Operation which includes the State 
agency's procedure for reviewing direct-mail issuance requirements in 
rural areas, and the results of applying that procedure for designating 
parts of, or entire, project areas as requiring direct-mail issuance 
because they are rural, and are areas in which benefit-eligible 
households face substantial difficulties in obtaining transportation. 
The requirements for this attachment to the State Plan of Operation are 
described in Sec. 274.2(g) of this chapter.
* * * * *

PART 274--ISSUANCE AND USE OF COUPONS

    4. In Sec. 274.2:
    a. a new sentence is added at the end of paragraph (a);
    b. the heading of paragraph (b) is revised;
    c. paragraphs (b)(2), (b)(3), and (b)(4) are removed;
    d. paragraphs (b)(1), (c), (d), and (e) are redesignated as 
paragraphs (b), (d), (e), and (f), respectively;
    e. two new sentences are added at the end of newly-redesignated 
paragraph (b);
    f. newly-redesignated paragraph (d)(1) is revised;
    g. paragraphs (d)(2) and (d)(3) are redesignated as paragraphs 
(d)(3) and (d)(4), respectively;
    h. newly-redesignated paragraph (d)(3) is revised; and
    i. new paragraphs (c), (d)(2) and (g) are added.
    The additions and revisions read as follows:


Sec. 274.2  Providing benefits to participants.

    (a) General * * * Requirements to assure timely and accurate 
issuance of benefits to eligible households in rural areas are 
described in paragraph (g) of this section.
    (b) Availability of benefits. * * * For households entitled to 
expedited service, the State agency shall make benefits available to 
the household not later than the fifth calendar day following the date 
of application. Whatever system a State agency uses to ensure meeting 
this delivery standard shall be designed to allow a reasonable 
opportunity for redemption of ATPs no later than the fifth calendar day 
following the date of application.
    (c) Combined allotments. For those households which are to receive 
a combined allotment, the State agency shall provide the benefits for 
both months as an aggregate (combined) allotment, or as two separate 
allotments, with the same validity period, made available at the same 
time, in accordance with the timeframes specified in Sec. 273.2 of this 
chapter.
    (d) Ongoing households * * *
    (1) State agencies that use direct-mail issuance shall stagger 
issuance over at least 10 days of the issuance month, and may stagger 
issuance over the entire issuance month. State agencies using a method 
other than direct-mail issuance may stagger issuance throughout the 
month, or for a shorter period. When staggering benefit delivery, 
however, State agencies shall not allow more than 40 days to elapse 
between the issuance of any two allotments provided to a 
[[Page 20183]] household participating longer than two consecutive, 
complete months. Regardless of the issuance schedule used, the State 
agency shall adhere to the reporting requirements specified in 
Sec. 274.4.
    (2) Upon the request of the tribal organization that exercises 
governmental jurisdiction over a reservation, the State agency shall 
stagger the issuance of benefits for eligible households located on 
reservations for at least 15 days each month.
    (3) When a participating household is transferred from one issuance 
system or procedure to another issuance system or procedure, the State 
agency shall not permit more than 40 days to elapse between the last 
issuance under the previous system or procedure, and the first issuance 
under the new system or procedure. The 40-day requirement does not 
apply to instances in which actions by recipients, such as failure to 
submit a monthly report, disrupt benefits. Transfers include, but are 
not limited to, households being moved into or out of a staggered 
issuance procedure, households on a fluctuating schedule within a 
staggered system, and households being moved from a direct-mail 
issuance system to an authorization document system. If the State 
agency determines that more than 40 days may elapse between issuances, 
the State agency shall divide the new issuance into two parts, with one 
part being issued within the 40-day period, and the second part, or 
supplemental issuance, being issued on the household's established 
issuance date in the new system or procedure. The supplemental issuance 
cannot provide the household more benefits than the household is 
entitled to receive.
* * * * *
    (g) Issuance in rural areas. State agencies shall 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. Exceptions shall be made for households which have 
exceeded the two allowable reported losses within a six-month period 
and replacements set forth in Sec. 274.6 (b) and (g), and direct-mail 
issuance is not required in those localities where the direct mail loss 
rates exceed, or are likely to exceed, standards set by the Secretary 
at Sec. 276.2(b) of this chapter. The State agency shall:
    (1) Submit an attachment to the State Plan of Operation 
(Sec. 272.2(d)(1)(xi) of this chapter) which describes the State's 
exemption from this requirement, because the State agency uses direct-
mail issuance throughout the State, or
    (2) Submit an attachment to the State Plan of Operation 
(Sec. 272.2(d)(1)(xi) of this chapter) which describes:
    (i) The areas designated by the State agency as rural;
    (ii) The rural areas where direct-mail issuance will not be used 
because:
    (A) Recipients do not face substantial difficulties in obtaining 
transportation to obtain their benefits, and/or;
    (B) Direct-mail issuance losses exceed the loss tolerance levels, 
or there is evidence which indicates that direct-mail issuance, if 
used, would produce losses which would exceed the loss tolerance levels 
established under Sec. 276.2(b)(4) of this chapter.
    (iii) The State agency's criteria for designating an area as rural. 
Such criteria may include, but are not limited to: the use of the 
Bureau of the Census definition; the distances that recipients may need 
to travel to reach an issuance office; or, other criteria described by 
the State agency.
    (iv) The State agency's minimum criteria for determining that 
recipients in an area designated as rural do not face substantial 
difficulties in obtaining transportation to obtain their benefits.
    (v) The State agency's schedule for introducing direct-mail 
issuance into any rural areas requiring direct-mail issuance because of 
substantial transportation problems.
    5. In Sec. 274.3, paragraph (e)(1) is revised to read as follows:


Sec. 274.3  Issuance systems.

* * * * *
    (e) Validity periods. (1) State agencies shall establish validity 
periods for issuances made in both authorization document and direct 
access systems. A validity period is the time frame during which a 
household may obtain benefits by transacting an authorization document, 
or receiving the benefits directly at an issuance point. Generally, the 
validity period coincides with the issuance month or the period of 
intended use, which may or may not be a calendar month. However, in 
instances in which authorization documents are distributed, or benefits 
become available for ongoing households late in the issuance month, the 
State agency shall extend the validity or availability period for 
either twenty (20) additional days, or until the end of the following 
issuance month, at the State agency's option. The State agency may also 
choose one of two dates which will initiate this extension of the 
validity or availability period. The State agency may choose to extend 
the period for authorization documents distributed or for benefits made 
available, on or after the 20th day of the issuance month or after the 
15th day of the issuance month. Whichever date the State agency chooses 
to initiate the required extension, the State agency must use the date 
consistently for all extensions in this category. A household which 
does not transact its authorization document, or obtain the benefits 
directly from an issuance point during the issuance's validity period, 
shall lose its entitlement to the benefits, and the State agency shall 
not issue benefits to such a household for such a period.
* * * * *
    6. In Sec. 274.11, the section heading, the heading and 
introductory text of paragraph (a), and paragraph (a)(1) are revised to 
read as follows:


Sec. 274.11  Issuance and inventory record retention, and forms 
security.

    (a) Availability of records. The State agency shall maintain 
issuance, inventory, reconciliation, and other accountability records 
for a period of three years as specified in Sec. 272.1(f) of this 
chapter. This period may be extended at the written request of FNS.
    (1) Issuance, inventory, reconciliation, and other accountability 
records shall include all Agency, State, and local forms involved in 
the State agency's receipt, storage, handling, issuance, and 
destruction of coupons completed by contract agents or any other 
individuals or entities involved in issuance or inventory, as well as 
those completed by the State agency.
* * * * *
    Dated: April 11, 1995.
Ellen Haas,
Under Secretary for Food, Nutrition, and Consumer Services.
[FR Doc. 95-10091 Filed 4-24-95; 8:45 am]
BILLING CODE 3410-30-U