[Federal Register Volume 60, Number 7 (Wednesday, January 11, 1995)]
[Proposed Rules]
[Pages 2703-2716]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-635]


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Proposed Rules
                                                Federal Register
________________________________________________________________________

This section of the FEDERAL REGISTER contains notices to the public of 
the proposed issuance of rules and regulations. The purpose of these 
notices is to give interested persons an opportunity to participate in 
the rule making prior to the adoption of the final rules.

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Federal Register / Vol. 60, No. 7 / Wednesday, January 11, 1995 / 
Proposed Rules

[[Page 2703]]



DEPARTMENT OF AGRICULTURE

Food and Consumer Service

7 CFR Parts 273 and 274

[Amendment No. 364]
RIN 0584-AB60


Food Stamp Program: Simplification of Program Rules

AGENCY: Food and Consumer Service, USDA.

ACTION: Proposed rule.

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SUMMARY: This action proposes several changes in Food Stamp Program 
rules relating to social security numbers, combined allotments, 
residency, excluded resources, contract income, self-employment 
expenses, certification periods, the notice of adverse action, 
recertification, and suspension under retrospective budgeting. The 
changes are being proposed as means to simplify regulatory requirements 
and to increase consistency with requirements of the Aid to Families 
with Dependent Children Program.

DATES: Comments must be received on or before March 13, 1995 to be 
assured of consideration.

ADDRESSES: Comments should be submitted to Judith M. Seymour, 
Eligibility and Certification Regulation Section, Certification Policy 
Branch, Program Development Division, Food and Consumer Service, USDA, 
3101 Park Center Drive, Alexandria, Virginia 22302. Comments may also 
be datafaxed to the attention of Ms. Seymour at (703) 305-2454. All 
written comments will be open for public inspection at the office of 
the Food and Consumer Service during regular business hours (8:30 a.m. 
to 5 p.m., Monday through Friday) at 3101 Park Center Drive, 
Alexandria, Virginia, Room 720.

FOR FURTHER INFORMATION CONTACT: Questions regarding the proposed 
rulemaking should be addressed to Ms. Seymour at the above address or 
by telephone at (703) 305-2496.

SUPPLEMENTARY INFORMATION:

Executive Order 12866

    This rule has been determined to be significant and was reviewed by 
the Office of Management and Budget under Executive order 12866.

Executive Order 12372

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

Regulatory Flexibility Act

    This rule has been reviewed with regard to the requirements of the 
Regulatory Flexibility Act of 1980 (5 U.S.C. 601-612). Ellen Haas, 
Under Secretary for Food, Nutrition, and Consumer Services, has 
certified that this proposed rule does 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

    Pursuant to 7 CFR 273.14, State welfare agencies must recertify 
eligible households whose certification periods have expired. 
Households are required to submit a recertification form. This rule 
authorizes State agencies to use a shortened or modified form of the 
application used for initial certification. The reporting and 
recordkeeping burden associated with the application, certification and 
continued eligibility of food stamp applicants is approved by the 
Office of Management and Budget under OMB No. 0584-0064. OMB approval 
of the recertification procedures contained in Sec. 273.14 of this 
proposed action is not necessary because the procedures do not add new 
or additional requirements on State agencies. In fact, the proposal 
gives State agencies more flexibility in recertifying households.
    The public reporting burden for the collection of information 
associated with the application, certification and continued 
eligibility of food stamp applicants is estimated to average .1561 
hours per response, including the time for reviewing instructions, 
searching existing data sources, gathering and maintaining the data 
needed, and completing and reviewing the collection of information. 
Send comments regarding this burden estimate or any aspect of the 
information collection requirements, including suggestions for reducing 
the burden, to the Certification Policy Branch, Program Development 
Division (address above) and to the Office of Information and 
Regulatory Affairs, OMB, Room 3208, New Executive Office Building, 
Washington, DC 20503, Attn: Laura Oliven, Desk Officer for FCS.

Executive Order 12778

    This 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'' paragraph of this 
preamble. Prior to any judicial challenge to the provisions of this 
rule or the application of its provisions, all applicable 
administrative procedures must be exhausted. In the Food Stamp Program 
the administrative procedures are as follows: (1) for Program benefit 
recipients--State administrative procedures issued pursuant to 7 U.S.C. 
2020(e)(1) and 7 CFR 273.15; (2) for State agencies--administrative 
procedures issued pursuant to 7 U.S.C. 2023 set out at 7 CFR 276.7 (for 
rules related to non-quality control (QC) liabilities) or Part 284 (for 
rules related to QC liabilities); (3) for Program retailers and 
wholesalers--administrative procedures issued pursuant to 7 U.S.C. 2023 
set out at 7 CFR 278.8.

Background

    In this rule, the Department proposes to revise Food Stamp Program 
regulations in response to State agency requests for waivers of Program 
requirements and suggestions for simplification of rules. In some 
cases, we are proposing to amend the regulations to incorporate 
guidance we have already provided to State agencies. In other 
instances, we are proposing to modify Program rules to provide more

[[Page 2704]]

consistency with requirements in the Aid to Families with Dependent 
Children (AFDC) program. Each proposal is discussed in detail below.

Social Security Numbers for Newborns--7 CFR 273.2(f)(1)(v), 7 CFR 
273.6(b)

    Current regulations at 7 CFR 273.6(a) require an applicant 
household to provide the State agency with the social security number 
(SSN) of each household member. A household member who does not have an 
SSN must apply for one before he or she can be certified, unless there 
is good cause for such failure as provided in 7 CFR 273.6(d). If a 
household member refuses or fails without good cause to apply for an 
SSN, the individual is ineligible to participate.
    Under a program instituted by the Social Security Administration 
(SSA) called ``Enumeration at Birth (EAB),'' 45 CFR 205.52, parents of 
a newborn child may apply for an SSN for the child when the child is 
born if this service is available at the hospital. When providing 
information for the child's birth certificate, the parent may request 
that the child be assigned an SSN and issued an SSN card as part of the 
birth registration process. The State records that information and 
subsequently provides enumeration data to SSA in Baltimore via magnetic 
tape. The time it takes for States to transmit data to SSA varies. 
However, SSA generally prints and mails cards within 3 days of receipt 
of the required data.
    Most hospitals give parents Form SSA-2853, ``Message From Social 
Security.'' This receipt form, which describes the EAB process and how 
long it will take to receive a card, contains the child's name and is 
signed and dated by a hospital official. It is accepted by State 
agencies for welfare or other public assistance purposes.
    Current program regulations do not address the EAB system. Food and 
Consumer Service (FCS) regional offices were informed in a memorandum 
dated July 28, 1989, to instruct State agencies that the Form SSA-2853 
(OP4) could be used as verification of application for an SSN if the 
State agency has other documentation connecting the baby named on the 
form to the household. We are proposing an amendment to 7 CFR 
273.2(f)(1)(v) to reflect that a completed Form SSA-2853 is acceptable 
as proof of SSN application for an infant. However, the proposed 
amendment would give State agencies and households more flexibility in 
this area than the 1989 policy memo granted.
    In cases in which a household is unable to provide or apply for an 
SSN for a newborn baby immediately after the baby's birth, Section 
273.6(d) currently allows for good cause exceptions to the SSN 
requirement. The regulations allow the member without an SSN to 
participate for one month in addition to the month of application. 
However, good cause does not include delays due to illness, lack of 
transportation or temporary absences of that household member from the 
household, and good cause must be shown monthly in order for the 
household member to continue to participate.
    Several State agencies have requested and been granted waivers to 
allow households up to four months following the month in which a baby 
is born to apply for an SSN for a newborn. In justifying the need for a 
waiver, the State agencies cited the difficulty some households 
experience in obtaining a certified copy of the birth certificate 
needed to apply for an SSN.
    To avoid a delay in adding a new member to the household, we 
propose to amend 7 CFR 273.6(b) to provide that, in cases in which a 
household is unable to provide or apply for an SSN for a newborn baby 
immediately after the baby's birth, a household may provide proof of 
application for an SSN for a newborn infant at its next 
recertification. If the household is unable to provide an SSN or proof 
of application at its next recertification, the State agency shall 
determine if the good cause provisions of 7 CFR 273.6(d) are 
applicable.

Combined Allotments--7 CFR 273.2(i) and 274.2(b)

    Current regulations at 7 CFR 274.2(b)(3) provide for the issuance 
of a combined allotment (prorated benefits for the application month 
and full benefits for the subsequent month) for eligible households 
applying after the 15th of the month that qualify for expedited 
service. The regulations require that to receive the combined 
allotment, a household must supply all required verification within the 
5-day expedited service timeframe. If the household does not supply all 
required verification within the expedited service timeframe, the 
household receives a prorated amount for the initial month issued 
within 5 days of application (with waived verification, if necessary, 
to meet the expedited timeframe) and a second allotment for the 
subsequent month issued after all necessary verification has been 
obtained.
    On March 31, 1992, the U.S. District Court for the Northern 
District of Georgia ruled against USDA in Johnson v. USDA and Madigan. 
This case concerned combined allotments for expedited service. The 
Court agreed with the plaintiffs that Section 8(c)(3)(B) of the Food 
Stamp Act, 7 U.S.C. 2017(c)(3)(B), requires that if an eligible 
household applies for food stamps after the fifteenth of the month and 
is entitled to expedited service, it must receive the prorated initial 
month's allotment and the full allotment for the second month within 
the expedited timeframe. In such a case, any additional requirements 
would be postponed until the end of the second month.
    In light of the District Court's decision, the Department chose to 
alter national food stamp policy regarding combined allotments. On June 
16, 1993, the Department issued a policy memorandum to its regional 
Food Stamp Program directors informing them of the change in policy. 
The regional directors were instructed to inform the State agencies in 
their regions of the change. The Department is proposing in this rule 
to incorporate the provisions of the policy memorandum into the Food 
Stamp Program's regulations.
    Currently, the regulations regarding combined allotments are 
contained at 7 CFR 274.2(b) (2), (3), and (4). In order to simplify 
these regulations, the Department is proposing to move the combined 
allotments requirements out of 7 CFR 274.2(b) and into 7 CFR 273.2(i). 
In 7 CFR 274.2, the Department is proposing to delete paragraphs (b) 
(2), (3), and (4), and redesignate paragraphs (b)(1), (c), (d), and (e) 
as paragraphs (b), (d), (e), and (f), respectively. The Department is 
proposing to add two sentences to the end of redesignated paragraph (b) 
which will contain the requirements for issuing benefits to expedited 
service households. The Department is also proposing to add a new 
paragraph (c) which will reference the combined allotment regulations 
at 7 CFR 273.2(i). In 7 CFR 273.2(i)(4)(iii), the Department is 
proposing to revise paragraph (C), and to add two new paragraphs, (D) 
and (E). 7 CFR 273.2(i)(4)(iii)(C) will include the requirements 
currently contained at 7 CFR 274.2(b)(2), which concern combined 
issuance for households certified under normal processing timeframes. 7 
CFR 273.2(i)(4)(iii)(D) shall contain the new requirement that a 
household which applies after the 15th of the month and is processed 
under expedited service procedures shall be issued a combined allotment 
consisting of prorated benefits for the initial month of application 
and benefits for the first full month of participation.

[[Page 2705]]

In these cases, any unsatisfied verification requirement would be 
postponed until the end of the second month. 7 CFR 273.2(i)(4)(iii)(E) 
shall include the requirements currently contained at 7 CFR 
274.2(b)(4), which concern households not entitled to combined 
allotments.
    The regulations at 7 CFR 273.2(i)(4)(iii)(B) currently require that 
households which apply after the fifteenth of the month and are 
assigned certification periods of longer than one month, must have all 
postponed verification completed before it can be issued its second 
month's benefits. Migrant households which apply after the fifteenth of 
the month and are assigned certification periods of longer than one 
month must provide all postponed verification from within-State sources 
before the second month's benefits can be issued, and must provide all 
postponed verification from out-of-State sources before the third 
month's benefits are issued. Because of the change in policy regarding 
combined allotments, eligible households that are entitled to expedited 
service and apply after the 15th of the month must now receive a 
combined allotment which includes their first and second month's 
benefits. Since these households will have already received their 
second month's benefits, postponed verification must now be completed 
prior to the third month of benefits. As noted above, this is current 
policy for migrants in regard to completing out-of-State verification, 
and the Department is proposing to broaden the requirement to make it 
mandatory for all households which apply after the fifteenth of the 
month and are assigned certification periods of longer than one month. 
Therefore, the Department is proposing to amend 7 CFR 
273.2(i)(4)(iii)(B) accordingly. The Department is also proposing to 
make a conforming amendment to 7 CFR 273.10(a)(1)(iv), which contains a 
similar verification requirement to that currently contained in 7 CFR 
273.2(i)(4)(iii)(B).
    Current regulations at 7 CFR 273.2(i)(4)(iii)(B) require that when 
households which apply for benefits after the 15th of the month provide 
the required postponed verification, the State agency shall issue the 
second month's benefits within five working days from receipt of the 
verification or the first day of the second calendar month, whichever 
is later. The Department is proposing to remove this requirement.
    Current regulations at 7 CFR 273.2(i)(4)(iii)(C) require that 
households which are eligible for expedited service and that apply 
after the fifteenth of the month must be issued their second month's 
benefits on the first working day of the second calendar month, not the 
day benefits would normally be issued in a State using staggered 
issuance. Because of the potentially lengthy period of time between 
issuance of the combined allotment for the month of expedited service 
and the first full month of participation and issuance of a second 
allotment for the third month of participation if benefits are issued 
to the household in a State using staggered issuance, the Department 
has decided to retain the issuance requirement of 7 CFR 
273.2(i)(4)(iii)(C) for the third month of benefits. Therefore, the 
Department is proposing to add a new paragraph 7 CFR 
273.2(i)(4)(iii)(F) which will require that in States with staggered 
issuance, households be issued their third allotment by the first 
working day of the third calendar month. For allotments in subsequent 
months, State agencies will employ their normal issuance mechanisms.
    Current regulations at 7 CFR 273.2(i)(4)(i)(B) require that 
households entitled to expedited service furnish a social security 
number (SSN) for each household member before the first full month of 
participation. Households that are unable to provide the required SSNs 
or who do not have one prior to the first full month of participation 
can only participate if they satisfy the good cause requirements with 
respect to SSNs specified in 7 CFR 273.6(d).
    Because of the change in combined allotment policy, eligible 
households that apply after the fifteenth of the month and are entitled 
to expedited service can receive their second month's benefits without 
having to furnish an SSN. The Department is proposing to revise the 
regulations at 7 CFR 273.2(i)(4)(i)(B) to require that households 
entitled to expedited service that apply after the fifteenth of the 
month furnish an SSN for each person prior to the third month of 
participation.
    Current regulations at 7 CFR 273.2(i)(4)(iii) provide that 
households that are certified for expedited service and have postponed 
verification requirements may be certified for either the month of 
application or for longer periods, at the State agency's option. 7 CFR 
273.2(i)(4)(iii)(A) currently addresses verification requirements for 
households that are certified only for the month of application, and 7 
CFR 273.2(i)(4)(iii)(B) currently addresses verification requirements 
for households that are certified for longer than the month of 
application. Neither section of the regulations addresses verification 
requirements for households that apply before the 15th of the month. 
The Department is proposing to eliminate this deficiency by amending 7 
CFR 273.2(i)(4)(iii)(A) to address verification requirements for 
households that apply on or before the 15th of the month and to amend 7 
CFR 273.2(i)(4)(iii)(B) to address verification requirements for 
households that apply after the 15th of the month.
    Current regulations at 7 CFR 273.2(i)(4)(iii) give State agencies 
the option of requesting any household eligible for expedited service 
which applies after the 15th of the month to submit a second 
application (at the time of initial certification) if the household's 
verification requirements have been postponed. Under current policy, 
that second application would be denied for the first month and acted 
on for the second month. However, now that expedited service households 
will be receiving a combined allotment of their first and second 
month's benefits, under our proposal, the second application would be 
denied for both the first and second months and acted on for the third 
month. The Department believes that current regulations do not allow 
for this procedure and is, therefore, proposing to amend the 
regulations at 7 CFR 273.10(a)(2)(i) to require that if a household 
files an application for recertification in any month in which it is 
receiving food stamp benefits, the State agency shall act on that 
application for eligibility and benefit purposes starting with the 
first month after the current certification period expires.

Residency--7 CFR 273.3

    Current rules at 7 CFR 273.3 require food stamp households to live 
in the project area in which they apply unless the State agency has 
made arrangements for particular households to apply in nearby 
specified project areas. A proposed rule on Consistency for Food Stamp 
Program, Aid to Families with Dependent Children, and Adult Assistance 
Programs (the Consistency rule), published September 29, 1987, at 52 FR 
36549, would have permitted State agencies to allow Statewide 
residency. The change was proposed to increase consistency with 
requirements of the AFDC and the Adult Assistance programs under Titles 
I, X, XIV, and XVI of the Social Security Act, which require that 
applicants reside in the State, but have no project area requirement. 
Under that proposed rule, State agencies would still have been able to 
designate limited project areas and restrict where a given household 
could apply. That proposed rule was not

[[Page 2706]]

published as a final rulemaking because of the initiation of a broader 
AFDC/food stamp consistency effort. However, in the interest of Program 
simplification, the Department has decided to repropose the provision. 
We are proposing, therefore, to amend 7 CFR 273.3 to give State 
agencies the option of permitting households to live anywhere in the 
State rather than in the project area in which they apply for benefits.
    Comments received on this provision of the proposed Consistency 
rule were favorable. One commenter did ask, however, that State 
agencies which continue to require an applicant to apply in a 
particular project area office be required to forward the application 
from an ``incorrect'' office to a ``correct'' receiving office. The 
regulations at 7 CFR 273.2(c)(2)(ii) provide that if a household files 
an application at the incorrect office within a project area, the State 
agency shall forward the application to the correct office the same 
day. The application processing timeframes begin when the correct 
office receives the application. This provision of 273.2(c)(2)(ii) 
would continue to apply to State agencies which require applicants to 
apply in a particular project area. We are proposing, however, to add a 
new paragraph (iii) to 7 CFR 273.2(c)(2) to address application 
processing timeframes in States which opt to allow Statewide residency. 
If a State agency does not require that households apply in specified 
project areas, the application processing timeframes would begin the 
day the application is received by any office.
    The Department is also proposing to make a second amendment to 7 
CFR 273.3 to clarify the requirements for transferring food stamp cases 
between project areas. Several commenters on the Consistency rule 
requested this clarification. The Department is proposing to amend 7 
CFR 273.3 to state that when a household moves within a State, the 
State agency may either require the household to reapply in the new 
project area or transfer the case from the previous project area to the 
new one and continue the household's certification without requiring a 
new application. If the State agency chooses to transfer the case, it 
must act on changes in the household circumstances resulting from the 
move in accordance with 7 CFR 273.12(c) or 7 CFR 273.21. The State 
agency must also ensure that potential client abuse of case transfers 
from project area to project area is identifiable through the State 
agency's system of duplicate participation checks required by 7 CFR 
272.4(f). Finally, the State agency must develop transfer procedures to 
guarantee that the transfer of a case from one project area to another 
does not affect the household adversely. These proposed requirements 
are consistent with the requirements for transferring cases between 
project areas stated in Policy Interpretation Response System (PIRS) 
Category 3 Policy Memo 3-91-03 issued December 17, 1990.

Funeral Agreements--7 CFR 273.8(e)(2)

    Regulations at 7 CFR 273.8(e)(2) exclude the value of one burial 
plot per household member from resource consideration. Questions have 
arisen concerning the treatment of pre-paid funeral agreements. In the 
Consistency rule, we proposed to adopt a funeral agreement policy 
similar to that of the AFDC program. AFDC regulations at 45 CFR 
233.20(a)(3)(i)(4) exclude from resource consideration ``bona fide 
funeral agreements (as defined and within limits specified in the State 
plan) of up to a total of $1,500 of equity value or a lower limit 
specified in the State plan for each member of the assistance unit.'' 
We proposed in the Consistency rule to amend 7 CFR 273.8(e) to allow 
for an exemption from resource consideration of up to $1,500 for bona 
fide, pre-paid funeral agreements that are accessible to the household. 
Funeral agreements that are inaccessible to a household were not 
affected by the proposed rule, as they are excluded from resource 
consideration under the provisions of 7 CFR 273.8(e)(8).
    There were 26 comments on the funeral agreement provision in the 
proposed rule. Many commenters mistakenly thought that the proposed 
provision would limit the exclusion of inaccessible funeral agreements 
to a maximum of $1,500. Others believed the $1,500 limit on the 
exclusion of funds in accessible funeral agreements should be either 
raised or removed.
    In this rule, the Department is again proposing the funeral 
agreement exclusion. We are retaining the $1,500 limit on the exclusion 
in order to remain consistent with AFDC and to lessen the likelihood of 
abuse of the exemption. Therefore, the Department is proposing to amend 
7 CFR 273.8(e)(2) to exclude as a resource the value of one bona fide 
funeral agreement up to $1,500 in equity value per household member.

Determining Income--7 CFR 273.10(c)(2)

    Current regulations at 7 CFR 273.10(c)(2)(iii) provide that 
households receiving Federal assistance payments (PA) or State general 
assistance (GA), Supplemental Security Income (SSI), or Old-Age, 
Survivors, and Disability Insurance (OASDI) benefits on a recurring 
monthly basis shall not have their monthly income from these sources 
varied merely because mailing cycles may cause two payments to be 
received in one month and none in the next month.
    There are other instances in which a household may receive a 
disproportionate share of a regular stream of income in a particular 
month. For example, an employer may issue checks early because the 
normal payday falls on a weekend or holiday. We have granted waivers to 
several State agencies to allow income such as State employment checks 
received monthly or twice a month to be counted in the month the income 
is intended to cover rather than the month in which it is received.
    We are proposing to amend 7 CFR 273.10(c)(2)(iii) to specify that 
income received monthly or semimonthly (twice a month, not every two 
weeks) shall be counted in the month it is intended to cover rather 
than the month in which it is received when an extra check is received 
in one month because of changes in pay dates for reasons such as 
weekends or holidays.

Contract Income--7 CFR 273.10(c)(3)(ii)

    Section 5(f)(1)(A) of the Food Stamp Act, 7 U.S.C. 2014(f)(1)(A), 
provides that households which derive their annual income (income 
intended to meet the household's needs for the whole year) from 
contract or self-employment shall have the income averaged over 12 
months. Current regulations at 273.10(c)(3)(ii) implement this 
provision of the Act, stating that ``[h]ouseholds which, by contract or 
self-employment, derive their annual income in a period of time shorter 
than 1 year shall have that income averaged over a 12-month period, 
provided the income from the contract is not received on an hourly or 
piecework basis.'' The regulations at 7 CFR 273.11(a)(1)(iii) address 
how self-employment income which is not a household's annual income and 
is intended to meet the household's needs for only part of the year 
should be handled. 7 CFR 273.11(a)(1)(iii) provides that ``[s]elf-
employment income which is intended to meet the household's needs for 
only part of the year shall be averaged over the period of time the 
income is intended to cover.'' The regulations, however, fail to 
specify how contract income which is not a household's annual income 
and is intended to meet the household's needs for only part of the year 
should be handled. This omission in the regulations has been

[[Page 2707]]

brought to our attention in several waiver requests from State 
agencies. We are taking action to rectify this deficiency in the 
regulations by proposing to amend 7 CFR 273.10(c)(3)(ii) to clarify 
that contract income which is not the household's annual income and is 
not paid on an hourly or piecework basis shall be averaged over the 
period the income is intended to cover.

Certification Periods--7 CFR 273.10(f)

    In October 1991, the Department solicited suggestions from State 
agencies for simplifying the recertification process. Several State 
agencies recommended changes in the requirements for certification 
periods to allow more flexibility in aligning the food stamp 
recertification and the PA/GA redetermination in joint cases. We have 
granted waivers to State agencies to facilitate matching the PA/GA and 
food stamp periods, including extension of food stamp certification 
periods for up to 16 months.
    Alignment of the food stamp recertification with the PA/GA 
redetermination has long been a problem for State agencies. Section 
3(c) of the Food Stamp Act, 7 U.S.C. 2012(c), requires that the food 
stamp certification period of a GA or PA household coincide with the 
period for which the household is certified for GA or PA. However, 
because PA/GA and Food Stamp Program processing standards and the 
period for which benefits must be provided are not the same, it is 
often difficult to get the certification periods for the programs to 
coincide.
    Some State agencies have requested that the Food Stamp Program 
return to the policy of open-ended certification periods which existed 
prior to the Food Stamp Act of 1977 so that the food stamp portion of 
the case may be recertified at the same time as the PA/GA 
redetermination. Section 11(e)(4) of the Act, 7 U.S.C. 2020(e)(4), 
however, requires that households be assigned definite certification 
periods and thus precludes the use of open-ended certification periods. 
It is also clear in the legislative history of the Act that Congress 
intended for households participating in the Food Stamp Program to be 
subject to distinct certification periods. The House of Representatives 
Report No. 464, 95th Cong., 1st Sess. (August 10, 1977), states on page 
277 that ``* * * in no event should [the mandate that the food stamp 
certification period be identical to the PA eligibility period] lead to 
food stamp eligibility for public assistance recipients being a 
perpetual entitlement as their assistance might be instead of being 
subject to distinct entitlements marked off by certification period[s] 
* * *'' We feel, therefore, that the intent of the Act clearly 
prohibits us from returning to open-ended certification periods.
    We are proposing, however, three alternative means of assisting 
State agencies in aligning PA/GA and food stamp certification periods. 
First, we are proposing to amend 7 CFR 273.10(f)(3) to allow the 
following procedure: When a household is certified for food stamp 
eligibility prior to an initial determination of eligibility for PA/GA, 
the State agency shall assign the household a food stamp certification 
period consistent with the household's circumstances. When the PA/GA is 
approved, the State agency shall reevaluate the household's food stamp 
eligibility. The household will not be required to submit a new 
application or undergo another face-to-face interview. If eligibility 
factors remain the same, the food stamp certification period can be 
extended up to an additional 12 months to align the household's food 
stamp recertification with its PA/GA redetermination. The State agency 
would be required to send a notice informing a household of any such 
changes in its certification period. At the end of the extended 
certification period the household must be sent a Notice of Expiration 
and must be recertified before being determined eligible for further 
food stamp assistance, even if the PA/GA redetermination has not been 
completed. In the event that a household's PA/GA redetermination is not 
completed at the end of the food stamp certification period and, as a 
result, the household's food stamp and PA/GA certification periods are 
no longer aligned, the State agency may employ the procedure described 
above to once again align those certification periods.
    Our second proposal for aiding State agencies in aligning PA/GA and 
food stamp certification periods is to allow State agencies to 
recertify a household currently receiving food stamps when the 
household comes into a State office to report a change in circumstances 
for PA/GA purposes. At that time, the State agency would require the 
household to fill out an application for food stamps and to undergo a 
face-to-face interview. If the household is determined eligible to 
continue receiving food stamps, its current certification period would 
end and a new one would be assigned.
    Our third proposal for aiding State agencies in aligning PA/GA and 
food stamp certification periods would allow State agencies to assign 
indeterminate certification periods to households certified for both 
food stamps and PA/GA. Under this proposal, a household's food stamp 
certification period would be set to expire one month after the 
household's scheduled PA/GA redetermination, so long as the period of 
food stamp certification did not exceed 12 months. Therefore, if a food 
stamp certification were set to expire in seven months, that being the 
month after the month the PA redetermination was due, but the PA 
redetermination was not done on time, the food stamp certification 
period could be postponed up to an additional five months to align food 
stamp recertification and PA/GA redetermination. In the twelfth month, 
the household would have to be recertified for food stamp purposes, 
even if the PA redetermination had not yet been completed.
    The Department is proposing to amend 7 CFR 273.10(f)(3) to permit 
State agencies to implement the three above-described procedures.

Calculating Boarder Income--7 CFR 273.11(b)

    Current rules at 7 CFR 273.11(b) provide that State agencies must 
use the maximum food stamp allotment as a basis of establishing the 
cost of doing business for income received from boarders when the 
household does not own a commercial boardinghouse. Boarders are not 
included as members of the household to which they are paying room and 
board. The households receiving the room and board payments must 
include those payments as self-employment income, but can exclude that 
portion of the payments equal to the cost of doing business. The rules 
provide that the cost of doing business is either (1) the maximum food 
stamp allotment for a household size equal to the number of boarders; 
or (2) the actual documented cost of providing room and meals, if that 
cost exceeds the maximum allotment. The Department is proposing to 
revise current regulations to provide State agencies with an additional 
option for calculating border income.
    The Consistency rule included a provision that would have required 
State agencies to use, in place of the maximum allotment method, a flat 
percentage equal to 75 percent of the boarder-generated income as the 
means of establishing the cost of doing business for income received 
from boarders. The proposal allowed the household to use actual 
expenses if it could verify that its actual expenses were higher than 
the flat percentage. This is currently the policy of the AFDC

[[Page 2708]]

program as indicated in 45 CFR 233.20(a)(6)(v)(B).
    There were only a few comments received on this proposal in the 
Consistency rule. The majority opposed the proposal, arguing that use 
of the fixed percentage would further burden households by requiring 
them to document all their actual expenses or face the possibility of 
overstating the income they receive from boarders.
    Several State agencies have obtained waivers to allow use of a flat 
percentage to calculate allowable costs of doing business for 
households with boarders. It is our understanding that other State 
agencies prefer the maximum allotment method.
    In this rule, we are proposing to add a new paragraph, 7 CFR 
273.11(b)(1)(ii)(C), to give State agencies the option of using actual 
costs, the maximum allotment for a household size equal to the number 
of boarders, a flat amount, or a percentage of income from boarders to 
determine the cost of doing business of households with boarders. 
Households must be given the opportunity to claim actual costs. We are 
not proposing a percentage limit at this time. Current waivers specify 
75 percent, 60 percent, or the limit used in the State's AFDC program. 
We are seeking comments concerning an appropriate percentage.

Day Care Providers--Sec. 273.11(b)(2)

    The Department is also proposing to allow households who are day 
care providers to use a standard per individual amount as a cost of 
doing business. Under current regulations, at 7 CFR 273.11(a)(4)(i), 
households which provide in-home day care can claim the cost of meals 
fed to individuals in their care as a cost of doing business, provided 
they can document the cost of each meal. Several State agencies have 
obtained waivers to use a flat dollar amount, such as $5 a day, or to 
use the FCS Child and Adult Care Food Program reimbursement rates, 
which are updated annually to reflect the cost of meals as specified in 
7 CFR 26.4(g).
    We believe use of a standard reimbursement rate for the cost of 
providing day care would eliminate the burden on day care providers to 
document itemized costs incurred for producing the income and would 
increase the benefits for households that fail to adequately document 
business costs. Use of a standard would also decrease the amount of 
time needed to process these self-employment cases and reduce payment 
errors. Therefore, we are proposing to amend 7 CFR 273.11(b) to add a 
new paragraph, (2), to allow use of a standard amount for determining 
the self-employment expenses of households providing day care. State 
agencies would be required to inform households of their opportunity to 
verify actual meal expenses and use actual costs if higher than the 
fixed amount. When establishing a standard amount, State agencies 
should take into account the differences in cost for full-day and part-
day care. Households that are reimbursed for the cost of meals fed to 
individuals in their care, for example through the FCS Child and Adult 
Care Food Program, cannot claim the standard but may claim actual 
expenses that exceed the amount of their reimbursement.

Exemption From Providing a Notice of Adverse Action--7 CFR 273.13(b)

    Current regulations at 7 CFR 273.13(a) require State agencies to 
send a notice of adverse action (NOAA) to a household prior to any 
action to reduce or terminate the household's benefits, except as 
provided in 7 CFR 273.13(b). That section does not include an exception 
to the NOAA requirements when mail sent to a household is returned with 
no known forwarding address. The AFDC regulations at 45 CFR 
205.10(a)(4)(ii) do not require a notice of adverse action in this 
situation. In the Consistency rule, the Department proposed to add an 
exemption from sending an NOAA if agency mail is returned with no known 
forwarding address. Since it is unlikely that the Postal Service can 
deliver a NOAA mailed to an address which is no longer correct, it is 
reasonable to specify in regulations that no notice is required if 
delivery cannot be reasonably expected.
    Few comments were received on this proposal and most were 
favorable. Therefore, the Department is reproposing the amendment to 7 
CFR 273.13(b) to provide that no NOAA is required if the household's 
mail has been returned with no known forwarding address.

Recertification--7 CFR 273.14

    Background. Over the years, the Department has become aware, 
through State agency waiver requests and other means, of the need to 
simplify the food stamp recertification process. The need for 
simplification has become especially important in this time of tight 
budgetary constraints and of increased demand on the time of State 
eligibility workers. In this rule, the Department is proposing to 
simplify recertification procedures in several areas.
    State agencies have requested more flexibility in developing 
recertification procedures. We understand the need of State agencies to 
be able to adopt procedures that are consistent with those of other 
programs and which can be administered in conjunction with computerized 
systems. However, the Department is limited in the extent to which it 
can give State agencies more flexibility because of the provisions of 
the Food Stamp Act. There are two main provisions in the Act that 
govern the timeframes for recertification. Section 11(e)(4), 7 U.S.C. 
2020(e)(4), provides that each participating household must receive a 
notice of expiration of its certification prior to the start of the 
last month of its certification period. That section of the Act also 
provides that a household which files an application no later than 15 
days prior to the end of the certification period shall, if found to be 
still eligible, receive its allotment no later than one month after the 
receipt of the last allotment. Section 11(e)(4) allows modification of 
the timeframes for monthly reporting households.
    We are proposing changes to the recertification process that will 
provide State agencies with more flexibility and at the same time 
retain the right of a household to receive uninterrupted benefits if it 
applies by the filing deadline and meets interview and verification 
requirements within the required timeframes. In exchange for the 
increased flexibility, State agencies would be responsible for 
providing households sufficient notice and time to comply with 
application, interview, and verification requirements. The proposed 
changes are discussed below.
    In accordance with Sec. 273.14(a) of the current regulations, 
households that meet all eligibility requirements must have their 
recertifications approved or denied by the end of their current 
certification period and, if recertified, be provided uninterrupted 
benefits. The regulations give State agencies two options for handling 
the cases of households who do not provide verification or attend an 
interview as required for recertification. The State agency may either 
deny the household's application at the end of the current 
certification period or within 30 days after the date the application 
was filed. State agencies also have the option of establishing 
verification timeframes. A household which does not meet all the 
verification requirements within required timeframes loses its right to 
uninterrupted benefits but can receive benefits within 30 days after 
the date the application was filed. These requirements are stated in 7 
CFR 273.14 (c) and (d). State agencies have found these procedures 
confusing and have requested that they be simplified.

[[Page 2709]]

    In this rulemaking we are proposing to reorganize the 
recertification section in an attempt to provide a clearer expression 
of the requirements. The proposed revision of 7 CFR 273.14(a) contains 
general introductory statements regarding actions the household and the 
State agency must take to ensure that eligible households receive 
uninterrupted benefits. We propose to include in revised 7 CFR 
273.14(b) requirements for the notice of expiration, the 
recertification form, the interview and verification. In revised 7 CFR 
273.14(c), we propose to include the filing deadlines for timely 
applications for recertification. These and other revisions are 
discussed below.
1. Recertification Process
    a. Notice of expiration (NOE). Several State agencies have 
requested that we reduce the mandated content of the NOE. Under current 
regulations at 7 CFR 273.14(b)(3), the following information is 
required in the NOE:

    (1) The date the current certification period ends;
    (2) The date by which the household must file an application for 
recertification to receive uninterrupted benefits;
    (3) Notice that the household must appear for an interview, 
which will be scheduled on or after the date the application is 
timely filed in order to receive uninterrupted benefits;
    (4) Notice that the household is responsible for rescheduling a 
missed interview;
    (5) Notice that the household must complete the interview and 
provide all required verification in order to receive uninterrupted 
benefits;
    (6) Notice of the number of days the household has for 
submitting missing verification;
    (7) Notice of the household's right to request an application 
and have the State agency accept an application as long as it is 
signed and contains a legible name and address;
    (8) The address of the office where the application must be 
filed;
    (9) Notice of the consequences of failure to comply with the 
notice of expiration;
    (10) Notice of the household's right to file the application by 
mail or through an authorized representative;
    (11) Notice of the household's right to request a fair hearing; 
and
    (12) Notice of the fact that any household consisting only of 
Supplemental Security Income (SSI) applicants or recipients is 
entitled to apply for food stamp recertification at an office of the 
Social Security Administration.

    We have reviewed the requirements for the NOE and have determined 
that none of the requirements in the current rule can be eliminated 
because they are required either by the provisions of the Act or 
judicial orders. Therefore, we have retained all of the current 
recertification requirements in the proposed revised section 
273.14(b)(1).
    b. Recertification form. In response to our request for ideas for 
simplifying the recertification process, several State agencies 
suggested that we develop a short recertification form to be used in 
conjunction with current case file information. Several State agencies 
have requested and been granted waivers to allow use of a modified 
application form for recertification. The forms developed by the State 
agencies do not require households to provide information which is 
already available in the case file.
    This rule proposes to revise 7 CFR 273.14(b)(2) to allow State 
agencies to use a modified application form for recertifying 
households. This form could only be used for those households which 
apply for recertification before the end of their current certification 
period. FCS does not plan to develop a model recertification form, so 
individual State agencies must devise this form themselves. However, 
because Section 11(e)(2) of the Act, 7 U.S.C. 2020(e)(2), requires that 
the Department approve all deviations from the uniform national food 
stamp application, all State agency-designed recertification 
applications must be approved by FCS before the forms can be used.
    To allow State agencies as much flexibility as possible in the 
design of their modified recertification forms, we are not specifying 
the exact questions that must be asked. The State agency should design 
an application that suits its own needs, whether it be a short form on 
which the household notes changes since its last certification, or a 
computer printout of household circumstances annotated by the 
caseworker, or some other type of form. Whichever type of form the 
State agency chooses to use, it must be able to obtain from that form, 
or have available in the case record, all information concerning 
household composition, income and resources needed to redetermine 
eligibility and the correct benefit amount for the first month of the 
new certification period. However, while we are not specifying 
questions that must be on the forms, we would require that all 
recertification forms include the information required by 7 CFR 
273.2(b)(1) (i), (ii), (iii), (iv) and (v). This information is 
required by Section 11(e)(2) of the Act, 7 U.S.C. 2020(e)(2), and 
apprises applicants of their rights and responsibilities under the 
Program. The information regarding the Income and Eligibility 
Verification System in 7 CFR 273.2(b)(2) may be provided on a separate 
form.
    c. Interviews. Under current regulations, State agencies are 
required to conduct face-to-face interviews with households applying 
for recertification. Several State agencies suggested that we modify 
the requirement that all households have face-to-face interviews. Some 
State agencies suggested eliminating the face-to-face interview 
entirely or reserve the office interview for those households that do 
not have telephones. Other State agencies indicated that case workers 
should be allowed to decide on a case-by-case basis which households 
should be interviewed. Other suggestions included eliminating the 
interview requirement entirely for households that are not error-prone, 
eliminating recertification interviews unless there is questionable 
information that cannot be resolved in any other manner, and giving 
State agencies the option of not interviewing households receiving AFDC 
if they are not due for an AFDC redetermination.
    We consider the face-to-face interview to be an important source of 
information about household circumstances. However, we have granted 
waivers on a State-by-State basis to substitute a telephone interview 
for the face-to-face interview for households with very stable 
circumstances, such as households in which all members are elderly or 
disabled and have no earned income. In an effort to be responsive to 
State agency requests for simplification and flexibility, we are 
proposing to revise 7 CFR 273.14(b)(3) to allow telephone interviews in 
place of face-to-face interviews at recertification for some categories 
of households. We are not allowing State agencies to substitute 
telephone interviews for face-to-face interviews on a case-by-case 
basis. Section 11(e)(2), 7 U.S.C. 2020(e)(2), currently provides for 
the waiver of the face-to-face interview on a case-by-case basis for 
those households for whom a visit to the food stamp office would be a 
hardship. We feel, however, that to allow caseworkers the option of 
waiving a face-to-face interview for any household based only on that 
caseworker's personal determination that a face-to-face interview is 
not needed may compromise the right to equal treatment guaranteed all 
food stamp recipients under Section 11(c) of the Act, 7 U.S.C. 2020(c).
    We are proposing to revise 7 CFR 273.14(b)(3) to allow State 
agencies to interview by telephone any household that has no earned 
income and whose members are all elderly or disabled. We are also 
proposing to give State agencies the option of conducting a face-to-
face interview only once a year with a food stamp household that 
receives PA or

[[Page 2710]]

GA. The interview could be conducted at the same time the household is 
scheduled for its PA or GA face-to-face interview. At any other 
recertification during that time period, the State agency may choose to 
interview the household by telephone. However, the State agency would 
be required to grant a face-to-face interview to any household that 
requests one.
    Several State agencies suggested that group interviews or 
videotapes be used whenever possible to cover areas of the 
recertification process common to all recipients. Current regulations 
do not prohibit the use of group interviews for informing households 
about the Program and Program rights and responsibilities. However, a 
certification worker must obtain information about specific household 
circumstances in a setting which guarantees confidentiality and 
privacy, as required by 7 CFR 273.2(e)(1).
    d. Verification. Current regulations at 7 CFR 273.14(c)(3) give 
State agencies the option of establishing timeframes for submission of 
verification information. To increase consistency with procedures for 
initial applications and provide sufficient time for households to 
obtain the required verification information, we are proposing to 
revise 7 CFR 273.14(b) to add a new paragraph (4) to require State 
agencies to allow households a minimum of 10 days in which to satisfy 
verification requirements.
    Current regulations at 7 CFR 273.2(f)(8)(i) require State agencies 
to verify at recertification a change in income or actual utility 
expenses if the source has changed or the amount has changed by more 
than $25, and previously unreported medical expenses and total 
recurring medical expenses which have changed by $25 or more. 7 CFR 
273.2(f)(8)(i) also requires that State agencies not verify income, 
total medical expenses, or actual utility expenses which are unchanged 
or have changed by $25 or less, unless the information is ``incomplete, 
inaccurate, inconsistent, or outdated.'' Several State agencies have 
requested that we simplify verification requirements at recertification 
by requiring them to only reverify information that is questionable, 
rather than information that is ``incomplete, inaccurate, inconsistent 
or outdated.'' The Department does not see that there is any 
substantive difference between the terms ``incomplete, inaccurate, 
inconsistent or outdated'' and the term ``questionable.'' Presumably, 
State agency caseworkers would consider questionable any information 
that is incomplete, inaccurate, inconsistent, or outdated. Therefore, 
if replacing the words ``incomplete, inaccurate, inconsistent, or 
outdated'' with the word ``questionable'' will simplify Program 
administration for State agencies, we see no objection to doing so. We 
are proposing, therefore, to amend 7 CFR 273.2(f)(8)(i)(A) and (C), and 
(ii) to replace the terms ``incomplete, inaccurate, inconsistent or 
outdated'' with the term ``questionable.''
    e. Filing deadline. Currently, 7 CFR 273.14(c)(1) provides that for 
monthly reporting households the deadline for filing an application for 
recertification is the normal date for filing a monthly report. Several 
State agencies have requested that, for the purpose of administrative 
efficiency and flexibility, the Department make the filing deadline for 
monthly reporters the 15th of the last month of the household's 
certification period (recertification month), the same as it is for 
nonmonthly reporting households.
    We are proposing to revise 7 CFR 273.14(c) to give State agencies 
the option of making the filing deadline for monthly reporters either 
the 15th of the recertification month or the household's normal date 
for filing a monthly report.
2. Timely Processing
    Current regulations at 7 CFR 273.14(d) provide that the State 
agency shall act to provide uninterrupted benefits to any household 
determined eligible after the household timely filed an application, 
attended an interview, and submitted all necessary verification 
information. Action to approve or deny a recertification application 
must be taken by the end of the certification period if the household 
has met all required application procedures. Households which are 
certified for one month or are in the second month of a two-month 
certification period must receive benefits within 30 days of their last 
issuance. Other households must receive benefits in their normal 
issuance cycle if they have met all processing requirements. If 
verification requirements are unsatisfied at the end of the 
recertification month, the State agency must provide benefits within 
five working days after the household supplies the missing verification 
information. If the State agency is at fault for delaying the 
household's benefits, it must provide benefits as soon as the household 
is determined eligible. Current regulations at 7 CFR 273.14(e) provide 
that eligible households which have complied with all requirements are 
entitled to restored benefits if the State agency does not provide 
benefits in the first month of the new certification period.
    7 CFR 273.14(f)(1) currently addresses failure of the household to 
appear for an interview or provide verification information as 
required. 7 CFR 273.14(f)(2) provides requirements for households that 
do not file a timely application.
    To clarify recertification requirements that address a variety of 
situations that may occur in application processing, we are proposing 
to reorganize sections 7 CFR 273.14(d), (e), and (f) into two new 
sections 7 CFR 273.14(d) and (e). New section 7 CFR 273.14(d) would 
combine all of the provisions of the previous sections relating to 
timeframes for providing benefits when all processing deadlines are 
met. New section 7 CFR 273.14(e) would address situations in which the 
household or the State agency fail to meet processing deadlines.
3. Delayed Processing
    We are proposing to include in new section 273.14(e) requirements 
for providing benefits when delays in application processing occur. 
Section 273.14(e)(1) will address delays caused by the State agency, 
and section 273.14(e)(2) will address delays caused by the household.
    We are also proposing a change in provisions for handling the 
recertification of households which do not comply with the requirements 
for interviews or verification. Under current regulations at 7 CFR 
273.14(a)(3), a State agency may deny a household's application for 
recertification at the time a household's certification period expires 
or within 30 days after the date the application was filed as long as 
the household has had adequate time to satisfy verification 
requirements. Under current regulations at 7 CFR 273.14(a)(2), a 
household that fails to attend a scheduled interview or to provide 
required verification information within required timeframes loses its 
right to uninterrupted benefits but cannot be denied eligibility at 
that time, unless the household fails to cooperate or the household's 
certification period has elapsed.
    To increase consistency with AFDC procedures and provide maximum 
flexibility to State agencies, we are proposing to include in revised 
section 7 CFR 273.14(e) a provision to allow State agencies the option 
of denying eligibility to households as soon as a failure to comply 
with the interview or verification requirement occurs. The State agency 
would be required to send the household a denial notice informing it 
that its application for recertification has been denied. The notice 
would have to contain the reason for the denial, the action required to 
continue

[[Page 2711]]

participation, the date by which it must be accomplished, the 
consequences of failure to comply, notification that the household's 
participation will be reinstated if it complies within 30 days after 
its application for recertification was filed and is found eligible, 
and that the household has a right to a fair hearing. If the household 
subsequently requests an interview or provides the required 
verification information within 30 days of the date of its 
recertification application and is found eligible, the State agency 
must reinstate the household. Under this option, benefits must be 
provided within 30 days after the application for recertification was 
filed or within 10 days of the date the household provided the required 
verification information or completed the interview, whichever is 
later.
    Current regulations at 273.14(f)(2) provide that any application 
not submitted in a timely manner shall be treated as an application for 
initial certification, except for verification requirements. If the 
household does not submit a recertification form before its 
certification period expires, the household's benefits for the first 
month of the new certification period are prorated in accordance with 7 
CFR 273.10(a)(2). However, Section 13916 of the 1993 Leland Act amended 
Section 8(c)(2)(B) of the Act, 7 U.S.C. 2017(c)(2)(B), to eliminate 
proration of first month's benefits if a household is recertified for 
food stamps after a break in participation of less than one month. 
Therefore, if a household submits an application for recertification 
after its certification period has expired, but before the end of the 
month after expiration, the application is not considered an initial 
application and the household's benefits for that first month are not 
prorated. We are proposing to include this new provision in revised 
section 7 CFR 273.14(e)(2)(ii).
4. Expedited Service
    Section 11(e)(2) of the Act, 7 U.S.C. 2020(e)(2), states that when 
a household contacts a food stamp office to make a request for food 
stamp assistance, it shall be permitted to file an application form. 
There is no distinction made in the law between an application for 
initial certification and an application for recertification. Section 
11(e)(9) of the Act, 7 U.S.C. 2020(e)(9), requires State agencies to 
provide coupons within five days after the date of application to 
destitute migrant or seasonal farmworkers, households with gross 
incomes less than $150 a month and liquid resources that do not exceed 
$100; homeless households; and households whose combined gross income 
and liquid resources are less than their monthly rent, mortgage and 
utilities. Since implementation of the expedited service provision of 
the Act, questions have arisen concerning whether expedited service 
requirements apply at recertification.
    Nothing in the legislative history of the Act gives any indication 
as to whether Congress intended households eligible for expedited 
service to receive such service every time they are certified for the 
Program, only at initial certification, or when there has been a break 
in benefits. We originally interpreted the Act and regulations to 
require that expedited service screening requirements apply only at 
initial certification. Since the law makes no distinction between 
applications for initial certification and recertification, we have 
concluded that expedited service provisions should apply to all 
households at recertification. This policy was prompted by the 
realization that some households that move between the last time they 
were certified and the date of their required recertification might not 
receive uninterrupted benefits. We believe it was the intent of 
Congress to provide expedited service when a household would not 
receive its next allotment by its next normal issuance cycle.
    Many State agencies have argued that expedited service at 
recertification is detrimental to recipient households because it 
interferes with their normal issuance cycle. Instead of receiving their 
benefits at the usual time each month, households recertified for 
expedited service often receive their benefits for the first month of 
the new certification period much earlier than normal. The next month 
they have to wait longer to receive benefits. In addition, to obtain 
expedited benefits, some households have to pick up their coupons at 
their local assistance office instead of having them mailed, which is 
an inconvenience to the household. We have determined that because of 
the requirements of Section 11(e)(2) of the Act, households may not be 
asked to waive their right to expedited service. Therefore, State 
agencies are not allowed to mail expedited issuance coupons, even at 
the household's request if such action would result in failure to meet 
the five-day requirement for delivery of benefits.
    State agencies have also argued that expediting issuance for 
households at recertification leads to an increased administrative 
burden. In some States, more than 50 percent of participating 
households now meet the criteria for expedited service. This has placed 
a tremendous burden on State agencies experiencing severe budgetary 
constraints, making it difficult for them to meet the 30-day and 5-day 
requirements for initial applications. State agencies argue that 
applying expedited screening requirements at recertification only 
increases the application processing problem without providing a 
substantial benefit to most households.
    In light of the issues discussed above, we have again reexamined 
our policy and have concluded that not all households must receive 
expedited service at recertification. Section 11(e)(4) of the Act, 7 
U.S.C. 2020(e)(4), states that households that apply in a timely 
fashion must receive their benefits no later than one month after the 
receipt of their last allotment. We believe that this provision of the 
law, which ensures that a household that punctually applies for 
recertification will continue to receive its benefits in its normal 
issuance cycle, should take precedence over the requirement for 
expedited service.
    We are proposing, therefore, to amend the regulations by including 
a new section, 7 CFR 273.14(f), which will clarify that households 
which punctually apply for recertification, or who apply late but 
within the certification period, are not entitled to expedited service. 
However, households which do not apply for recertification until the 
month after their certification period ends are entitled to expedited 
service if they are otherwise eligible for such service. A conforming 
amendment to 7 CFR 273.2(i)(4)(iv) is also proposed.

Retrospective Suspension--7 CFR 273.21(n)

    Current regulations at 7 CFR 273.21(n) allow State agencies the 
option of suspending issuance of benefits to a household that becomes 
ineligible for one month. State agencies that do not choose suspension 
must terminate a household's certification when it becomes ineligible, 
and the household must reapply to reestablish its eligibility for the 
Program. Current regulations at 7 CFR 273.21(o) provide that when a 
household is suspended based on prospective ineligibility, the State 
agency shall not count any noncontinuing circumstances which caused the 
prospective ineligibility when calculating the household's benefits 
retrospectively in a subsequent month.
    The need for suspension typically occurs when a household paid 
weekly (or biweekly) receives an extra check in a month with five (or 
three) paydays. Under current policy, State agencies which opt to 
suspend rather than terminate a household's participation

[[Page 2712]]

must anticipate prospectively which month the household will be 
ineligible and suspend the household's participation for that month. 
Many State agencies have received waivers that allow them to suspend 
the household for the issuance month corresponding to the budget month 
in which the household receives the extra check. This is the method 
used for suspension in the AFDC program. In an effort to achieve 
consistency between the AFDC and Food Stamp Programs, we are proposing 
to amend 7 CFR 273.21(n) to allow State agencies the option of 
prospective or retrospective suspension. The option to suspend and the 
method of suspending must be applied Statewide.

Implementation

    The Department is proposing that the provisions of this rulemaking 
must be implemented no later than 180 days after publication of the 
final rule. The Department also proposes to allow variances resulting 
from implementation of the provisions of the final rule to be excluded 
from error analysis for 90 days from the required implementation date, 
in accordance with 7 CFR 275.12(d)(2)(vii).

List of Subjects

7 CFR Part 273

    Administrative practice and procedure, Aliens, Claims, Food Stamps, 
Fraud, Grant programs--social programs, Penalties, Records, Reporting 
and recordkeeping requirements, Social Security.

7 CFR Part 274

    Administrative practice and procedure, Food Stamps, Fraud, Grant 
programs--social programs, Reporting and recordkeeping requirements, 
State liabilities.

    Accordingly, 7 CFR parts 273 and 274 are proposed to be amended as 
follows:
    1. The authority citation of parts 273 and 274 continues to read as 
follows:

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

PART 273--CERTIFICATION OF ELIGIBLE HOUSEHOLDS

    2. In Sec. 273.2:
    a. A new paragraph (c)(2)(iii) is added.
    b. A new sentence is added to the end of paragraph (f)(1)(v).
    c. The last sentence of paragraph (f)(8)(i)(A) is amended by 
removing the words ``incomplete, inaccurate, inconsistent, or 
outdated'' and adding in their place the word ``questionable''.
    d. The second sentence of paragraph (f)(8)(i)(C) is amended by 
removing the words ``incomplete, inaccurate, inconsistent, or 
outdated'' and adding in their place the word ``questionable''.
    e. Paragraph (f)(8)(ii) is amended by removing the words 
``incomplete, inaccurate, inconsistent, or outdated'' and adding in 
their place the word ``questionable''.
    f. Paragraphs (i)(4)(iii)(A), (i)(4)(iii)(B), and (i)(4)(iii)(C) 
are revised.
    g. New paragraphs (i)(4)(iii)(D), (i)(4)(iii)(E), and 
(i)(4)(iii)(F) are added.
    h. A new sentence is added at the end of paragraph (i)(4)(iv).
    The additions and revisions read as follows:


Sec. 273.2.   Application processing.

* * * * *
    (c) Filing an application. * * *
    (2) Contacting the food stamp office. * * *
    (iii) In State agencies that elect to have Statewide residency, as 
provided in Sec. 273.3, the application processing timeframes begin 
when the application is filed in any food stamp office in the State.
* * * * *
    (f) Verification. * * *
    (1) Mandatory verification. * * *
    (v) Social security numbers. * * * A completed SSA Form 2853 shall 
be considered proof of application for an SSN for a newborn infant.
* * * * *
    (i) Expedited Service. * * *
    (4) Special procedures for expediting service. * * *
    (iii) * * *
    (A) For households applying on or before the 15th of the month, the 
State agency may assign a one-month certification period or assign a 
normal certification period. Satisfaction of the verification 
requirements may be postponed until the second month of participation. 
If a one-month certification period is assigned, the notice of 
eligibility may be combined with the notice of expiration or a separate 
notice may be sent. The notice of eligibility must explain that the 
household has to satisfy any verification requirements that were 
postponed. For subsequent months, the household must reapply and 
satisfy any verification requirements which were postponed or be 
certified under normal processing standards. During the interview, the 
State agency should give the household a recertification form and 
schedule an appointment for a recertification interview. If the 
household does not satisfy the postponed verification requirements and 
does not appear for the interview, the State agency does not need to 
contact the household again.
    (B) For households applying after the 15th of the month, the State 
agency may assign a 2-month certification period or a normal 
certification period of no more than 12 months. Verification may be 
postponed until the third month of participation, if necessary, to meet 
the expedited timeframe. If a two-month certification period is 
assigned, the notice of eligibility may be combined with the notice of 
expiration or a separate notice may be sent. The notice of eligibility 
must explain that the household is obligated to satisfy the 
verification requirements that were postponed. For subsequent months, 
the household must reapply and satisfy the verification requirements 
which were postponed or be certified under normal processing standards. 
During the interview, the State agency should give the household a 
recertification form and schedule an appointment for a recertification 
interview. If the household does not satisfy the postponed verification 
requirements and does not attend the interview, the State agency does 
not need to contact the household again. When a certification period of 
longer than 2 months is assigned and verification is postponed, 
households must be sent a notice of eligibility advising that no 
benefits for the third month will be issued until the postponed 
verification requirements are satisfied. The notice must also advise 
the household that if the verification process results in changes in 
the household's eligibility or level of benefits, the State agency will 
act on those changes without advance notice of adverse action. If the 
State agency chooses to exercise the option to require a second 
application in accordance with the introductory text of paragraph 
(i)(4)(iii) of this section, it shall act on that application starting 
with the first month after the current certification period expires. If 
the household is eligible, the State agency shall issue benefits within 
five working days of the receipt of the necessary verification. When 
the postponed verification requirements are not completed within 30 
days after the end of the household's last certification period, the 
State agency shall terminate the household's participation and shall 
issue no further benefits.
    (C) Households which apply for initial month benefits (as described 
in Sec. 273.10(a)) after the 15th of the month, are processed under 
standard processing timeframes, have completed the application and have 
satisfied all verification requirements within 30 days of the date of 
application, and have been determined eligible to receive

[[Page 2713]]

benefits for the initial month of application and the next subsequent 
month, shall be issued a combined allotment which includes prorated 
benefits for the month of application and benefits for the first full 
month of participation. The benefits shall be issued in accordance with 
Sec. 274.2(c) of this chapter.
    (D) Households which apply for initial benefits (as described in 
Sec. 273.10(a)) after the 15th of the month, are processed under 
expedited service procedures, have completed the application, and have 
been determined eligible to receive benefits for the initial month and 
the next subsequent month, shall receive a combined allotment 
consisting of prorated benefits for the initial month of application 
and benefits for the first full month of participation within the 
expedited service timeframe. If necessary, verification will be 
postponed to meet the expedited timeframe. The benefits shall be issued 
in accordance with Sec. 274.2(c) of this chapter.
    (E) The provisions of paragraphs (i)(4)(iii)(C) and (i)(4)(iii)(D) 
of this section do not apply to households which have been determined 
ineligible to receive benefits for the month of application or the 
following month, or to households who have not satisfied the postponed 
verification requirements. Households eligible for expedited service 
may, however, receive benefits for the initial month and next 
subsequent month under the verification standards of paragraph (i)(4) 
of this section. Benefits of less than ten dollars ($10) shall not be 
issued to a household under the provisions of paragraphs (i)(4)(iii)(C) 
and (i)(4)(iii)(D) of this section.
    (F) In a State with staggered issuance, if a household applies 
after the 15th of the month and is certified for more than two months, 
it shall be issued its third month's benefits on the first working day 
of the third calendar month, not the staggered issuance date. If the 
State agency chooses to exercise the option to require a second 
application in accordance with paragraph (i)(4)(iii) of this section 
and receives the application before the third month, it shall not deny 
the application but hold it pending until the third month. The State 
agency will issue the third month's benefits within five working days 
from receipt of the necessary verification information but not before 
the first day of the month. If the postponed verification requirements 
are not completed within 45 days of the date of application, the State 
agency shall terminate the household's participation and shall issue no 
further benefits.
    (iv) * * * State agencies shall apply the provisions of this 
section at recertification if a household does not apply for 
recertification until the month after its certification period ends.
* * * * *
    3. In Sec. 273.3:
    a. The existing undesignated paragraph is designated as paragraph 
(a), and is further amended by removing the first sentence and adding 
two sentences in its place.
    b. Paragraph (b) is added.
    The additions read as follows:


Sec. 273.3  Residency.

    (a) A household shall live in the State in which it files an 
application for participation. The State agency may also require a 
household to file an application for participation in a specified 
project area (as defined in Sec. 271.2 of this chapter) or office 
within the State. * * *
    (b) When a household moves within the State, the State agency may 
require the household to reapply in the new project area or it may 
transfer the household's casefile to the new project area and continue 
the household's certification without reapplication. If the State 
agency chooses to transfer the case, it shall act on changes in 
household circumstances resulting from the move in accordance with 
Sec. 273.12(c) or Sec. 273.21. It shall also ensure that duplicate 
participation does not occur in accordance with Sec. 272.4(f) of this 
chapter, and that the transfer of a household's case shall not 
adversely affect the household.
    4. In Sec. 273.6, a new paragraph (b)(4) is added to read as 
follows:


Sec. 273.6  Social security numbers.

* * * * *
    (b) Obtaining SSNs for food stamp household members. * * *
    (4) If the household is unable to provide proof of application for 
an SSN for a newborn, the household must provide the SSN or proof of 
application at the next recertification. If the household is unable at 
the next recertification to provide proof of application, the State 
agency shall determine if the good cause provisions of paragraph (d) of 
this section are applicable.
* * * * *
    5. In Sec. 273.8, the first sentence of paragraph (e)(2) is revised 
to read as follows:


Sec. 273.8  Resource eligibility standards.

* * * * *
    (e) Exclusions from resources. * * *
    (2) Household goods, personal effects, the cash value of life 
insurance policies, one burial plot per household member, and the value 
of one bona fide funeral agreement per household member, provided that 
the agreement does not exceed $1500 in equity value, in which event the 
value above $1500 is counted. * * *
* * * * *
    7. In Sec. 273.10:
    a. The second sentence of paragraph (a)(1)(iv) is amended by adding 
the words ``second full'' after the words ``benefits for the''.
    b. Paragraph (a)(1)(iv) is further amended by removing the third 
and fourth sentences.
    c. Paragraph (c)(2)(iii) is revised.
    d. A new sentence is added at the end of paragraph (c)(3)(ii);
    e. A new sentence is added to the end of paragraph (f)(3), and four 
new paragraphs, (f)(3)(i), (f)(3)(ii), (f)(3)(iii), and (f)(3)(iv) are 
added; and
    f. The first sentence of paragraph (g)(2) is amended by adding the 
words ``if the household has complied with all recertification 
requirements'' after ``current certification period.''
    The additions and revision read as follows:


Sec. 273.10  Determining household eligibility and benefit levels.

* * * * *
    (c) Determining income. * * *
    (2) Income only in month received. * * *
    (iii) Households receiving income on a recurring monthly or 
semimonthly basis shall not have their monthly income varied merely 
because of changes in mailing cycles or pay dates or because weekends 
or holidays cause additional payments to be received in a month.
    (3) Income averaging. * * *
    (ii) * * * Contract income which is not the household's annual 
income and is not paid on an hourly or piecework basis shall be 
prorated over the period the income is intended to cover.
* * * * *
    (f) Certification periods. * * *
    (3) * * * To align the PA or GA and food stamp recertification, the 
State agency may do the following:
    (i) When the household's eligibility for PA or GA has been 
determined, the State agency may review the household's food stamp 
eligibility. If eligibility factors remain the same, the household's 
certification period can be extended up to an additional 12 months to 
align the household's food stamp recertification with its PA/GA 
redetermination. The State agency would be required to send a notice 
informing the household of changes in its certification period. At the 
end of the

[[Page 2714]]

extended certification period the household must be sent a Notice of 
Expiration and must be recertified before being eligible for further 
food stamp assistance, even if the PA/GA redetermination is not set to 
expire. This procedure may also be used to align a household's PA/GA 
and food stamp certification periods if those certification periods are 
no longer aligned as a result of the household's failure to comply with 
the PA/GA redetermination requirements.
    (ii) Except as specified in paragraph (f)(3)(iii) of this section, 
State agencies may assign households food stamp certification periods 
that expire the month following the household's required PA/GA 
redetermination, provided the food stamp certification period does not 
exceed 1 year. If a PA/GA household has not had its PA/GA 
redetermination by the end of the 11th month following its initial 
certification or its last redetermination for food stamps, the State 
agency shall send the household a notice of expiration of its food 
stamp certification period and recertify the household in accordance 
with the provisions of Sec. 274.14 of this chapter.
    (iii) State agencies which have a monthly reporting system and, 
therefore, allow more than 1 year to elapse before redetermining their 
PA/GA cases, but which can predict with certainty in which month the 
PA/GA redetermination will take place, may assign PA/GA food stamp 
households definite food stamp certification periods that expire at the 
end of the month following the month in which the PA/GA redetermination 
is scheduled. If for any reason the PA/GA redetermination is not made 
by the end of the month for which it was scheduled, the State agency 
shall send the household a notice of expiration of its food stamp 
certification period and recertify the household in accordance with the 
provisions of Sec. 274.14 of this chapter.
    (iv) If a household reports a change in circumstance for PA/GA, the 
State agency may review the household's food stamp eligibility at the 
same time. The household will be required to submit a recertification 
form for food stamps and to undergo a face-to-face interview. If the 
household is determined eligible, its old certification period shall be 
terminated and a new period not to exceed 12 months shall be assigned.
* * * * *
    8. In Sec. 273.11.
    a. The heading of paragraph (b) is revised;
    b. The introductory text of paragraph (b)(1)(ii) is revised.
    c. Paragraph (b)(1)(ii)(B) is amended by removing the period at the 
end of the paragraph and adding in its place a semicolon and the word 
``or''.
    d. A new paragraph (b)(1)(ii)(C) is added;
    e. A new paragraph (b)(2) is added.
    The revisions and additions are as follows:


Sec. 273.11  Action on Households with Special Circumstances.

* * * * *
    (b) Households with income from boarders and day care. (1) 
Household with boarders. * * *
    (ii) Cost of doing business. In determining the income received 
from boarders, the State agency shall exclude the portion of the 
boarder payment that is a cost of doing business. Provided that the 
amount allowed as a cost of doing business shall not exceed the payment 
the household receives from the boarder for lodging and meals, the cost 
of doing business shall be equal to one of the following:
* * * * *
    (C) 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. However, if the applicant or recipient requests use of the 
verified actual amount, the State agency shall use the actual amount.
* * * * *
    (2) Income from day care. Households deriving income from day care 
may elect one of the following methods of determining the cost of meals 
provided to the individuals:
    (i) Actual documented costs of meals;
    (ii) A standard per day amount based on estimated per meal costs; 
or
    (iii) Current reimbursement amounts used in the Child and Adult 
Care Food Program.
* * * * *
    9. In Sec. 273.13, a new paragraph (b)(15) is added to read as 
follows:


Sec. 273.13  Notice of adverse action.

* * * * *
    (b) Exemptions from notice. * * *
    (15) The household's address is unknown and mail directed to it has 
been returned by the post office indicating no known forwarding 
address. The household's benefits must, however, be made available to 
it within five working days if the household contacts the State agency 
during the payment period covered by a returned benefit.
    10. Sec. 273.14 is revised to read as follows:


Sec. 273.14  Recertification

    (a) General. No household may participate beyond the expiration of 
the certification period assigned in accordance with Sec. 273.10(f) 
without a determination of eligibility for a new period. The State 
agency must establish procedures for notifying households of expiration 
dates, providing recertification forms, scheduling interviews, and 
recertifying eligible households prior to the expiration of 
certification periods. Households must apply for recertification and 
comply with interview and verification requirements.
    (b) Recertification process.
    (1) Notice of expiration.
    (i) The State agency shall provide households certified for one 
month or certified in the second month of a two-month certification 
period a notice of expiration (NOE) at the time of certification. The 
State agency shall provide other households the NOE before the first 
day of the last month of the certification period, but not before the 
first day of the next- to-the-last month. Jointly processed PA and GA 
households need not receive a separate food stamp notice if they are 
recertified for food stamps at the same time as their PA or GA 
redetermination.
    (ii) Each State agency shall develop a NOE. A model form (Form FCS-
439) is available from FCS. The NOE must contain the following:
    (A) the date the certification period expires;
    (B) the date by which a household must submit an application for 
recertification in order to receive uninterrupted benefits;
    (C) the consequences of failure to apply for recertification in a 
timely manner;
    (D) notice of the right to receive an application form upon request 
and to have it accepted as long as it contains a signature and a 
legible name and address;
    (E) information on alternative submission methods available to 
households which cannot come into the certification office or do not 
have an authorized representative and how to exercise these options;
    (F) the address of the office where the application must be filed;
    (G) the household's right to request a fair hearing if the 
recertification is denied or if the household objects to the benefit 
issuance;
    (H) notice that any household consisting only of Supplemental 
Security Income (SSI) applicants or recipients is entitled to apply for 
food stamp recertification at an office of the Social Security 
Administration;

[[Page 2715]]

    (I) notice that failure to attend an interview may result in delay 
or denial of benefits; and
    (J) notice that the household is responsible for rescheduling a 
missed interview and for providing required verification information.
    (iii) To expedite the recertification process, State agencies are 
encouraged to send a recertification form, an interview appointment 
letter, and a statement of needed verification required by 
Sec. 273.2(c)(5) with the NOE.
    (2) Recertification form.
    (i) The State agency shall provide each household with a 
recertification form to obtain all information needed to determine 
eligibility and benefits for a new certification period. This form can 
only be used by households which are applying for recertification 
before the end of their current certification period. Recertification 
forms must be approved by FCS as required by Sec. 273.2(b)(3). The 
recertification form must elicit from the household sufficient 
information regarding household composition, income and resources that, 
when added to information already contained in the casefile, will 
ensure an accurate determination of eligibility and benefits. The 
information required by Sec. 273.2(b)(1) (i), (ii), (iii), (iv) and (v) 
must be included on the recertification form. The information regarding 
the Income and Eligibility Verification System in Sec. 273.2(b)(2) may 
be provided on a separate form. A combined form for PA and GA 
households may be used in accordance with Sec. 273.2(j). Monthly 
reporting households shall be recertified as provided in 
Sec. 273.21(q). State agencies may use the same form for households 
required to report changes in circumstances and monthly reporting 
households.
    (ii) The State agency may request that the household bring the 
recertification form to the interview or return the form by a specified 
date (not less than 15 days after receipt of the form).
    (3) Interview. (i) As part of the recertification process, the 
State agency shall conduct a face-to-face interview with a member of 
each household. The face-to-face interview may be waived in accordance 
with Sec. 273.2(e). The State agency may also waive the face-to-face 
interview for a household that has no earned income if all of its 
members are elderly or disabled. The State agency has the option of 
conducting a telephone interview or a home visit for those households 
for whom the office interview is waived. However, a household that 
requests a face-to-face interview must be granted one.
    (ii) If a household receives PA/GA and will be recertified more 
than once in a 12-month period, the State agency may choose to conduct 
a face-to-face interview with that household only once during that 
period. The face-to-face interview shall be conducted at the same time 
that the household receives a face-to-face interview for PA/GA 
purposes. At any other recertification during that year period, the 
State agency may interview the household by telephone or conduct a home 
visit. However, a household that requests a face-to-face interview must 
be granted one.
    (iii) If a household does not appear for an interview scheduled 
before it has submitted a recertification form, the State agency must 
reschedule the interview. 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.
    (4) Verification. Information provided by the household shall be 
verified in accordance with Sec. 273.2(f)(8)(i). The State agency shall 
provide the household a notice of required verification as provided in 
273.2(c)(5) and notify the household of the date by which the 
verification requirements must be satisfied. The household must be 
allowed a minimum of 10 days to provide required verification 
information.
    (c) Timely application for recertification.
    (1) Households reporting required changes in circumstances that are 
certified for one month or certified in the second month of a two-month 
certification period shall have 15 days from the date the NOE is 
received to file a timely application for recertification.
    (2) Other households reporting required changes in circumstances 
that submit applications by the 15th day of the last month of the 
certification period shall be considered to have made a timely 
application for recertification.
    (3) For monthly reporting households, the filing deadline shall be 
either the 15th of the last month of the certification period or the 
normal date for filing a monthly report, at the State agency's option. 
The option chosen must be uniformly applied to the State agency's 
entire monthly reporting caseload.
    (4) For households consisting of applicants or recipients of SSI 
who apply for food stamp recertification at offices of the SSA in 
accordance with Sec. 273.2(k)(1), an application shall be considered 
filed for normal processing purposes when the signed application is 
received by the SSA.
    (d) Timely processing.
    (1) Households that were certified for one month or certified for 
two months who are in the second month of the certification period and 
have met all required application procedures shall be notified of their 
eligibility or ineligibility. Eligible households shall be provided an 
opportunity to receive benefits no later than 30 calendar days after 
the date the household received its last allotment.
    (2) Other households that have met all application requirements 
shall be notified of their eligibility or ineligibility by the end of 
their current certification period. In addition, the State agency shall 
provide households that are determined eligible an opportunity to 
participate by the household's normal issuance cycle in the month 
following the end of its current certification period.
    (e) Delayed processing.
    (1) Delays caused by the State agency. Households which have 
submitted an application for recertification in a timely manner but, 
due to State agency error, are not determined eligible in sufficient 
time to provide for issuance of benefits by the household's next normal 
issuance date shall receive an immediate opportunity to participate 
upon being determined eligible, and the allotment shall not be 
prorated. If the household was unable to participate for the month 
following the expiration of the certification period because of State 
agency error, the household is entitled to restored benefits.
    (2) Delays caused by the household.
    (i) If a household does not submit a new application by the end of 
the certification period, the State agency must close the case without 
further action.
    (ii) If a recertification form is submitted more than one month 
after the filing deadline, it shall be treated the same as an 
application for initial certification. In accordance with 
Sec. 273.10(a)(1)(ii), the household's benefits shall not be prorated 
unless there has been a break of more than one month in the household's 
certification.
    (iii) A household which submits an application by the filing 
deadline but does not appear for an interview scheduled after the 
application has been filed, or does not submit verification within the 
required timeframe, loses its right to uninterrupted benefits. The 
State agency has three options for handling such cases:
    (A) Send the household a denial notice as soon as the household 
fails to appear for an interview or submit required verification 
information. If the interview is completed, or the household provides 
the required

[[Page 2716]]

verification information within 30 days of the date of application and 
is determined eligible, the household must be reinstated and receive 
benefits within 30 calendar days after the application was filed or 
within 10 days of the date the interview is completed or required 
verification information is provided, whichever is later. In no event 
shall a subsequent period's benefits be provided before the end of the 
current certification period.
    (B) Deny the household's recertification application at the end of 
the last month of the current certification period. The State agency 
may on a Statewide basis either require households to submit new 
applications to continue benefits or reinstate the households without 
requiring new applications if the households have been interviewed and 
have provided the required verification information within 30 days 
after the applications have been denied.
    (C) Deny the household's recertification request 30 days after 
application. The State agency may on a Statewide basis either require 
households to submit new applications to continue benefits or reinstate 
households without requiring new applications if such households have 
been interviewed and have provided the required verification within 30 
days after the applications have been denied.
    (f) Expedited service. A State agency is not required to apply the 
expedited service provisions of Sec. 273.2(i) at recertification if the 
household applies in a timely manner for recertification or applies 
late but within the certification period.
    11. In Sec. 273.21, paragraph (n)(1) is amended by adding a 
sentence to the end of the paragraph to read as follows:


Sec. 273.21  Monthly Reporting and Retrospective Budgeting (MRRB).

* * * * *
    (n) Suspension. * * *
    (1) * * * The State agency may on a Statewide basis either suspend 
the household's certification prospectively for the issuance month or 
retrospectively for the issuance month corresponding to the budget 
month in which the noncontinuing circumstance occurs.
* * * * *

PART 274--ISSUANCE AND USE OF COUPONS

    12. In Sec. 274.2:
    a. Paragraphs (b)(2), (b)(3), and (b)(4) are removed.
    b. Paragraphs (b)(1), (c), (d), and (e) are redesignated paragraphs 
(b), (d), (e), and (f), respectively.
    c. Two sentences are added to the end of newly redesignated 
paragraph (b).
    d. A new paragraph (c) is added.
    The additions read as follows:


Sec. 274.2  Providing benefits to participants.

* * * * *
    (b) * * * For households entitled to expedited service, the State 
agency shall make available to the household coupons or an ATP card, 
not later than the fifth calendar day following the date the 
application was filed. 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 day the application was filed.
    (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 (one) allotment, or as two separate 
allotments made available at the same time, in accordance with the 
timeframes specified in S273.2(i) of this chapter.
* * * * *
    Dated: January 4, 1995.
Ellen Haas,
Under Secretary for Food, Nutrition, and Consumer Services.
[FR Doc. 95-635 Filed 1-10-95; 8:45 am]
BILLING CODE 3410-30-U