Supplemental Nutrition Assistance Program: Standardization of State Heating and Cooling Standard Utility Allowances

Federal RegisterNov 18, 2024

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DEPARTMENT OF AGRICULTURE

Food and Nutrition Service

7 CFR Part 273

[FNS-2019-0009]

RIN 0584-AE69

Supplemental Nutrition Assistance Program: Standardization of State Heating and Cooling Standard Utility Allowances

AGENCY:

Food and Nutrition Service (FNS), Department of Agriculture (USDA).

ACTION:

Final rule.

SUMMARY:

This rule finalizes changes proposed October 3, 2019, by the Department to revise Supplemental Nutrition Assistance Program (SNAP) regulations for calculating standard utility allowances (SUAs) and expand allowable shelter expenses to include basic internet costs. It requires State agencies to submit for FNS approval their SUA methodologies at least every five years, and methodology submissions must incorporate any revisions necessary to demonstrate that the baseline expenditure data and underlying methodology reflect recent trends and changes. This rule also provides State agencies with the flexibility necessary to ensure that they meet households' needs while also aligning SUAs with data on low-income household utility costs in a more consistent manner. This rule also finalizes updates proposed April 20, 2016, regarding the treatment of Low Income Home Energy Assistance Program or other similar energy assistance program payments, in accordance with amendments made to the Food and Nutrition Act of 2008 by the Agricultural Act of 2014. The intent of this final rule is to ensure consistency and integrity of SUAs across the country, which the Department believes is good governance.

DATES:

Effective date:

This final rule is effective January 17, 2025.

Compliance date:

The compliance date for SUA changes is October 1, 2025.

ADDRESSES:

SNAP Program Development Division, Food and Nutrition Service, USDA, 1320 Braddock Place, Alexandria, Virginia 22314.

FOR FURTHER INFORMATION CONTACT:

Catrina Kamau, Certification Policy Branch, Program Development Division, Food and Nutrition Service, 1320 Braddock Place, Alexandria, Virginia 22314. Email:

SNAPCPBRules@usda.gov.

Phone: (703) 305-2022.

SUPPLEMENTARY INFORMATION:

Acronyms or Abbreviations

American Community Survey, ACS

Code of Federal Regulations, CFR

Consumer Expenditure Survey, CEX

Consumer Price Index, CPI

Fiscal Year, FY

Food and Nutrition Act of 2008, the Act

Food and Nutrition Service, FNS

Heating and Cooling Standard Utility Allowance, HCSUA

Limited Utility Allowance, LUA

Low-Income Home Energy Assistance Act of 1981, LIHEAA

Low-Income Home Energy Assistance Program, LIHEAP

Residential Energy Consumption Survey, RECS

Short Term Energy Outlook, STEO

Standard Utility Allowance, SUA

State SNAP Agencies, State agencies or States

Supplemental Nutrition Assistance Program, SNAP

U.S. Department of Agriculture, the Department or USDA

References

• Title 7 of the Code of Federal Regulations, part 273

• Holleyman, Chris, Timothy Beggs, and Alan Fox.

Methods to Standardize State Standard Utility Allowances.

Prepared by Econometrica for the U.S. Department of Agriculture, Food and Nutrition Service, August 2017.

https://www.fns.usda.gov/snap/methods-standardize-state-standard-utility-allowances.

• Holleyman, Chris, Pratima Damani, and Erick Torres.

Updating Standardized State Heating and Cooling Utility Allowance Values.

Prepared by SP Group, LLC for the U.S. Department of Agriculture, Food and Nutrition Service, March 2023.

https://www.fns.usda.gov/snap/updating-hcsua-values.

• MD/DC/DE Broadcasters Ass'n

F.C.C.,

253 F.3d 732, 734 (D.C. Cir. 2001).

• U.S. Department of Agriculture, Food and Nutrition Service, Office of Policy Support,

Characteristics of Supplemental Nutrition Assistance Program Households: Fiscal Year 2022,

by Mia Monkovic. Project Officer, Aja Weston. Alexandria, VA, 2024.

https://www.fns.usda.gov/research/snap/characteristics-fy22.

• U.S. Department of Agriculture, Food and Nutrition Service,

Supplemental Nutrition Assistance Program—Section 4006 Agricultural Act of 2014—Implementing Memorandum,

5 March 2014. Retrieved from:

https://www.fns.usda.gov/snap/eligibility/deduction/liheap-implementation-memo

in November 2023.

• U.S. Department of Health & Human Services.

LIHEAP IM 1999-10 on Federal Public Benefits Under the Welfare Reform Law—Revised Guidance,

June 15, 1999. Retrieved from

https://www.acf.hhs.gov/ocs/policy-guidance/liheap-im-1999-10-federal-public-benefits-under-welfare-reform-law-revised

in November 2023.

• U.S. Energy Information Administration,

2015 Residential Energy Consumption Survey

in section, “Electricity Use in Homes.” Retrieved from

https://www.eia.gov/energyexplained/use-of-energy/electricity-use-in-homes.php

in November 2023.

• U.S. Energy Information Administration,

Residential Energy Consumption Survey

for indicated years (1980-2015). Retrieved from

https://www.eia.gov/energyexplained/use-of-energy/homes.php

in November 2023.

• U.S. Energy Information Administration,

Monthly Energy Review,

Table 2.2, April 2022, preliminary data for 2021. Retrieved from

https://www.eia.gov/energyexplained/use-of-energy/homes.php

in November 2023.

• U.S. Energy Information Administration,

U.S. Energy Insecure Households were Billed More for Energy than Other Households,

May 23, 2023. Retrieved from

https://www.eia.gov/todayinenergy/detail.php?id=56640

in November 2023.

• USGCRP, 2018:

Impacts, Risks, and Adaptation in the United States: Fourth National Climate Assessment, Volume II

[Reidmiller, D.R., C.W. Avery, D.R. Easterling, K.E. Kunkel, K.L.M. Lewis, T.K. Maycock, and B.C. Stewart (eds.)]. U.S. Global Change Research Program, Washington, DC, USA, 1515 pp. doi: 10.7930/NCA4.2018.

Combined Final Rule

This final rule incorporates provisions originally proposed in two separate notices of proposed rulemaking (NPRM): The October 3, 2019, NPRM titled “Supplemental Nutrition Assistance Program: Standardization of State Heating and Cooling Standard Utility Allowances” (84 FR 52809), and the April 20, 2016, NPRM titled “Supplemental Nutrition Assistance Program: Standard Utility Allowances Based on the Receipt of Energy Assistance Payments Under the Agricultural Act of 2014” (81 FR 23189). While originally published as separate NPRMs, the provisions contained in these rules both relate to determining household shelter expenses, and therefore, the Department is addressing the NPRMs in this single final rule. In this final rule, the Department will refer to the October 3, 2019, NPRM as the SUA NPRM. The Department will refer to the April 20, 2016, NPRM as the LIHEAP NPRM.

The Department intends for the LIHEAP NPRM provisions of this final rule and the SUA NPRM provisions to be separate and severable from one another. If any provision related to the SUA NPRM is stayed or determined to be invalid, it is the Department's intention that the remaining provisions

related to the LIHEAP NPRM shall continue in effect. For example, if a court were to invalidate the final rule's HCSUA standardization provision, the provisions related to the LIHEAP NPRM would remain in effect, as those provisions “could function sensibly without the stricken provision.”

MD/DC/DE Broadcasters Ass'n

F.C.C.

, 253 F.3d 732, 734 (D.C. Cir. 2001) (internal quotations omitted).

This rule redesignates several regulatory citations to reflect amendments to the regulatory text resulting from this final rule. Where applicable, each redesignation is reflected explicitly in the discussion of the corresponding provision.

Background on SUAs and the SUA NPRM

The Food and Nutrition Act of 2008 (the Act) establishes national eligibility standards for SNAP, including net income standards, and provides allowable deductions from gross income to determine the net income of a household. Apart from a standard deduction for all households, deductions are available to households based on their circumstances. Some of these deductions include: earned income; dependent care costs when needed for work, searching for work, training, or education; medical expenses over $35 for elderly or disabled households; and excess shelter costs.

The excess shelter deduction allows households to deduct shelter expenses that exceed 50 percent of their income after all other deductions are taken. For households without an elderly or disabled member, the deduction must not exceed a maximum limit. Households with elderly or disabled members are not subject to a limit. Shelter expenses include the basic cost of housing as well as certain utilities and other allowable expenses listed in 7 CFR 273.9(d)(6)(ii). To help streamline the application and certification process, section 5(e)(6) of the Act permits State agencies to develop SUAs to use in lieu of actual utility expenses in determining a household's shelter costs for the purposes of the excess shelter deduction. The Act requires that State SUAs must be developed “in accordance with regulations promulgated by the [USDA].”

7 U.S.C. 2014(e)(6)(C)(i).

Per USDA's regulations, at 7 CFR 273.9(d)(6)(iii), State agencies may create three types of SUAs: a heating and cooling SUA (HCSUA); a limited utility allowance (LUA); and single utility allowances (also referred to as “individual standards”). The HCSUA is the largest of the SUAs and is available to households that incur heating or cooling expenses separate from their rent or mortgage. The HCSUA is comprehensive and includes costs for heating or cooling and all other allowable utilities. The LUA includes expenses for at least two utilities; single utility allowances may be used for stand-alone utility costs. Neither the LUA nor single utility allowances include costs for heating and/or cooling. Utility expenses captured in SUAs may include: electricity or fuel for purposes other than heating or cooling, water, sewerage, well and septic tank installation and maintenance, telephone, and garbage or trash collection.

7 CFR 273.9(d)(6)(ii)(C).

A State agency may mandate use of SUAs for all households with qualifying expenses if the State agency has developed one or more SUAs that include the costs of heating and cooling and one or more SUAs that do not include the costs of heating and cooling.

Under this option, households entitled to the SUA may not claim actual expenses, even if the expenses are higher than the SUA. Households not entitled to the SUA may claim actual allowable expenses.

7 U.S.C. 2014(e)(6)(C)(iii); 7 CFR 273.9(d)(6)(iii)(E).

SNAP regulations require State agencies to review SUAs annually and adjust to reflect changes in costs.

State agencies must submit the figures to FNS for approval at the annual update and whenever a State agency changes methodologies (Office of Management and Budget (OMB) Control Number 0584-0496; Expiration Date 7/31/2026). In developing SUAs, program requirements do not prescribe a particular methodology or data sources for State agencies to use. State agencies have a certain amount of flexibility to tailor the program's administration to meet the needs of their residents. SUAs embody this flexibility, as they vary from State to State and reflect not only the different costs, but the different utility needs in each State. For example, the heating and cooling needs of Maine residents are not the same as those in Mississippi as these States have differing climates, energy usage, and commonly used energy sources. While this flexibility is critical and each State's circumstances are unique, without consistent parameters for SUA methodologies, the Department is concerned that the information State agencies use to determine SUAs is outdated and may not reflect low-income households' current utility costs.

7 CFR 273.9(d)(6)(iii)(B).

Monthly shelter costs, such as rent, mortgage, and utilities, comprise a significant share of most Americans' household budgets. Similarly, in the SNAP benefit calculation, SUAs comprise a significant share of household shelter costs. The use of SUAs allows for a streamlined approach over an itemized, case-by-case approach to determine household utility costs and is a substantial factor in evaluating whether the household is eligible for the excess shelter deduction. As such, SUAs can affect a household's eligibility for the excess shelter deduction and, ultimately, the household's eligibility for SNAP and their benefit amount. Aligning SUAs with current household conditions, including in households with unusually high utility expenses, is important to ensure that the application of the excess shelter deduction adequately reflects household circumstances and ultimately, the appropriateness of the benefit levels.

The Department explored options for standardizing State SUAs in a 2017 study, “Methods to Standardize State Standard Utility Allowances” (Holleyman, et al., 2017) (2017 SUA Study).

The 2017 SUA Study evaluated State agency methodologies and reviewed available utility cost data sources. The study found that most of the methodologies State agencies employ fall into one of two categories: (1) those that rely on recent State-specific utility data; and (2) those that adjust a base number using an inflation measure such as the CPI of utility costs. Of the 19 State agencies that update a base number, the study found that less than half (seven States) knew the source of their base number, and many did not know when it was established.

Holleyman, Chris, Timothy Beggs, and Alan Fox.

Methods to Standardize State Standard Utility Allowances.

Prepared by Econometrica for the U.S. Department of Agriculture, Food and Nutrition Service, August 2017.

Further, the 2017 SUA Study noted that State HCSUAs differed considerably from the average utility expenditures among low-income households in their State. The authors speculated that State agencies may set their SUAs higher than the average costs to minimize benefit loss for households with very high utility expenses. In evaluating this possibility, the authors compared State HCSUA values to values derived from Federal survey data and found variation in the degree to which State agencies set their HCSUAs compared to HCSUAs set at the 85th percentile of utility costs for low-income households. The study used the

85th percentile for illustrative purposes and not as a recommended threshold, as the Department has not previously set a designated threshold for SUAs and has allowed State agencies flexibility in this area.

The authors found that most State agencies used HCSUAs below the 85th percentile of utility costs for low-income households in their State based on the Federal survey data, meaning that their HCSUAs may be under-representing the costs for households with high utility expenses.

To ensure consistent and transparent application of the HCSUA across the country, the Department proposed a methodology to standardize the way State agencies calculate HCSUAs in the SUA NPRM published October 3, 2019. The Department notes that it also used the term “benefit equity” in the NPRM to describe the purpose of standardizing SUA methodologies. Multiple commenters, described in more detail below, raised concerns about the use of this term given that benefit levels depend on household circumstances, including differences in utility costs. This term, in addition to “consistency” and “integrity,” were used to describe the Department's goal of ensuring each State's SUAs represent utility costs for low-income households in the State by proposing clear data requirements to calculate them. However, after considering this terminology, the Department agrees with commenters that “benefit equity” is imprecise compared with the other terms used. Therefore, the Department will use the terms “consistency” and “integrity” throughout to describe the purpose of the SUA NPRM and the final rule.

The methodology in the proposed rule would establish each State agency's HCSUA at the 80th percentile of low-income households' utility costs in the State. The proposed rule would cap most LUAs and individual standards for other utility costs at a percentage of the State agency's HCSUA. The proposed rule would add the cost of basic internet as an allowable utility expense and establish a national maximum amount for a new telecommunications SUA that would include internet and telephone costs. FNS would calculate the initial figures and update them annually.

Summary of General Comments on the October 3, 2019, (SUA) NPRM

The Department received over 125,000 public comment submissions on the SUA NPRM.

Of these, approximately 6,500 were unique and nearly 118,800 were associated with form letter campaigns. The Department reviewed and considered all comments received.

Posted public comments may be found at

regulations.gov https://www.regulations.gov/document/FNS-2019-0009-0001/comment

Approximately 35 individual commenters expressed general support for the proposed changes, citing concerns about increasing government spending and the need to prevent fraudulent activity. A non-profit organization argued that SUAs have led to significant distortions in eligibility determinations and benefit levels between States and significantly weaken program integrity. This commenter claimed that State agencies frequently set SUA thresholds above what applicants are paying for utilities, creating a greater risk for abuse and violating the statutory intent of SUA policies. While the Department appreciates these comments, the Department notes that setting SUAs above what some applicants are paying for utilities is not fraudulent, as SUAs are not meant to represent average household utility expenses.

In past guidance,

the Department encouraged State agencies to set SUAs high enough to ensure most households use the SUA rather than claim actual utility costs, while also reflecting actual costs. Most State agencies mandate the use of SUAs, as described above. The flexibility State agencies have to set SUAs above the average household's costs protects vulnerable households with higher-than-average utility costs in mandatory SUA States. The Department proposed changes to SUA methodologies out of concern that SUAs are outdated and do not reflect recent trends and data on household utility costs, leading to inconsistencies between State SUA values and the utility costs SNAP households incur.

U.S. Department of Agriculture, Food and Nutrition Service,

Food Stamp Program Standard Utility Allowances Requirements and Methodologies,

FNS Notice 79-47, May 1979. Retrieved from:

https://www.fns.usda.gov/snap/sua-requirements-and-methodologies

in December 2023.

Additionally, approximately 15 commenters supported the proposed update to the telephone standard to include basic internet services. Multiple commenters, including advocacy groups, a policy advocacy organization, multiple State government agencies, a religious organization, and a trade association, agreed with the Department's argument that internet is an essential service. Additional commenters, including an advocacy group, a legal services organization, a policy advocacy organization, and State government agencies generally supported updating the telephone standard to include internet services.

Approximately 107,980 commenters, the majority of which were from form letter campaigns, generally opposed the proposed changes in the SUA NPRM. Many of these commenters expressed concerns that standardizing HCSUAs at the 80th percentile would decrease benefits and negatively impact the general health and well-being of certain demographics, including women, elderly individuals, individuals with higher-than-average shelter costs, individuals with disabilities, and children. Some commenters also expressed concern over how the changes might affect the stability of the economy.

One food bank, ten non-profit and advocacy organizations, six form letter campaigns, one professional association, one religious organization, one food service industry organization, and two local governments expressed opposition to the proposed rule because it was projected to cut SNAP benefits for a significant number of households. The same religious organization and two other form letter campaigns opposed the changes because they were projected to cause 8,000 people to lose SNAP benefits. An advocacy group wrote that the proposed rule would eliminate 18 percent of the average SNAP family's food budget. The Department notes that most SNAP households (81 percent) would have experienced no change to their benefits or a benefit increase under the proposed rule, as noted in the Regulatory Impact Analysis (RIA). The Department also notes that these projections are no longer accurate, given the changes in the final rule, which are described in more detail below.

Further, a form letter campaign, a State-elected official, three advocacy organizations, one policy advocacy organization, and an individual commented that the proposed rule would force struggling families to choose between heating and cooling their homes and putting food on the table. Two food banks, a form letter campaign, a religious organization, a State government, a trade association, and four advocacy groups cited evidence that suggests SNAP supports housing stability and alleviates the trade-offs families often face between purchasing food or other basic necessities, such as healthcare and utilities. A form letter campaign wrote that the proposed rule discriminates against families with high shelter costs.

Multiple commenters raised concerns about the proposed rule's cut to SNAP benefits and the associated food security and health implications. A food bank, a

healthcare association, and an individual expressed concerns regarding the negative impacts of food insecurity on a person's health. A legal services organization, four religious organizations, a healthcare association, an educational institution, two advocacy groups, and a policy advocacy organization commented that the proposed rule would exacerbate food insecurity and significantly increase healthcare costs. A form letter campaign stated that Congress authorized SNAP to encourage participant households to consume nutritious foods and found that limiting the purchasing power of low-income households contributed to food insecurity and malnutrition.

Commenters also raised concerns regarding the overall impact of the SUA NPRM in conjunction with the final rule published on December 5, 2019, entitled “Supplemental Nutrition Assistance Program: Requirements for Able-Bodied Adults Without Dependents” (84 FR 66782), and the proposed rule published on July 24, 2019, entitled “Revision of Categorical Eligibility in the Supplemental Nutrition Assistance Program (SNAP)” (84 FR 35570). Commenters expressed concern that these regulatory changes proposed by the Department would adversely impact households and their benefits, compounding the impact of the SUA NRPM for some households. These comments are no longer relevant as the Department rescinded (86 FR 34605) and withdrew (86 FR 30795) these proposed and final changes to program rules.

Approximately 17,340 commenters discussed the proposed rule as it relates to SNAP's statutory purpose and Congressional intent. Two food banks, two religious organizations, three local/municipal governments, a policy advocacy organization, a trade association, two legal services groups, two form letter campaigns, a health care association, a community organization, and seven advocacy groups claimed that the proposed rule was an attempt to sidestep Congress and reduce SNAP benefits. Many of these commenters, as well as two form letter campaigns, two federally-elected officials, 11 advocacy groups, three legal services groups, a religious organization, three food banks, an academic, a trade association, and a community organization, argued that the proposed rule subverts the 2018 Farm Bill, which made no changes to SUAs.

Twelve commenters, including a policy advocacy organization, two advocacy groups, a lawyer, four legal services groups, two individual commenters, a local/municipal government, and a federally-elected official, claimed the proposed rule was in violation of the Administrative Procedure Act (APA). Two of the legal services commenters alleged the proposed rule was arbitrary and capricious because it did not provide adequate reasoned rationale to inform meaningful comment, as required by the APA. A federally-elected official and an advocacy group claimed the proposed rule violates the APA because it failed to consider all relevant factors. A policy advocacy organization said that the proposed rule does not provide enough information for the public to meaningfully comment on the proposed methodology. The commenter wrote that the proposed rule violates the APA because it does not provide a justification for the 80th percentile HCSUA cap.

The Department appreciates the commenters' concerns about the proposed rule's potential adverse impact on SNAP households and has made changes in the final rule that may address these concerns. These changes include the Department not finalizing the proposed HCSUA methodology standardization provision and the proposed caps on LUAs and individual standards. The Department still believes it is necessary to ensure a clear justification for the any SUA that a State sets, and therefore the Department is providing State agencies with the flexibility to continue setting their own SUAs while standardizing the data and methodology criteria that FNS will use to approve SUAs. As noted above, commenters broadly supported accounting for basic internet costs in SUAs. The final rule makes changes to treat basic internet costs like any other allowable utility cost that can be included in the HCSUA, LUA, and as an individual standard. The Department further explains these changes and the accompanying rationale later in this preamble.

The Department disagrees with commenters' claims that the Department lacks the authority to standardize SUAs. While the Department agrees that Congress did not make changes to SUAs during the passage of the 2018 Farm Bill, the Department notes that Congress did not change sec. 5(e)(6)(C)(i) of the Food and Nutrition Act of 2008 either, which gives the Secretary the authority to promulgate regulations concerning how SUAs are set by State agencies.

As such, the Department maintains the authority to regulate SUAs within the statutory framework.

7 U.S.C. 2014(e)(6)(C)(i) (“[A] State agency may use a standard utility allowance in accordance with regulations promulgated by the Secretary. . . .”).

In the sections that follow, the Department presents each provision of the proposed rule: the relevant, substantive comments related to the provision; and any changes made to the final rule in a section-by-section format. Throughout this comment analysis, the Department views a comment as substantive if it provides an opinion or recommendation on a specific policy and includes detailed reasoning.

Standardizing HCSUA Methodology

In the SUA NPRM, the Department proposed to amend SNAP regulations at 7 CFR 273.9(d)(6)(iii) to create a new, standardized methodology for calculating State HCSUAs. The proposed standardization set HCSUAs at the 80th percentile of utility costs for low-income households in each State, calculated annually by FNS.

The NPRM methodology would use best-available utility cost information from nationally representative Federal sources that reflect State-specific household expenses, such as the American Community Survey (ACS), drawing on the recommendations of the 2017 SUA Study. The methodology would also allow the Department to use other data sources if such Federal sources are not available or if better data becomes available. Under the SUA NPRM, FNS would calculate and provide States with standardized HCSUAs using the following sources and set SUAs at the 80th percentile of utility costs for low-income households:

• ACS with adjustments based on the Residential Energy Consumption Surveys (RECS) to derive the energy component of the HCSUA.

• ACS and Consumer Expenditure Surveys (CEX) data to derive the water, sewer, and trash component of the HCSUA.

• Current pricing information on telecommunications services from service providers.

As needed, FNS would adjust the estimates from the sources listed above using utility expenditure growth rates and population growth estimates in order to reflect the current fiscal year.

Since the proposed data sources do not collect information for territories, such as Guam and the Virgin Islands, the Department proposed to continue to allow these territories to use their own methodologies, and conduct their own calculations, subject to FNS approval.

Using the utility cost information from these sources, FNS would set the standardized HCSUAs at the 80th percentile of utility costs for low-income households in each state. In the

SUA NPRM, the Department explained that it chose the 80th percentile because standardizing at this level would reduce the amount of variation between utility costs and HCSUA amounts across States. Additionally, the Department argued that setting HCSUA values at the 80th percentile would balance the need to create more accurate standards while still capturing households that have higher than average utility costs, as most States mandate SUAs in lieu of actual costs.

Commenters expressed opposition to the proposed standardized HCSUA methodology due to concerns about the following, which are discussed in more detail in the paragraphs below:

• Negatively impacting SNAP participants, especially among certain demographics.

• Setting HCSUAs at the 80th percentile of low-income households' utility costs without clear rationale;

• Limiting State agencies' flexibility to address their unique needs; and

• Using the data sources the Department proposed, in lieu of other State-specific data sources.

Approximately 240 commenters expressed general opposition to the proposal to set HCSUAs at the 80th percentile of low-income households' utility costs in the State. Many of these commenters requested further explanation for the Department's rationale for capping the HCSUA at the 80th percentile. These comments included those from form letter campaigns, multiple members of the U.S. Congress, a legal center, a legal services organization, a health care association, multiple local/municipal commenters, a State agency, and advocacy groups.

Approximately 107,980 commenters expressed general opposition to standardizing the HCSUA methodology process due to the potential adverse effects on certain demographics. Three form letter campaigns, a food bank, five advocacy groups, and an individual, discussed the negative impacts of the proposed changes on people with disabilities. Two of these form letter campaigns, the same individual, an additional food bank, and an additional advocacy group stated that 11 percent of SNAP households include a person with a disability, and those households will be disproportionately impacted by the proposed rule. Many of these same commenters, and an additional food bank and advocacy group, argued that the proposed rule would similarly harm elderly SNAP recipients. Another form letter campaign stated that households with a family member with disabilities are two to three times more likely to experience food insecurity than households without a family member with disabilities. This form letter further claimed that the proposed rule would force people with disabilities and their families to choose between spending their limited resources on food or other necessities such as housing, utilities, and medical expenses.

A policy advocacy organization and an advocacy group argued that the rule would have a disproportionate negative impact on women because women make up the majority of SNAP recipients. Comments from one advocacy group and a policy advocacy organization argued the proposed changes would increase food insecurity for children, and two food banks, four advocacy groups, and a policy advocacy organization cited the proposed rule's RIA, which estimated a 19 percent net reduction in SNAP benefits for households with children, with an average annual loss of $336 in food assistance. The Department notes that the proposed rule's RIA did not estimate a 19 percent net reduction in SNAP benefits for households with children. Rather, it noted that 19 percent of SNAP households with children were expected to see a reduction in their SNAP benefits under the proposed rule.

In addition to the impact on certain demographics, commenters expressed concern that standardizing the HCSUA at the 80th percentile would not adequately cover the lowest-income household's high utility costs and would result in decreases to SNAP benefits. Two form letter campaigns noted that the proposed rule would cut $4.5 billion over five years in SNAP benefits. A community organization, multiple advocacy groups, multiple State government agencies, a food bank, a professional association, and a legal services organization criticized the proposed methodology, writing that 19 percent, or approximately one in five, of SNAP households would see a reduction in benefits under the proposed rule. Three legal services organizations, one attorney, four advocacy groups, four policy advocacy organizations, and one religious organization stated that using the 80th percentile would result in lower HCSUAs than the Department has allowed under long-standing policy. Some commenters raised the potential for the Department to set default HCSUAs at a different percentile and provided suggestions. Advocacy groups and an attorney stated that, while interstate inequities exist, it would be preferable for States with lower-than-average utility allowances to raise them rather than standardizing all States' HCSUAs.

The Department appreciates commenters' concerns about the proposed rule's potential adverse impact on certain demographics. The Department is aware of the potential negative impact on elderly and disabled households since they do not have a cap on their excess shelter deduction in the Act. Therefore, without the cap on shelter expenses that all other households have, households with elderly or disabled members are more likely to see a greater change in their benefit amounts (both increases and decreases) due to any change in HCSUA methodologies than households without elderly or disabled members. The Department is committed to serving all households, including those with elderly or disabled members who are most affected by changes to SUAs, and will support State agencies' implementation of the final rule as they help households understand any changes to their benefits and are available for questions, as necessary.

Numerous commenters also expressed broader concerns about potential SNAP benefit decreases under this rule. The Department understands the importance of benefit stability for households, but also recognizes that SUAs must reflect low-income household utility costs in order to serve their purpose. SUAs may change as utility costs increase or decrease, and those changes are reflected in the SNAP benefit level. The impact that SUAs have on benefits is important, which is why the SUA NPRM sought to bring more consistency to the SUA process and ensure greater integrity in the data used to calculate them. The Department has made changes in the final rule to allow State agencies more flexibility in developing their SUA methodologies to ensure that they meet households' needs in a more consistent manner. These changes also address commenter concerns regarding the SUA NPRM's impact on SNAP benefit levels. The Department will provide targeted technical assistance to State agencies highlighting the flexibilities provided in this final rule and considerations for minimizing potential negative impacts on households, including the Department's waiver authority.

In addition to concerns regarding SNAP benefit impacts, many commenters expressed concerns that standardizing HCSUA methodologies would remove important, existing flexibility for State agencies to address their residents' unique needs. An advocacy group argued that the existing regulations provide State agencies the

flexibility to accurately address the needs of their residents as energy prices vary by location and reflect differing climates. The commenter added that the new process would remove State specificity in relation to the State's unique circumstances and decrease the overall precision of the HCSUAs. Similarly, a policy advocacy organization argued that States are best positioned to develop and administer their own methodologies and determine appropriate SUA amounts based on their region and climate. A non-profit organization criticized the Department's approach in trying to find data sets that fit all States, and instead suggested allowing individual States to use data sets that would best fit their needs.

In addition to State flexibility concerns, multiple commenters, including two advocacy groups, three legal services organizations, a religious organization, two policy advocacy groups, a trade association, two State government agencies, and local government raised concerns about the data sources the Department proposed using as part of its methodology. Specifically, the commenters questioned: (1) the multi-year lags in the availability of RECS data; (2) the effects of possible recall bias on ACS-based cost estimates; (3) the rationale for using RECS data which, at the time of the proposed rule, used regional averages for some States when there was not enough information to develop a State-level estimate;

and (4) why the Department did not consider using utility cost data sourced from State public service commissions. Additionally, commenters requested that the Department codify the proposed methodology in the rule and regulations, rather than providing FNS with the flexibility to change it in the future.

The Department notes that RECS data is available for all States now.

Commenters also expressed concern that State agencies with more accurate data than the sources used in the Department's proposed methodology would not have the opportunity to appeal or submit their methodologies. Multiple commenters wrote that individual State agencies will be able to develop much more accurate utility usage figures from utility provider data in comparison to the proposed standardization methodology. A State government agency commented that the Department should allow State agencies to resubmit their HCSUA base methodology with justification and data to support it. A legal services organization and an advocacy group that opposed using RECS suggested that the Department develop a process for State agencies and the public to appeal or present alternative data in calculating HCSUA values. Similarly, an advocacy group and a State agency criticized the omittance in the proposed rule of any opportunity to provide more accurate State data in lieu of the data sources used by the Department. Finally, a non-profit organization suggested that the Department provide technical assistance to State agencies to determine whether their current HCSUA approach best reflects the needs of their individual State, or if the proposed Department methodology would be a better fit.

Lastly, the Department solicited comments specifically related to the standardization exception made for territories for which ACS and RECS do not collect data. The Department received one comment from an advocacy group that supported this treatment of Guam and the Virgin Islands. Another commenter stated that Puerto Rico is similar to Guam and the Virgin Islands and should therefore also be allowed to use its own SUA methodologies. The Department notes that currently, Puerto Rico does not operate SNAP, so SUA policy does not impact this territory; however, the Department agrees that it would treat all territories subject to SUA policy similarly.

After careful consideration of the comments related to the importance of State flexibility and concerns about the limitations of the Department's proposed standardization methodology, the Department is not finalizing the proposed HCSUA standardization as proposed. The Department agrees that State agencies need flexibility to reflect their households' unique utility needs and that, in some cases, State utility data provides more specific, accurate information to inform HCSUA methodologies. Rather than finalizing the proposed HCSUA standardization, the Department will continue to allow State agencies to set their own HCSUA methodology, subject to FNS approval.

Additionally, the Department understands commenters' concerns regarding the rationale for setting HCSUAs at the 80th percentile and the need for State flexibility in setting HCSUAs. As such, the Department will not require State agencies to set HCSUAs at a specific percentile of low-income households' utility costs in the State.

While the Department will no longer set HCSUA values based on a standardized methodology or specific percentile across all States, the Department maintains the purpose of the SUA NPRM is to improve consistency and data integrity in State SUA calculations, albeit through a different method. The Department maintains that there should be clearer guidelines and requirements for State agencies to follow when developing their HCSUAs to ensure these standards accurately reflect low-income households' utility costs. Therefore, in lieu of the proposed HCSUA methodology standardization, the Department is revising 7 CFR 273.9(d)(6)(iii) to allow States to continue to set their own HCSUAs, while standardizing the data and methodology criteria that FNS will use to approve SUAs. This standardization method includes two requirements.

First, State agencies must submit for FNS approval their HCSUA methodology at least every five years. Methodology submissions must incorporate any revisions necessary to demonstrate that the baseline expenditure data and underlying methodology reflect recent trends and changes. The methodology update must include changes to the baseline expenditure data and an explanation of the State agency's methodology for deriving HCSUAs from such data.

The Department notes that this is in addition to the existing requirement in regulations that State agencies must review their SUAs annually and adjust to reflect changes in costs, such as by using sources like CPI. This annual update to reflect changes in costs refers to interim years between the State agency's full methodology update, when new utility data may not be available yet. The Department is also maintaining the existing regulatory requirement that State agencies must submit their methodologies for FNS approval when the State agency develops or changes its methodology.

This five-year period strikes an appropriate balance between capturing changes to general trends in energy markets and utility prices while minimizing the burden on State agencies or utility providers. The Department considered requiring State agencies to revise and submit their methodologies more often than every five years but deemed the existing annual update requirement sufficient to capture changes in interim years; however, State agencies may update their HCSUA methodology more frequently if they wish.

Similarly, the Department considered a longer period between methodology revisions. A longer period raised concerns about how well State agencies could capture shifts in utility costs and account for trends like changing climate

conditions' impact on energy sources. State agencies unable to source data directly from utility providers are likely to rely on survey data, which can lag behind current conditions by several years. As such, allowing State agencies to update their methodologies every seven to eight years could result in baseline methodologies reflecting conditions that are a decade or more out-of-date. This five-year period requirement ensures that State agencies electing to use survey sources will use more recent ones.

Second, State agencies' methodologies must:

• Reflect the entire State or geographic area the SUA covers;

• Use data sourced from utility providers or similarly reliable source;

• Reflect expenses incurred by low-income households,

• Distinguish if the utility is for heating or cooling, if applicable; and

• Reflect residential utility expenses.

The Department chose these criteria to ensure HCSUAs accurately represent the utility costs of low-income households, including households with higher than average utility costs, in the designated area while providing State agencies additional flexibility in creating their standards. These criteria align with the goals of the data and methodology the Department proposed to use in the SUA NPRM. The Department notes that, for the purposes of these criteria, “utility providers” includes any company or organization that supplies or sells a utility allowed under 7 CFR 273.9(d)(6)(ii)(C).

The standardized criteria outlined above will ensure State agencies are developing HCSUAs based in appropriate data to support the values; however, it is important that HCSUAs reflect more than just the average household's costs. SUAs need to also represent households with higher-than-average utility costs since most State agencies mandate the use of SUAs. The final rule is forgoing setting a specific percentile for HCSUAs to provide State agencies with additional flexibility and to avoid mandating significantly lower SUAs. While the NPRM proposed requiring that HCSUAs be set at the 80th percentile, this final rule modifies this approach. Under this final rule, State agencies may set HCSUAs at levels higher than the 80th percentile. State agencies have good reasons to take into account the need to capture utility expenses for the vast majority of households, which requires including those that have higher than average utility costs. This final rule allows states this flexibility. Since most State agencies mandate the use of SUAs, it is important that their values reflect more than just the average household's costs and account for households with significant utility expenses. The Department will provide State agencies with technical assistance and support to assess appropriate distributions of utility costs as part of its methodology review.

In developing or revising their HCSUA methodologies, State agencies may select to use Federal sources to meet these requirements. While the Department is no longer finalizing the use of ACS data, in conjunction with RECS and CEX data, to standardize HCSUAs, the Department maintains that this methodology is acceptable and based on the best currently available, annually-updated national Federal surveys for determining utility expenses for low-income households at the State level. For example, RECS is the only source that validates households' reported energy expenditures with data from their utility providers. It also provides end-use information, which allows for estimation of energy expenses by low-income households with heating and cooling expenses. The Department also notes that ACS is updated annually and based on a very large sample, which makes it valuable for producing representative, recent estimates for every State.

The 2017 SUA Study, as well as a subsequent 2023 study

conducted by the Department, found that combining this data with ACS data offsets some of the limitations of each data source with the advantages of the other. While not mandating their use, the Department encourages State agencies without more recent and accurate State-specific data to review and consider using Federal survey data, such as ACS and RECS, to develop their HCSUAs. These sources would be considered “similarly reliable” to utility provider data. The Department will publish guidance and provide State agencies with technical assistance in developing their HCSUA methodologies as needed. As part of this technical assistance, FNS will provide factors for State agencies to consider when identifying data sources and establishing methodologies. FNS will also provide examples of approved State agency methodologies for reference. FNS will work with State agencies on a state-by-state basis to address their unique circumstances and review flexibilities that may minimize potential negative impacts on households.

Holleyman, Chris, Pratima Damani, and Erick Torres. Updating Standardized State Heating and Cooling Utility Allowance Values. Prepared by SP Group, LLC for the U.S. Department of Agriculture, Food and Nutrition Service, March 2023.

While these criteria allow State agencies more flexibility than the proposed standardization, the Department understands that some commenters were wary of any changes to the current process. A State government agency asked for the Department to simply maintain the current system. A legal services organization wrote that the proposed rule provides insufficient reasons for departure from prior policy in removing States' ability to set their own SUAs. Multiple members of the U.S. Congress, a State government agency, and a professional association commented that the Department did not provide any evidence as to why the proposed rule's standardization approach is preferable to current State agency methodologies. Similarly, an advocacy group stated that by nature of the SUA approval process and methodologies not being public, the Department did not provide any insight into the SUA process and what specific issues the Department has with State agencies' methodologies as a rationale for the proposed rule. A legal services organization asked why the Department has not altered or rejected State agency SUAs, when it has the option to review them, if current methodologies used by State agencies are objectionable.

The Department recognizes the impact of HCSUAs in determining eligibility and benefit amounts and has provided additional information to reiterate the purpose and rationale of the SUA NPRM below. Rather than only adjusting certain State HCSUAs, the Department is making changes through regulations because the Department's concerns with HCSUAs are not specific to any one State agency, and the changes would affect consistency and integrity throughout the program nationwide.

In response to comments asking for additional rationale and clarity on issues with the current SUA methodologies, the Department reexamined State agencies' HCSUA base methodologies. In line with the 2017 SUA Study's findings, discussed above, the Department found several State agencies adjusting a base number annually using an inflation measure such as the CPI Fuels and Utilities index but could not locate the underlying source or methodology behind their base number. Other State agencies submitted methodologies based on old data (ranging from 10-47 years old), did not consider low-income households' utility costs, and/or did not consider end-use for the utility. Only a few State agencies' methodologies used more

recent data sourced from utility providers, but these often did not account for low-income households' utility costs.

Prior to this rulemaking, the Department has provided State agencies limited information on specific parameters or requirements for calculating data-driven SUA methodologies. As a result, the Department has approved changes to SUA methodologies and annual updates to SUA values based on a variety of methodologies and data sources.

Since some State agencies continue to adjust historic base numbers without an underlying, clear methodology, the Department has growing concerns that some State agencies' data is outdated and may not reflect low-income households' utility costs today. Since the mid-1970s, when the Department first introduced SUAs, household utility usage and composition has changed significantly. For example, the U.S. Energy Information Administration found that energy use per household has declined steadily between 1980-2015, due to improvements in building insulation and materials and improved efficiencies of heating and cooling equipment and other appliances.

While there have been improvements to building materials across all homes in the past few decades, households that struggle to pay their energy costs are “more likely to report their homes are drafty or poorly or not insulated [. . .] than households that did not experience energy insecurity.”

These same energy insecure households, some of which may also receive SNAP benefits given their low-incomes, were billed more for energy than other households in 2020.

U.S. Energy Information Administration,

Residential Energy Consumption Survey

for indicated years (1980-2015). Retrieved from

https://www.eia.gov/energyexplained/use-of-energy/homes.php

in June 2022.

U.S. Energy Information Administration,

U.S. Energy Insecure Households were Billed More for Energy than Other Households, May 23, 2023. Retrieved from https://www.eia.gov/todayinenergy/detail.php?id=56640 in November 2023.

Ibid.

Further, residential energy sources have shifted from primarily natural gas in 1970 to electricity in 2020.

In this same period, air conditioning has become “one of the fastest growing energy uses in homes.”

The U.S. Energy Information Administration found that while in 1980, 57 percent of homes used air conditioning, 87 percent of homes used air conditioning in 2015.

Factors such as changing climate conditions may continue to shift energy use, the mix of energy sources used by households, and the prices of those energy sources over time. The U.S. Global Change Research Program's Fourth National Climate Assessment notes that “by 2040, nationwide, residential, and commercial electricity expenditures are projected to increase by six percent to 18 percent under a higher [temperature increase] scenario (RCP8.5), four percent to 15 percent under a lower scenario (RCP4.5), and four percent to 12 percent under an even lower scenario (RCP2.6).”

U.S. Energy Information Administration,

Monthly Energy Review,

Table 2.2, April 2022, preliminary data for 2021. Retrieved from

https://www.eia.gov/energyexplained/use-of-energy/homes.php

in June 2022.

U.S. Energy Information Administration,

2015 Residential Energy Consumption Survey

in section, “Electricity Use in Homes.” Retrieved from

https://www.eia.gov/energyexplained/use-of-energy/electricity-use-in-homes.php

in September 2022.

Ibid.

USGCRP, 2018:

Impacts, Risks, and Adaptation in the United States: Fourth National Climate Assessment, Volume II

These factors and changes confirm that State agencies must review and revise their SUA methodologies as needed to accurately reflect low-income households' utility costs and reflect current trends. Beyond outdated source values, when HCSUA methodologies do not incorporate changes in energy sources, the methodology can under (or over) count the share of different utility expenses in a household's budget. The Department recognizes that providing State agencies broad discretion and allowing HCSUA updates based on outdated methodologies may have embedded inconsistency into the process. Further, the Department understands that while some State agencies have an HCSUA methodology that is outdated, unknown, or unclear, other State agencies have State-specific data sourced from utility providers that is more recent or accurate than the proposed data sources used by FNS.

In acknowledgement of these issues, the Department is finalizing revisions to the HCSUA methodology process, albeit with changes and more State agency flexibility, to recalibrate the process. While the Department is not finalizing the proposed HCSUA standardization provision, the standardized criteria outlined above will ensure more consistency between HCSUA methodologies across the nation.

Since the Department is no longer finalizing HCSUA standardization, this final rule treats territories the same as all other States and does not contain any special rules related to territories.

While the proposed rule included standardized HCSUA language at 7 CFR 273.9(d)(6)(iii)(B)(

), the final rule amends the proposed language to remove HCSUA standardization and add methodology requirements and redesignates this section at 7 CFR 273.9(d)(6)(iii)(C) for clarity.

Changes to Current SUA Options

The SUA NPRM proposed to eliminate State agency options to vary SUAs by season, household size, or geographic area as part of the Department's efforts to bring greater consistency across States and in recognition of the low number of State agencies taking these options. Currently, six State agencies vary their SUAs by household size, only Alaska and New York vary by geographical area, and no State agencies adjust their SUAs by season.

Approximately 75 commenters, including individuals, a legal services association, a policy advocacy organization, community organization, and State agencies, expressed opposition to eliminating these options. Commenters shared concerns that removing these flexibilities may cause harm to SNAP recipients by treating all States and localities in the same manner when energy needs, heat sources, climates, and housing types are varied. An individual commenter stated that citizens burdened with paying very high heating and cooling bills in certain regions are more likely to suffer because of a SUA calculation that does not account for regional differences in poverty and climate. Further, a legal services commenter stated that the flexibility allowing State agencies to calculate utility costs and rates is essential for States where heating costs, sources, and housing types vary. A federally-elected official expressed concern that the proposed rule would negatively impact the residents of the official's State, who rely on SNAP benefits calculated using factors specific to their community and costs associated with the disparate regions of their State. Commenters also expressed that removing these options would unduly restrict State agency flexibilities.

Two form letter campaigns noted that the proposal would force a “one-size-fits-all” policy for both shelter and utility costs across the country. Several commenters, including multiple advocacy groups, a federally-elected official, and an attorney highlighted specific impacts the proposed rule would have on certain geographic areas. An advocacy group and an attorney said that the proposed rule would harm SNAP participants living in northern

and colder states, with specific mentions of Vermont and California. An individual commenter stated that the proposed rule would harm SNAP participants living in southern cities, such as Memphis, Tennessee, where low-income households spend an average of 13.2 percent of their income on energy. The commenter also cited the large energy burdens of other southern cities, including Birmingham, Alabama; Atlanta, Georgia; and New Orleans, Louisiana.

An advocacy group expressed disagreement with the concept in the proposed rule that eliminating State agency options to vary SUAs by season, household size, or geographic areas would bring greater benefit equity across States. Similarly, a policy advocacy organization stated that the Department failed to explain how eliminating an option available to all State agencies (even if only adopted by a few States) improves benefit equity and ignores the potential harm to low-income households in rural areas that need the benefits. Further, an advocacy group stated that incorrectly treating all States' and localities' needs the same causes inequity. After considering the terminology and these comments, the Department maintains the purpose of the SUA NPRM, to improve the integrity and consistency of SUAs, but has decided to use the term “consistency” rather than “benefit equity” throughout the final rule to be more precise.

As noted above, one of the two State agencies that currently varies its SUAs by geographical areas is Alaska. Program rules grant Alaska and Hawaii additional considerations

to account for cost-of-living differences and provide further program flexibilities to Alaska because of its extremely remote geography. The SUA NPRM did not include any exceptions for Alaska and Hawaii. The Department solicited comments on whether additional flexibilities for Alaska and Hawaii should be included in the final rule.

For example, there are specific gross and net income eligibility limits for Alaska and Hawaii.

See

7 CFR 273.9(a)(1) and (2).

The Department received comments in support of allowing exceptions for Alaska and Hawaii. Alaska State government officials commented explaining how their current SUA calculations use data from utility companies to create region-specific values and that their methodology allows for more accurate SUAs. An advocacy group also expressed surprise that the SUA NPRM did not include special considerations for Alaska and Hawaii. This advocacy group asked if the 2017 SUA Study considered using ACS five-year data to develop SUAs at the sub-State regional level. A policy advocacy organization also stated that it is possible that States like Alaska, Minnesota, Nebraska, South Dakota, Washington, and other States with sizable Tribal populations may want the option to create a separate SUA for households that live on Tribal lands. The commenter suggested Tribes could collect data on the utility costs of their Tribal members living in remote areas, and such an approach might allow State agencies to more adequately reflect the utility costs of Tribal members who participate in SNAP in those areas.

The Department agrees with commenters that some States and localities have unique needs related to energy use, climates, remoteness, and heat sources and may have data to support an HCSUA based on these factors. As described above, the final rule permits State agencies to develop their own SUA methodologies subject to FNS approval, while incorporating data and methodology requirements. To align with that action, the Department will also maintain the option for State agencies to vary SUAs by season, household size, or geographic area, which will address concerns for Alaska and Hawaii in particular. The Department will amend the proposed language at 7 CFR 273.9(d)(6)(iii)(A) to maintain the option for States to vary SUAs based on these factors.

The SUA NPRM proposed changes to additional existing SUA options, one of which was to eliminate the option for State agencies to include the excess heating and cooling costs of public housing residents in the LUA if they wish to offer the lower standard to such households. The SUA NPRM also withdrew the option for State agencies to include the cooling expense in the electricity utility allowance for States where cooling expenses are minimal. Due to the changes proposed for calculating HCSUAs and LUAs, the Department proposed to discontinue these options to ensure all households that incurred heating and cooling costs would be eligible to receive the HCSUA, and not a lower LUA.

A State government supported the clarification that public housing residents who incur heating or cooling costs in States that mandate SUAs would receive the HCSUA. A legal services organization argued that the Department provided insufficient rationale for this change, and an individual commenter alleged that the proposal would harm public housing residents and would enhance institutional discrimination against people with disabilities, low-income seniors, African Americans, Hispanics, Asian-Pacific Islanders, and Native Americans. However, these households would actually receive a higher standard by eliminating this option because HCSUAs encompass full heating and cooling costs, and the Department's position is that all households that incur heating or cooling costs in a State that mandates use of SUAs should be entitled to the HCSUA to ensure consistency across households and States. Therefore, the Department will finalize as proposed, aside from a small technical correction to replace the word “to” with “for” in the sentence “[. . .] it must use a standard utility allowance that includes heating and cooling costs to residents of public housing units [. . .].” While the proposed rule included this provision at 7 CFR 273.9(d)(6)(iii)(E)(

), the Department will redesignate this section as 7 CFR 273.9(d)(6)(iii)(G)(

LUAs and Individual Standards

The Department proposed in the SUA NPRM that State agencies would continue to use their own methodologies to determine LUA and individual standard amounts, if amounts do not exceed maximum limits established by the Department. State agencies would submit their annual LUA and individual standard values to FNS for approval. The proposal would cap LUAs at 70 percent of a State's HCSUA and individual standards at 35 percent of a State's HCSUA. When analyzing the SUA values developed as part of the 2017 SUA Study, the researchers found that most States' individual standards were near 35 percent of their HCSUA. Similarly, most States' LUAs did not exceed 70 percent of their HCSUA. FNS would issue the capped amounts via memo to the State agencies and provide the values publicly on the FNS website.

In FY 2022, only 9.0 percent of households used a LUA or individual standard when determining SNAP eligibility and benefit levels.

Although they impact a small portion of SNAP participants, the Department proposed to cap these standards at a percentage of the HCSUA to extend standardization efforts and mitigate future inconsistencies.

U.S. Department of Agriculture, Food and Nutrition Service, Office of Policy Support,

Characteristics of Supplemental Nutrition Assistance Program Households: Fiscal Year 2022,

by Mia Monkovic. Project Officer, Aja Weston. Alexandria, VA, 2024.

Five commenters opposed the proposed cap of LUAs and individual standards. An advocacy group

expressed concern that the cap on LUAs would harm low-income families and disproportionately impact the elderly and persons with disabilities. One advocacy group and a public policy advocacy organization stated that the Department's proposed caps were arbitrary and that the SUA NPRM did not adequately explain the need to cap LUAs. The same public policy advocacy organization and a legal service organization questioned why the Department would standardize the HCSUA methodology but allow State agencies to develop their own LUAs and individual standards. Further, a State government official commented that the 70 percent maximum is too low for their State's LUA and that the cap does not relieve the administrative burden on State agencies.

One commenter, a State agency, proposed an alternative to the proposed cap on LUAs and individual standards. The commenter expressed support for the proposed methodology outlined in the rule since it would result in a higher HCSUA and increase SNAP benefits for 35 percent of recipients in their State. However, the commenter recommended that the Department either change the percentage cap amount, calculate the cap on LUAs based on the total utility costs from the ACS and RECS, or allow State agencies to use their own methodology with Department approval.

Given the revisions to the proposed HCSUA standardization provision, the Department also reevaluated the proposed caps to LUAs and individual standards and whether they align with the purpose of the SUA NPRM to increase SUA consistency and integrity through data-based methodologies. The Department agrees with commenters that State agencies should retain the flexibility to base LUA and individual standard values in data reflective of the utility costs these standards represent rather than uniformly cap them as a percentage of the HCSUA. Retaining this flexibility also maintains consideration of the unique aspects of each State, such as utility composition and trends.

As such, the Department will not finalize the proposed cap for LUAs and individual standards. Instead, State agencies will continue to set their own LUAs and individual standards and submit these figures to the Department annually. Consistent with the revised requirements for HCSUA methodologies, State agencies' must submit for FNS approval their LUA and individual standard methodologies at least every five years. Methodology submissions must incorporate any revisions necessary to demonstrate that the baseline expenditure data and underlying methodology reflect recent trends and changes. Additionally, State agencies' methodologies must:

• Reflect the entire State or geographic area the SUA covers;

• Use data sourced from utility providers or similarly reliable source;

• Reflect expenses incurred by low-income households,

• Distinguish if the utility is for heating or cooling, if applicable; and

• Reflect residential utility expenses.

Like with HCSUA methodologies, the Department chose these criteria to ensure LUAs and individual standards accurately represent the utility costs of low-income households, including households with higher than average utility costs, in the designated area while providing State agencies additional flexibility in creating their standards. The Department will publish guidance and provide State agencies with technical assistance in developing their LUA and individual standard methodologies as needed. As part of this technical assistance, FNS will provide factors for State agencies to consider when identifying data sources and establishing methodologies. FNS will also provide examples of approved methodologies for reference.

The Department amended, combined, and redesignated this provision from the proposed 7 CFR 273.9(d)(6)(iii)(B)(

) and (

) and finalizes at 7 CFR 273.9(d)(6)(iii)(B) and (C).

Including Basic Internet as an Allowable Shelter Cost and Updating SUAs To Include Basic Internet Costs

In recognition of internet access as a necessity for school, work, and job search, the Department proposed to amend 7 CFR 273.9(d)(6)(ii)(C) to add the cost of basic internet service. The proposed changes would replace the telephone standard (

i.e.,

the individual standard for telephone costs) with a broader telecommunications standard that includes costs for one telephone, basic internet service, or both. The proposed rule would not allow an individual standard for only basic internet service costs, as internet costs could only be part of the new telecommunications standard. The Department proposed to calculate the maximum telecommunications standard amount annually by reviewing nationally available low-cost plans for one telephone line and basic internet access for essential services. Similar to LUAs and individual standards, State agencies would still calculate their own telecommunications figures annually. The Department would review and approve the methodology and final figures, subject to the national cap. The Department estimated that the telecommunications standard cap would be approximately $55 in FY 2020 based on a search of available resources for low-cost carriers.

As proposed, the new telecommunications standard would be available to households with utility costs for one telephone, basic internet service, or both. Households with basic internet and/or telephone costs would either receive the telecommunications standard or use their actual costs, subject to the national cap. For example, households with more than basic internet packages, such as those combined with cable television service, would not be able to count the cost of their entire package. These households would instead either receive the telecommunications standard or have their actual costs of phone and/or basic internet counted, up to the amount of the standard, depending on the option the State agency selects. Additionally, State agencies would be allowed to include the telecommunications costs as part of their LUA so long as the telecommunications share of the LUA would not exceed the amount set for the telecommunications standard.

Approximately 15 commenters supported the proposed update to the telephone standard. Multiple commenters, including advocacy groups, a policy advocacy organization, multiple State government agencies, a religious organization, and a trade association, agreed with the Department's argument that internet is an essential service. Additional commenters, including an advocacy group, a legal services organization, a policy advocacy organization, and State government agencies generally supported updating the telephone standard to include internet services.

Two advocacy groups and a legal services organization also commented that the estimated $55 telecommunications standard cap is too low. One recommended creating a separate internet standard from the telephone standard rather than a combined telecommunications standard, and others argued the cap should be set at the 80th or 95th percentile. A food bank and a legal services organization argued that the explanation for how the Department developed the $55 cap was insufficient. A State agency recommended that State agencies should have the option to either accept the maximum limit established for the telecommunications standard or to use their own methodology, as approved by the Department.

An advocacy group shared alternatives to the Department's proposed telecommunications standard methodology, including comments on which expenses should be allowable as a deduction. The commenter argued that FNS should allow modem rentals, costs of hardware, and subscription costs as allowable expenses and that State agencies should be able to choose whether to offer a standalone internet individual standard, a combined telecommunications standard, or both, depending on their States' needs.

The Department appreciates commenters who supported and confirmed the importance of including basic internet costs as an allowable shelter cost. The Department agrees that this change is critical, as the internet plays a pivotal role in Americans' daily lives, regardless of income level, and is a necessary expense in a household's budget. High-speed internet is a necessary utility for school, work, and job searches. As such, the final rule allows the costs for basic internet service as an allowable shelter cost.

The Department also appreciates the suggestions for alternative ways of allowing basic internet costs. The Department agrees with commenters that allowing State agencies to set a basic internet individual standard, instead of a combined telecommunications standard, is better aligned with how the Department treats other individual standards. For instance, under current rules, State agencies may offer all other utilities (including telephone) as individual standards but may only combine them when using HCSUAs and LUAs. Therefore, the final rule allows State agencies to develop a basic internet individual standard, independent from the telephone standard, rather than as part of a telecommunications standard. Under the final rule, State agencies have the option to develop their own methodology for the basic internet individual standard, similar to other individual standards, rather than abiding by a national maximum amount proposed by the Department in the SUA NPRM. State agencies that choose this option will calculate their basic internet individual standards each fiscal year and submit them to FNS for approval, similar to other LUAs and individual standards.

State agencies may also include basic internet costs in their LUAs and HCSUAs. Rather than FNS incorporating a capped telecommunications standard into a standardized HCSUA as proposed, the final rule allows State agencies to incorporate basic internet costs in their HCSUA methodologies in line with how other utility expenses are reflected in the HCSUA.

Consistent with the revised requirements for other SUA methodologies, including individual standards like telephone, State agencies must submit for FNS approval their basic internet individual standard methodology at least every five years. Methodology submissions must incorporate any revisions necessary to demonstrate that the baseline expenditure data and underlying methodology reflect recent trends and changes. Additionally, State agencies' methodologies must:

• Reflect the entire State or geographic area the SUA covers;

• Use data sourced from utility providers or similarly reliable source;

• Reflect expenses incurred by low-income households,

• Distinguish if the utility is for heating or cooling, if applicable; and

• Reflect residential utility expenses.

Like with HCSUA methodologies, the Department chose these criteria to ensure basic internet individual standards accurately represent the utility costs of low-income households, including households with higher than average utility costs, in the designated area while providing State agencies additional flexibility in creating their standards. the Department will publish guidance and provide State agencies with technical assistance in developing their basic internet methodology as needed. As part of this technical assistance, FNS will provide factors for State agencies to consider when identifying data sources and establishing methodologies. FNS will also provide examples of approvable methodologies for reference.

In determining which costs to include in the basic internet individual standard, the Department agrees with commenters on the need to create consistency across similar utilities, such as telephone. Program rules at 7 CFR 273.9(d)(6)(ii)(C) include the following allowable costs for telephone: all service fees required to provide service for one telephone, including, but not limited to, basic service fees, wire maintenance fees, subscriber line charges, relay center surcharges, 911 fees, and taxes; and fees charged by the utility provider for initial installation of the utility. One-time deposits cannot be included.

Therefore, the Department is finalizing the following costs as part of the basic internet individual standard: all service fees required to provide households with basic internet service, including but not limited to, monthly subscriber fees for a basic internet connection (

i.e.

the base rate paid by the household each month in order to receive service, which may include high-speed internet); taxes and fees charged to the household by the provider that recur on monthly bills; and the cost of one modem rental.

The Department believes the abovementioned allowable costs are consistent with the costs allowed for the telephone individual standard. The Department also notes that if a household does not pay any of its internet costs, including because those costs are paid in full by a program similar to, for example, the Lifeline program or the former Affordable Connectivity Program, then the household would not qualify for the basic internet individual standard.

These changes, including the change to the basic internet individual standard calculation and allowable costs are finalized by amending the proposed 7 CFR 273.9(d)(6)(ii)(C); amending the proposed 7 CFR 273.9(d)(6)(iii)(A)(

); amending and redesignating the proposed 7 CFR 273.9(d)(6)(iii)(B)(

) as 7 CFR 273.9(d)(6)(iii)(B); and adding methodology requirements at 7 CFR 273.9(d)(6)(iii)(C).

Compliance Dates for Implementing SUA NPRM Changes

The Department expects State agencies to need time to review their current SUA methodologies and make updates to align with the new requirements. Similarly, the Department will need time to review State agencies' methodologies and work with each State agency to ensure they meet the new requirements. As such, the compliance date for SUA changes is October 1, 2025. The Department encourages State agencies to implement changes at the beginning of the Federal fiscal year to minimize disruption to SNAP households since State agencies typically make changes to SUAs and Cost of Living Adjustments at this time. The Department will provide State agencies with technical assistance to revise and receive approval for SUA methodologies in advance of the compliance date, including information on State flexibilities to ensure that SUAs meet households' needs while also aligning with the data available on low-income household utility costs in a more consistent manner.

Background and Summary of Comments on the April 20, 2016, (LIHEAP) NPRM

In addition to the changes to HCSUA methodologies and SUA options, the final rule will also update 7 CFR 273.9(d)(6)(iii)(C). These changes

finalize revisions for how Low-Income Home Energy Assistance Program (LIHEAP) payments are considered to confer eligibility for the HCSUA. This update is consistent with requirements included in the Agricultural Act of 2014 (Pub. L. 113-79).

Section 4006 of the Agricultural Act of 2014 amended requirements for how payments issued under the Low-Income Home Energy Assistance Act (LIHEAA), as amended, confer HCSUAs to households. These changes require that State agencies confer the HCSUA to households receiving a payment, or on behalf of which payments were made, under LIHEAA or other similar energy assistance program, only when the payment is greater than $20 annually and received in either the current month or in the immediately preceding 12 months. The changes were effective with the enactment of the Agricultural Act of 2014, and State agencies were required to begin implementation on March 10, 2014. The Department published an implementation memo,

“Supplemental Nutrition Assistance Program—Section 4006 Agricultural Act of 2014—Implementing Memorandum,” on March 5, 2014, instructing State agencies to implement the change.

U.S. Department of Agriculture, Food and Nutrition Service,

Supplemental Nutrition Assistance Program—Section 4006 Agricultural Act of 2014—Implementing Memorandum,

5 March 2014. Retrieved from:

https://www.fns.usda.gov/snap/eligibility/deduction/liheap-implementation-memo

in September 2022.

To make the corresponding update to SNAP regulations, the LIHEAP NPRM titled “Supplemental Nutrition Assistance Program: Standard Utility Allowances Based on the Receipt of Energy Assistance Payments Under the Agricultural Act of 2014,” was published on April 20, 2016, and proposed updates to 7 CFR 273.9(d)(6)(iii)(C). The Department received a total of nine comments on the LIHEAP NPRM from five advocate groups, two legal services organizations, and two nonprofit organizations. The comments were generally favorable of the proposed provisions, while also providing helpful feedback for consideration in developing the final provisions in this rule. Six commenters in particular were supportive of the rule overall. Several of these commenters noted the real and helpful impact of conferring the HCSUA to eligible LIHEAP receiving households. A more detailed discussion of the comments regarding the NPRM and the changes made in the final rule follows below.

Agricultural Act of 2014 Changes

For the purposes of the HCSUA, receipt of a LIHEAP payment serves as a proxy for State agencies to determine if a household incurs heating or cooling utility costs. Before the enactment of the Agricultural Act of 2014, section 5(e)(6)(C)(iv) of the Act provided that all households receiving a LIHEAP payment or all households on behalf of which a LIHEAP payment was made automatically qualified for the HCSUA, regardless of the amount of the LIHEAP payment. Some State agencies used this policy to maximize use of the HCSUA by issuing a nominal LIHEAP payment (generally around $1) to all SNAP households. Receipt of the nominal payment allowed the household to receive the HCSUA, even when the household would not have otherwise qualified for the HCSUA because they did not pay for heating or cooling.

The Agricultural Act of 2014 amended section 5(e)(6)(C)(iv)(I) of the Act to adjust how the HCSUA is applied to households receiving LIHEAP payments. The amendment altered this process by requiring State agencies to make the HCSUA available to households that received a payment (or households on behalf of which a payment was made), in the current month or in the immediately preceding 12 months, that was greater than $20 annually under the LIHEAA, or other similar energy assistance program. These requirements were effective March 10, 2014. As a result, the current regulations at 7 CFR 273.9(d)(6)(iii)(C) must be updated to reflect the Agricultural Act of 2014 changes.

As in the LIHEAP NPRM, in this discussion, the phrase “qualifying LIHEAP or other payment” refers to those LIHEAP or other similar energy assistance program payments that are in excess of $20 annually and have been received by or made on behalf of the household in the current or immediately preceding 12 months.

Other Similar Energy Assistance Programs

In the LIHEAP NPRM, the Department proposed that the statutory term “other similar energy assistance program” be defined as a separate home energy assistance program designed to provide heating or cooling assistance through a payment directly to or on behalf of low-income households. Three commenters supported the proposed standard for what constitutes an “other similar energy assistance program.” The proposed definition is adopted as final in this rule.

One of those three commenters suggested adding this definition in the general definitions section at 7 CFR 271.2. Although the Department appreciates the suggestion, 7 CFR 271.2 contains more general definitions relevant to the program overall, instead of issue-specific areas such as this one. For example, Low Income Home Energy Assistance Act of 1981 (LIHEAA) is referenced at the standard utility allowance section of the regulations at 7 CFR 273.9 but not 7 CFR 271.2. As a result, the Department did not add the definition to the general definitions section at 7 CFR 271.2 in this final rule.

The above commenter also asked that the Department provide examples of other similar energy assistance programs and include payments from housing authorities to individually billed tenants, State fuel funds, and State analogues to LIHEAP. The Department believes other similar energy assistance programs could include (but are not limited to) certain State-only funded programs designed to assist households with heating or cooling expenses (separate from a household's rent or mortgage), home energy bills, weatherization (see below for additional discussion on weatherization payments) or energy-related minor home repairs. The Department did not add examples of specific energy assistance programs to the regulatory language because those programs may change in the future and may no longer meet the definition of an “other similar energy assistance program.” The Department notes that, in general, State agencies should evaluate a potentially eligible program on a case-by-case basis. To ensure consistency and fairness across the caseload, State agencies must establish clear and reasonable standards for evaluating whether a program constitutes a similar energy assistance program.

Finally, this commenter agreed with the Department's proposal to allow people living in public housing, not just private housing, and billed individually for heating and cooling costs to qualify for the HCSUA. However, the commenter argued that the utility allowances that individuals in public housing receive either as a rent reduction or a cancellation of their cash rental obligation and a partial rebate are energy assistance similar to LIHEAP. This commenter also suggested that the entire amount of the allowance is energy assistance, not just the smaller (or zero) amount that the household receives as a rebate after the housing authority nets out the household's rental obligation.

Although the Department appreciates this comment, the Department notes that section 5(e)(6)(C)(ii)(II) of the Act

prohibits the use of an HCSUA for households that incur a heating or cooling expense but live in public housing that has central utility meters and charges households only for excess utility costs. The prohibition does not apply in States that have mandated the use of SUAs, per section 5(e)(6)(C)(iii)(III) of the Act. Therefore, the Department proposed at 7 CFR 273.9(d)(6)(iii)(C)(

)(

) that households in public housing units with central utility meters and who are charged only for excess heating or cooling costs are not entitled to a standard that includes heating or cooling costs, unless the State agency mandates the use of SUAs in accordance with the proposed paragraph 7 CFR 273.9(d)(6)(iii)(E). This provision is adopted as proposed but redesignated at 7 CFR 273.9(d)(6)(iii)(D)(

The definition of an “other similar energy assistance program” is designed to provide parameters but also give State agencies flexibility to determine what constitutes a potentially eligible program within the confines of this definition. The Department maintains that the definition provided in the final rule sufficiently addresses the concerns noted by the commenter.

Current Month

The Agricultural Act of 2014 included a requirement at sec. 5(e)(6)(C)(iv)(I) of the Act that households receive an energy assistance payment in the “current month” or the immediately preceding 12 months in order to qualify for the HCSUA. The Department proposed to define “current month” to refer strictly to the calendar month, meaning from the first to the final day of a given month.

One commenter encouraged the Department to use a broader interpretation of “current month” to mean the first full calendar month of the certification period. Another commenter believed the proposed definition of “current month” is too restrictive and suggested the Department allow payments made within SNAP's 30-day processing period to confer eligibility.

The Department appreciates the commenters' concerns; however, the Agricultural Act of 2014 revised the Act to prohibit State agencies from anticipating receipt of a LIHEAP or other qualifying payment to confer a household's eligibility for the HCSUA. The changes allow a household to be eligible for the HCSUA if it receives the qualifying payment in the current month or immediately preceding 12 months. In the LIHEAP NPRM, the Department proposed that the HCSUA may be applied only if the household is scheduled to receive a payment in the current calendar month to allow for some flexibility within the timeline set in the Act. The proposed definition of “current month” balances flexibility with the need to adhere to the timeline in the statutory text. For these reasons, the Department adopts this provision as proposed in the final rule.

Moving Households

In the LIHEAP NPRM, the Department indicated that State agencies using HCSUAs would provide the standard to households who receive a qualifying LIHEAP or other payment, regardless of any change in the household's residence or address. One commenter suggested that the Department incorporate this clarification into final regulatory text. The Department agrees this change promotes consistency across States and is making this revision to the regulations at 7 CFR 273.9(d)(6)(iii)(D)(

One commenter supported the proposal that if a State agency has an indication that a household received a qualifying LIHEAP payment in another State, the State agency should act on this information. The Department reiterates that if, at the time of certification, the State agency has an indication that a household received a qualifying LIHEAP or other payment in another State, the new State agency should pursue clarification. Procedures regarding acting on changes after certification are already contained in 7 CFR 273.12 of the regulations, and the Department did not make any changes to these existing requirements in the final rule.

Overissuance

Section 4006 of the Agricultural Act of 2014 no longer allows a State agency to use an HCSUA in determining eligibility and benefit amount for a household that does not otherwise incur heating or cooling costs based on the State agency's expectation that the household would receive a qualifying LIHEAP or other payment in future months. The Department proposed to only allow the HCSUA to be applied to a household's case based on anticipated receipt if the payment is scheduled to be received within the current calendar month. This allows State agencies the option to consider a qualifying LIHEAP or other payment received by the household for the purposes of conferring HCSUA eligibility, so long as the payment is scheduled in the current month. If the anticipated payment is not received within that month, benefits received by the household would be considered an overissuance and the State agency may be required to pursue a claim against the household.

The Department received adverse comments on this provision. One commenter stated the language regarding claims is confusing and inappropriate. Another commenter suggested removing claims language for overissuance from the regulatory text since State agencies are already responsible for determining overissuances. Another commenter believed that the overpayments language suggests a lapse or delay in a payment itself triggers an overpayment and suggested deleting this language and indicating that State agencies must follow overpayment regulations at 7 CFR 273.18.

The Department agrees that 7 CFR 273.18 already requires State agencies to collect overissuances and the proposed language is unnecessary and potentially confusing. Therefore, the Department revised 7 CFR 273.9(d)(6)(iii)(C)(

)(

iii

) in the final rule to remove the reference to claims to avoid such confusion. State agencies will be expected to pursue claims in these circumstances under existing regulations at 7 CFR 273.18. State agencies are already aware of the procedures and requirements regarding the establishment of a claim against a household for any benefits issued in error under 7 CFR 273.18. Additionally, the Department has redesignated the proposed 7 CFR 273.9(d)(6)(iii)(C)(

)(

iii

) as 7 CFR 273.9(d)(6)(D)(

Proration

The Department proposed to revise language at 7 CFR 273.10(d)(6) to reflect the requirement in section 5(e)(6)(C)(iv)(IV) of the Act that assistance under LIHEAA be considered prorated over the heating or cooling season for which the assistance was provided. One commenter believed that the rule should reflect that a payment need not actually be paid during the preceding 12 months, so long as one of those months was in the heating season for which a LIHEAP payment was made and the prorated amount of the grant exceeded $20.

The Act requires the receipt of a qualifying LIHEAP or other program payment in the current month or immediately preceding 12 months that was greater than $20 annually. State agencies are also expected to prorate LIHEAP payments over an entire heating or cooling season. As the commenter suggested, because State agencies must prorate LIHEAP payments over a season, each month covered by the proration could be used to confer eligibility for the HCSUA based on the receipt of a LIHEAP

payment. For example, if a household receives a $150 LIHEAP payment in October 2021, intended for the heating season in that State (from October through February), the State agency would consider the payment prorated to $30 per month from October 2021 through February 2022. If the household applies for SNAP in January 2023, the household would be eligible for the HCSUA based on the receipt of LIHEAP payment in the immediately preceding 12 months.

Furthermore, the Act does not restrict proration to only one heating or cooling season as the amount could qualify the household for the HCSUA for multiple seasons. For example, if an existing SNAP household received a $200 LIHEAP payment in October 2021, the household could use the LIHEAP payment to qualify for the HCSUA from October 2021 through February 2022, as well as from October 2022 through February 2023 since the household received the payment within the immediately preceding 12 months. In summary, the household's receipt of a $200 LIHEAP payment in October 2021 could effectively make the household eligible for the HCSUA from October 2021 through February 2023.

As such, it is reasonable that a household could be eligible for the HCSUA in more than one heating or cooling season, based on the receipt of one LIHEAP payment. In order to clarify this, the final rule revises the regulatory text at 7 CFR 273.10(d)(6) to specify that a prorated qualifying LIHEAP may qualify an individual or household for the HCSUA in more than one heating or cooling season, so long as the payment was received within the last 12 months or the proration period covered at least one month in the preceding 12 months.

The Department would also like to note that while the LIHEAP NPRM preamble correctly stated that the statutory requirement to prorate over the entire heating or cooling season only applied to assistance provided under LIHEAA, this was not clearly reflected in the proposed amendatory language. The final amended 7 CFR 273.10(d)(6) will reflect this specification.

Quantifiable

As the Act requires LIHEAP or other payments to exceed $20 in order to confer HCSUA eligibility, these payments must be quantifiable in order to exceed this established threshold. The Department proposed that State agencies must be able to quantify, in dollars, the amount of the payment for purposes of granting the HCSUA.

Two commenters supported the Department's proposed definition of “quantifiable.” One commenter said the rule should be amended to make clear that the provider of the energy assistance may provide the assistance in the form of an in-kind benefit which may not have a precise value and the State agency may rely on estimates to determine if the $20 threshold has been exceeded (for example, if a household receives firewood or coal).

The Department appreciates the concern that some households may receive assistance in the form of in-kind items as opposed to receiving a payment from LIHEAP or similar assistance programs. Organizations may provide households with home heating oil, firewood, or coal, and other goods which vary based on geographic area. The Act does not specify that the payment be cash, and the Department agrees that State agencies may include in-kind assistance as a qualifying LIHEAP or other payment for purposes of conferring the HCSUA. The State agency must be reasonably able to quantify that the amount of this assistance exceeds the $20 threshold. State agencies must develop workable, reasonable procedures to determine how in-kind assistance would be quantified, including how to reasonably estimate the value of those goods, and must apply those procedures consistently and fairly across the caseload. The Department revises the regulations at proposed 7 CFR 273.9(d)(6)(iii)(C)(

)(

iii

) and redesignates this section to 7 CFR 273.9(d)(6)(iii)(D)(

), as described above, to incorporate this change.

Split Households

The Department proposed that if a household that received a qualifying LIHEAP or other payment subsequently splits into two SNAP households, State agencies must determine which household is eligible for the HCSUA. The Department maintained the State agency is in the best situation to determine which household would receive the HCSUA based on the qualifying LIHEAP or other payment. The State's chosen policy would need to be applied in a consistent and equitable way. The Department proposed to revise 7 CFR 273.9(d)(6)(iii)(C) to incorporate these standards.

Commenters expressed concern that the regulatory language in the LIHEAP NPRM provided too much State discretion and could have error-prone results. For example, one commenter argued that because there are so many ways for a household to divide, State agencies will find it difficult to apply the policy consistently, which could lead to quality control errors. This commenter, in addition to others, suggested that the fairest and most administratively straightforward way to apply this policy is to make the HCSUA available to any member who lived in a household that received a qualifying LIHEAP payment in the prior 12 months.

Due to concerns that the proposed regulatory language could lead to inconsistent application and be unfair for households, the Department is revising the regulations at proposed 7 CFR 273.9(d)(6)(iii)(C)(

)(

iii

) (redesignated at 7 CFR 273.9(d)(6)(iii)(D)(

) in this final rule). The Department is making this change to require State agencies that elect to use the HCSUA to grant the HCSUA to a household in which a member: (1) previously received a qualifying LIHEAP payment as part of different household, or (2) was previously a member of a different household on which behalf a LIHEAP payment was made. While these individuals no longer reside in the same household, they did receive a qualifying payment in the preceding 12 months, and therefore are eligible for the HCSUA under the Act. This procedure will allow for consistent treatment of all impacted SNAP households.

Actions on Changes

The Department explained in the LIHEAP NPRM preamble that if a SNAP household subsequently receives a qualifying LIHEAP or other payment after certification, or if one is made on the household's behalf during the certification period, the State agency must take action according to the rules of their chosen reporting system under 7 CFR 273.12.

One commenter requested that the Department add this language to the regulatory text. This commenter explained that it is not clear that receipt of LIHEAP should be known to the State agency and acted on during a certification period without further action from the household. While the Department appreciates this feedback, provisions regarding reporting and State agency actions on changes, including unclear information, are addressed in 7 CFR 273.12, and this rulemaking will not affect those provisions. Specifying the applicability of the 7 CFR 273.12 procedures to enumerated issues may cause confusion. The provision is finalized as proposed.

Verification

Under Federal rules, households applying for SNAP do not need to provide verification for utility costs unless questionable, if the household is claiming expenses in excess of the

State's HCSUA, or in accordance with a State-specific verification requirement. Similarly, the Department proposed that receipt of more than $20 in qualifying LIHEAP or other payments would not require verification for SNAP purposes unless questionable.

Two commenters commended the Department for codifying that LIHEAP or similar energy assistance payments do not need to be verified for SNAP unless questionable. One of those commenters also said when a State agency learns of a payment from an energy assistance provider, the information should be verified upon receipt and the State agency should immediately change the benefit level. That commenter also believes State agencies should be encouraged to develop regular automated data feeds from energy assistance providers. Similarly, three commenters requested clarification regarding the treatment of payments received after certification and asked the Department to work with States to develop best practices for prompt re-budgeting.

The Department appreciates these comments. Federal requirements at 7 CFR 273.2(f)(1)(iii) provide that utility costs must be verified only if questionable, if the household is claiming expenses in excess of the State's SUA, or in accordance with a State-specific verification requirement. State agencies establish standards for what is questionable. For purposes of LIHEAP payments, when the information is received directly from an energy assistance provider by the State agency, there is no Federal requirement for the State agency to request additional information from the household unless it is considered questionable. In limited situations, a household's receipt of a LIHEAP payment may be considered questionable, and the State agency could require a household to provide verification, for example, if the household has moved. The existing regulations at 7 CFR 273.12(c) provide State agency requirements for processing changes. Note that although the regulations only require State agencies to verify utility information if it is questionable, State agencies have the option under 7 CFR 273.2(f)(3) to choose to verify utility costs even if not questionable. If a State agency chooses to verify non-questionable utility costs, the State agency must ensure that procedures are consistent across the caseload.

For the reasons stated above, the Department is finalizing this provision as proposed.

Tracking

The Department proposed that State agencies would be responsible for tracking the date of receipt of the qualifying LIHEAP or other similar energy assistance payment to ensure the requirements are met. At 7 CFR 273.9(d)(6)(iii)(C)(

)(

iii

), the Department proposed that the State agency must document the date of receipt of a payment made under LIHEAA or other similar energy assistance program to ensure the payment was received in the current month or the immediately preceding 12 months and exceeded $20 annually. Five commenters found the use of the term “document” confusing as it could be interpreted as “verification”. They also requested clarification that the documentation requirement is the responsibility of State agencies, not the household.

The Department proposed to use the term “document” in the regulatory text instead of the term “verify” intentionally. Regardless of the State agency's choice on verification when the information is not questionable, the State agency must document in the case file the date of receipt of a qualifying payment. This will ensure the payment was received in the current month or the immediately preceding 12 months and exceeded $20 annually. State agencies have the discretion to follow whatever procedure works best for them to ensure that they accurately document this information in the case file beyond the general requirement that the State agency document the receipt of payment. This provision is finalized as proposed in the redesignated 7 CFR 273.9(d)(6)(iii)(D)(

)(

iii

Data Sharing Agreements

In the LIHEAP NPRM, the Department encouraged State agencies to modify data sharing agreements with their respective LIHEAP agencies, as appropriate, to ensure transmission of timely and accurate information needed for SNAP eligibility and benefit determinations. One commenter recommended that the final rule should include safeguards to ensure that State agencies have data sharing agreements with LIHEAP administrative agencies.

While the Department appreciates this suggestion, the Department declines to finalize this requirement. The Agricultural Act of 2014 does not require State agencies to enter into data sharing agreements with LIHEAP administrative agencies and requiring such agreements in regulation may be unwieldy. Nevertheless, the Department believes these agreements could be highly beneficial for both the State agencies and the LIHEAP agencies. Such agreements could establish standard operating procedures, expectations, and other details that would help ensure both parties are clear on the terms of the relationship. The Department encourages States to enter into data sharing agreements when possible. States should modify their data sharing agreements with their respective LIHEAP agencies as appropriate to ensure transmission of timely and accurate information needed for SNAP eligibility and benefit determination.

Weatherization

Because the Act requires that the LIHEAP or other payment must have been received by or made on behalf of a household, the Department proposed that weatherization payments paid to a landlord cannot confer eligibility for the HCSUA. The Department declined to confer eligibility for the HCSUA for households within a multi-family dwelling when the multi-family dwelling receives weatherization project funding. The Department explained that the Act does not explicitly address how State agencies should evaluate LIHEAP funds that are used to pay for weatherization projects in multi-family dwellings and noted that a June 15, 1999, Information Memorandum

issued by the Department of Health and Human Services (HHS), which oversees LIHEAP at the Federal level, found that weatherization of multi-unit buildings “is not a benefit provided to an individual, household or family eligibility unit.”

The Department requested comments on this issue and potential alternative approaches.

U.S. Department of Health & Human Services.

LIHEAP IM 1999-10 on Federal Public Benefits Under the Welfare Reform Law—Revised Guidance,

June 15, 1999. Retrieved from

https://www.acf.hhs.gov/ocs/policy-guidance/liheap-im-1999-10-federal-public-benefits-under-welfare-reform-law-revised

in July 2022.

HHS has since confirmed that this guidance was issued exclusively for a different purpose and requested its removal from consideration. See preamble language for additional information.

Three commenters responded to the Department's request for feedback on this issue. One commenter believed receipt of weatherization assistance from a LIHEAP or other similar energy assistance program should automatically confer the HCSUA to a household. Two commenters encouraged the Department to allow multi-unit weatherization projects to make all SNAP households within the multi-unit dwelling eligible for HCSUA. To do so, these commenters suggested that State agencies could divide the total value of a weatherization payment (or in-kind service, per the discussion

above on quantifiable benefits) by the number of units in the multi-unit dwelling to determine the payment received on behalf of each household. One of these commenters argued that prohibiting weatherization payments from conferring the HCSUA to households living in multi-family dwellings would unfairly exclude these households since LIHEAP funds often pay for weatherization programs.

The Department concurs with commenters that while the determination may be more difficult for multi-family dwellings, weatherization payments paid to a landlord could be considered a payment made on behalf of the household depending on the circumstances. The Department agrees that all households that receive a LIHEAP or other similar energy assistance program payment that meets the statutory requirements to confer HCSUA eligibility should be treated similarly. Further, HHS has since confirmed that its June 15, 1999, Information Memorandum was issued exclusively to assist in the application of rules under the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 and requested that the Department remove it from consideration in determining whether weatherization payments for multi-unit buildings can be considered a payment made “on behalf of a household.” As such, the Department is revising its position on weatherization payments and confirms that a household is eligible for the HCSUA if the household lives in a multi-unit dwelling or an individual unit and receives a qualifying weatherization program payment.

However, the Department maintains that prescribing how weatherization payments are divided among households in a multi-unit dwelling when they are paid directly to a building manager or contractor would be administratively burdensome and restrictive. While two commenters suggested a method for how State agencies could quantify multi-unit dwelling weatherization payments for each household within that dwelling, the Department understands that State SNAP agencies may have different access to weatherization funding information depending on the structure of the State, data sharing agreements, and eligibility systems. Further, the Department establishing a methodology could hinder State agencies from using more workable solutions based on the information they have access to or require other State agencies to establish complicated processes to meet this lone requirement.

Therefore, the Department is providing State agencies flexibility to determine the method for assessing whether a weatherization payment was received by (or on behalf of the household), in the current month or in the immediately preceding 12 months, and that the payment was greater than $20 annually, as required by the Act. State agencies must develop workable, reasonable procedures to determine how multi-unit dwelling weatherization payments would be quantified for households and must apply those procedures consistently and fairly across the caseload. The revised language is found at 7 CFR 273.9(d)(6)(iii)(D)(

)(

vii

Procedural Matters

Executive Order 12866, 13563, and 14094

Executive Orders 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. Executive Order 14094 of April 6, 2023, focuses on modernizing regulatory review and updates the definition of a significant regulation.

This final rule has been determined to be significant under section 3(f)(1) of Executive Order (E.O.) 12866, as amended by E.O 14094, and was reviewed by OMB in conformance with Executive Order 12866.

Regulatory Impact Analysis

The Department estimates the total increase in Federal SNAP benefit spending associated with the SUA provisions of the final rule to be approximately $5.4 billion over the five-year period FY 2025-FY 2029. This represents an increase in Federal transfers (SNAP benefits). Effects on Federal transfers are expected to begin in FY 2025. Effects on Federal costs are expected to begin in FY 2025 and are estimated to be approximately $612,000 over the 5-year period FY 2025-FY 2029. Effects on State administrative costs are expected to begin in FY 2025 and are estimated to be approximately $561,000 over the five-year period. The final rule will not affect household burden.

The Department estimates that approximately 29 percent of SNAP households will see an average 6 percent increase in their monthly SNAP benefit ($15 per month, per household) and 5 percent of SNAP households will see an average 2.6 percent reduction their monthly SNAP benefit ($7 per month, per household). A very small number of households (less than 0.01 percent of all SNAP households) are estimated to lose benefits as a result of the final rule, losing an average of $30 in monthly benefits. The remaining 66 percent of households will see no change to their SNAP benefit. The rule is also expected to result in an increase in ongoing administrative burden for most State SNAP agencies.

This rule will increase the existing burden currently approved (OMB Control Number 0584-0496; Expiration Date 7/31/2026).

Regarding the LIHEAP provisions, the Department notes that States were required by statute to implement the Agricultural Act of 2014's change related to LIHEAP immediately for any household whose initial certification period began on or after March 10, 2014. Therefore, any reduction in transfers related to the LIHEAP provisions of this final rule is assumed to be fully incorporated into the current SNAP baseline.

Regulatory Flexibility Act

The Regulatory Flexibility Act (5 U.S.C. 601-612) requires Agencies to analyze the impact of rulemaking on small entities and consider alternatives that would minimize any significant impacts on a substantial number of small entities. Pursuant to that review, it has been certified that this rule would not have a significant impact on a substantial number of small entities.

The final rule primarily impacts SNAP households. Small entities, such as smaller SNAP-authorized retailers, would not be subject to any new requirement. On average, nationwide, SNAP retailers would likely see an increase in the amount of SNAP benefits redeemed at stores under this final rule as the final rule is expected to increase transfers (SNAP benefit spending) by 1.3 percent. As of FY 2022, approximately 76 percent of authorized SNAP retailers (about 195,700 retailers) were small groceries, convenience stores, combination grocery stores, and specialty stores, store types that are likely to fall under the Small Business Administration gross sales threshold to qualify as a small business for Federal Government programs. While these stores make up most authorized

retailers, collectively they redeem about 12 percent of all SNAP benefits.

Amongst States, 43 States are expected to experience a net increase in SNAP benefit as a result of the final rule, ranging from 0.1 percent to 3.4 percent. In these States, small retailers may experience a small increase in sales. The remaining 10 States are expected to see a net decrease, ranging from −0.4 percent to −1.8 percent, in total SNAP benefits because of the final rule. These States are: Maine, Massachusetts, New Hampshire, New Jersey, New York, North Dakota, Ohio, Rhode Island, South Dakota, and Vermont. Of the total 195,700 authorized SNAP retailers that likely qualify as a small business, 17 percent are located in these 10 States. They account for 16 percent of redemptions among likely small, authorized SNAP retailers.

Congressional Review Act

Pursuant to the Congressional Review Act (5 U.S.C. 801

et seq.

), the Office of Information and Regulatory Affairs has determined that this rule meets the criteria set forth in 5 U.S.C. 804(2).

Unfunded Mandates Reform Act

Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public Law 104-4, establishes requirements for Federal agencies to assess the effects of their regulatory actions on State, local, and Tribal governments and the private sector. Under section 202 of the UMRA, the Department generally must prepare a written statement, including a cost benefit analysis, for proposed and final rules with “Federal mandates” that may result in expenditures by State, local, or Tribal governments, in the aggregate, or 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 most cost effective or least burdensome alternative that achieves the objectives of the rule.

This final rule does not contain Federal mandates (under the regulatory provisions of Title II of the UMRA) for State, local, and Tribal governments or the private sector of $100 million or more in any one year. Thus, the rule is not subject to the requirements of sections 202 and 205 of the UMRA.

Executive Order 12372

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

Federalism Summary Impact Statement

Executive Order 13132 requires Federal agencies to consider the impact of their regulatory actions on State and local governments. Where such actions have federalism implications, agencies are directed to provide a statement for inclusion in the preamble to the regulations describing the agency's considerations in terms of the three categories called for under section (6)(b)(2)(B) of Executive Order 13132.

The Department has considered the impact of this rule on State and local governments and has determined that this rule does not have federalism implications. Therefore, under section 6(b) of the Executive order, a federalism summary is not required.

Executive Order 12988, Civil Justice Reform

This final 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 and timely implementation. This rule is not intended to have retroactive effect unless so specified in the Effective Dates section of the final rule. Prior to any judicial challenge to the provisions of the final rule, all applicable administrative procedures must be exhausted.

Civil Rights Impact Analysis

The Department has reviewed the final rule in accordance with the Department Regulation 4300-004, “Civil Rights Impact Analysis” (CRIA), to identify and address any major civil rights impacts the final rule might have on SNAP participants by gender, race, and ethnicity, as well as impacts on children, the elderly, and persons with disabilities. The final rule allows State agencies to continue to set their own SUA methodologies, subject to FNS approval. State agencies must submit for FNS approval their SUA methodologies at least every five years. Methodology submissions must incorporate any revisions necessary to demonstrate that the baseline expenditure data and underlying methodology reflect recent trends and changes. State agencies' methodologies must also meet certain criteria. The final rule also expands allowable shelter expenses to include basic internet costs. Finally, the final rule finalizes updates to the treatment of LIHEAP payments, in accordance with the Agricultural Act of 2014 (2014 Farm Bill).

The Department ran a simulation using FY 2022 SNAP Quality Control data to estimate how the final rule would impact SNAP participants by gender, race, and ethnicity, as well as impacts on children, the elderly, and persons with disabilities. SNAP participants identified as female are slightly more likely to both gain and lose benefits than SNAP participants identified as male. Households with children are slightly less likely to gain or lose benefits than all households. Households headed by a non-Hispanic White individual or Asian individual are more likely to lose benefits under the final rule. Households headed by an Asian individual are also slightly more likely to gain benefits compared to all households. Households headed by a non-Hispanic Black individual are slightly less likely to gain benefits compared to all households. Among households expected to lose benefits under the final rule, households headed by an Asian or Hispanic individual are expected to experience a larger average benefit loss. Additionally, households with elderly individuals or individuals with disabilities are more likely to lose or gain benefits due to finalized changes to SUAs because these households are not subject to the cap on the allowable excess shelter deduction. Thus, these households with elderly individuals and individuals with disabilities are more likely to be impacted by changes to the HCSUA. The mitigation and outreach strategies outlined in the regulation and this CRIA are intended to minimize the impacts on the protected groups.

Finally, households that previously qualified for the HCSUA based on receipt of a LIHEAP payment of less than $20 without actual costs experienced a benefit change due to the provisions contained in 2014 Farm Bill. Due to the unavailability of data on the specific individuals impacted by the LIHEAP provision within the final rule, the Department is unable to determine whether this change had an adverse or disproportionate impact on SNAP participants who are members of protected classes.

Executive Order 13175

Executive Order 13175 requires Federal agencies to consult and coordinate with Tribes on a government-to-government basis on policies that have Tribal implications, including regulations, legislative

comments or proposed legislation, and other policy statements or actions that have substantial direct effects on one or more Indian Tribes, on the relationship between the Federal Government and Indian Tribes, or on the distribution of power and responsibilities between the Federal Government and Indian Tribes.

This rule has potential Tribal implications. FNS provided an opportunity for consultation on this issue on October 30, 2020. One question was received and answered on the impact of the proposed changes State-by-State and no additional requests for consultation were received. If further consultation on the provisions of this final rule is requested, the Office of Tribal Relations will work with FNS to ensure quality consultation is provided.

Paperwork Reduction Act

The Paperwork Reduction Act of 1995 (44 U.S.C. Chap. 35) requires OMB to approve all collections of information by a Federal agency before they can be implemented. Respondents are not required to respond to any collection of information unless it displays a current valid OMB control number.

In accordance with the Paperwork Reduction Act of 1995, this final rule contains information collections that are subject to review and approval by the Office of Management and Budget. The Department solicited public comments in the respective NPRMs that were incorporated into this final rulemaking regarding changes in the information collection burden that would result from the finalization of changes in the rule. The respective NPRMs were proposed on October 3, 2019, “Supplemental Nutrition Assistance Program: Standardization of State Heating and Cooling Standard Utility Allowances” (RIN 0584-AE69); and on April 20, 2016, “Supplemental Nutrition Assistance Program: Standard Utility Allowances Based on the Receipt of Energy Assistance Payments Under the Agricultural Act of 2014” (RIN 0584-AE43). The Department will refer to the October 3, 2019, NPRM as the SUA NPRM and the April 20, 2016, NPRM as the LIHEAP NPRM. The LIHEAP NPRM finalized by this rulemaking does not have associated burden under the Paperwork Reduction Act.

These changes are contingent upon OMB approval under the Paperwork Reduction Act of 1995. Once the information collection request is approved by OMB, the agency will publish a separate notice in the

Federal Register

announcing OMB approval.

Due to the timeline of the SUA NPRM, the Department had initially requested a new information collection (designated by OMB as Control Number 0584-0651). However, there are no longer conflicts with the 0584-0496 revision timeline given changes to the final rule publication date. Therefore, instead of creating a new information collection, the Department is revising the existing information collection (0584-0496) to reflect State agencies updating SUA baseline methodology at least every five years; State agencies using contractors to support updates to SUA baseline methodology; and State agencies establishing a basic internet individual standard.

Title:

Supplemental Nutrition Assistance Program (SNAP): State Agency Options for Standard Utility Allowances and Self-Employment Income.

OMB Number:

0584-0496.

Form Number:

None.

Expiration Date:

Previously approved through July 31, 2026.

Type of Request:

Revision.

Abstract:

Section 5 of the Food and Nutrition Act of 2008 (FNA), as amended, permits States to use standard utility allowances (SUAs) in lieu of actual utility expenses in determining a household's shelter costs for the purposes of the excess shelter deduction. This final rule revises SNAP regulations for calculating standard utility allowances and expands allowable shelter expenses to include basic internet costs.

Commenters on the proposed rule explained that portions of the proposed rule would not decrease or may increase State agency burden. The Department agrees and is including additional burden to account for changes in policy in the final rule, such as State agencies updating SUA methodology to align with criteria in the final rule and State agencies establishing SUAs including basic internet costs. The final rule also adjusts the estimates for updating and reporting on SUAs to reflect changes in the approved information collection during the 2023 revision of this information collection (OMB Control number: 0584-0496; Expiration Date 7/31/2026).

The Department is revising the existing information collection covering State agency reporting and recordkeeping for on SUAs (OMB Control Number: 0584-0496, Expiration Date 7/31/2026) to reflect changes from the final rule. There are no new or revised recordkeeping burden or third-party disclosure requirements.

This rule also finalizes the updates to the treatment of Low-Income Home Energy Assistance Program (LIHEAP) payments in accordance with amendments made to the FNA by the Agricultural Act of 2014. These changes do not have associated burden under the Paperwork Reduction Act and are not reflected in this section.

PRA-Related Comments on Proposed Rule

Following publication of the SUA NPRM, the Department received comments directly on the estimated cost and burden hours and comments related to the underlying proposed program changes. As a result, the Department has made changes to the estimated burden in the final rule. Two State agencies agreed that the proposal for FNS to standardize and calculate the Heating and Cooling Standard Utility Allowance (HCSUA) would reduce the State administrative burden associated with determining values and reporting to FNS. However, most comments asserted that State agencies would experience more administrative burden than reflected in the proposed rule.

Multiple commenters, representing two State agencies, a city government, a congressional office and six advocacy organizations, argued that due to the lower HCSUA because of the proposed rule, some State agencies would switch from using a mandatory HCSUA to a voluntary HCSUA. The commenters explained that these State agencies would have an increase in administrative burden due to calculating households' actual heating and cooling costs. Since the final rule does not require State agencies adopt a lower HCSUA and instead allows State agencies to continue calculating their own HCSUAs, subject to FNS approval, the Department does not expect State agencies will switch from using a mandatory HCSUA to a voluntary HCSUA.

A State agency and a non-profit organization commented that the proposed standardization of the HCSUA and proposed caps on LUAs would do little to relieve administrative burden on State agencies. The commenters argued that State agencies will still be required to calculate LUAs and that much of the data used to calculate LUAs are from the same sources that are used to calculate the HCSUA. The final rule requires State agencies to continue calculating all SUAs, including the HCSUA, LUAs and individual standards. Therefore, the Department increased the burden for State agencies to annually update SUAs.

A State agency and a county government suggested that State agencies and counties will incur administrative costs for policy and system automation changes required to implement the proposed rule. The

Department agreed and added start-up burden for each State agency to account for the hours they will spend establishing SUAs that include the cost of basic internet. The Department also considered the burden households may newly experience when reporting on applications or in interviews whether they incur internet costs and verifying costs if the State agency uses voluntary SUAs and the applicant wishes to claim actual expenses in excess of the State SUA. Similarly, State agencies will have burden associated with requesting such information. The Department maintains this burden is already included in OMB-approved ICR 0584-0064 (exp. 6/30/2027), which accounts for the burden on households and State agencies associated with the SNAP application process. This information collection includes burden for applications, interviews, and verification. Therefore, the Department is not including additional household or State burden related to these activities in this information collection.

Additionally, one advocacy organization expressed opposition to the proposed information collection due to their general opposition to the proposed rule. The commenter explained that they think the administrative burden component is irrelevant compared to the potential negative impact on families losing benefits under the proposed rule. The Department believes that the changes in the final rule, which give States more flexibility to reflect their households' unique utility needs, address the commenter's broad concerns.

Beyond specific comments on the information collection and administrative burden, other comments impact the total burden under the final rule. Commenters to the NPRM expressed concerns about the data sources the Department intends to use to calculate HCSUA values. In response to these and other comments, the Department is not finalizing the proposed HCSUA methodology standardization. Instead, the Department is providing State agencies with the flexibility to continue setting their own SUAs while standardizing the data and methodology criteria that FNS will use to approve SUAs. State agencies submit for FNS approval their SUA methodologies at least every five years. Methodology submissions must incorporate any revisions necessary to demonstrate that the baseline expenditure data and underlying methodology reflect recent trends and changes. The methodology update must include changes to the baseline expenditure data and an explanation of the State agency's methodology for deriving HCSUAs from such data. The Department added to the burden to reflect burden hours incurred by State agencies revising their SUA methodologies every five years. Additionally, given the methodology criteria, the Department assumes that some State agencies will choose to solicit contractor support to identify data sources and revise SUA methodologies. The Department added to the burden to reflect the time to solicit, award, and oversee such contracts, as well as the estimated cost of the contracts.

Changes to Burden Estimates in the Final Rule

In this revision, the Department differentiates between annual burden, burden incurred every five (5) years due to rule provisions, and start-up burden for implementing rule provisions. For the first year of implementation of the final rule, the reporting burden will include the annual burden, burden incurred every five (5) years, and start-up burden. The Department estimates the total first year reporting burden will be 6,680 total annual burden hours and 275 total annual responses from 53 State agencies. For subsequent years, the burden will only include annual burden and one-fifth (

1/5

) of the burden incurred every five (5) years. The Department estimates the subsequent year reporting burden will be 2,118 total burden hours and approximately 133 total annual responses from 53 State agencies. The Department estimates that the total recordkeeping annual burden will be 13.25 total burden hours and 53 annual responses from 53 State agencies.

In the proposed rule information collection request, the Department estimated that State agencies that accept the FNS-calculated HCSUA value would spend one (1) hour per State to update their existing LUAs and individual standards and respond to this data collection. The final rule requires that State agencies continue making annual updates to all SUAs, including the HCSUA, instead of accepting an FNS-calculated value. Therefore, the Department now estimates that all 53 State agencies will submit two (2) responses, at ten (10) hours each to update their SUAs annually. This includes burden to update SUAs based on the consumer price index (CPI) or similar sources, correspond with FNS, and update systems and policy materials.

Compared to the prior revision, this represents a decrease of 2.5 hours because the burden for updating SUA baseline methodology is now accounted for separately, as discussed below. In alignment with the prior revision, the burden now includes two responses to account for State agencies' review of their preliminary SUA amounts and their final SUA amounts. The estimated total burden for this provision is 1,060 hours (53 State agencies × 2 SUA requests per State agency × 10 hours per request = 1,060 hours).

In addition to annual updates, the Department estimates that given the requirements of the final rule to update SUA baseline methodology, in the first year and every five (5) years thereafter, all 53 State agencies will submit two (2) responses at 40 hours each. This includes burden to gather and analyze data sources, calculate SUAs, and submit revisions to SUA methodology to FNS. This includes two (2) responses to account for State agencies' review of their preliminary methodology and their final methodology. This estimate is based on the Department's recent experience evaluating annual SUA updates and providing technical assistance to State agencies, with additional time for State agencies to ensure data sources and methodology meet the criteria in the final rule. The estimated total burden for this provision is 4,240 hours (53 State agencies × 2 SUA methodology updates per State agency × 40 hours per request = 4,240 hours). Since the Department estimates State agencies will incur this burden every five (5) years, the average annual burden is 848 hours (4,240 hours/5 years = 848 hours annually).

The Department estimates that in the first year and every five (5) years thereafter, five (5) State agencies will solicit contractor support to make required updates to SUA baseline methodology. This estimate assumes that approximately one-fifth to one-quarter of the State agencies FNS identified as likely to make substantial revisions to their HCSUA methodology will solicit contractor support. Based on prior review of State agency SUA submissions, the Department assumes most State agencies will perform updates internally, but some may seek contractor support. The Department estimates that each State agency will spend approximately 160 hours soliciting, awarding, and managing such contracts and spend approximately $100,000 on such contracts. These estimates are based on the Department's experience with previous Federal and State agency contracts for data analysis. The estimated total burden for this provision is 800 hours (5 State agencies × 1 contract per State agency × 160 hours per request = 800 hours). Since the Department estimates State agencies

will incur this burden every five (5) years, the average annual burden is 160 hours (800 hours/5 years = 160 hours annually).

Additionally, there will be start-up responses for establishing SUAs covering basic internet costs. The Department estimates that in the first year all 53 States will submit one (1) response at ten hours each to establish a basic internet individual standard and HCSUA or LUAs covering basic internet costs. The includes the burden to gather and analyze internet data sources and to build the ability to use the basic internet individual standard into their systems and processes. The estimated total burden for this provision is 530 hours (53 State agencies × 1 response per State agency × 10 hours per request = 530 hours).

This rule also finalizes updates proposed on April 30, 2016, to the treatment of Low-Income Home Energy Assistance Program (LIHEAP) payments, in accordance with amendments made to the FNA by the Agricultural Act of 2014. These changes do not have associated burden under the Paperwork Reduction Act.

In addition to the program changes related to the final rule, this information collection also covers the burden of State agency methodologies for determining the cost of doing business in self-employment cases. Current data indicates 23 out of 53 State agencies have already incorporated a self-employment methodology. For this revision, the Department continues to estimate that five (5) State agencies will establish a new methodology for offsetting the cost of producing self-employment income, either for the first time or as an update to their current methodology. This estimate is consistent with the estimate in the most recent approval of this information collection, approved 7/7/2023. The Department has received few updates to State agencies' self-employment methodologies over the last five years, so five (5) States represents the high end of the estimate. The Department estimates that each of these five (5) responses will have a response time of 10 hours, for a total annual burden of 50 hours (5 State agencies × 1 request per State agency × 10 working hours per request = 50 hours). This burden estimate is consistent with the prior revision of this information collection.

Recordkeeping Burden

All 53 State agencies are required to keep and maintain one record of the information gathered and submitted to FNS for SUA and self-employment options, and the Department estimates this process takes 15 minutes (or 0.25 hours) per year. The total annual burden for this provision is estimated at 13.25 hours (53 State agencies × 1 record per State agency × 0.25 hours = 13.25 hours). This burden estimate is consistent with the prior submission for this activity.

There are no new recordkeeping or third-party disclosure requirements resulting from the final rule, and there have been no other changes to this recordkeeping requirement since the Department last consulted with State agencies on the estimate.

The full burden estimates are shown in the chart below:

BILLING CODE 3410-30-P

ER18NO24.037

ER18NO24.038

BILLING CODE 3410-30-C

Estimated Number of Respondents:

53 State Agencies.

Estimated Frequency of Response:

5.19 (first year), 2.51 (subsequent years).

Estimated Total Annual Responses:

275 (first year), 133.20 (subsequent years).

Estimated Time per Response:

24.29 hours (first year), 15.90 hours (subsequent years).

Estimated Total Annual Burden Hours:

6,680 (first year), 2,118 (subsequent years).

E-Government Act Compliance

The Department is committed to complying with the E-Government Act, 2002, to promote the use of the internet and other information technologies to provide increased opportunities for citizen access to Government information and services, and for other purposes.

List of Subjects in 7 CFR Part 273

Administrative practice and procedure, Claims, Employment, Food stamps, Fraud, Government employees, Grant programs—social programs, Supplemental Security Income, Wages.

Accordingly, 7 CFR part 273 is amended as follows:

PART 273—CERTIFICATION OF ELIGIBLE HOUSEHOLDS

1. The authority citation for part 273 continues to read as follows:

Authority:

7 U.S.C. 2011-2036.

2. In § 273.9, revise paragraphs (d)(6)(ii)(C) and (d)(6)(iii) to read as follows:

§ 273.9

Income and deductions.

(d) * * *

(6) * * *

(ii) * * *

i.e.,

the operation of air conditioning systems or room air conditioners); electricity or fuel used for purposes other than heating or cooling; water; sewerage; well installation and maintenance; septic tank system installation and maintenance; garbage and trash collection; all service fees required to provide service for one telephone, including, but not limited to, basic service fees, wire maintenance fees, subscriber line charges, relay center surcharges, 911 fees, and taxes; service fees associated with basic internet connection, including, but not limited to, monthly subscriber fees (

i.e.,

the base rate paid by the household each month in order to receive service, which may include high-speed internet), taxes and fees charged to the household by the provider that recur on monthly bills, and the cost of one modem rental; and fees charged by the utility provider for initial installation of the utility. One-time deposits cannot be included.

(iii)

Standard utility allowances.

(A) A State agency may use standard utility allowances (standards) in place of actual costs in determining a household's excess shelter deduction. The State agency may use different types of standards but cannot allow households the use of two standards that include the same expense. The State agency may vary the standards by factors such as household size, geographical area, or season. Only utility costs identified in paragraph (d)(6)(ii)(C) of this section may be used in developing standards described in paragraphs (d)(6)(iii)(A)(

) through (

) of this section. The following standards are allowable:

(

) An individual standard for each type of utility expense;

(

) A standard utility allowance for all utilities that includes heating or cooling costs (HCSUA); and

(

) A limited utility allowance (LUA) that includes electricity and fuel for purposes other than heating or cooling, water, sewerage, well and septic tank installation and maintenance, and garbage or trash collection. The LUA may also include telephone and/or internet costs. The LUA must include expenses for at least two utilities.

(B) The State agency must review the standards annually and make adjustments to reflect changes in costs, rounded to the nearest whole dollar. State agencies must provide the amounts of standards to FNS annually and submit methodologies to FNS for approval when the methodologies are developed or changed.

(C) The State agency must submit for FNS approval their methodologies at least every five years. Methodology submissions must incorporate any revisions necessary to demonstrate that the baseline expenditure data and underlying methodology reflect recent trends and changes. State agencies' methodologies must:

(

) Reflect the entire State or geographic area the SUA covers;

(

) Use data sourced from utility providers or similarly reliable source;

(

) Reflect expenses incurred by low-income households;

(

) Distinguish if the utility is for heating or cooling, if applicable; and

(

) Reflect residential utility expenses.

(D) A standard with a heating or cooling component must be made available to the following households:

(

) Households that incur heating or cooling expenses separately from their rent or mortgage;

(

) Households in rental housing who are billed by their landlords on the basis of individual usage or who are charged a flat rate separately from their rent. However, households in public housing units which have central utility meters and which charge households only for excess heating or cooling costs are not entitled to a standard that includes heating or cooling costs based only on the charge for excess usage, unless the State agency mandates the use of standard utility allowances in accordance with paragraph (d)(6)(iii)(G) of this section; and

(

) Households that receive a payment or on behalf of which a payment was made under the Low Income Home Energy Assistance Act of 1981 (LIHEAA) or other similar energy assistance program, if in the current month or in the immediately preceding 12 months and such payment was greater than $20 annually.

(

) Other similar energy assistance programs are separate home energy assistance programs designed to provide heating or cooling assistance through a payment received by or made on behalf of low-income households. State agencies must establish clear and reasonable standards for evaluating whether a program constitutes a similar energy assistance program.

(

) A payment received by a household or made on behalf of a household under LIHEAA or other similar energy assistance program must be quantifiable in order to confer eligibility for the heating and cooling standard utility allowance. A quantifiable payment is one that the State agency quantifies, in dollars. In-kind energy assistance, such as firewood or coal, may be considered an other similar energy assistance program payment if the State agency establishes reasonable procedures for quantifying the payment in a manner that is applied consistently across the caseload.

(

iii

) The State agency shall document the date and receipt of a payment made under LIHEAA or other similar energy assistance program to ensure the payment was received in the current month or the immediately preceding 12 months and exceeds $20 annually.

(

) State agencies shall not consider anticipated receipt of a payment to be an actual payment received under the LIHEAA or other similar energy assistance program when determining a household's eligibility for the HCSUA. However, for purposes of this sub clause, a State agency may consider a payment under the LIHEAA or other similar energy assistance program to be received by the household, or on behalf of the household, if the household is scheduled to receive the payment in the current month.

(

) In a case where a payment is scheduled to be received in the current month and the payment is not actually made within that month, the State agency is responsible for determining whether an overissuance has occurred.

(

) A State agency must grant the HCSUA to individuals who received a qualifying LIHEAP or other payment, regardless of changes in residence or address. Individuals who live in a household that received a qualifying LIHEAP or other payment who subsequently move into a separate household are entitled to receive the HCSUA in their new, separate households.

(

vii

) A household is eligible for the HCSUA if the household lives in a multi-unit dwelling or individual unit and receives a qualifying weatherization program payment. State agencies must develop workable, reasonable procedures to determine how multi-unit dwelling weatherization payments would be quantified for households and must apply those procedures consistently and fairly across the caseload.

(E) A household that has both an occupied home and an unoccupied home is only entitled to one standard.

(F) At initial certification, recertification, and when a household moves, the household may choose between a standard or verified actual utility costs for any allowable expense identified in paragraph (d)(6)(ii)(C) of this section, unless the State agency has opted, with FNS approval, to mandate use of a standard. Households certified for 24 months may also choose to switch between a standard and actual costs at the time of the mandatory interim contact required by § 273.10(f)(1) if the State agency has not mandated use of the standard.

(G)(

) A State agency may mandate use of standard utility allowances for all households with qualifying expenses if the State uses one or more standards that include the costs of heating and cooling and one or more standards approved by FNS that do not include the costs of heating and cooling, and the standards will not result in increased program costs. The prohibition on increasing program costs does not apply to necessary increases to standards resulting from utility cost increases.

(

) If the State agency chooses to mandate use of standard utility allowances, it must use a standard utility allowance that includes heating or cooling costs for residents of public housing units which have central utility meters and which charge the households only for excess heating or cooling costs. The State agency also must not prorate a standard utility allowance that includes heating or cooling costs provided to a household that lives and shares heating or cooling expenses with others.

(

) In a State that chooses this option, households entitled to the standard may not claim actual expenses, even if the expenses are higher than the standard. Households not entitled to the standard may claim actual allowable expenses.

(H) If a household lives with and shares heating or cooling expenses with another individual, another household, or both, the State agency shall not prorate the standard for such households if the State agency mandates use of standard utility allowances in accordance with paragraph (d)(6)(iii)(G) of this section. The State agency may not prorate the SUA if all the individuals who share utility expenses but are not in the SNAP household are excluded from the household only because they are ineligible.

3. In § 273.10, revise paragraph (d)(6) to read as follows:

§ 273.10

Determining household eligibility and benefit levels.

(d) * * *

(6)

Energy assistance payments.

The State agency shall prorate energy assistance payments as provided for in § 273.9(d) over the entire heating or cooling season the payment is intended to cover. Any such prorated energy assistance payments may qualify an individual or household for the HCSUA in more than one heating or cooling season.

Tameka Owens,

Acting Administrator and Assistant Administrator, Food and Nutrition Service.

Note:

The following appendix will not appear in the Code of Federal Regulations.

Appendix A—Regulatory Impact Analysis

I. Statement of Need

The United States Department of Agriculture (the Department) is finalizing this rule, which revises Supplemental Nutrition Assistance Program (SNAP) regulations to expand allowable shelter expenses to include basic internet costs and establish clearer guidelines and requirements for State agencies to follow when developing standard utility allowances (SUAs) to ensure consistency and integrity in the application of SUAs across the country. While the Department is not finalizing the proposed rule's provision standardizing the methodology for calculating SUAs nor establishing a percentile at which they must be calculated, the Department maintains that clearer requirements will improve consistency and integrity in the program, which the Department believes is good governance. This rule also finalizes updates to the treatment of Low-Income Home Energy Assistance Program (LIHEAP) payments or other similar energy assistance program payments, in accordance with amendments made to the Food and Nutrition Act of 2008 by the Agricultural Act of 2014.

Without consistent parameters for SUA methodologies and the data used to calculate SUAs, the Department is concerned that information State agencies use to determine SUAs is outdated and may not reflect low-income households' current utility costs. In a 2017 study, “Methods to Standardize State Standard Utility Allowances” (Holleyman, et al., 2017) (referred to in this analysis as the 2017 SUA Study), the Department found differences in how well State heating and cooling standard utility allowance (HCSUA) values reflected data on utility expenditures among low-income households in each State. These findings persisted in a 2023 update, “Updating Standardized State Heating and Cooling Utility Allowance Values” (Holleyman, et al., 2023) (referred to in this analysis as the 2023 SUA Study). Establishing clearer requirements for how States should use data to establish SUAs is important to ensure SUAs are aligned with current household conditions and that the application of the excess shelter deduction reflects household circumstances and, ultimately, the appropriateness of the benefit level.

II. Summary of Impacts

The Department estimates the total increase in Federal SNAP benefit spending associated with the SUA provisions of the final rule to be approximately $5.4 billion over the five-year period FY 2025-FY 2029, averaging $1.1 billion per year. This represents a 1.34 percent increase in Federal transfers (SNAP benefits) upon full implementation. Effects on Federal transfers are expected to begin in FY 2025. Effects on Federal costs are expected to begin in FY 2025 and are estimated to be approximately $612,000 over the 5-year period FY 2025-FY 2029, averaging about $122,000 annually. Effects on State administrative costs are expected to begin in FY 2025 and are estimated to be approximately $561,000 over the five-year period (an increase of less than 0.01 percent from baseline projections), averaging $112,000 annually.

The Department estimates that approximately 29 percent of SNAP households will see an average 6 percent increase in their monthly SNAP benefit (averaging $15 per month, per household) and 5 percent of SNAP households will see an average 2.6 percent reduction their monthly SNAP benefit (averaging $7 per month, per household). Benefit increases are primarily due to the inclusion of internet service as an allowable shelter expense in SUAs. In addition, a small share of households will experience a benefit gain due to increases in some States' HCSUA values due to new data quality standards and periodic methodology reviews, particularly in States that have not updated their HCSUA methodologies or underlying data in recent

years. Benefit losses are due to expected decreases in some States' HCSUA values due to new data quality standards and periodic methodology reviews, particularly in States that have not updated their HCSUA methodologies or underlying data in recent years. The remaining 66 percent of households will see no change to their SNAP benefit. A very small number of households (less than 0.01 percent of all SNAP households) are estimated to lose benefits as a result of the final rule, losing an average of $30 in monthly benefits. The rule is also expected to result in an increase in ongoing administrative burden for most State SNAP agencies.

The final rule will not affect household burden.

This rule will increase the existing burden currently approved (OMB Control Number 0584-0496; Expiration Date: July 31, 2026).

The final rule's effects are summarized in the following table (Table 1). Increases in SNAP benefit payments are categorized as transfers in the accounting statement (Table 2); increases in administrative burden for States are categorized as costs; and Federal costs to administer the provisions of the final rule are categorized as Federal costs. Regarding the LIHEAP provisions of the final rule, which finalize how LIHEAP payments are considered to confer eligibility for the HCSUA, the Department notes that States were required by statute to implement the Agricultural Act of 2014's change related to LIHEAP immediately for any household whose initial certification period began on or after March 10, 2014. For households that were already certified for SNAP, States had some flexibility in determining when to implement this change

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