Food Stamp Program: Noncitizen Eligibility, and Certification Provisions of Pub. L. 104-193, as Amended by Public Laws 104-208, 105-33 and 105-185

DEPARTMENT OF AGRICULTURE

Food and Nutrition Service

7 CFR Parts 272, 273, 274, and 277

[Amendment Number ]

RIN 0584-AC40

Food Stamp Program: Noncitizen Eligibility, and Certification Provisions of Pub. L. 104-193, as Amended by Public Laws 104-208, 105-33 and 105-185

AGENCY:

Food and Nutrition Service, USDA.

ACTION:

Proposed rule.

SUMMARY:

This rule proposes to amend Food Stamp Program (Program) regulations to implement several provisions of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996, and subsequent amendments to these provisions made by the Omnibus Consolidated Appropriations Act of 1996, the Balanced Budget Act of 1997, and the Agricultural Research Extension and Education Reform Act of 1998. This action proposes options related to matching activities, fair hearing and recipient services. This action proposes provisions which would increase State agency flexibility in processing applications for the Program and allow greater use of standard amounts for determining deductions and self-employment expenses. This action also proposes revisions to the requirements for determining alien eligibility and the eligibility and benefits of sponsored aliens, and to require certain transitional housing payments and most State and local energy assistance to be counted as income, exclude the earnings of students under 18 from income, and require proration of benefits following any break in certification.

Other provisions of this proposed action would establish ground rules for implementing the Simplified Food Stamp Program, allow State agencies options to issue partial allotments for households in treatment centers, count all, part or, in some cases, none of the income of an ineligible alien in determining the benefits of the rest of the household, issue combined allotments to certain expedited service households, and certify elderly or disabled households up to 24 months and other households up to 12 months. The action also proposes several changes to existing regulations in response to the President's reform initiative to remove overly prescriptive, outdated, and unnecessary regulatory provisions.

We are also taking this opportunity to add vehicles to the assets which may be covered under the inaccessible resources provisions of the Food Stamp Act of 1977, to clarify what constitutes an adequate notice of adverse action period, and to make a change to exclude from income on-the-job training payments received under the Summer Youth Employment and Training Program as required by Section 702 of the Job Training Reform Amendments of 1992.

DATES:

Comments must be received on or before May 1, 2000 to be assured of consideration.

ADDRESSES:

Comments should be submitted to Patrick Waldron, Program Analyst, Certification Policy Branch, Program Development Division, Food and Nutrition Service, USDA, 3101 Park Center Drive, Alexandria, Virginia 22302, (703) 305-2805. Comments may also be faxed to the attention of Mr. Waldron at (703) 305-2486. The internet address is: Patrick.Waldron@FNS.USDA.GOV. All written comments will be open for public inspection at the office of the Food and Nutrition 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 Mr. Waldron at the above address or by telephone at (703) 305-2805.

SUPPLEMENTARY INFORMATION:

Executive Order 12866

This proposed rule has been determined to be economically significant and was reviewed by the Office of Management and Budget in conformance with Executive Order 12866.

Executive Order 12372

The Food Stamp Program (Program) is listed in the Catalog of Federal Domestic Assistance under Number 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). Shirley R. Watkins, Under Secretary for Food, Nutrition and Consumer Services, has certified that this rule will not have a significant economic impact on a substantial number of small entities. State and local welfare agencies will be the most affected to the extent that they administer the Program.

Executive Order 12988

This rule has been reviewed under Executive Order 12988, Civil Justice Reform. This rule is intended to have preemptive effect with respect to any State or local laws, regulations or policies which conflict with its provisions or which would otherwise impede its full implementation. This rule is not intended to have retroactive effect unless so specified in the “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.

Unfunded Mandate Analysis

Title II of the Unfunded Mandate Reform Act of 1995 (UMRA), Pub. L. 104-4, establishes requirements for Federal agencies to assess the effects of their regulatory actions on State, local, and tribal governments and the private sector. Under section 202 of the UMRA, the Department generally must prepare a written statement, including a cost-benefit analysis, for proposed and final rules with “Federal mandates” that may result in expenditures to State, local, or tribal governments, in the aggregate, or to the private sector, of $100 million or more in any one year. When such a statement is needed for a rule, section 205 of the UMRA generally requires the Department to identify and consider a reasonable number of regulatory alternatives and adopt the least costly, more cost-effective or least burdensome alternative that achieves the objectives of the rule.

This rule contains no Federal mandates (under the regulatory provisions of Title II of the UMRA) which impose costs on State, local, or tribal governments or to the private sector of $100 million or more in any one year. Thus, this rule is not subject to the requirements of sections 202 and 205 of the UMRA.

Civil Rights Impact Analysis

FNS has reviewed this proposed rule in accordance with the Department Regulation 4300-4, “Civil Rights Impact Analysis” to identify and address any major civil rights impacts the proposed rule might have on minorities, women, and persons with disabilities. After a careful review of the rule's intent and provisions, and the characteristics of

food stamp households and individuals participants, FNS has determined that there is no way to soften their effect on any of the protected classes. FNS has no discretion in implementing many of these changes. The changes required to be implemented by law, have been implemented.

All data available to FNS indicate that protected individuals have the same opportunity to participate in the Food Stamp Program as non-protected individuals. FNS specifically prohibits the State and local government agencies that administer the program from engaging in actions that discriminate based on race, color, national origin, gender, age, disability, marital or family status. Regulations at 7 CFR 272.6 specifically state that “State agencies shall not discriminate against any applicant or participant in any aspect of program administration, including, but not limited to, the certification of households, the issuance of coupons, the conduct of fair hearings, or the conduct of any other program service for reasons of age, race, color, sex, handicap, religious creed, national origin, or political beliefs.” Discrimination in any aspect of program administration is prohibited by these regulations, the Food Stamp Act, the Age Discrimination Act of 1975 (Pub. L. 94-135), the Rehabilitation Act of 1973 (Pub. L. 93-112, section 504), and title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d). Enforcement action may be brought under any applicable Federal law. Title VI complaints shall be processed in accordance with 7 CFR part 15. Where State agencies have options, and they choose to implement a certain provision, they must implement it in such a way that it complies with the regulations at 7 CFR 272.6.

Regulatory Impact Analysis

Need for Action

This action is needed to implement provisions of Pub. L. 104-193 (PRWORA) which would: (1) Remove specific requirements for State agency processing of food stamp applications; (2) revise requirements for determining the eligibility of aliens; (3) count as income certain State and local energy assistance; (4) allow State agencies to count all or part of an alien's income in determining the benefits of the rest of the household; (5) require that the full amount of a sponsor's income and resources be counted in determining the eligibility of a sponsored alien; (6) allow State agencies to certify households consisting entirely of elderly or disabled members up to 24 months; (7) exclude the earnings of students under age 18; (8) make use of a homeless shelter deduction optional; (9) allow State agencies to mandate use of a standard utility allowance if they have at least one standard that includes heating and cooling costs and one that does not; (10) eliminate the exclusion for vendored transitional housing payments for homeless households; (11) allow use of standard amounts in determining self-employment expenses; (12) make optional the issuance of combined allotments to expedited service households that apply after the 15th of the month; (13) allow State agencies to issue partial allotments to households in treatment centers; (14) require proration of benefits following any break in certification; (15) allow State agencies to accept an oral withdrawal from the household for a fair hearing; (16) revise requirements for producing or displaying nutritional education materials; (17) eliminate mandated training standards; (18) eliminate requirement for reviewing and reporting on office hours; (19) revise mail issuance requirements in rural areas; (20) prohibit Federal reimbursement for recruitment activities and recruitment activities from being approved as part of a State agency's optional Outreach plan; (21) make optional rather than mandatory the use of the Income Eligibility and Verification System and the Systematic Alien Verification for Entitlements match programs; and (22) establish ground rules for implementing the Simplified Food Stamp Program (SFSP) . In addition, this action is needed to implement a Departmental initiative to revise the current policy on determining the resource value of licensed vehicles.

PRWORA Provisions

Benefits

State agencies will benefit from this rule to the extent that it increases State agency flexibility and simplifies Program requirements.

Costs

The food stamp changes made in this rule would reduce Program costs for the 5-year period Fiscal Year (FY) 2000 through FY 2004 by approximately $2.75 billion, primarily as a result of the provisions that make many aliens ineligible to participate (section 402) and the provision that requires that most State and local energy assistance be counted as income for food stamp purposes (section 808). The Program realizes smaller savings from the following provisions: Section 807, earnings of children; section 809, standard utility allowances; section 811, transitional housing payments; and section 827, proration of benefits at recertification. The SFSP authorized under section 854 may result in savings or increased Program costs with respect to individual households; however, the net impact of SFSP implementation must be cost neutral. The Departmental initiative to revise the treatment of inaccessible resources produces a cost which slightly lowers the total savings from this rule. The savings from the remaining provisions in the rule are negligible; therefore, we will not discuss them in this analysis.

Section 402—Alien Eligibility

Section 402 of the PRWORA significantly reduces the number of legal aliens who are eligible for food stamps. Effective August 22, 1996, for applicants and August 22, 1997, for current recipients, many aliens legally admitted for permanent residence who were previously eligible became ineligible. The exceptions are those admitted as refugees, asylees, Cubans, Haitians, Amerasians, and those who have had removal withheld who retain eligibility for the first 5 years (later changed to 7 years by the Agricultural Research Extension and Education Reform Act of 1998 (AREERA) after admission; lawful permanent residents who have earned at least 40 quarters of coverage as defined by the Social Security Administration; and those who are serving or have served in the U.S. armed forces and their spouses and children. Effective November 1, 1998, AREERA made certain Hmong, Highland Laotians, and American Indians born in Canada eligible for food stamps. It also made aliens who were lawfully living in the U.S. on August 22, 1996, eligible for food stamps if they are under 18 or are disabled, or were 65 or older on August 22, 1996.

Those aliens who lost eligibility will contribute to smaller State agency caseloads. However, determining the eligibility of individuals will be more complicated. For certain categories of aliens, State agencies will have to determine when the individuals were admitted. For other categories, State agencies will have to obtain information regarding the applicant's work history. Thus, there may be no significant savings in caseworker time.

In FY 2000, without taking into account the cost of restoring benefits to selected aliens through AREERA, we estimate that the savings would have been $500 million. We estimate that in 1998, approximately 790,000 participants lost eligibility with an average benefit loss of $75 a month and

another 285,000 people remained eligible but lost an average of $15 a month. About 685,000 people living in households with ineligible aliens received a slightly larger per person benefit for those still eligible and participating in the Program, on average $15 per month. This is because of economies of scale in the allotment tables which are by household size,

e.g.,

a two-person household based on no income would receive a larger per person allotment than a three-person household based on no income. It is important to realize that all of these “gainers” lived in households where the total food stamp benefit available to the household declined.

Based on information from a simulation model using 1996 Food Stamp Quality Control data, together with information from the Immigration and Naturalization Service on immigration and naturalization patterns and the Survey of Income and Program Participation (SIPP) on the work histories of aliens, we estimate that 20 percent of permanent residents meet the 40-quarters work exemption. Using information from the Current Population Survey on the veteran status of aliens, we estimate that less than 1 percent meet the veteran's exemption. Moreover, because applications for naturalization have increased dramatically over the last two years, it is anticipated that naturalizations will increase through FY 2001, reducing somewhat the number of persons losing eligibility and benefits through that time period compared to FY 1998.

The enactment of AREERA on November 1, 1998 restored benefits to an estimated 210,000 legal aliens, costing an additional $185 million in 2000 and $775 million for the 5-year period FY 2000-FY 2004.

PRWORA does not address how or whether to count the income or resources of the aliens made ineligible by PRWORA for purposes of determining eligibility or allotment amounts for the rest of the household. Alternatives were considered including counting ineligible aliens' resources and all income; counting resources and a pro-rated share of income; not counting the ineligible aliens' income, but capping the resulting allotment for the eligible members at the allotment a similarly situated all citizen household would receive; or counting neither income nor resources. The alternative chosen under the proposed rule would be to allow the State agency to pick one State-wide option for determining the eligibility and benefit level of households with members who are aliens made ineligible under PRWORA. State agencies may either: (1) Count the resources and a pro-rated share of the ineligible aliens' income; or (2) count the resources, not count the ineligible aliens' income, but cap the resulting allotment for the eligible members at the allotment amount the household would receive were it not for the PRWORA eligibility restrictions.

Using a simulation based on the 2000 baseline version of the 1996 QC Minimodel, we estimate that the option of excluding the income of PRWORA-ineligible aliens increases costs by an estimated $0 million for FY 2000 and $20 million for FY 2000-FY 2004. These estimates take into account current State practices and an expected shift of some States from the first option.

As a result, the combined effect of these changes will cause savings to fall through FY 2002, and then rise after that with the expected increases in the average benefit. After accounting for increased naturalization, AREERA, and changes in the counting of PRWORA-ineligible aliens' income being implemented starting in FY 2001, savings are estimated at $315 million in FY 2000, $320 million in FY 2001, $360 million in FY 2002, $380 million in FY 2003, and $410 million in FY 2004. Savings related to the alien provisions for the 5-year period FY 2000-FY 2004 are estimated to be $1.785 billion.

Section 807—Earnings of Children

This provision revises the current exclusion from income of the earnings of elementary or secondary school students under age 22 to exclude the earnings of these students if they are under 18. Based on the 1996 Quality Control data, it is estimated that the benefits of approximately 2,700 students will be reduced an average of $89 per month. FY 2000 savings are estimated at $5 million and a 5-year savings of $25 million.

Section 808—Energy Assistance

This provision eliminates the exclusion from income of most State and local energy assistance payments. Federal, State, or local one-time payments for weatherization and replacement or repair of heating or cooling devices are excluded. All federal energy assistance payments are excluded, except those provided under Title IV-A of the Social Security Act. State agencies are required to count as income the portion of the public assistance grant previously excluded as energy assistance. Using 1996 food stamp QC data on the number of AFDC/FSP households in each State and 1996 Green Book data on the average AFDC disregard for state-provided energy assistance, we estimated that benefits for approximately 3.959 million participants will be reduced, with each person losing an average of $4.42 a month. This results in a savings of $210 million for FY 2000 and a 5-year savings of $1.05 billion.

Section 811—Transitional Housing Payments

This provision removes the statutory exclusion from consideration as household income any State PA or GA payments made to a third party on behalf of a household residing in transitional housing for the homeless. State agencies may continue to exclude PA housing payments from income if they are emergency or special payments over and above the regular grant or are provided for migrant or seasonal farmworker households while they are in the job stream. GA housing payments may be excluded if they are provided by a State or local housing authority, are emergency or special payments, or the assistance is provided under a program in a State in which no GA payments may be made directly to the household in the form of cash. State agencies will have to notify affected households that their benefits will be reduced. Based on estimates derived from data on AFDC and shelter payments made to the number of food stamp households estimated to be living in welfare hotels, approximately 76,000 recipients will lose benefits, for a savings of $10 million in FY 2000 and a 5-year savings of $50 million. The average benefit loss per person is about $11 a month.

Section 809—Standard Utility Allowances

This provision allows State agencies to mandate use of a standard utility allowance that includes heating or cooling costs, provided the State agency has another standard allowance that does not include heating or cooling costs and the mandatory standards will not increase Program costs. The PRWORA also provides that in a State that does not choose to make standards mandatory, households are allowed to switch between actual expenses and a standard only at recertification.

The proposed rule provides requirements for a nonheating/cooling standard and would require State agencies to provide FNS with sufficient data to determine whether or not the State agency's proposed standards are cost-neutral. The proposed rule also provides that elderly or disabled households certified for 24 months may switch at the 12-month point when the State agency is required to contact the household. The State agency would be

required to allow households a choice between using actual expenses or a standard when they move and incur shelter expenses. The proposed rule also would allow households in private rental housing to use a standard allowance that includes heating or cooling costs if they incur an expense for heating or cooling separately from their rent. Many of these households are currently entitled to the standard because they receive Low-Income Home Energy Assistance (LIHEAP) payments. Households in public rental housing that incur only the cost of excess usage are prohibited by the Food Stamp Act from receiving a heating or cooling standard. Providing direct entitlement to a heating or cooling standard to households in private rental housing would eliminate the need for the State agency to verify receipt of LIHEAP, which has been problematic for State agencies and households.

The provision of the PRWORA allowing mandatory utility standards would increase State agency flexibility and reduce the time needed to calculate the shelter expenses of households which previously claimed actual costs. Savings result from two factors: (1) If a State mandates a standard, households with shelter costs higher than the SUA would no longer be allowed to claim actual costs and (2) households will no longer be allowed to switch between the SUA and actual costs one additional time during each 12-month period.

Using a simulation model based on 1994 data from the Survey of Income and Program Participation (SIPP), and adjusting for the fact that only five States (Delaware, Louisiana, Michigan, North Dakota, and Wyoming) with only seven percent of the caseload initially implemented this option, we estimate that the benefits of approximately 60,000 people were reduced in 1998 for an average loss of $12 a month, and 783 people lost eligibility for an average monthly loss of $31. The total savings were estimated to be $10 million.

We assume that more States will implement this provision, once they turn their attention from implementing TANF. We estimate that in five years, States that account for 28 percent of total benefit issuance will have opted for required use of the SUA. Under these assumptions, total savings are $20 million in FY 2000 and $175 million over 5 years. By FY 2004, slightly over 3,000 people may lose eligibility.

Section 818—Treatment of the Income of Ineligible Aliens

This rule would implement the provision which allows State agencies to elect to count either all or part of an ineligible alien's income if the alien is in a category that was ineligible

prior

to PRWORA when calculating the eligibility and benefits of the other individuals in the household. These aliens are primarily aliens admitted under color of law, those without documentation to establish eligible status, and those temporarily residing in the country legally, such as diplomats and students. (Treatment of the income and resources of the classes of aliens made ineligible by PRWORA is different, and it is discussed above.)

In order not to give preferential treatment to households with ineligible aliens in classes that were ineligible prior to PRWORA over citizen households, the rule would allow State agencies a further option to count all of the income for purposes of applying the gross income test, but use a prorated share to determine eligibility and level of benefits. For example, a household consisting of an undocumented alien and a citizen may have an income which would place the household over the maximum income limit if all of it is counted. However, if the undocumented alien is excluded from the household and only a prorated share of his or her income is counted, the remaining citizen member could be eligible. This option would allow the State agency to count all of the undocumented alien's income for purposes of determining if the household's gross income is below the gross income limit but only counting a prorated share for determining the household's allotment level. The State agency will need to consider if the number of cases affected will warrant two different income computations. Whatever option the States selects will have to be applied to all ineligible aliens in the same class.

Prior to the enactment of PRWORA, States were required to prorate only a share of the ineligible alien's income to the household. For example if a household consisted of one ineligible alien and two eligible participants, under prorating, two-thirds of the income of the ineligible alien would be counted as income available to the food stamp household. Under the 100 percent option, all of that ineligible alien's income would be counted.

Of the two States electing to count 100 percent of the income of ineligible aliens, only one State has continued this policy. The budget assumes only that one State will continue to opt for the 100 percent option. Deeming 100 percent of the income of an ineligible household member increases the countable income of food stamp households. Some households lose eligibility if deeming 100 percent of the ineligible aliens' income causes their countable income to exceed the thresholds. Other households remain eligible but, with a higher net income, qualify for smaller benefits.

Using a simulation based on 1996 Food Stamp Quality Control data adjusted to reflect rules in place in FY 1999, we estimate that under the provision allowing States to count 100 percent of the income of aliens ineligible prior to enactment of PRWORA, approximately 1,000 people remained eligible but lost an average of $95 a month in benefits and 1,000 recipients became ineligible losing $190 a month in benefits. Savings are estimated at $5 million for FY 2000 and $25 million for FY 2000-FY 2004.

Section 827—Proration of Benefits at Recertification

This provision requires that provisions for prorating benefits at recertification revert to those in place before enactment of the Mickey Leland Childhood Hunger Relief Act of 1993. Except for migrant and seasonal farmworker households, benefits would be prorated if there is any break in certification. State agencies are affected to the extent that they have to reprogram computers and revise guidance to staff. Based on a 1989 GAO study on recertification, entitled

Participants Temporarily Terminated for Procedural Noncompliance,

we estimate that the benefits of approximately 1.23 million people will be reduced, for a savings of $20 million in FY 2000 and $100 million over 5 years. Those losing benefits lose an estimated average of less than $1.50 a month.

Departmental Initiative—Inaccessible Resources and Vehicles

Benefits

This proposed rule would allow some households with licensed vehicles of moderate value to participate in the program, if they are otherwise eligible and have little equity in the vehicle. State agencies could benefit from simplification of procedures as vehicles in which the household has little equity are excluded from consideration as resources.

Costs

This provision will revise current procedures to include some vehicles under the inaccessible resources provision. Equity in a vehicle of less than one-half of the applicable resource standard for the household will exempt the vehicle from consideration as a resource. This provision has negligible costs in FY 2000. In FY 2001, the

estimated cost is $55 million and the five year cost is $430 million.

Paperwork Reduction Act

The information collection requirements described in § 273.2, § 273.14(b),and § 273.21 of this proposed rule governing the application, certification, and ongoing eligibility of food stamp households have been approved under OMB No. 0584-0064. The information collection requirements described in § 273.9(d) and § 273.11(b) of this proposed rule governing administration of the homeless shelter deduction, establishing and reviewing standard utility allowances, and establishing methodologies for offsetting the cost of producing self-employment income have been approved under OMB No. 0584-0096. See Vol. 64 FR 472, dated January 5, 1999, for a description of the information collection requirements and request for comment.

The information collection requirements governing State agency administration and management described in this proposed rule at Part 272 have been eliminated, made optional or significantly modified as a result of implementation of certain provisions of the PRWORA amending the Food Stamp Program. Therefore, current reporting and record keeping burden, previously approved by OMB and assigned control numbers 0584-0064, 0584-0083, and 0584-0350, either remains the same or there is no longer an information collection burden associated with the provisions discussed in the preamble to this rule. Comments regarding this burden estimate or any other aspect of this collection of information, including suggestions to reduce this burden may be sent to: U.S. Department of Agriculture, Clearance Officer, OCIO, room 404-W, Washington, DC 20250 and to Wendy A. Taylor, OIRM, Office of Management and Budget, Washington, DC 20503.

Background and Discussion of Proposed Regulatory Changes

On August 26, 1996, Pub. L. 104-193, the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (hereinafter referred to as “PRWORA”) was enacted. PRWORA contained numerous provisions amending the Food Stamp Act of 1977 (hereinafter referred to as “the Food Stamp Act” or “the Act”). The PRWORA contained several provisions designed to increase State agency flexibility in administering the Food Stamp Program—especially in the area of household application and certification for Program benefits and to encourage individuals to take personal responsibility for their own welfare. These provisions are addressed in this proposal. In addition, this rule addresses provisions of PRWORA relating to the eligibility of aliens which did not amend the Act. State agencies were notified in an agency memorandum that they were required to implement the mandatory provisions upon enactment for applicant households and at recertification for participant households without waiting for formal regulations.

For those sections of the regulations we are proposing to amend as a result of PRWORA, we are also taking this opportunity to propose regulatory changes in response to the President's regulatory reform initiative to remove overly prescriptive, outdated and unnecessary provisions of the regulations.

The requirements of each provision of PRWORA addressed by this proposal and the proposed regulatory changes are discussed in the remaining pages of this preamble. Those changes being made in response to the President's regulatory reform initiative are also identified and discussed.

Part 272—Requirements for Participating State Agencies

Operating Guidelines and Forms—7 CFR 272.3

The PRWORA contains several provisions offering State agencies optional courses of action in their administration of the Food Stamp Program. These options will be included in Program regulations at the appropriate location and are discussed later in this preamble. We propose that the options chosen by the State agencies be included in the State's Plan of Operation. However, we do not intend to make a conforming amendment at 7 CFR 272.3 as the current regulation sufficiently addresses this requirement. Under current rules at 7 CFR 272.3, when a State agency implements rule changes, including any optional provisions, the State agency is required to provide written procedures or guidelines to State staff. These written procedures or guidelines are also required to be submitted to FNS for review and comment at the same time they are issued to State staff.

The optional provisions referred to in the previous paragraph include State agency options to: (1) Issue separate or combined allotments to expedited service households that apply for benefits after the 15th of the month as is currently allowed for non-expedited service households; (2) have a homeless shelter deduction; (3) require mandatory utility allowances; (4) certify households in which all members are elderly or disabled for 24 months; (5) determine the benefits of a household containing an ineligible alien in accordance with 7 CFR 273.11(c)(1) or (c)(2); (5) make exceptions to using direct mail issuance in rural areas; and (6) accept an oral withdrawal from the household for a fair hearing request. The proposed provisions for including these options in the regulations are discussed in detail below in order of the regulatory citation.

State Employee Training—7 CFR 272.4(d)

Section 836 of PRWORA deleted all Federal requirements for State employee training. Prior to the enactment of PROWRA, Section 11(e)(6) of the Food Stamp Act (7 U.S.C. 2020(e)(6)) required State agencies to provide continuing training for all personnel involved with certification actions. The Food Stamp Act further provided State agencies with the option of contracting for training for persons who work with volunteers or nonprofit organizations that provide outreach or eligibility screening to persons who may be potentially eligible for food stamp benefits. The current rules at 7 CFR 272.4(d) include these provisions and require State agencies to provide training for all hearing officials and performance reporting system reviewers. Under current rules, FNS is also required to review the effectiveness of State agency training based on information obtained from Agency reviews and other sources.

To implement Section 836 of PRWORA, we are proposing to delete all the mandatory training requirements at 7 CFR 272.4(d). On the basis of their own experience, States will determine the training needs necessary to develop staff skills that assure efficient and effective program administration. FNS fully supports State training efforts and believes State agencies will maintain quality training programs as an essential element of effective Program administration. Deleting 7 CFR 272.4(d) reflects the change in the law.

Hours of Operation—7 CFR 272.4(g)

Section 848 of PRWORA deleted previously designated Section 16(b) of the Food Stamp Act. That section required the Secretary of Agriculture to establish standards for the periodic review of food stamp office hours to ensure that employed individuals were adequately served by the FSP. It also required State agencies to submit regular reports specifying the administrative actions that the State

planned to take to meet the standards prescribed in that section. The corresponding rules at 7 CFR 272.4(g) specify that State agencies are responsible for determining the hours that food stamp offices are open and that, at least once annually, State agencies must review the hours of operation and maintain the results of the reviews for review by FNS.

To implement Section 848 of PRWORA, we are proposing to make clear that State agencies are responsible for setting the hours of operation for their food stamp offices. However, we propose that in setting office hours State agencies are expected to take into account the special needs of the people they expect to serve. We ask them to be especially sensitive to the needs of households who contain working persons because these individuals may not be able to leave work to go to the food stamp office unless the food stamp office is open during non-traditional times such as evenings or weekends. In deciding what office hours will be offered, State agencies need to consider section 11(e)(2)(A) of the Food Stamp Act, as amended by section 835 of PRWORA, which requires them to accommodate special needs. In singling out the working poor, we recognize that the Program serves a vital role in helping families move to self-sufficiency and that even people working full-time at minimum wages and taking advantage of the Earned Income Tax Credit may continue to fall below the poverty level without food stamp assistance. In commenting on this provision, we would appreciate any recommendations on how eligible or potentially eligible working individuals can best be assured adequate access to the Program.

The proposed revisions at newly redesignated § 272.4(f) no longer require State agencies to assess or report on office hours. It is expected that they will do such assessment on their own without the need for a regulatory requirement.

Nutrition Education Materials—7 CFR 272.5(b)

Prior to the enactment of PRWORA, Section 11(e)(14) of the Food Stamp Act (7 U.S.C. 2020(e)(14)) and corresponding regulations at 7 CFR 272.5(b) required FNS to supply State agencies with posters and pamphlets containing information about nutrition and the relationship between diet and health. State agencies were required to display these posters and to make these pamphlets available at all food stamp and public assistance offices.

Section 835 of PRWORA deleted Section 11(e)(14) of the Food Stamp Act. The removal of this language requiring FNS to supply nutrition education materials to States in no way implies a lesser commitment to nutrition education in the FSP by FNS. In fact, it is our intention to strengthen and improve nutrition among low-income households through the vigorous promotion of nutrition education in the Program. Our commitment to the importance of nutrition education for food stamp recipients reflects the mandate of the Program which is, as specified by Section 2 of the Food Stamp Act, to “* * * safeguard the health and well-being of the nation's population by raising levels of nutrition.” (7 U.S.C. 2012) We will continue to expect States to help recipients use food stamp benefits to maximum nutritional advantage. States' growing levels of commitment to nutrition education and its importance are supported by the increasing number of States that have approved State plans for optional nutrition education over the past several years. As of Fiscal Year 1999, 46 State agencies have nutrition education plans and have committed over $70 million in non-Federal resources to FSP nutrition education. It is expected in future years that additional States will become actively involved in nutrition education delivery. FNS will continue to encourage active State agency commitment to the delivery of nutrition education to FSP clients.

In response to changes in PRWORA, we are proposing to replace paragraphs 7 CFR 272.5(b)(1)(i), 7 CFR 272.5(b)(1)(ii), and 7 CFR 272.5(b)(1)(iii) with a new paragraph (b)(1). The proposed paragraph would specify FNS' commitment to encourage State agencies to develop Food Stamp Nutrition Education Plans as allowed under current rules at 7 CFR 272.2(d)(2). While most State agencies have a Nutrition Education Plan, FNS encourages all State agencies to seriously consider developing such plans so that FSP clients have access not only to food stamps, but also to nutrition education that promotes the effective and economical use of food stamps for healthier diets and healthier lives.

Paragraph 7 CFR 272.5(b)(1)(iv), which discusses the Expanded Food and Nutrition Education Program (EFNEP), would be redesignated as 7 CFR 272.5(b)(2). By law, State agencies must continue to encourage food stamp participants to participate in EFNEP and allow EFNEP personnel to distribute nutrition education materials or talk to participants in local food stamp offices. Paragraphs (b)(2) and (b)(3), which reiterate certain State agencies' responsibilities, would be redesignated as paragraphs (b)(3) and (b)(4).

Optional Use of the Income and Eligibility Verification System (IEVS) and the Systematic Alien Verification for Entitlements (SAVE) Program—7 CFR 272.8, 272.11 and 273.2

Currently, 7 CFR 272.8 and 7 CFR 273.2 require State agencies to maintain and use an income and eligibility verification system (IEVS) to request and to exchange wage and benefit information on Food Stamp applicants and recipients from specified data sources. The provisions of 7 CFR 272.8 also require that, prior to requesting or exchanging data, State agencies enter into data exchange agreements with the data source agencies and that these agreements be included in the State Plan of Operation. The State Plan attachment details the State agency's IEVS targeting methods, number of information items acted upon, and a cost-benefit analysis justification. The regulations at 7 CFR 272.11 require State agencies to participate in the Immigration and Naturalization Service's Systematic Alien Verification for Entitlement (SAVE) Program.

Section 840 of PRWORA amended Section 11(e)(18) of the Food Stamp Act (7 U.S.C. 2020(e)(18)) to make IEVS and SAVE State options. Consequently, we are proposing in this rule to remove the requirement that State agencies operate either an IEVS or a SAVE system. We believe that many States will decide to continue to avail themselves of these opportunities to match their Food Stamp case files against other Federal data sources. Furthermore, it is in a State's best interest to utilize wage, income, and immigration status information as there is a Food Stamp error reduction and cost avoidance potential in the use of these matches. Therefore, since in all likelihood many States will wish to continue to take advantage of these matching opportunities, these proposed regulations would provide a maximum amount of latitude to States to use IEVS and SAVE to the best advantage of the State and with minimum Federal oversight and record keeping requirements. These proposed regulations would require only that State agencies which opt to use IEVS and SAVE observe the requirements of the data exchange agreements with agencies from which data will be obtained or exchanged. Current requirements to report targeting methods and provide cost-benefit justification would be rescinded in this

rule. This proposed rule also eliminates requirements for meeting follow-up time frames. States should be aware, however, that quality control reviews will continue to use data obtained from IEVS and SAVE systems as a case analysis tool.

The proposed amendments to the current regulations are incorporated under 7 CFR 272.8, 7 CFR 272.11 and 7 CFR 273.2.

Part 273—Certification of Eligible Households

Application Processing—7 CFR 273.2 (a) Through (j)

Section 835 of PRWORA amended sections 11(e)(2) and (e)(3) of the Act, 7 U.S.C. 2020(e)(2) and (e)(3) which govern the food stamp application and certification process. Section 11(e) provides more flexibility for State agencies to tailor day-to-day operations of the Program to the needs of individual States while ensuring that households continue to receive timely, accurate and fair service. More specifically, Section 835 removed the requirement that the Secretary design a uniform national food stamp application form and eliminated dictates concerning what information had to be included on the application form and in what particular location on the form. Section 11(e) of the Act now provides that State agencies must develop their own food stamp application form and establish their own operating procedures for local food stamp offices. States may now use electronic storage of applications and other information, including the use of electronic signatures. States must provide a method of certifying and issuing coupons to eligible homeless individuals.

While the language of amended Section 11(e) encourages personal responsibility and provides more State agency flexibility, it retains a few specific provisions to protect a client's right to timely, accurate, and fair service. The Act continues to: (1) Require that applications be processed within 30 days; (2) permit households to apply for participation on the same day they first contact the food stamp office during office hours; (3) consider an application as “filed” on the date the applicant submits the application with the applicant's name, address, and signature (benefits are calculated based on the filing date of an application); (4) require that an adult representative certify the truth of the information on the application, including citizenship or alien status of each member, and that such signature is sufficient to comply with any provision of Federal law requiring applicant signatures; and (5) require that the State agency provide each household, at the time of application, a clear written statement explaining what acts the household must perform to cooperate in obtaining verification and otherwise complete the application process.

Pursuant to Section 11(e) of the Act, as amended by Section 835 of PRWORA and the Department's response to the President's reform initiative to remove overly prescriptive, outdated, and unnecessary provisions of regulations, we are proposing to amend 7 CFR 273. 2, “Application Processing.” The changes that would be made are discussed in detail in the following paragraphs of this preamble. Some minor editing changes would also be made but are not discussed in detail.

Title of Part 273.2

The rulemaking would change the title of 7 CFR 273.2 from “Application processing” to “Office operations and application processing.”

General Purpose—7 CFR 273.2(a)

A new paragraph (a) would be added and titled “Office operations.” Current paragraphs (a), (b), and (c) of 7 CFR 273.2 would be revised and combined into a single new paragraph (b).

New paragraph (a) would incorporate the language contained in amended Section 11(e)(2)(A) requiring State agencies to establish their own procedures governing office operations that the State agency determines best serve households in the State, including households with special needs, such as, but not limited to, households with elderly or disabled members, households in rural areas with low-income members, homeless individuals, households residing on reservations, and households in areas in which a substantial number of members of low-income households speak a language other than English. It would also incorporate the requirements that the State agency provide timely, accurate, and fair service as required by Section 835 of PRWORA. This revised paragraph would also clarify that a State agency may not impose a processing requirement for another assistance program as a condition of food stamp eligibility. This is in accordance with Section 11(e)(5) of the Act (7 U.S.C. 2020(e)(5)) which provides that the State agency may not impose any additional eligibility requirements. Eligibility for food stamps must be based solely on the Act and food stamp regulations and not on another program's requirements. Pursuant to the requirement for fair service, we have added a sentence that the State agency must have a procedure for informing persons who wish to apply for food stamps about the application process and their rights and responsibilities.

State agencies are reminded that pursuant to current regulations at 7 CFR 272.3(b), operating procedures or guidelines established by the State agency are required to be submitted to FNS as part of the State's Food Stamp Plan of Operation.

Food Stamp Application—7 CFR 273.2(b) and (c)

New paragraph (b) would be titled “Application processing.” The introductory text for this paragraph would include language from the first sentence of current paragraph (a) which defines the application process to include filing of an application, being interviewed, and providing verification. The second, third, and fourth sentences of current paragraph (a) would be removed. The second sentence now requires State agencies to act promptly on applications and provide food stamp benefits retroactive to the month of application for those households determined eligible. The third sentence provides that expedited service must be available. These requirements are addressed in separate paragraphs under this section; therefore, there is no need to repeat them here. The fourth sentence simply introduces the rest of the provisions under 7 CFR 273.2(a) and is unnecessary.

New paragraph 7 CFR 273.2(b)(1) would be titled “Application design” and would include the requirement of amended Section 11(e)(2)(B)(ii) that State agencies design their own application forms. Pursuant to Section 11(e)(2)(C), the application form may include the electronic storage of information and the use of electronic signatures. The requirement in current paragraph (b)(3) regarding the need for prior FNS approval of State-designed applications which deviate from the Federally designed application would be removed because Section 835 eliminated the requirement that State agencies use a Federally-designed application.

Proposed paragraph (b)(1) would provide that the food stamp application may be designed separately or included in a State-designed multi-program application. As discussed later in this preamble under the section entitled “PA, SSI, and GA categorical eligibility—7 CFR 273.2(j),” PRWORA eliminated

mandatory

joint application processing for certain households. However, under Section 11(e), State agencies are not prohibited from

continuing to use joint processing. If they do, the food stamp eligibility of jointly processed cases would continue to be based solely on food stamp eligibility criteria contained in the Act. The benefit levels of all households would also continue to be based solely on food stamp criteria.

New paragraph 7 CFR 273.2(b)(2) would be entitled “Application contents.” Section 835 of PRWORA amended section 11(e) of the Act to remove the list of mandatory application content requirements. This mandatory list currently appears at 7 CFR 273.2(b). New paragraph (b)(2) would replace this list with a general requirement that the application must contain all necessary information to comply with the Act and regulations. Notices that are required to be given to households by the Act may be included on the application itself or a document to accompany the application.

Departmental regulation 4300-3, dated February 25, 1998, requires that the following nondiscrimination statement appear on the application itself even if a joint program application is being used:

“The U.S. Department of Agriculture (USDA) prohibits discrimination in all its programs and activities on the basis of race, color, sex, religion, national origin, or political beliefs. Persons with disabilities who require alternative means for communication of program information (Braille, large print, audiotape, etc.) should contact USDA's TARGET Center at (202) 720-2600 (voice and TDD).

“To file a complaint of discrimination, write to USDA, Director, Office of Civil Rights, Room 326-W, Whiten Building, 14th and Independence Avenue, SW, Washington, D.C. 20250-9410 or call (202) 720-5964 (voice and TDD). USDA is an equal opportunity provider and employer.”

State agencies are reminded that Section 835 only affected application content requirements mandated by the Act. Some of the other notices appearing on the former model food stamp application form were included to ensure compliance with other laws or to ensure a stronger case against Program violators. The notices that are still required by other Federal laws include: (1) Collection of racial and ethnic data and notification to applicants that disclosure of such information is voluntary; (2) notification to applicants that the Act requires collection of the social security numbers of household members and that the Privacy Act requires notification of the intended use of the numbers; and (3) notification to applicants of the use of IEVS, participation in the SAVE program, and other computer matching systems as governed by the Deficit Reduction Act and the Computer Matching and Privacy Protection Acts. These requirements are discussed at greater length in 7 CFR 273.2(f). Use of the IEVS and SAVE systems were made optional by Section 840 PRWORA; but if a State uses these systems, they must notify applicants pursuant to the Computer Matching and Privacy Protection Acts. As stated earlier, prior to PRWORA, State-designed applications were required to be modeled after the Federally-designed application; therefore, all State-designed applications were in compliance with these other requirements. We would include in new paragraph (b)(2) language necessary to ensure that State agencies continue to include this information on State-designed applications even though the applications are no longer subject to FNS approval.

We are proposing that a new statement be included on State-designed applications to ensure specific compliance with the Privacy Act as it relates to administrative offset programs as described in sections 3716 and 3720A of title 31 U.S.C. and section 5514 of title 5 U.S.C.

New paragraph 7 CFR 273.2(b)(3) would be entitled “Jointly processed cases” and would provide that if a State agency has a procedure that allows applicants to apply for the food stamp program and another program at the same time, the State agency shall notify applicants that they may file a joint application for more than one program or they may file a separate application for food stamps independent of their application for benefits from any other program. The proposed paragraph would continue to require joint applications to be processed for food stamp purposes in accordance with food stamp procedural, timeliness, notice, and fair hearing requirements. The proposed rule would continue to provide that no household shall have its food stamp benefits denied solely on the basis that its application to participate in another program has been denied or its benefits under another program have been terminated without a separate determination by the State agency that the household failed to satisfy a food stamp eligibility requirement. Section 835 of PRWORA added an exception to this prohibition for disqualifications as a penalty for failure to comply with a public assistance program rule or regulation. We have published a separate proposed rule (64 FR 70920) to address disqualifications as a penalty for failure to comply with a public assistance program rule or regulation. The proposed regulation provides that households that file a joint application for food stamps and another program and are denied benefits for the other program shall not be required to resubmit the joint application or to file another application for food stamps but shall have their food stamp eligibility determined based on the joint application in accordance with the food stamp processing time frames for expedited service and normal processing time frames from the date the joint application was initially accepted by the State.

Pursuant to this rulemaking, new paragraph (c) would be entitled “Filing an application” and new paragraph (c)(1) would be entitled “Filing process.” This paragraph contains the requirement appearing in the first sentence of current paragraph (c)(1) regarding the manner in which applications can be submitted. The new language clarifies that the application may be submitted by facsimile transmission as well as in person, through an authorized representative, or by mail. The new language also recognizes that some State agencies are using on-line or other types of automated applications that may require the applicant to come into the local office to complete the application. New paragraph (c)(1) would also contain the requirement appearing in the fifth sentence of current paragraph (c)(1) that allows an applicant to file an incomplete application provided it contains at the least the applicant's name, address, and signature. The proposed language of new paragraph (c)(1) would also include PRWORA requirement which allows the use of electronic signatures. The new paragraph specifically provides that applications signed through the use of electronic signature techniques and applications containing handwritten signatures which are then transmitted to the appropriate office via fax or other electronic transmission technique are acceptable.

New paragraph 7 CFR 273.2(c)(2) would be entitled “Household's right to file.” It would provide that the State agency must make food stamp applications readily accessible to all potentially eligible households or to anyone who requests one which is currently required by 7 CFR 273.2(c)(3). The proposed paragraph would contain the requirement in current 7 CFR 273.2(c)(2)(i) that the State agency shall provide an application in person or by mail to anyone who requests one. The requirement in current paragraph

(c)(2)(i) for mailing an application on the same day as initial contact by the household is modified to require mailing by the next business day. The proposed paragraph would contain the requirement in the fourth sentence of 7 CFR 273.2(c)(1) that a household be allowed to file an application on the same day it contacts the food stamp office during office hours.

The first sentence of 7 CFR 273.2(c)(4) provides that the State agency shall post signs in the certification offices which explain the application processing standards and the right to file an application on the day of initial contact. New paragraph (c)(2) would require State agencies to post signs or make available other advisory materials explaining a person's right to file an application on the day of their first contact with the food stamp office and the application processing procedures. State agencies would be required to notify all persons who contact a food stamp office and either request food assistance or express financial and other circumstances which indicate a probable need for food assistance, of their right to file an application and “encourage” them to do so. For purposes of this provision “encourage” does not mean recruitment or persuasion. It means that State agencies have a responsibility to inform individuals who express an interest in food assistance, or express concerns which indicate food insecurity, about the Food Stamp Program and their right to apply. We believe these requirements are necessary under Section 835 of PROWRA which requires fair, accurate, and timely service, and that applicant households be permitted to apply the same day they first contact the food stamp office in person. It is very important to notify households through some means of these rights because benefits are provided to eligible households retroactive to the date of application.

The second sentence of current 7 CFR 273.2(c)(4) requires State agencies to include information on the application form that explains the processing standards and the right to file an application on the day of initial contact. As explained above, State agencies are no longer required to have this information on the food stamp application form.

The language appearing in the fifth sentence of current paragraph (c)(1) requiring the State agency to advise households that they do not need to be interviewed before filing an application as long as it is signed by the applicant or an authorized representative would be removed. We do not believe this provision is necessary if the State agency informs households of the right to file an application on the first day they contact the food stamp office.

New paragraph (c)(2) would address the handling of applications filed at the wrong certification office. The proposed rule would continue to allow the State agency to require households to file an application at a specific certification office or allow them to file an application at any certification office within the State or project area. The proposed rule would contain the requirement in the second sentence of 7 CFR 273.2(c)(2)(ii) that if an application is received at an incorrect office, the State agency shall advise the household of the address and telephone number of the correct office. However, this proposal would modify the requirement in the third sentence that the State agency offer to forward the application to the correct office that same day. We would require the State agency to forward the application to the correct office not later than the next business day. The third sentence in 7 CFR 273.2(c)(2)(ii) that requires the State agency to inform the household that its application will not be considered filed and the processing standards shall not begin until the application is received by the appropriate office would be removed, because this information should be included on the sign or other advisory information required above. The fourth sentence in 7 CFR 273.2(c)(2)(ii) that requires State agencies to forward applications mailed to the wrong office to the appropriate office the same day would be revised to require mailing by the next business day. As noted above, if an application is received at the incorrect office, the State agency would be required to inform the household of the address and telephone number of the correct office.

Section 7 CFR 273.2(c)(iii) provides that in States that have elected to have Statewide residency, the application processing time frames begin when the application is filed in any food stamp office in the State. This provision would be removed as unnecessary, because any office in the State would be considered the correct food stamp office.

The language appearing in the sixth sentence of current paragraph (c)(1) which requires State agencies to document the date the application was filed by recording on the application the date it was received by the food stamp office would be removed. State agencies have developed many ways of maintaining applications, through paper records and through automated systems. Depending on the system used by a State agency, an alternate method of identifying the date an application was received may be more appropriate than the method specified in the regulations. We believe that State agencies are in the best position to decide the method for establishing the date of application. Removing the requirement to annotate the application does not eliminate a State agency's responsibility to process an application within 30 days of its receipt.

We would retain in new paragraph (c)(4) the requirement in current paragraph (c)(5), “Notice of required verification,” that State agencies provide households, at the time of application for certification and recertification, with a clear written statement of what acts the household must perform in cooperating with the application process, and identify potential sources of required verification. The requirement in current paragraph (c)(5) that State agencies assist in the verification processing would be retained, but modified, in the new provision. While PRWORA eliminated the specific requirement to assist in obtaining verification, it substituted a general requirement that State agencies address the requirements of “special needs” households in their administration of the Program. Such households include, but are not limited to, households with elderly or disabled members, households in rural areas with low-income members, homeless individuals, households residing on reservations, and households in areas in which a substantial number of members of low-income households speak a language other than English. We do not believe that PRWORA amendment should have the result of leaving households with limited mobility, transportation difficulties, or limited English language capabilities to complete verification requirements totally without State agency assistance. Accordingly, the State agency must continue to inform such households of the State agency's responsibility to assist the household in obtaining required verification, providing the household is cooperating with the State agency. The specific requirement in current paragraph (c)(5) that the State agency comply with bilingual requirements would not be included in the new provision, because a general requirement to comply with bilingual standards is set forth elsewhere in current regulations (7 CFR 272.4(b)), and it is not necessary to repeat the requirement here. With these changes, current paragraph (c)(5) would be removed.

Current 7 CFR 273.2(c)(6), “Withdrawing an application,” would

be redesignated as the new paragraph (c)(3).

Household Cooperation—7 CFR 273.2(d)

Current 7 CFR 273.2(d) contains provisions relative to household cooperation in the application process and quality control reviews. We propose to retain most of the language of current paragraph (d)(1) and all of the contents of current paragraph (d)(2). The changes to paragraph (d)(1) we would make are discussed below. Paragraph (d)(1) would be titled “Cooperation with application process.” We would remove the example of “refusal to cooperate” appearing in current paragraph (d)(1) as unnecessary. There are numerous ways that a household could refuse to cooperate, and the example is not definitive. While we are removing the example, we nonetheless expect State agencies to continue to determine non-cooperation in accordance with the standard set forth in the regulation. If a household believes that it has been denied unjustly for refusal to cooperate, it retains the right to request a fair hearing.

We would expand on the policy regarding household cooperation with subsequent reviews to provide that a subsequent review can be in the form of an in-office interview. It is not our intent that State agencies routinely require households to appear for an interview to resolve discrepancies found during a household's certification period. However, we do believe State agencies should have the flexibility to require an in-office interview when the State agency has new information which calls into question the household's current eligibility or level of benefits. For example, a State agency may discover information indicating that a household is not reporting earned or unearned income, which would affect the household's eligibility and benefit level and raise questions about whether the failure to report is an intentional Program violation. Refusal to appear for the interview would result in the household's case being closed. In all cases, where the State agency determines that benefits will be reduced or terminated, the household is entitled to receive a notice of adverse action, unless exempt from such notice, pursuant to 7 CFR 273.13.

We would remove the last two sentences of current paragraph (d)(1). The first of these sentences provides that the State agency may not determine a household to be ineligible when a person outside of the household fails to cooperate with a request for verification. Section 835 of PRWORA amended section 11(e)(3) of the Act to remove this requirement. As a result of this change, the last sentence of current paragraph (d)(1) is unnecessary and would be removed. That sentence describes certain individuals who are not considered “outside” the household for the purpose of the existing provision. Removal of these provisions does not change current policy because refusal to cooperate continues to be defined as refusal by a household member.

Interviews—7 CFR 273.2(e)

Current 7 CFR 273.2(e) requires households to participate in a face-to-face interview with a caseworker at the time of certification and each recertification. Prior to PRWORA, the Act did not contain an explicit provision requiring food stamp applicants to be interviewed. This has always been a regulatory requirement. Section 11(e)(2) did provide language which allowed elderly/disabled households to request a waiver of the in-office interview under certain conditions. Section 835 of PRWORA amended section 11(e)(2) of the Act to remove this waiver language, thereby eliminating any reference in the Act to the fact that in-office interviews are conducted. The Department believes that Congress did not seek to eliminate the Program's requirement for conducting in-office interviews; rather, by removing the in-office interview waiver language in the Act, Congress provided State agencies, rather than households, the flexibility to determine when the in-office interview should be waived. In consideration of the removal of the waiver language and in the spirit of PRWORA, the Department believes it is appropriate to reevaluate current policy and determine whether or not to continue requiring face-to-face interviews. A face-to-face interview affords an eligibility worker the best opportunity to explore and resolve questionable or unclear information on the application or other documents presented by the household in support of its application for benefits in order to make an informed eligibility determination. The face-to-face interview also provides an opportunity for households to ask questions to help them better understand the many facets of the Program and to obtain clarification of questions on the application.

At the same time, we want to allow some flexibility in this area. Therefore, after careful consideration, the Department is proposing that a face-to-face interview be required at the time of initial certification and at least once every 12 months thereafter unless the household is certified for longer than 12 months or the face-to-face interview is waived by the State agency. This would eliminate the requirement to conduct a face-to-face interview at the time a recertification if it occurs during the 12-month period since the last face-to-face interview. Conforming amendments would be made to the recertification provisions of existing rules at 7 CFR 273.14. Proposed provisions regarding State agency waiver of the face-to-face interview are discussed later in this section of the preamble.

In response to the President's regulatory reform initiative to remove outdated, unnecessary and overly prescriptive rules, we are also proposing additional changes to current interview requirements, as discussed below. The proposed changes are also consistent with the spirit of PRWORA to provide more State agency flexibility in the area of household application and certification.

Current 7 CFR 273.2(e)(1) requires that interviews be held in the food stamp office or other certification site. We propose to remove this requirement. State agencies could continue to conduct all interviews in a food stamp office or could choose to conduct interviews in other mutually convenient locations, including the household's home. If the interview is conducted in the household's residence, the proposal would continue to require that such interview be scheduled in advance with the household.

We would also remove the sixth and eighth sentences of paragraph (e)(1). These sentences address the need for privacy and confidentiality of the household's circumstances. The seventh sentence also addresses the need for privacy; therefore, the sixth and eighth sentences are repetitive and unnecessary.

The provision would continue to provide that the person interviewed may be the head of the household, spouse, or another responsible household member, or an authorized representative and that the applicant may bring any person to the interview he or she chooses, and that the applicant's right to privacy must be protected during the interview. The proposal also clarifies that the interview may be conducted separately or jointly with an interview for another assistance program.

Current 7 CFR 273.2(e)(2) addresses waivers of the interview requirement. Prior to enactment of PRWORA, the interview could

only

be waived if requested by the household because the household was unable to appoint an authorized representative and had no

adult household members able to come to the office because the members were elderly, mentally or physically handicapped, lived in a location not served by a certification office, had transportation difficulties, or had similar hardships as determined by the State agency. Section 835 of PRWORA struck this waiver provision from the Act and amended Section 11(e)(2) to provide State agencies the authority to waive an interview without first being requested by a household. Under this proposal, the State agency must waive the in-office face-to-face interview in favor of a telephone interview or announced home visit for household hardship cases. The proposal would allow the State agency to determine what constitutes hardship cases. State agencies could also waive the in-office interview in favor of a telephone interview or announced home visit for households with no earned income if all of its members are elderly or disabled. This change is consistent with existing waiver authority at 7 CFR 273.14 which allows the State agency to waive the in-person interview at recertification for such households. The State agency would continue to be required to grant a face-to-face interview to any household that requests one.

We would remove 7 CFR 273.2(e)(2)(i) regarding State agency options to conduct telephone or announced home visit interviews as this policy is incorporated in the new introductory language of paragraph (e)(2) discussed above. We would also remove current paragraphs (e)(2)(ii) and (iii) as unnecessary and overly prescriptive. Paragraph (e)(2)(ii) provides that the waiver of the face-to-face interview does not exempt the household from the verification requirements. Paragraph (e)(2)(iii) provides that the waiver of the face-to-face interview must not affect the length of the household's certification period.

We would remove current paragraph (e)(3). The first sentence requires the State agency to schedule all interviews as promptly as possible to insure that eligible households receive an opportunity to participate within 30 days after the application is filed. We would remove this sentence and add a sentence to remind State agencies that they should schedule interviews so as to allow the household at least 10 days to provide required verification before the end of the 30 day processing period. The remainder of current paragraph (e)(3) requires State agencies to schedule a second interview if a household fails to attend the first scheduled interview. Under the waiver authority in 7 CFR 272.3(c), we have granted waivers to the requirement that State agencies schedule a second interview if the applicant fails to attend the first scheduled interview. Some State agencies have found it burdensome to schedule multiple interviews and have found that a household that fails to attend the first scheduled interview frequently does not attend a second scheduled interview. We recognize that a household may not be able to attend a scheduled interview. However, in the spirit of PRWORA, which focuses on State agency flexibility in the certification process and household responsibility, we do not want to mandate that the State agency be responsible for rescheduling a missed interview. State agencies that want to may continue to do this. To be consistent with the waiver approvals noted above, we are adding a requirement to proposed paragraph (c)(1) that State agencies advise households that they may reschedule any missed appointment.

Verification—7 CFR 273.2(f)

Current 7 CFR 273.2(f) sets forth the procedures, including the types of documents required, for providing verification to establish the accuracy of statements on the application. Some information must be verified in all cases and other information must be verified if questionable. The mandatory verification requirements are specified in paragraph (f)(1), and the verification requirements for questionable information are specified in paragraph (f)(2).

In response to the President's regulatory reform initiative, we propose to simplify the current provisions of paragraphs (f)(1) and (f)(2) by removing repetitive information and overly prescriptive requirements for use of specific documents wherever possible. We also propose to change the order of the subparagraphs in paragraph (f)(1) so those that relate to financial criteria will be grouped together toward the end of the paragraph. Current paragraph (f)(1)(i) regarding gross nonexempt income would be renumbered (f)(1)(vi). Current paragraph (f)(1)(ii) regarding alien status would be revised and renumbered as (f)(1)(iv).

Section 402 of PRWORA and Sections 503 through 509 AREERA made extensive changes in requirements for alien eligibility which affect the verification requirements. The changes affecting eligibility are described below under the discussion of

Alien eligibility—7 CFR 273.4.

Section 432 of PRWORA also affects the requirements for verification of alien eligibility. Section 432(a) of PRWORA required the Attorney General to publish regulations not later than 18 months after the date of enactment of PRWORA (August 22, 1996) providing requirements for verifying that a person applying for a Federal public benefit is a qualified alien and is eligible to receive the benefit. Section 504 of the Omnibus Consolidated Appropriations Act (OCAA), Pub. L. 104-208 amended section 432(a) to provide that by the same date the Attorney General, in consultation with the Secretary of Health and Human Services (HHS), must also establish procedures for a person applying for a Federal public benefit to provide proof of citizenship. Section 5572(a) of the Balanced Budget Act of 1997, Pub. L. 105-33 provides that not later than 90 days after enactment of the law, the Attorney General, in consultation with HHS, must issue interim guidance for verifying qualified alien status and eligibility for a Federal public benefit. The interim guidance developed by the Department of Justice (DOJ) was published in the

Federal Register

on November 17, 1997 (62 FR 61344). State agencies should also be aware that DOJ will be publishing a final rule on Verification of Eligibility for Public Benefits. The proposed rule has been published in the

Federal Register

, 63 FR 41662, August 4, 1998. Our proposed rule references the forthcoming final rule. Relevant changes to alien verification procedures made by DOJ's final rule will be incorporated into the final version of this rule. The interim guidance provides currently acceptable procedures for the verification of citizenship, alien status, and military connections. Section 432(b) of PRWORA provided that not later than 24 months after the date the verification regulations are adopted, States that administer a program that provides a Federal public benefit must have in effect a verification system that complies with the new regulations. We would remove current paragraphs (f)(1)(ii)(B), (C), and (D), which mandate the types of documents that must be used for verification. State agencies may refer to the interim guidance developed by DOJ, Program policy interpretations, and procedures developed by the Social Security Administration (SSA) for obtaining work history information. These sources provide examples of verification, including verification provided by the household, which State agencies may use in developing their own verification requirements.

Current 7 CFR 273.2(f)(1)(ii)(A) which requires the household to provide verification that each alien is eligible

would be removed. In the introductory paragraph (f)(1)(iv), we would provide that the immigration status of all aliens and other factors relevant to the eligibility of individual aliens must be verified prior to certification. Other factors relevant to the eligibility of individual aliens could be the date of admission or date status was granted; military connection; 40 qualifying quarters of work coverage; battered status; Indian, Hmong or Highland Laotian status; place of residence on August 22, 1996; or age on August 22, 1996. We would also include in new paragraph (f)(1)(iv) the provision from the first sentence of current paragraph (f)(1)(ii)(G), which provides that an alien whose eligibility is questionable is ineligible until the alien provides acceptable documentation, with two exceptions which would be contained in new paragraphs (f)(1)(ii)(A) and (B). The last sentence of current paragraph (f)(1)(ii)(G) would be removed because the reference to 7 CFR 273.11(c) is unnecessary. With these changes, current paragraph (f)(1)(ii)(G) would be eliminated. In regard to expedited service, the eligible status of aliens would have to be determined prior to certification, but verification could be postponed in accordance with paragraph (i).

Pursuant to the President's regulatory reform initiative, the first two sentences and the last sentence of current paragraph (f)(1)(ii)(E) would be removed because they do not provide any significant guidance to State agencies and are unnecessary. New paragraph (f)(1)(ii)(A) would include the provisions appearing in the third and fourth sentences of current paragraph (f)(1)(ii)(E), with some changes in wording for clarity. The third sentence of current paragraph (f)(1)(ii)(E) provides that when a State agency accepts a non-Immigration and Naturalization Service (INS) document from the household as reasonable evidence of alien status, the State agency must send the document to INS for verification. The fourth sentence of current paragraph (f)(1)(ii)(E) provides that the agency must not delay, deny, reduce or terminate an individual's benefits while awaiting such verification. With these changes, current paragraph (f)(1)(ii)(E) would be eliminated.

New paragraph (f)(1)(iv)(B) would be added to address verification of alien eligibility when work history is questionable. Section 402(a)(2)(B) of PRWORA provides that aliens lawfully admitted for permanent residence may be eligible for food stamps if they can be credited with 40 qualifying quarters of work. The conforming amendment proposed here would provide that verification of eligibility based on 40 qualifying quarters of work must be obtained before the alien can be certified unless the State agency or the applicant has submitted a request to SSA regarding the number of quarters of work that can be credited, SSA has responded that the individual has fewer than 40 quarters, and the individual or the State agency has documentation from SSA that SSA is conducting an investigation to determine if more quarters can be credited. If it can be documented that SSA is conducting an investigation, the individual may participate for up to 6 months from the date of the first determination that the number of quarters was insufficient for eligibility. This provision is based on an interpretation of the phrase “has worked 40 qualifying quarters of coverage” set forth in section 402(a)(2)(B)(ii) of PRWORA. An immigrant, under the express terms of section 402(a)(2)(B), would be eligible for food stamp benefits if the immigrant had actually worked 40 qualifying quarters of coverage, notwithstanding SSA's inaccurate or incomplete recording of the immigrant's work history. Food stamp eligibility is premised on the immigrant's act of working the 40 quarters rather than SSA's recording of the immigrant's work history. Thus, in keeping with past practice concerning the receipt of benefits pending the completion of Federal government verification, we propose to permit immigrants to receive food stamp benefits for a maximum period of 6 months. We emphasize that food stamp benefits pending the completion of an SSA investigation are only available to an alien who: (1) Is admitted as a lawful permanent resident under the INA (

i.e.,

an immigrant); (2) SSA has determined has fewer than 40 quarters of coverage; and (3) provides the State agency with documentation produced by SSA indicating SSA is investigating the number of quarters creditable to the alien.

Current 7 CFR 273.2(f)(1)(ii)(F) would be removed. That paragraph specifies that alien applicants must be provided sufficient time (at least 10 days) to provide verification and that benefits must be provided timely. The time period for providing verification would be included in the introductory text of paragraph (f).

Current paragraph (f)(1)(iii) would be renumbered (f)(1)(x), and the first sentence would be revised to conform to Section 809 of PRWORA which amended Section 5(e) of the Act, 7 U.S.C. 2014(e), to allow State agencies to mandate use of standard utility allowances. The revised paragraph would require that actual utility costs be verified if they are used. Current paragraphs (f)(1)(iv) regarding the verification of medical costs would be renumbered (f)(1)(vii).

Current paragraph (f)(1)(v) regarding verification of social security numbers (SSN) would be revised and renumbered (f)(1)(iii). The third sentence of current paragraph (f)(1)(v) requires that once an SSN is verified, the State agency must permanently annotate in the case file the verification provided by the household to prevent unnecessary reverification. Section 835 of PRWORA amended Section 11(e) of the Act to remove the prohibition against requiring a household to submit additional verification for information already currently verified. Therefore, we would remove this requirement currently found in paragraph 273.2(f). We would make the fourth sentence of current paragraph (f)(1)(v), which provides that the State agency must accept as verified an SSN which has been verified by another program participating in the Income Eligibility and Verification System (IEVS), optional except for households which are categorically eligible. We believe this provision is overly prescriptive, and State agencies should have the flexibility to determine if they want to continue such verification polices. We would remove the last two sentences of current paragraph (f)(1)(v) which instruct State agencies on what to do if an individual is unable to provide an SSN or does not have an SSN. These procedures are established in 7 CFR 273.6 and do not need to be repeated here. We would include a reference to 7 CFR 273.6 instead. We would add the requirement in 7 CFR 273.2(f)(8)(i)(B) to verify newly obtained SSNs at recertification.

Current 7 CFR 273.2(f)(1)(vi) would be revised and renumbered (f)(1)(ii). This paragraph requires the verification of residency, specifies that to the extent possible residency must be verified in conjunction with the verification of other information, and includes examples of sources of verification. We would remove the requirement that residency be verified in conjunction with other information and remove the examples. The list is not inclusive, and the eligibility worker is in the best position to know whether the other documentation provided is sufficient to verify residency. We would also remove the last sentence in current paragraph (f)(1)(vi) which specifies that no durational requirement may be established. This requirement is already

established in 7 CFR 273.3 and does not need to be repeated here.

Current paragraph (f)(1)(vii) specifies the requirements for verifying identity and includes a list of examples of acceptable documentary evidence. We would renumber it as (f)(1)(i) and remove the list of examples of acceptable documentary evidence. State agencies may establish their own documentation standards, provided those standards do not exceed the general standards provided in this paragraph.

Current paragraph (f)(1)(viii) would be renumbered as (f)(1)(v). Current paragraph (f)(1)(viii)(A) specifies the types of documentation required to verify disability as defined in 7 CFR 271.2. We would remove the detailed listing of required documentation. Some of the documentation listed is self-evident and does not need to be regulated. Other documentation requirements that may be necessary are best left to the discretion of the eligibility worker. In current paragraph (f)(1)(viii)(B), we would make some minor editing changes for clarity.

Current paragraph (f)(1)(ix) contains provisions regarding verification required when a household reapplies after being disqualified for refusal to cooperate with quality control (QC) reviewers. We would renumber this paragraph (f)(1)(xii) and add the title “Refusal to cooperate with QC reviewer” to the paragraph for consistency.

We would remove current paragraph (f)(1)(x). The requirement in this paragraph to verify household composition if it is questionable is not necessary since paragraph (f)(2) requires verification of all questionable information. The remainder of the text of current paragraph (f)(1)(x) requires individuals who claim separate household status to provide documentation to the State agency that they are separate. We believe that this requirement is unnecessary and provides no meaningful guidance to the State agency. If the individual(s) meets the requirements in regulations at 7 CFR 273.1 to be a separate household, the State agencies can request proof; however, the primary evidence that would need to be provided is proof that the individual purchases food and prepares meals separately. Signed statements by the individuals involved would in most cases be the only documentation that could be provided.

Current paragraph (f)(1)(ix) concerning shelter costs for homeless households would be renumbered (f)(1)(x) and the first sentence would be revised to conform with Section 5(e) of the Act, 7 U.S.C. 2015(e)(5), as amended by Section 809 of PRWORA which establishes an optional homeless household shelter deduction. This PRWORA change is discussed later in this preamble. We would not include the language currently appearing in the second and third sentences of this newly designated paragraph which requires the eligibility worker to use prudent judgment in determining if the homeless household’s verification of shelter expenses is adequate and provides an example. These sentences do not provide specific verification requirements and thus are not necessary.

It should be noted that through a regulatory publishing error, the current regulations at 7 CFR 273.2(f) contain two paragraphs designated as (f)(1)(xii). The first paragraph (f)(1)(xii) regarding the verification of physical or mental fitness of a student claiming to be an eligible student because of a disability would be removed. Since the verification is not mandatory in every case and State agencies are allowed by current paragraph (f)(2) to verify questionable information, we believe the current provision is unnecessary.

The second paragraph (f)(1)(xii) pertains to child support payments. This paragraph would be revised and renumbered (f)(1)(vii). We would retain the requirement for verification of the information. We would remove the third and fourth sentences because they are unnecessary. The third sentence encourages, but does not require, State agencies to use information from the State's Child Support Enforcement (CSE) automated data files in verifying child support payments. The fourth sentence provides that the State agency must give the household an opportunity to resolve discrepancies between household and CSE verification. Since this is the standard procedure for use of computer match data, it is not necessary to include the requirement here.

We would add a new paragraph (xi), “Unverified expenses.” Currently 7 CFR 273.2(f)(3)(ii) contains procedures a State agency must follow if a household fails to provide required verification of a deductible expense within the required processing time. We believe this provision should be simplified and moved to paragraph (f)(1) because it applies to that paragraph as well.

Current 7 CFR 273.2(f)(2)(i) provides that the State agency must verify, prior to certification of the household, all other factors of eligibility which are questionable and affect a household's eligibility and benefit level. This section also requires State agencies to establish guidelines to be used in determining what will be considered questionable and prohibits any requirement for verification based on race, religion, ethnic background, or national origin or targeting the guidelines to groups such as migrant workers or Native Americans for more intensive verification. These provisions would be retained.

Paragraph (f)(2)(ii) currently provides requirements for verification of citizenship if a household's statement that a household member is a U.S. citizen is questionable. We would combine paragraphs (f)(2)(i) and (f)(2)(ii) into a new paragraph (f)(2) and revise the provisions regarding verification of citizenship. We are retaining the requirement that citizenship be verified only if it is questionable and the provision that participation in another program that requires verification of citizenship is acceptable if verification was obtained for the other program. As indicated above under the discussion of verification of alien eligibility, DOJ has provided guidelines for verification of citizenship as well as alien eligibility. Therefore, we propose to remove the verification guidance in current paragraph (f)(2)(ii) and provide in new paragraph (f)(2) that State agencies must verify citizenship in accordance with the DOJ guidance if a household member's citizenship status is questionable.

Current paragraph (f)(3) allows the State agency to mandate verification of any other factor which affects household eligibility or benefit level, including household size where not questionable. We would remove the phrase “including household size where not questionable.” The provision already allows the State agency to mandate verification of any factor not already mandated by the regulations. Therefore, this phrase is unnecessary.

Current paragraph (f)(3)(i) provides that the State agency may establish its own standards to provide that all questionable information is verified in accordance with 7 CFR 273.2(f)(2), that such standards do not allow for inadvertent discrimination, and that the standards cannot be applied to households certified by SSA in accordance with 7 CFR 273.2(k) without SSA concurrence. We would remove the references to verifying questionable information and nondiscrimination because these requirements are covered in the new paragraph (f)(2) and § 272.6 respectively.

We would remove 7 CFR 273.2(f)(3)(ii) which contains procedures for handling a case if a State agency opts to verify a deductible expense and obtaining the verification would delay a household's certification.

The first sentence provides that if a State agency opts to verify a deductible expense and obtaining the verification may delay the certification, the State agency must advise the household that its eligibility and benefit level may be determined without providing a deduction for the claimed but unverified expense. As all expenses for which verification is mandatory are covered by this provision, we would include it under new paragraph (f)(1)(xi) of this section. The second and third sentences identify specific deductions covered by this provision, and they would be removed because they are unnecessary. The provision in the fourth sentence regarding use of the standard utility allowance would be included in new paragraph (f)(1)(xi) of this section. The remaining text concerning delayed processing would be removed because it is covered by new paragraph (h)(3) of this section regarding delays in application processing.

We would combine the provisions of 7 CFR 273.2 (f)(4)(i), (ii), (iii) and (iv) regarding sources of verification into a single paragraph designated as (f)(4). Current paragraphs (f)(4)(i), (ii) and (iii) provide that documentary evidence must be the primary source of verification and that collateral contacts and home visits may be used only when documentary evidence is insufficient. We recognize that each State agency needs the flexibility to decide what sources of verification are appropriate in that State. Technological advances have made verification of many items achievable through computer checks. In many instances, the eligibility worker is best able to decide what verification is appropriate in a specific situation. However, State agencies should afford households some flexibility in providing necessary verifications. Therefore, in the new paragraph (f)(4), we would replace the specific requirements on sources of verification with a general statement requiring State agencies to establish their own standards for sources of verification. The standards would focus on determining the adequacy of the documentary evidence the household provides to support the statement on the application. State agencies may not limit households to one specific form of verification, if other documents can prove equally its statements. The new paragraph (f)(4) would continue to prohibit home visits unless scheduled in advance with the household. In some contexts such visits have been found to be violations of the Fourth Amendment to the Constitution (See, e.g.,

Reyes

v.

Edmunds

472 F. Supp 1218 (D. Minn. 1979). The new paragraph (f)(4) would also retain the requirement in current paragraph (f)(4)(iv) on the handling of verification discrepancies.

We would condense the provisions of 7 CFR 273.2(f)(5)(i) and (f)(5)(ii) into a single new paragraph (f)(5). This paragraph would include the requirement in the first sentence of current paragraph (f)(5)(i) which provides that the household has primary responsibility for providing documentary evidence to support statements on the application and to resolve any questionable information. The remaining sentences of current paragraph (f)(5)(i) require State agencies to help applicants with verification, allow households to supply documentary evidence in person or through another means, prohibit State agencies from requiring households to present verification in person, and require the State agency to accept any reasonable documentary evidence provided by households. Section 835 of PRWORA revised section 11(e) of the Act to remove the requirement that State agencies assist households in obtaining verification and the prohibition against requiring households to present additional proof of a matter for which the State agency already possesses current verification. While PRWORA removed the requirement to assist all households in the verification process, there remains a mandate to offer assistance to special needs households. As previously stated in the discussion relating to the notice of required verification, the proposal would require State agencies to offer assistance in completing verification requirements for such households. We would retain the sentences allowing households to provide verification through whatever means they choose, prohibiting States from requiring the household to supply verification in person, except in the case of a suspected intentional Program violation, and requiring the State agency to accept any reasonable documentary evidence provided by households. We believe these long standing policies are a necessary adjunct of the PRWORA requirement that State agencies provide accurate, timely, and fair service.

We would also remove current paragraph (f)(5)(ii) which provides that the State agency may use collateral contacts or announced home visits when documentary evidence is insufficient to make a determination of eligibility or benefit level and establishes specific requirements for obtaining a reliable collateral contact. Proposed paragraph (f)(4) would allow State agencies to set their own verification standards, establishes collateral contact requirements, and requires that home visits be scheduled in advance. Therefore, these statements are unnecessary.

Current paragraph (f)(6) requires the State agency to document eligibility, ineligibility, and benefit level determinations. This documentation must be in sufficient detail to allow a reviewer to determine the reasonableness and accuracy of the determination. For obvious reasons, we do not intend to change the requirements of this paragraph.

We would remove 7 CFR 273.2(f)(7) regarding use of the State Data Exchange (SDX) and Beneficiary Data Exchange (BENDEX) databases. The provisions in this section are also contained in 7 CFR 272.8 and are not necessary here. Consistent with the removal of paragraph (f)(7), we would renumber current paragraphs (f)(8), (9), and (10) as paragraphs (f)(7), (8), and (9), respectively.

Newly redesignated paragraph (f)(7) provides procedures for verification of household circumstances reported subsequent to initial certification. Current paragraph (f)(7)(i) contains requirements for verifying changes reported at the time of recertification. Current paragraph (c)(7)(ii) contains requirements for verifying changes reported during the certification period. We would combine paragraphs (f)(7)(i) and (f)(7)(ii) into a single paragraph designated as (f)(7) and establish new verification requirements for changes that occur at any time subsequent to the initial certification.

Section 11(e)(3)(C) of the Act prior to PROWRA prohibited a State agency from requiring additional proof of a matter on which the State agency already has current verification, unless the State agency has reason to believe that the information possessed by the agency is inaccurate, incomplete, or inconsistent. The current regulations require verification for a change in income or actual utility expenses if the source has changed or the amount has changed by more than $25 and for previously unreported medical expenses and total recurring medical expenses which have changed by more than $25. Income may not be verified if the source has not changed or if the amount has not changed by more than $25, unless the information is incomplete, inaccurate, inconsistent or outdated.

Section 835 of PROWRA removed the prohibition on requiring households to submit additional information. Therefore, we propose to replace the current regulatory requirements with a general requirement that the State

agency verify information as required by 7 CFR 273.2(f)(1), (2), and (3), as proposed to be amended by this action, when a household reports any changes during the certification period or at recertification which would affect eligibility or the benefit level, or if unchanged information becomes questionable. Although this may increase verification efforts in a few instances,

e.g.

, when income changes by less than $25, we believe that this requirement is simpler to understand and administer, because the procedure is the same for all household circumstances. We believe that the proposed requirement that the change would have to affect eligibility or the benefit level will limit the increase in verification efforts significantly. The Department is particularly interested in receiving comments on this proposal.

We would remove newly designated paragraph (f)(8)(ii) regarding disclosure safeguards and agreements because 7 CFR 272.8 contains these requirements. With the removal of newly designated paragraph (f)(8)(ii), newly designated paragraphs (f)(8)(iii), (iv), and (v) would be redesignated as paragraphs (f)(8)(ii), (iii), and (iv), respectively. Minor editing changes would be made to the newly designated paragraphs (f)(8)(ii) and (iii).

Current paragraph (f)(9), newly designated as paragraph (f)(8), contains procedures for using the Income Eligibility Verification System (IEVS) information to verify eligibility and benefits. As previously discussed in this preamble, section 840 of PRWORA amended Section 11(i)(18) of the Act, 7 U.S.C. 2020(e)(18), to make use of IEVS a State agency option. This provision was effective upon enactment of the law, and States were allowed to implement this provision as of that date. If State agencies do access IEVS, most of the procedures contained in this paragraph are still appropriate. However, in newly redesignated paragraph (f)(8)(iv), we would remove the requirement that the State agency put in writing any information it has received from IEVS if it is requesting independent verification from the household. State agencies may be obtaining this information on-line while the household is present or may be able to request the independent verification more readily through a telephone call. Therefore, specifying that the request for verification be in writing restricts the State agency unnecessarily. Currently the section specifies the household's right to a fair hearing if it is terminated for failure to respond to a request for verification of IEVS data and again if it verifies information that results in a negative action. We would remove the repetitive language regarding a household's right to a fair hearing.

Newly designated paragraph (f)(9) provides procedures for verifying alien status through the SAVE system. As previously discussed in this preamble, section 11(p) of the Act, as amended by section 840 of PRWORA, makes use of the SAVE system a State agency option. If the State agency uses the SAVE system, the procedures in this paragraph would apply. We would simplify the language of paragraph (f)(9) and eliminate repetitive statements contained in paragraph (f)(9)(i) regarding the procedures for obtaining verification from the household and the first sentence of (f)(9)(iii) regarding the procedures for accessing the SAVE system.

Normal Processing—7 CFR 273.2(g); Delays in Processing—7 CFR 273.2(h)

Current 7 CFR 273.2(g) requires State agencies to process applications within 30 days. Current 7 CFR 273.2(h) provides requirements for handling applications when the process is delayed beyond the legislatively mandated 30 days. We would remove paragraph (h) entirely. We would revise paragraph (g) and redesignate it as paragraph (h). New paragraph (g) would contain provisions related to authorized representatives, and it will be addressed later. Proposed changes are made in response to the President's regulatory reform initiative to remove overly prescriptive regulations. The changes are also consistent with the spirit of PRWORA allowing State agencies to establish their own operating procedures and our belief that State agencies should have more flexibility with regard to application processing.

New paragraph (h)(1) would retain the policy contained in current paragraph (g)(1) that State agencies provide eligible households an opportunity to participate within 30 days of the date of application. We would remove, as unnecessary, the third sentence of current paragraph (g)(1) referring to the special procedures in 7 CFR 273.2(i) for expedited service.

The first sentence of current paragraph (g)(3), which requires that a notice of denial be sent within 30 days if the household is found to be ineligible, would be added to new paragraph (h)(1). The remainder of current paragraph (g)(3) would be removed to enhance State agency flexibility. The second sentence requires the State agency to send a notice of denial on the 30th day if a household has failed to appear for two scheduled interviews and made no subsequent contact with the State agency to express interest in pursuing the application and requires the household to file a new application if it is denied under these circumstances. This paragraph also requires that the State agency deny an application on the 30th day if it was able to conduct an interview and request all of the necessary verification, but the household failed to provide the verification.

As stated above, under the Department's proposal, current paragraph (h) would be removed. It provides detailed procedures for State agencies to follow in the event that final action is not taken on an application within 30 days from the date a household applies. We propose to replace the provisions under current paragraph (h) with a new paragraph (h)(2) which would require State agencies to continue to process cases if the State agency is at fault for not processing the case within the 30-day time period. If the State agency is at fault for delaying the application process, benefits would be restored back to the application filing date. If the household is at fault for the delay, the State agency may either deny the case or hold it pending for an additional period of time to be determined by the State agency but not more than 2 months. If the household is at fault for the delay, benefits would be provided retroactive to the date the household takes the required action.

In new paragraph (h)(3), we would retain, but consolidate, the procedures for determining the cause of a delay, taking into account the changes mandated by PRWORA. Delays that are the fault of the State agency include, but are not limited, to failure to explore and attempt to resolve with the household any unclear and incomplete information provided at the interview; failure to inform the household of the need for one or members to register for work and allow the members at least 10 days to complete work registration; failure to provide the household with a statement of required verification and allow the household at least 10 days to provide the missing verification; and failure to notify the household that it could reschedule a missed interview. Delays that are the fault of the household include, but are not limited to, failure to cooperate with the State agency in resolving any unclear or incomplete information provided at the interview; failure to register household members for work; failure to provide missing verification; and failure to reschedule a missed interview appointment.

Authorized Representatives—7 CFR 273.2(g)

We propose to redesignate the provisions of current 7 CFR 273.1(f) on authorized representatives as paragraph 7 CFR 273.2(g). We believe the authorized representative provisions more appropriately belong under 7 CFR 273.2. We also propose to amend the authorized representative provisions as discussed below.

Current provisions regarding the use of authorized representatives in the application process are contained in several sections of the regulations. Section 273.1(f) contains general requirements for using an authorized representative to apply for the program, special procedures for drug addict and alcoholic treatment centers and group homes acting as authorized representatives, special procedures for use of an authorized representative for minor household members, restrictions on the use of authorized representatives, and provisions for disqualification of authorized representatives. Sections 273.11(e) and (f) also contain requirements for use of authorized representatives in the certification of residents of treatment centers and group homes, respectively. Section 274.5 contains requirements for use of authorized representatives to obtain benefits and current 7 CFR 274.10(c) contains requirements for emergency authorized representatives. In proposed new paragraph (g), we would condense and revise requirements for use of authorized representatives that appear in 7 CFR 273.1(f), 7 CFR 273.11(e) and (f), and 7 CFR 274.5.

We would move to 7 CFR 273.11(e) and (f) the requirements for treatment centers and group homes. The introductory paragraph of 7 CFR 273.1(f)(2) would be removed as unnecessary. The discussion in subparagraph (i) regarding addict and alcoholic treatment centers would be included in 7 CFR 273.11(e)(1) in place of the reference to 7 CFR 273.1(f)(2). In current subparagraph (ii) regarding group living arrangements, similar references in the first, second, fourth, fifth, and last sentences would be included in 7 CFR 273.11(f)(1). The 6th sentence would be included in 7 CFR 273.11(f)(7). The remainder of the paragraph would be removed as unnecessary. A reference to 7 CFR 273.11(e) and (f) would be included in the new paragraph 7 CFR 273.2(g)(1)(iii).

Proposed 7 CFR 273.2(g)(1) would be entitled “Applying for benefits.” In new paragraph (g)(1)(i) we would include the provisions of current 7 CFR 273.1(f), (f)(1)(i) and (f)(1)(ii) with minor editorial changes. The new paragraph would include the current provisions that allow an authorized representative to act for the household in the application process and to complete work registration forms for those household members required to register for work. It would also continue to require the State agency to inform the household of its liability for overissuances which result from erroneous information given by the authorized representative. We would remove the two regulatory references, because they are misleading. The reference to 7 CFR 273.11 is intended to assure that, except when the drug and alcoholic treatment centers and certain group living arrangements act as authorized representatives, the household is told of its liability for erroneous information given by the authorized representative. We would add regulatory language and remove the regulatory reference to ensure proper application of the policy. The intent of the reference to 7 CFR 273.16 is unclear so we are removing it. The new paragraph would retain the criteria in current paragraphs (f)(1)(i) and (f)(1)(ii) that nonhousehold members may be designated as authorized representatives only if the authorized representative has been designated in writing by the head of the household, the spouse, or another responsible member of the household, and the authorized representative is an adult who is sufficiently aware of relevant household circumstances to properly represent the household. We would remove current paragraph (3) regarding nonhousehold members who can apply for minors and include the content in new paragraph (f)(ii).

The information in introductory paragraph 7 CFR 274.5(a) and the first sentence of paragraph (b) would be removed as unnecessary. The contents of paragraph (a)(1) and the second sentence of (a)(2) would be included in new paragraph (g)(2) entitled “Obtaining food stamp benefits” with minor editorial changes. The new paragraph would include the current provisions for encouraging the household to name an authorized representative for obtaining benefits at the time of application, that the representative's name be recorded in the household's casefile and on its ID, and that the representative for obtaining benefits may be the same person designated to make application on behalf of the household. In proposed new paragraph (g)(2)(ii), we would include a reference to 7 CFR 274.10(c) which provides for designating an emergency authorized representative subsequent to the time of certification.

A new paragraph (3) entitled “Using benefits” would be added. This paragraph would include the information currently contained in 7 CFR 274.5(a)(6) and (7) and 274.5(c). The last sentence in 7 CFR 274.5(c) which prohibits a person disqualified for committing an intentional Program violation from using coupons on behalf of the household would be removed because it is not administratively feasible to enforce this provision.

The current restrictions on designating authorized representatives in 7 CFR 273.1(f)(4) for application processing and 7 CFR 274.5 for obtaining benefits would be combined in proposed paragraph 7 CFR 273.2(g)(4), entitled “Restrictions on designations of authorized representatives.” We would revise the provisions to omit examples and other unnecessary language. Proposed paragraph (4)(i) would provide that State agency employees involved in certification and issuance and retailers authorized to accept food stamp benefits may not act as authorized representatives without the specific written approval of the designated State agency official and only if that official determines that no one else is available to serve as an authorized representative. Proposed paragraph (4)(ii) would provide that individuals disqualified for intentional Program violations cannot act as authorized representatives while they are disqualified unless no one else is available. Proposed paragraph (4)(iii) would include the provisions for disqualifying authorized representatives for misrepresentation or abuse, and paragraph (4)(iv) would contain the current provision that homeless meal providers may not act as authorized representatives for homeless food stamp recipients.

The current restrictions provide that the State agency cannot impose a limit on the number of households an authorized representative may represent. In the event an employer is designated as the authorized representative for his or her employee or that a single authorized representative has access to a large amount of benefits, the State agency must exercise caution to assure that the household has freely requested the assistance of the authorized representative, the household's circumstances are correctly represented, the household is receiving the correct amount of benefits, and the authorized representative is properly using the coupons. We believe these are unrealistic expectations for the State agency. Section 11(e)(7) of the Act, 7

U.S.C. 2020(e)(7), allows the Secretary to restrict the number of households which may be represented by an individual. We would delegate this authority to the State agency in lieu of the current provision in order to enable the State agency to prevent abuse.

With these proposed changes, current 7 CFR 273.1(f) and 7 CFR 274.5 would be removed. The regulatory site of 7 CFR 274.5 would be reserved for future use.

Expedited Service—7 CFR 273.2(i)

Currently, 7 CFR 273.2 (i) lists the categories of households entitled to expedited service and establishes the procedures that State agencies must use in providing that service. The PRWORA included several provisions affecting the expedited service requirements.

Section 838 of PRWORA amended Section 11(e)(9) of the Act, 7 U.S.C. 2020(e)(9) by removing households consisting entirely of homeless people as a category of households entitled to expedited service. Section 838 also increased the number of days which State agencies have to provide expedited service from 5 to 7 calendar days. In accordance with these provisions, this rule removes the reference to homeless households in current paragraph (i)(1)(iii), renumbers paragraph (iv) as (iii), and changes the expedited processing timeframe appearing in current paragraph (i)(3) from 5 days to 7 days. Note: These changes are also included in another rule which may be published before this rule. These are nondiscretionary changes that are being made here to avoid unnecessary confusion.

In response to the President's regulatory reform initiative to remove unnecessary, redundant, outdated, or overly prescriptive rules, we would remove repetitive definitions and make several changes in the procedures for providing expedited service, as discussed below.

Under current paragraph (i)(2), State agencies are required to design their application procedures to identify households eligible for expedited service at the time they apply. The proposed rule would continue to require State agencies to prescreen applications for entitlement to expedited service. In addition, the proposed rule would require State agencies to document their evaluations. The current paragraph provides screening examples. The examples would be removed in the proposed rule, because they are unnecessary.

We would amend the first sentence of 7 CFR 273.2(i)(3)(i) to add language referring to access to benefits through an Electronic Benefit Transfer (EBT) system or other electronic access devices in the first sentence. We would remove the reference to households residing in institutions applying jointly for SSI and food stamps as procedures for these households are addressed elsewhere in the regulations. We would remove paragraphs (i)(3)(ii) and (i)(3)(v). These two paragraphs provide the expedited time frame within which benefits must be provided to residents of drug addiction or alcoholic treatment and rehabilitation centers, residents of group living arrangements, and residents of shelters for battered women and children who are eligible for expedited service. As the expedited time frame is no different from the requirements for other households eligible for expedited service, there is no need for separate regulatory sections for these households.

We would renumber 7 CFR 273.2(i)(3)(iii) and (i)(3)(iv) as paragraphs (i)(3)(ii) and (i)(3)(iii), respectively, to reflect the proposed removal of paragraph (i)(3)(ii). We would amend newly designated paragraph (i)(3)(ii) to reflect the proposed removal of the requirement for an in-office interview discussed earlier in this preamble. We would also remove the sentence that provides that the first day of the 7-day period within which expedited service must commence is the calendar day following application. The first day for all application processing requirements is the calendar day following application. This sentence is, therefore, repetitive and unnecessary.

Current paragraph (i)(4) provides the special procedures State agencies must use for expedited service. These procedures are very detailed requirements that State agencies must follow, including a multitude of options. In this rule we propose to significantly streamline these requirements as discussed below.

In 7 CFR 273.2(i)(4)(i), we would remove the references to the sources of verification. We would subdivide current paragraph (i)(4)(i) into paragraphs entitled “Verification,” “Social security numbers,” and “Work registration.” Under new paragraph (i)(4)(iii), we would include a requirement that the applicant register for work, but we would remove the language about attempting to register other members prior to certification. If an authorized representative applies on behalf of the household, that person may register a member for work so this should not delay the process.

Current paragraph (i)(4)(i)(B) already provides that the State agency may verify factors other than identity, residency, and income provided that verification can be accomplished within expedited processing standards. We believe that providing specific directions for certain additional items is therefore unnecessary. The eligibility worker is in the best position to decide what information can be verified and how verification can be achieved in a specific case.

Paragraph (i)(4)(i)(B) currently provides that households entitled to expedited service will be asked to furnish an SSN or apply for one for each person before the second full month of participation. Households entitled to expedited service were allowed to participate for the first full month without providing or applying for an SSN because of the requirement to combine the prorated allotment for the month of application and benefits for the first full month for households applying after the 15th of the month. Since Section 828 of PRWORA made use of combined allotments a State agency option, as discussed below, we propose to provide that households must furnish or apply for an SSN prior to the second month's issuance or, if the State agency issues combined allotments, prior to the third month's issuance. For newborns, we would require the household to provide an SSN or proof of an application for an SSN at its next recertification or within 6 months following the month the baby is born, whichever is later, in accordance with 7 CFR 273.6(b)(4). Those household members who do not meet these requirements must be allowed to continue to participate if they satisfy the good cause requirements specified in 7 CFR 273.6(d).

We would remove 7 CFR 273.2(i)(4)(ii). This paragraph requires the State agency to promptly contact the collateral contact to obtain verification. State agencies have the option of verifying information provided by the household either through a collateral contact or through readily available documentation pursuant to current paragraph (i)(4)(i)(A). There is no requirement that verification be accomplished solely through a collateral contact. Further, the State agency is required to process an application so that benefits can be provided within the expedited service time standard, regardless of the method of verification used. Therefore, this paragraph is unnecessary.

We would remove 7 CFR 273.2(i)(4)(iii). The provisions regarding certification periods would be removed because they are unnecessary. The provisions regarding postponed verification would be included in new

paragraph (i)(4)(i)(B). The provisions regarding notices of eligibility and expiration would be removed because they are also included in 7 CFR 273.10(g)(1).

Proposed paragraph (i)(4)(ii)(A) would provide that if a household applies on or before the 15th of the month and is assigned a certification period of longer than one month postponed verification must be obtained prior to the second month's issuance. The State agency must issue the second month's benefits within seven working days from receipt of the verification but not before the first day of the second month.

Proposed paragraph (i)(4)(ii)(B) would provide that if a household applies after the 15th of the month postponed verification must be submitted prior to the third month's issuance. The third month's benefits must be provided within seven working days from the receipt of the necessary verification, but not before the first day of the third month.

Newly designated paragraph (i)(5) allows State agencies to issue combined allotments to households that apply after the 15th of the month and have their applications processed under the expedited service procedures. The combined allotment consists of a prorated amount for the month of application and the benefits for the first full month of participation. Section 203 of the Hunger Prevention Act of 1988 (Pub. L. 100-435) amended section 8(c) of the Act, 7 U.S.C. 2017(c), to require State agencies to provide combined allotments to all households applying after the 15th of the month. Regulations dated June 7, 1989 (54 FR 24518) implemented this requirement. Section 1732 of the 1990 Leland Act (Pub. L. 101-624) amended section 8(c)(3) of the Act to make use of combined allotments for households processed under the 30-day standard a State agency option. This provision was added to 7 CFR 273.2(g) by regulations dated October 17, 1996 (61 FR 54303). Combined allotments were still required for households entitled to expedited service. The October 17, 1996 regulations moved that requirement from 7 CFR 274.2(b)(2) to 7 CFR 273.2(i)(4) and provided that, if necessary, verification should be postponed to meet the expedited time frame. Section 828 of PRWORA amended section 8(c) of the Act again to make combined allotments optional for expedited service households as well as households processed under normal procedures. We would amend newly designated paragraph (i)(5) to provide that, at State agency option, households applying after the 15th of the month may receive a combined allotment.

We would remove 7 CFR 273.2(i)(4)(iii)(D) which prohibits providing benefits to households determined ineligible in the month of application or the following month or which have failed to provide postponed verification. This paragraph would be removed because it is not necessary.

Current paragraph (i)(4)(iv) would be renumbered as paragraph (i)(6), and it would be entitled “Frequency.” The provision would continue to provide that there is no limit to the number of times a household can be certified under the expedited service procedures but the expedited procedures would not apply at the time of recertification if a household reapplies before the end of its current certification period.

Current paragraph (i)(4)(v) would be removed as unnecessary. That paragraph provides that households requesting, but not entitled to, expedited service must have their applications processed according to normal standards.

We are also proposing to make additional editing changes throughout paragraph (i) which are not discussed in detail in this preamble. These changes do not affect the procedural requirements but simply provide clarity or brevity.

PA, GA and Categorically Eligible Households—7 CFR 273.2(j)

Current regulations at 7 CFR 273.2(j) mandate categorical eligibility for certain households and mandate joint application processing requirements for households in which all members are receiving public assistance, supplemental security income (SSI), or general assistance (GA). Section 835 of PRWORA amended Section 11(e) of the Act to eliminate the mandate for joint processing of such cases. However, State agencies may opt to continue to jointly process these cases. Accordingly, we would revise current paragraph (j) in its entirety to: (1) Retain pertinent categorical eligibility provisions; (2) remove provisions or references associated with mandatory joint application processing; and (3) retain those joint processing provisions we believe are necessary to protect the client should a State agency opt to continue joint processing of TANF, SSI or GA households.

We would change the title of 7 CFR 273.2(j) to “Categorical eligibility.” We would remove current paragraphs (j)(1), (j)(3) and (j)(5) which set forth mandatory joint processing requirements. Although we would remove paragraphs (j)(1) and (j)(3), some statements in these paragraphs would be retained but moved to other locations in the regulations or in the new paragraph (j). Current paragraph (j)(5) also provides that a separate application must be used for TANF/GA food stamp applicants. Under the provisions of PRWORA, the type of application used is a State agency option; therefore, the provision is being removed. With the removal of paragraphs (j)(1) and (j)(3), current paragraphs (j)(2) and (j)(4) would be redesignated as paragraphs (j)(1) and (j)(2), respectively.

New paragraph (j)(1) would be entitled “TANF and SSI households.” and it would be revised in its entirety. We would retain the policy but simplify the language. New paragraph (j)(2) would be entitled “GA households.” The new paragraph would be revised. We would retain the policy but make some editorial changes. We would remove current paragraphs (j)(4)(vi) regarding categorical eligibility for combination households as unnecessary.

Alien Eligibility—7 CFR 273.4

Under section 6(f) of the Act, 7 U.S.C. 2015(f), and current rules at 7 CFR 273.4(a), citizens, nationals, and aliens lawfully admitted for permanent residence, refugees, asylees, parolees, and certain other specifically listed categories of aliens were eligible to participate in the Food Stamp Program, if they met the other eligibility criteria. Under section 402 of PRWORA, as amended, citizens and non-citizen nationals remain eligible, but the remaining categories of eligible aliens have been changed.

We propose to revise 7 CFR 273.4(a) to remove references to those aliens no longer eligible and add provisions referencing the alien provisions of Title IV of PRWORA, as amended. We also propose to revise the section to remove unnecessary and overly prescriptive requirements. As discussed above, we would also make conforming amendments to 7 CFR 273.2(f)(1)(ii) to address verification of alien eligibility under the new alien eligibility requirements and to reference the DOJ interim guidance.

Current regulations at 7 CFR 273.4(a) which provide that a citizen is eligible for food stamp benefits do not define “citizen.” We propose to add a reference in paragraph (a)(1) to the DOJ interim guidance which includes a definition of the term. According to Step 3 A. of the guidance, a citizen is one of the following (subject to certain exceptions and qualifications):

1. A person (other than the child of a foreign diplomat) born in one of the several States or in the District of Columbia, Puerto Rico, Guam, the U.S.

Virgin Islands, or the Northern Mariana Islands who has not renounced or otherwise lost citizenship;

2. A person born outside of the United States to at least one U.S. citizen parent (sometimes referred to as a “derivative citizen”); or

3. A naturalized U.S. citizen.

The DOJ interim guidance also includes non-citizen nationals under the discussion of citizenship. A non-citizen national is a person born in an outlying possession of the United States (American Samoa or Swain's Island) on or after the date the U.S. acquired the possession, a person whose parents are U.S. non-citizen nationals (subject to certain residency requirements), or certain persons who elected to become nationals but not citizens of the United States pursuant to section 302 of the Covenant to Establish a Commonwealth of the Northern Mariana Islands in Political Union with the United States of America (Pub. L. 94-241, 90 Stat. 263, 48 U.S.C. 1801 note). In the past, Food Stamp Program regulations did not distinguish between citizens and non-citizen nationals. For clarity, we propose to add the term “non-citizen national” to paragraph (a)(2) to provide that non-citizen nationals are eligible to participate.

Section 431 of PRWORA, as amended by section 501 of the OCAA and sections 5302, 5562, and 5571 of the Balanced Budget Act, defines a qualified alien as:

(1) An alien who is lawfully admitted for permanent residence under the Immigration and Nationality Act (INA);

(2) An alien who is granted asylum under section 208 of the INA;

(3) A refugee who is admitted to the United States under section 207 of the Act;

(4) An alien who is paroled into the United States under section 212(d)(5) of the INA for a period of at least 1 year;

(5) An alien whose removal or deportation is being withheld under section 241(b)(3) or 243(h) of the INA;

(6) An alien who is granted conditional entry pursuant to section 203(a)(7) of the INA as in effect prior to April 1, 1980;

(7) A battered alien, an alien whose child has been battered, or an alien child of a battered parent; or

(8) A Cuban or Haitian entrant as defined in section 501(e) of the Refugee Education Assistance Act of 1980.

Section 5562 of the Balanced Budget Act amended the INA citation for aliens whose deportation has been withheld to add a reference to section 241(b) of the INA. The OCAA amended section 243(h) of the INA to consolidate the two former procedures of deportation and exclusion into one procedure called removal. The section was renumbered as 241(b)(3) but appropriate conforming amendments were not made to section 402 and other sections of PRWORA which referenced section 243(h). The Balanced Budget Act corrected that omission.

Section 501 of the OCAA amended section 431 of PRWORA by adding a new paragraph (c) to provide that certain aliens who have been battered or subject to extreme cruelty are considered qualified aliens if they meet certain criteria. Section 5571(c) of the Balanced Budget Act further amended section 431(c) by adding a new paragraph (3) to include the alien child of a battered parent as a qualified alien. To be a qualified alien based on battery or extreme cruelty, the alien must meet the following conditions:

(1) The alien or the alien's child has been battered or subjected to extreme cruelty in the U.S. by a spouse or parent or by a member of the spouse or parent's family residing in the same household as the alien, but only if the spouse or parent consents to or acquiesces in such battery or cruelty; in the case of a battered child, the alien did not actively participate in the battery or cruelty; in the case of an alien child whose parent has been battered, the child must be living in the same household as a parent who has been battered under these circumstances;

(2) The battered alien or child no longer resides in the same household as the abuser;

(3) There is a substantial connection between the battery or cruelty and the need for benefits;

(4) The alien described in paragraph (1) must also have been approved or have a petition pending with INS that sets forth a prima facie case for status as a spouse or a child of a U.S. citizen under INA section 204(a)(1)(A)(ii), (iii) or (iv); classification under section 204(a)(1)(B)(ii) or (iii); suspension of deportation and adjustment of status under section 244(a)(3); status as a spouse or child of a citizen under section 204(a)(1)(A)(i); or classification under section 204(a)(1)(B)(i). An alien whose child has been battered or subjected to extreme cruelty by a spouse of a parent of the alien must have been approved or have a petition pending with INS for classification under section 204(a)(1)(B)(ii) or (iii).

Section 5571 of the Balanced Budget Act also amended section 431 of PRWORA to provide that the agency providing the benefits will be responsible for determining whether there is a substantial connection between the need for benefits and the abuse. Section 5571 also provides that the Attorney General must issue guidance concerning the meaning of the terms “battery” and “extreme cruelty” and the standards to be used for determining whether there is a substantial connection between the abuse and the need for benefits. The Attorney General's guidance was published in the

Federal Register

on December 11, 1997 (62 FR 75285).

We do not propose to include in the regulatory language all the provisions of the law for establishing eligibility as a battered alien because detailed information is available in the DOJ interim guidance and the battered aliens are not eligible for food stamps unless they meet one of the criteria we propose to list in new paragraph (a)(5)(ii).

Section 5302 of the Balanced Budget Act added Cuban and Haitian entrants, as defined in section 501(e) of the Refugee Education Assistance Act of 1980, to the list of qualified aliens in section 431 of PRWORA. We would include the list of qualified aliens in the proposed paragraph (a)(5)(i).

To be eligible for food stamps, most aliens must be both a qualified alien as defined in section 431 of PRWORA and meet one of the food stamp criteria in section 402 of PRWORA. Section 402, as amended by the Balanced Budget Act, limits eligibility for food stamps to qualified refugees, asylees, deportees, specified Amerasians, Cuban and Haitian entrants, certain legal permanent residents, and veterans and active duty personnel and the spouse and unmarried dependent children of the veterans and active duty personnel. We would include the list in proposed paragraph (a)(5)(ii).

Under section 402(a)(2)(B) of PRWORA, the eligibility of aliens lawfully admitted for permanent residence is limited to those who have earned or can be credited with 40 qualifying quarters of work as determined under title II of the Social Security Act and as provided under section 435 of PRWORA, as amended by section 5573 of the Balanced Budget Act. An alien may be credited with all of the qualifying quarters worked by a parent of the alien before the alien becomes 18 and the quarters worked by a spouse of the alien during their marriage, if they are still married or the spouse is deceased. We propose to include this requirement in the introductory language of the new paragraph (b)(1).

To establish eligibility based on 40 quarters of work, the State agency may request information from the Social Security Administration through the Quarters of Coverage History System

(QCHS) and/or obtain verification from the household. State agencies may request and receive information regarding qualifying quarters from SSA according to SSA instructions. For each individual (other than the person who signed the application) whose SSN is submitted to SSA with a request for quarters of coverage information, the State agency must obtain a signed form consenting to the release of the information. This form is to be filed in the household's case file. Section 5573 of the Balanced Budget Act authorizes SSA to disclose quarters of coverage information concerning an alien and an alien's spouse or parents to other government agencies. Therefore, if quarters of coverage based on relationship are needed and a signed form cannot be obtained, the State agency may submit a request to SSA for information regarding the individual's work history. These requests will be processed manually by SSA. Procedures for requesting information from SSA are contained in SSA's manual for obtaining quarters of coverage information.

Aliens who can be credited with 40 qualifying quarters, as reported by SSA, would be certified, if otherwise eligible. Those who do not have 40 quarters according to SSA records and who accept that determination would be denied participation. However, individuals who believe they should be credited with more quarters of work may request that SSA investigate their work history to determine if more quarters can be credited. As indicated above under the discussion of verification of alien eligibility, we propose to require that if SSA is conducting an investigation to determine if more quarters can be credited, the applicant may participate pending the results of the investigation for up to 6 months from the date of SSA's original finding of insufficient quarters. A conforming amendment is being proposed to include this requirement in the verification requirements in new 7 CFR 273.2(f)(1)(iv)(B).

SSA has prepared guidance for State agencies to use in requesting work history information through the QCHS. Through this system, State agencies are able to obtain information about work performed in jobs covered by Title II of the Social Security Act and some work that is not covered by Title II, such as some employment with federal, State, or local governments or nonprofit organizations. If the State agency cannot obtain work history information from SSA, the State agency will have to obtain verification of work from the applicant or other available data sources. This will always be the case for recent quarters worked because of the time it takes SSA to update the database using the most recent tax returns. Lag quarters are quarters for which SSA has not had time to update the information.

Section 402(a)(2)(B)(ii) of PRWORA also provides that no qualifying quarter creditable for a period beginning after December 31, 1996, can be included as one of the credited quarters if the individual received any Federal means-tested public benefit (as provided under section 403) during that quarter. Section 435 of PRWORA provides that no qualifying quarter for any period after December 31, 1996, by a parent or spouse of the alien may be included if the parent or spouse received any Federal means-tested public benefit during that quarter. Section 403(c) includes a list of types of assistance or benefits that are exempt from the prohibition (exempt assistance). The list includes certain emergency medical assistance; short-term, non-cash emergency disaster relief; assistance under the National School Lunch Act; assistance under the Child Nutrition Act of 1966; certain non-Title XIX public health assistance; certain foster care and adoption payments; student assistance provided under titles IV, V, IX, and X of the Higher Education Act of 1965, and titles III, VII, and VIII of the Public Health Service Act; benefits under the Head Start Act; and benefits under the Workforce Reinvestment Act. The list also includes in-kind services which may not be means-tested, such as soup kitchens and short-term shelter, specified by the Attorney General. The DOJ published a Notice in the

Federal Register

on August 30, 1996 (61 FR 45985), containing a non-exclusive list of the types of exempt in-kind services.

Each federal agency which issues means-tested public benefits is responsible for identifying and publishing a list of benefits to which the term “Federal means-tested public benefit” as used in PRWORA applies. According to

Federal Register

Notices published by HHS (62 FR 45256) and SSA (62 FR 5284) on August 26, 1997, TANF, Medicaid, and SSI are Federal means-tested public benefits. According to a

Federal Register

Notice published by this Department on July 7, 1998 (63 FR 36653), the Food Stamp Program and the block grant food assistance programs in Puerto Rico, American Samoa, and the Commonwealth of the Northern Mariana Islands are the only FNS program to which the term applies. We are proposing that “received” means that the alien actually received the assistance or food stamps in the quarter in question.

We propose to provide in paragraph (a)(5)(ii)(A) that if an alien was determined eligible for any Federal means-tested public benefit as defined by the agency providing the benefit or was certified to receive food stamps during any quarter after December 31, 1996, the quarter cannot be credited toward the 40-quarter total. Likewise, if the alien needs a quarter from a parent or spouse, the parent or spouse's quarter cannot be counted if the parent or spouse was determined eligible for any Federal means-tested public benefit or was certified to receive food stamps during the quarter. For example, if the alien worked and his parents received SSI in the first quarter of 1997, the alien would have one quarter counted because he worked and he did not receive assistance; if the alien did not work, but his parents worked and received SSI, the alien would not have any countable quarters.

Section 402(a)(2)(A) of PRWORA provided that refugees admitted under section 207 of the INA, asylees admitted under section 208 of the INA, and aliens whose deportation or removal has been withheld under sections 243(h) or 241(b)(3) of the INA would be eligible for 5 years. Refugees would be eligible for 5 years from the date of entry into the country, asylees would be eligible for 5 years from the date asylum was granted, and deportees would be eligible for 5 years from the date deportation or removal was withheld. Section 5302 of the Balanced Budget Act reorganized section 402(a)(2)(A) to separate the requirements for eligibility for SSI and food stamps and to provide in paragraph (A)(ii)(IV) that an alien granted status as a Cuban or Haitian entrant, as defined in section 501(e) of the Refugee Education Assistance Act of 1980, would be eligible for 5 years from the date granted that status. Section 5306 of the Balanced Budget Act further amended section 402(a)(2)(A) of PRWORA to add a new paragraph (A)(ii)(V) which provided that certain Amerasians would be eligible for 5 years from date admitted to the United States as an Amerasian immigrant pursuant to section 584 of the Foreign Operations Appropriations Act, incorporated as section 101(e) of Public Law 100-202 and amended by Public Law 100-461. This legislation provided for certain Amerasians in Vietnam, with their close family members, to be admitted to the U.S. as immigrants through the Orderly Departure Program beginning on March 20, 1988. These Amerasians will be admitted for permanent residence at the point of entry.

The AREERA further amended section 402 of PRWORA. Section 503 of

AREERA amended section 402(a)(2)(A) of PRWORA to extend the time period that refugees, asylees, deportees, Cubans, Haitians, and Amerasians can be eligible from 5 years to 7 years. Section 402(a)(1) of PRWORA makes all other types of qualified aliens (with the exceptions of lawful permanent residents with 40 qualifying quarters of work and alien members of the armed forces, alien veterans, and certain members of such an alien's family) ineligible for food stamps for as long as they maintain their current alien status; all other non-qualified aliens are ineligible under section 401(a) of PRWORA. Section 504 of AREERA amended section 402(a)(2)(F) of PRWORA to provide that aliens who are receiving benefits or assistance for blindness or disability as defined in section 3(r) of the Food Stamp Act may be eligible for food stamps provided that they were lawfully residing in the United States on August 22, 1996. Section 505 of AREERA amended section 402(a)(2)(G) of PRWORA to provide that aliens who are American Indians born in Canada to whom the provisions of section 289 of the Immigration and Nationality Act apply or who are members of an Indian tribe as defined in section 4(e) of the Indian Self-Determination and Education Assistance Act may be eligible for food stamps. Section 506 of AREERA added a new section (I) to section 402(a)(2) of PRWORA to make aliens eligible if they were lawfully residing in the United States on August 22, 1996 and they were 65 years of age or older on that date. Section 507 of AREERA added a new section (J) to section 402(a)(2) of PRWORA to make aliens eligible if they were lawfully residing in the United States on August 22, 1996 and are currently under 18 years of age. Section 508 of AREERA added a new section (K) to section 402(a)(2) of PRWORA to make any individual eligible who is lawfully residing in the United States and was a member of a Hmong or Highland Laotian tribe at the time that the tribe rendered assistance to United States personnel by taking part in a military or rescue operation during the Vietnam era (8/5/64-5/7/75.) Section 508 further extends food stamp eligibility to the spouse, or unremarried surviving spouse, and unmarried dependent children of such Hmong or Laotian.

Section 509 of AREERA amended section 403(b) of PROWRA to provide that American Indians made eligible by Section 505 and Hmong and Highland Laotians and their families made eligible by Section 508 do not have to be qualified aliens to be eligible for food stamps. These are the only aliens who can be eligible for food stamps without being a qualified alien as defined in Section 431 of PROWRA.

We propose to include the alien eligibility criteria added by AREERA in section 7 CFR 273.4(a).

The aliens provisions contained in AREERA are effective November 1, 1998.

Section 403 of PRWORA, as amended by Balanced Budget Act, provides that, with certain exceptions, aliens, including those admitted for lawful permanent residence, who enter the country on or after August 22, 1996, are barred from Federal means-tested public benefits for 5 years. As noted above, section 402 of PRWORA, as amended by the Balanced Budget Act, contains a specific timeframe for the Food Stamp Program which is somewhat different. Section 402, as amended, provides that for food stamp purposes refugees, asylees, aliens whose deportation have been withheld, Cubans, Haitians and Amerasians are only eligible for 7 years. The time limits imposed by section 402, as amended, govern the Food Stamp Program because that section specifically references the Food Stamp Program. Section 403 of PRWORA arguably also applies to the Food Stamp Program. This is because food stamps are a “Federal means-tested public benefit under section 403. See 63 FR 36653, 36654. However, section 402(a)(2)(A) of PRWORA makes refugees, asylees, deportees, Cubans, Haitian, and Amerasians eligible for food stamps for 7 years. Following this 7-year eligibility period, these groups of qualified aliens are ineligible for as long as they remain in one of the described alien categories. Conversely, section 403(b)(1) exempts these same groups of qualified aliens from the initial 5-year ban on the receipt of Federal means-tested public benefits. At the expiration of the 5-year ban, a qualified alien falling into one of the described alien categories is eligible for Federal means-tested public benefits without any time limitation. Thus, the application of both sections 402 and 403 of the Food Stamp Program would result in an unavoidable conflict: under section 402, aliens within the described categories would be eligible for 7 years followed by a ban on the receipt of further benefits, while under section 403, these same aliens would be eligible for benefits from the time they fall within one of the described alien categories without time limitation.

In order to avoid this conflict, we propose to apply the requirements of section 402 uniformly to the Food Stamp Program. This interpretation avoids the absurd result of separate provisions of PRWORA mandating mutually inconsistent eligibility determinations. Additionally, this interpretation is supported by Congress' express citation to the Food Stamp Act within the body of section 402 (see 402(a)(3))(B), 7 U.S.C. 1612(a)(3)(B)), while section 403 contains no such cross-reference. Thus, we believe the strictures of section 402 more closely express Congress' intentions for alien participation in the Food Stamp Program.

Section 402, as amended, does not impose any time limit on aliens admitted for legal permanent residence who can be credited with 40 quarters of work. We propose that the five-year ban in section 403 not apply to aliens admitted for lawful permanent residence for food stamp purposes. We propose to include the seven-year time limit in section 402 for refugees, asylees, deportees, Cubans, Haitians, and Amerasians in new paragraph (a)(2).

Under section 402(a)(2)(C) of PRWORA, an alien lawfully residing in any State who is a veteran honorably discharged for reasons other than alien status or who is on active duty in the Armed Forces of the United States for reasons other than training or the spouse or unmarried dependent child of a veteran or person on active duty is eligible to participate. Section 5563 of the Balanced Budget Act amended the provision regarding military-related eligibility to: (1) Apply the minimum active duty service requirement (24 months or the period for which the person was called to active duty); (2) expand the definition of “veteran” to include military personnel who die while on active duty and certain aliens who served in the Philippine Commonwealth Army during World War II or served as Philippine Scouts after World War II; and (3) add eligibility for the unremarried surviving spouse of a deceased veteran, provided the couple was married for at least one year or for any period if a child was born of the marriage or was born to the veteran and the spouse before the marriage and the spouse has not remarried.

We propose to define an unmarried dependent child for purposes of section 402(a)(2)(C) regarding persons with a military connection to include a legally adopted or biological dependent child of an honorably discharged veteran or active duty member of the Armed Forces if the child is under the age of 18 or if a full-time student under the age of 22. It would also include a child of a decreased veteran provided the child was dependent upon the veteran at the

time of the veteran's death. In addition, we propose to include a disabled child age 18 or older if the child was disabled and dependent on the active duty member or veteran prior to the child's 18th birthday. This definition is consistent with that developed for the Supplemental Security Income (SSI) program. We also propose to apply this definition of an unmarried dependent child to section 402(a)(2)(K) regarding unmarried dependent children of Hmong and Highland Laotians. Section 431(a) of PROWRA provides that except as otherwise provided, the terms used have the same meaning given such terms in section 101(a) of the Immigration and Nationality Act (INA). However, there is no definition of a child in section 101(a), and there are two definitions in 101(b), one for immigration purposes and one for nationality purposes. Because of the ambiguity of the law and the fact that both of the INS definitions are much more complicated than the definition used for SSI purposes, we propose to use the SSI definition of dependent child. We also considered using dependent as used for other food stamp purposes such as the work registration exemption, but believe they are too restrictive for this purpose.

We propose to include the eligibility provision for individuals with a military connection in new paragraph (a)(5)(ii)(G).

Under current regulations at 7 CFR 273.4(a)(8) and (a)(9), aged, blind, or disabled aliens admitted for temporary or permanent residence under section 245A(b)(1) of the INA and special agricultural workers admitted for temporary residence under section 210(a) of the INA are eligible to participate. The PRWORA does not address the status of aliens admitted for temporary residence. Therefore, these aliens are eligible only if they meet the requirements of section 402 of PRWORA described above, and we propose to remove paragraphs (a)(8) and (a)(9).

We also propose to remove 7 CFR 273.4(b), (c) and (d) as unnecessary and redesignate paragraph (e) as paragraph (b). Current paragraph (b) is a partial list of ineligible aliens. Current paragraph (c) refers to the provisions in 7 CFR 273.11(c)(2) for treatment of the income and resources of an ineligible alien and is unnecessary. Current paragraph (d) explains how to treat the income and resources of an alien while awaiting a determination of an individual's eligible alien status. Provisions governing the treatment of individuals while awaiting verification of eligible alien status are located at 7 CFR 273.2(f)(1)(ii), and it is not necessary to repeat the procedure at 7 CFR 273.4. We would retain in redesignated paragraph 7 CFR 273.4(b) the requirement in current 7 CFR 273.4(e) to report illegal aliens to INS.

We are proposing a conforming amendment to 7 CFR 273.1(b)(2)(ii), concerning ineligible household members. We propose to change the reference in 7 CFR 273.1(b)(2)(ii) from “§ 273.4(a)” to “§ 273.4” because both paragraphs 273.4(a) and (b) describe eligibility requirements for aliens.

We are proposing to move the sponsored alien provisions from 7 CFR 273.11(j) to new 7 CFR 273.4(c) and to renumber 7 CFR 273.11(k) as 7 CFR 273.11(j). This will consolidate most of the alien provisions.

Inaccessible Resources—Vehicles—7 CFR 273.8(e) and (g)

On August 21, 1995, we published a final rule implementing section 1719 of the Mickey Leland Memorial Domestic Hunger Relief Act of 1990 (Pub. L. 101-624, 104 Stat. 3783), as amended by section 904 of the Food, Agriculture, Conservation, and Trade Act of 1991 (Pub. L. 102-237, 105 Stat.1818). These statutory provisions, which amended section 5(g) of the Act (7 U.S.C. 2014(g)(5)), expanded the criteria under which a resource is considered inaccessible. The final rule required State agencies to develop standards for identifying resources which, as a practical matter, the household is unable to sell for any significant return because the household's interest is relatively slight or because the costs of selling the household's interest would be relatively great. Under the final rule, a resource so identified is excluded if the estimated amount returned to the household from its sale would be less than half of the amount of the applicable resource standard for the household. For reasons cited in the preamble discussion, we determined that the amendment did not apply to negotiable instruments or vehicles. Subsequently, through litigation, various courts determine

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