Food Stamp Program: Miscellaneous Provisions of the Food, Agriculture, Conservation, and Trade Act Amendments of 1991 and Earned Income Tax Credit Amendment

SUMMARY: This rule implements several legislative provisions from the

Food, Agriculture, Conservation, and Trade Act Amendments of 1991, the

Mickey Leland Childhood Hunger Relief Act of 1993, and the Food Stamp

Program Improvements Act of 1994. It finalizes provisions in a proposed

rule published in the Federal Register on November 1, 1993. The

provisions affect categorical eligibility of households receiving

general assistance, monthly reporting and retrospective budgeting, and

earned income tax credit resource exclusions. This rule also makes

technical corrections to the Food Stamp Program regulations concerning

waivers of retrospective budgeting requirements, self-employment

income, verification, State agency action on reports and changes in

reporting and budgeting status.

DATES: Effective Dates: This rule is effective October 28, 1994, except

that 7 CFR 273.8(e)(12)(i) is effective January 1, 1991; 7 CFR

273.8(e)(12)(ii) is effective September 1, 1994; 7 CFR 273.21(b) is

effective March 25, 1994; and the amendments to 7 CFR 273.2(j) are

effective February 1, 1992.

Implementation Dates: The amendments made by this rule must be

implemented October 28, 1994, except that 7 CFR 273.8(e)(12)(i) must be

implemented January 1, 1991; 7 CFR 273.8(e)(12)(ii) must be implemented

September 1, 1994; 7 CFR 273.21(b) must be implemented March 25, 1994;

and the amendments to 7 CFR 273.2(j) must be implemented February 1,

1992.

FOR FURTHER INFORMATION CONTACT:

Judith M. Seymour, Supervisor, Eligibility and Certification

Regulations Section, Certification Policy Branch, Program Development

Division, Food Stamp Program, Food and Nutrition Service, USDA, 3101

Park Center Drive, Alexandria, Virginia 22302 or by telephone at (703)

305-2496.

SUPPLEMENTARY INFORMATION:

Executive Order 12866

This final rule has been determined to be not significant for

purposes of Executive Order 12866 and therefore has not been reviewed

by the Office of Management and Budget.

Executive Order 12778

This final rule has been reviewed under Executive Order 12778,

Civil Justice Reform. This rule is intended to have preemptive effect

with respect to any state or local laws, regulations, or policies which

conflict with its provisions or which would otherwise impede its full

implementation. This rule is not intended to have retroactive effect

unless so specified in the ``Effective Date'' paragraph of this

preamble. Prior to any judicial challenge to the provisions of this

rule or the application of its provisions all applicable administrative

procedures must be exhausted. In the Food Stamp Program the

administrative procedures are as follows: (1) for program benefit

recipients--state administrative procedures issued pursuant to 7 U.S.C.

s2020(e)(10) and 7 CFR 273.15; (2) for State agencies--administrative

procedures issued pursuant to 7 U.S.C. s2023 set out at 7 CFR 276.7

(for rules related to non-quality control (QC) liabilities) or part 284

(for rules related to QC liabilities); (3) for retailers and

wholesalers--administrative procedures issued pursuant to 7 U.S.C.

s2023 set out at 7 CFR 278.8.

Executive Order 12372

The Food Stamp Program is listed in the Catalog of Federal Domestic

Assistance under No. 10.551. For the reasons set forth in the final

rule and related Notice(s) to 7 CFR part 3105, subpart V (48 FR 29115;

June 24, 1983; or 48 FR 54317, December 1, 1983, as appropriate), this

Program is excluded from the scope of Executive Order 12372 which

requires intergovernmental consultation with State and local officials.

Regulatory Flexibility Act

This final rule has also been reviewed with regard to the

requirements of the Regulatory Flexibility Act of 1980 (Pub. L. 96-354,

94 Stat. 1164, September 19, 1980). Ellen Haas, Assistant Secretary for

Food and Consumer Services, has certified that this rule would not have

a significant economic impact on a substantial number of small

entities. The changes would affect food stamp applicants and recipients

and State and local agencies which administer the Food Stamp Program.

Paperwork Reduction Act

In accordance with the Paperwork Reduction Act of 1980 (44 U.S.C.

3507), the reporting and recordkeeping requirements associated with

monthly reporting and retrospective budgeting (MRRB) have been approved

by the Office of Management and Budget (OMB) under OMB No. 0584-0064.

The provisions in this final rule are related to certification and

MRRB, but they do not impose additional reporting or recordkeeping

requirements.

Public Comment

The amendment to 7 CFR 273.21(b) discussed in this rule is being

adopted as a final rule without prior notice and comment. This

provision of the Food Stamp Program regulations responds to the

direction of Congress in Section 101(a) of the Food Stamp Program

Improvements Act of 1994 (Pub. L. 103-225), 7 U.S.C. 2015(c)(1),

prohibiting State agencies from requiring monthly reporting for

households residing on Indian reservations unless such a requirement

was in existence on March 25, 1994, the date Pub. L. 103-225 was

enacted. Because of the nondiscretionary nature of Section 101(a) of

Pub. L. 103-225, Ellen Haas, Assistant Secretary for Food and Consumer

Services, has determined, pursuant to 5 U.S.C. 553, that public comment

on this provision prior to implementation is unnecessary as it would

serve no practical purpose.

Background

On December 4, 1991, the Department published final rulemakings

entitled ``Categorical Eligibility and Application Provisions of the

Mickey Leland Memorial Domestic Hunger Relief Act'' (56 FR 63605) and

``Monthly Reporting and Retrospective Budgeting Amendments and Mass

Changes'' (56 FR 63597). These rulemakings made changes to Food Stamp

Program requirements concerning categorical eligibility and monthly

reporting and retrospective budgeting (MRRB). On December 13, 1991, the

Food, Agriculture, Conservation, and Trade Act Amendments of 1991 (Pub.

L. 102-237 (105 Stat. 1818)) (FACT amendments) were enacted. That

legislation required modification of provisions implemented in the

December 4, 1991, rulemakings. In addition, various provisions of the

Omnibus Budget Reconciliation Act of 1990 (Pub. L. 101-508) and Section

13913 of the Mickey Leland Childhood Hunger Relief Act, Chapter 3,

Title XIII of the Omnibus Budget Reconciliation Act of 1993, Pub. L.

103-66 (1993 Leland Act), modified existing Food Stamp Program

requirements concerning the treatment of Earned Income Tax Credits

(EITC). Proposed rules to implement these legislative changes were

published at 58 FR 58458 on November 1, 1993 and provided the public

with 90 days to comment on the proposed provisions.

In addition, on January 20, 1994, the Department held a public

hearing at the FNS Headquarters office in Alexandria, Virginia. The

purpose of the hearing was to provide for a public dialogue among the

State agencies, advocacy groups, and other interested parties

concerning the provisions of the 1993 Leland Act. The Department

received eight written comments on the proposed provisions, seven from

State agencies and one from a local agency. Two comments were received

on the EITC provision (Section 13913 of the 1993 Leland Act) at the

public hearing. The concerns raised by the commenters are discussed

below. For additional information on the provisions discussed in this

rule, the reader should refer to the preamble of the proposed rule, 58

FR 58458-61.

Categorical Eligibility for Recipients of General Assistance (GA)

Section 5(a) of the Food Stamp Act of 1977, as amended (the Act), 7

U.S.C. 2014(a), provides that the recipients of certain types of GA

payments are categorically eligible for Food Stamp Program benefits.

That is, receipt of a payment from a qualifying program entitles the

recipient to food stamp eligibility regardless of other income or

resources.

Under current regulations at 7 CFR 273.2(j)(4)(i), a GA program is

considered appropriate for categorical eligibility if it:

1. Has income and resource eligibility standards either separate

from or included in the payment standard which do not exceed those of

the food stamp, Aid to Families with Dependent Children (AFDC) or SSI

programs;

2. Provides GA benefits as defined in 7 CFR 271.2; and

3. Provides assistance that is not limited to emergency assistance.

Section 902 of the FACT amendments amended Section 5(a) of the Act

to change the criteria for GA programs that confer categorical

eligibility. Section 5(a) now specifies that, with certain exceptions,

households shall be eligible for food stamps if each member receives

benefits under a State or local GA program that complies with the

standards established by the Secretary for ensuring that the program is

based on income criteria comparable to or more restrictive than those

under subsection 5(c)(2) of the Food Stamp Act and ``not limited to

one-time emergency payments that cannot be provided for more than one

month.'' Section 5(c)(2) contains the gross income limit of 130 percent

of the poverty line, as defined in section 673(2) of the Community

Services Block Grant Act (42 U.S.C. 9902(2)). Congress did not

establish any resource standard for GA programs suitable for conferring

categorical eligibility.

The November 1, 1993, rulemaking proposed to amend 7 CFR

273.2(j)(4)(i) to provide that a GA program must have the following

characteristics in order for recipients of the GA program's benefits to

be considered categorically eligible for food stamp benefits: 1) the

program must have income eligibility standards at least as restrictive

as the food stamp gross income limit specified in 7 CFR 273.9(a)(1); 2)

the program must provide GA benefits as they are defined in the

regulations at 7 CFR 271.2; and 3) the program must also provide

benefits that are not limited to one-time emergency payments.

The Department received three comments on this proposal, two

supporting it and one requesting a clarification about the

implementation date for local GA programs. The regulatory provisions

concerning GA categorical eligibility were effective for State GA

programs on February 1, 1992, and for local GA programs on August 1,

1992. Subsequently, Section 902 of the FACT amendments concerning GA

programs was made effective for both State and local GA programs on

February 1, 1992 by Section 1101(d)(1) of the FACT amendments.

Accordingly, the Department is adopting as proposed the modifications

to provisions at 7 CFR 273.2(j)(4)(i).

Monthly Reporting and Retrospective Budgeting--Households Residing on

Indian Reservations

Section 1723 of the 1993 Leland Act amended Section 6(c)(1)(A)(i)

of the Act, 7 U.S.C. 2015(c)(1)(A)(i), to exempt households residing on

Indian reservations from MRRB effective February 1, 1992. The

Department implemented Section 1723 in a final rule amending 7 CFR

273.21(b)(4) on December 4, 1991, 56 FR 63605.

Since that time, several pieces of legislation have been enacted

that affect this provision. Implementation of this provision was

initially postponed by Section 908 of the FACT amendments until April

1, 1993, and then by Public Law 103-11 (107 Stat 41) until February 1,

1994. In the November 1, 1993, rulemaking, the Department proposed at

58 FR 58459 to revise 7 CFR 272.1(g)(121)(ii) to delete the requirement

to implement 7 CFR 273.21(b)(4) by February 1, 1992. Thus, proposed 7

CFR 272.1(g)(121)(ii) addressed only the implementation of provisions

concerning the design of the monthly report form. A new implementation

date of February 1, 1994, was proposed for the mandatory exclusion of

households residing on Indian reservations. Following publication of

the proposed rule, Section 1 of Public Law 103-205 was enacted on

December 17, 1993, again postponing implementation of the prohibition

concerning MRRB on Indian reservations until March 15, 1994. State

agencies were notified of this delay through an implementing memorandum

dated January 6, 1994.

On March 25, 1994, the Food Stamp Program Improvements Act of 1994

(Pub. L. 103-225 (108 Stat. 106)) was enacted. Section 101(a) of that

law modified the prohibition against monthly reporting for households

residing on Indian reservations that had been added to section

6(c)(1)(A) of the Act (7 U.S.C. 2015(c)(1)), by Section 1723 of the

Leland Act. Section 6(c)(1)(C)(iii) now directs that State agencies

which were not requiring households residing on Indian reservations to

submit monthly reports on March 25, 1994, are prohibited from

establishing monthly reporting requirements for these households. These

households may be retrospectively budgeted. State agencies that were

using monthly reporting on March 25, 1994, for households residing on

Indian reservations may continue to do so if certain enumerated

conditions are met. In this final rule, the Department is addressing

the prohibition against establishing new monthly reporting for

households residing on Indian reservations if no monthly reporting

system was in place on March 25, 1994. The Department is including the

prohibition in this rulemaking as a final rule without prior notice and

comment because it is nondiscretionary and, therefore, consistent with

5 U.S.C. 553, prior notice and comment would serve no practical

purpose. The provisions in Section 101(a) of Pub. L. 103-225 dealing

with the one-month grace period afforded reservation households for

submitting required reports, 7 U.S.C. 2015(c)(1)(C) (i) and (ii), will

be addressed in a future proposed rulemaking.

The Department received one comment in response to the November 1,

1993, proposed rule on this subject that is relevant despite the change

in law brought about by Section 101(a) of Pub. L. 102-225. The

commenter requested clarification of what is meant by ``residing on an

Indian reservation.'' This provision applies to any household residing

within the boundaries of an Indian reservation. As defined in Section

3(j) of the Act (7 U.S.C. 2012(j)), ``reservation'' means the

geographically determined area or areas over which a tribal

organization (as the term is defined in subsection (p)) exercises

governmental jurisdiction. Section 3(p) of the Act defines a tribal

organization as ``the recognized governing body of an Indian tribe

(including the tribally recognized intertribal organization of such

tribes), as the term ``Indian tribe'' is defined in the Indian Self-

Determination Act (25 U.S.C. 450b(b)), as well as any Indian tribe,

band, or community holding a treaty with a State government.''

In this final rule, the Department is adopting as proposed on

November 1, 1993, the revision to 7 CFR 272.1(g)(121)(ii) to delete the

requirement to implement 7 CFR 273.21(b)(4) by February 1, 1992. The

Department is not adopting the parenthetical phrase ``(beginning

February 1, 1994)'' as proposed in 7 CFR 273.21(b). In order to

implement the prohibition barring a State agency from establishing

monthly reporting on Indian reservations if it was not doing so on

March 25, 1994, the Department is revising 7 CFR 273.21(b) to prohibit

establishing after March 25, 1994 any monthly reporting system for

households residing on Indian reservations.

Monthly Reporting and Retrospective Budgeting--Prorating Supplements

for New Household Members

The final rulemaking, ``Monthly Reporting and Retrospective

Budgeting Amendments and Mass Changes'' (56 FR 63597, December 4,

1991), at 7 CFR 273.21(f)(1)(iii)(D), authorized a State agency, at its

option, to provide a prorated supplement for a new household member in

the month for which the change is reported for retrospectively budgeted

households, if the State agency provided a prorated supplement for

AFDC. The provision was effective January 3, 1992, and was to be

implemented by July 1, 1992. This provision was a technical amendment

that allowed State agencies to treat new household members consistent

with its treatment of new household members for AFDC.

Section 910(1) of the FACT amendments amended Section 9(c)(1) of

the Act, 7 U.S.C. 2017(c)(1), to prohibit proration of benefits during

the certification period except for the initial month. In a manner that

would not conflict with Section 910(1), the Department wanted to allow

State agencies the option to provide a supplement for a new household

member in the month the change is reported. Therefore, the Department

proposed on November 1, 1993, to revise 7 CFR 273.21(f)(1)(iii)(D) to

allow State agencies the option to provide a supplement for the entire

month for a new household member for the month in which the change was

reported

The Department received four comments on the proposal, two

supporting it and two requesting clarification. The Department has

revised the language of the proposed revision of 7 CFR

273.21(f)(1)(iii)(D) to make it clear that State agencies are being

given an option to add a new household member in the month the change

is reported in a two-month system (the processing month) or the first

day of the issuance month following the month the report is received.

If the State agency opts to add a new household member in the

processing month, a full supplement for that member shall be provided,

rather than the prorated supplement specified in the December 4, 1991,

rulemaking concerning MRRB. Accordingly, with the one change noted

above, the proposed revision of 7 CFR 273.21(f)(1)(iii)(D) is adopted

as final.

Earned Income Tax Credits

Section 11111(b) of the Omnibus Budget Reconciliation Act of 1990

(OBRA 1990) (Pub. L. 101-508) excluded an Earned Income Tax Credit

(EITC) received as a lump sum or in payments under section 3507 of the

Internal Revenue Code from income and resource consideration for the

individual and his/her spouse for the month of its receipt and the

following month for food stamp and certain housing programs purposes.

Section 402 of the Hunger Prevention Act of 1988 (Pub. L. 100-435)

amended Section 5(d)(14) of the Act, 7 U.S.C. 2014(d)(14), to exclude

EITC payments from income. OBRA 1990 mandated that the exclusion of

EITC payments from resources be implemented January 1, 1991. The

Department proposed in the November 1, 1993, rulemaking to add a

paragraph (xii) to 7 CFR 273.8(e)(11) to exclude any Federal EITC

received as a lump sum or as payments under section 3507 of the

Internal Revenue Code from resource consideration for the month of its

receipt and the following month beginning January 1, 1991. The

Department did not receive any comments on this proposal. Therefore,

the Department is adopting as final the proposal to exclude from

resources any Federal EITC for the month of its receipt and the

following month. However, as discussed below, the exclusion will

replace the provision that is currently located at 7 CFR 273.8(e)(12).

Section 13913 of the 1993 Leland Act amended Section 5(g)(3) of the

Food Stamp Act, 7 U.S.C. 2014(g)(3), to extend the exclusion of any

household member's EITC as a resource for 12 months, if the household

was participating at the time of the receipt of the EITC and provided

the household remains on the program continuously during that time. In

accordance with Section 13193 of the 1993 Leland Act, the Department

proposed on November 1, 1993, to modify 7 CFR 273.8(e)(11)(xii) to

exclude the EITC payment received by a participating household

consistent with the conditions of exclusion specified in Section 13913

of the 1993 Leland Act, beginning September 1, 1994. The Department

also proposed that continuous participation include breaks in

participation of one month or less due to administrative reasons, such

as delayed recertifications or missing or late monthly reports, as

recommended in the legislative history at 139 Cong. Rec. H6032, August

4, 1993.

The Department received five comments on this provision. One

commenter requested the Department to clarify whether the exclusion

applied to State and local EITC payments as well as the Federal EITC.

Unlike the two-month exclusion of the EITC for applicants and

participants enacted by Section 11111(b) of OBRA 1990, the 12-month

exclusion for participants provided for in Section 13913 of the 1993

Leland Act is not restricted to the Federal EITC. The proposed

regulatory language has been revised to reflect that the 12-month

exclusion applies to any EITC while the two-month exclusion applies

only to the Federal EITC. Two commenters requested that the exclusion

be a total exclusion, not limited to 12 months. As the law specifically

establishes a 12-month exclusion, the Department is unable to make the

exclusion permanent. One commenter requested that the continuous

participation provision be eliminated. That commenter also requested

two clarifications, (1) whether the month of receipt was the first

month of the exclusion and (2) whether breaks resulting from one month

suspensions for ineligibility were included in the administrative

reasons. The final commenter requested that ``continuous

participation'' be modified to allow for breaks in participation of

longer than one month. For purposes of this exclusion, the month of

receipt would be the first month of the exclusion. As ``continuous

participation'' is required by section 13913 of the Leland Act, that

requirement cannot be eliminated. House Report No. 103-111 (May 23,

1993), p. 29, states that ``[i]t is not intended that households that

reapply within one month of their termination from the program be

denied this exclusion.'' Further, it is evident that Congress intended

that the only time a break in participation would not result in the

loss of the exclusion is when the break is for administrative reasons

and provided the household continues to meet the income and resource

eligibility criteria (Congressional Record, H6032, August 4, 1993). The

Department believes the intent of Congress was to continue to allow the

exclusion for administrative reasons only and for one month only.

Consequently, the Department is adopting as proposed the requirement

that the household participate continuously except for breaks of one

month or less resulting from administrative reasons.

The Department proposed that the 12-month EITC exclusion be located

in the Program regulations together with the two-month EITC exclusion

at 7 CFR 273.8(e)(11)(xii). In the final rule we are placing both EITC

exclusions in 7 CFR 273.8(e)(12). The two-month exclusion is designated

7 CFR 273.8(e)(12)(i), and the 12-month exclusion is at 7 CFR

273.8(e)(12)(ii). It is necessary to designate the exclusions

separately because the two-month exclusion is in the Internal Revenue

Code while the 12-month exclusion is in the Food Stamp Act, the two

exclusions have different implementing dates, and the two exclusions

affect different categories of recipients. Therefore, in this final

rule, the Department is removing an obsolete exclusion and adding new 7

CFR 273.8(e)(12) (i) and (ii).

Miscellaneous Technical Changes

Budgeting Waivers--7 CFR 273.21(a)(4)

Section 273.21(a)(4) of the regulations allows FNS to approve

waivers of the Food Stamp Program budgeting requirements to conform

food stamp budgeting procedures to AFDC's budgeting procedures.

However, this section has not been updated to incorporate the

additional households excluded from retrospective budgeting that are

listed in 7 CFR 273.21(b). In order to conform 7 CFR 273.21(a)(4) to 7

CFR 273.21(b), the Department proposed to revise the language in 7 CFR

273.21(a)(4) to prohibit waivers under 7 CFR 273.21(a)(4) for all

households in 7 CFR 273.21(b). One comment was received supporting the

proposal. We are adopting the provision at 7 CFR 273.21(a)(4) as

proposed.

Self-Employment Income--7 CFR 273.21(f)(2)(i)

The Department proposed to revise 7 CFR 273.21(f)(2)(i) to require

that self-employment income be budgeted such that the income would not

affect more benefit months than the number of months over which it was

prorated. This proposal would have corrected an omission in the Monthly

Reporting and Retrospective Budgeting Amendments and Mass Changes final

rulemaking (56 FR 63597) published December 4, 1991. Under the

proposal, prorated self-employment income would be treated in the same

fashion that prorated contract and prorated nonexcluded educational

income is treated. One comment opposing the provision was received.

Despite the opposing comment, the Department is adopting the provision

because it makes the treatment of prorated self-employment income

similar to other prorated income and more equitably treats households

with such income.

Prorated contract and nonexcluded educational income are required

to be budgeted retrospectively. In response to a request from a State

agency, we proposed at 7 CFR 273.21(f)(2) (i), (ii), and (iii) to

require that prorated self-employment, contract, and nonexcluded

educational income be prospectively budgeted, provided that the income

not affect more benefit months than the number of months in the period

over which it is prorated. We indicated in the November 1, 1993,

proposed rule that we were interested in hearing from States that are

using retrospective budgeting as to whether they prefer to

retrospectively or prospectively budget these types of income. The

Department received eight comments on this proposal. Six commenters

preferred that we continue to require these types of income to be

retrospectively budgeted because continuous regulatory changes are

greater problems than individual case problems presented by

retrospective budgeting. One State agency requested that we switch to

prospective budgeting and described one particular problem that

retrospective budgeting created. One commenter recommended that we give

State agencies the option to prospectively or retrospectively budget

these types of income. One commenter who preferred to have the income

continue to be retrospectively budgeted requested that State agencies

be given the option to prospectively or retrospectively budget such

income, rather than adopt the proposal to require prospective

budgeting. The Department has considered the comments and has decided

to revise the proposed provision to permit State agencies to opt to

either prospectively or retrospectively budget such income. Such option

must be made on a State-wide, not a case-by-case, basis. The Department

has revised 7 CFR 273.21(f)(2) (i), (ii), and (iii) accordingly to

allow State agencies to prorate self-employment, contract, and

nonexcluded educational income either prospectively or retrospectively.

For consistency with the prorated income proposal, the Department

proposed at 7 CFR 273.21(f)(2)(iv) that prorated deductible expenses be

budgeted prospectively. Again for consistency, the Department has

changed the provision at 7 CFR 273.21(f)(2)(iv) to allow State agencies

the option to either prospectively or retrospectively budget prorated

deductible expenses. State agencies may choose a different budgeting

procedure for deductions than income. However, such option must be made

on a State-wide, not a case-by-case, basis.

Verification--7 CFR 273.21(i)

The Department proposed in 7 CFR 273.21(i) to allow State agencies

to request verification for any item on the monthly report that has

changed or appears questionable. The Department also sought comments on

an alternate proposal in the November 1, 1993 proposed rule. That

proposal would allow State agencies to request that verification be

submitted with the monthly report form for any item that has changed or

can be expected to change on a frequent basis. The Department received

five comments, two supporting the option in the rule and two supporting

the alternate proposal in the preamble. One commenter supported both

provisions under the aegis of increased State agency latitude. As there

was no consensus of option among the commenters, the Department has

adopted the provision as proposed in 7 CFR 273.21(i) to allow State

agencies to request verification for any item on the monthly report

that has changed or appears questionable.

State Agency Action on Reports--7 CFR 273.21(j)(3)

The Department proposed to revise the first sentence in 7 CFR

273.21(j)(3)(iii) to clarify that when an item is required to be

verified by the State agency and the household fails to provide that

verification, the actions in (A) through (E) will be taken as

appropriate. One comment was received supporting the proposal.

Accordingly, the provision at 7 CFR 273.21(j)(3)(iii) is being adopted

as proposed.

Changes in Reporting/Budgeting Status--7 CFR 273.21(r)

The current regulatory language at 7 CFR 273.21(r)(2)(i) states

that the first month of prospective budgeting would be the first month

that the household was no longer required to file a monthly report. The

Department proposed to revise 7 CFR 273.21(r)(2)(i) to state that the

household's benefits shall be prospectively budgeted no later than the

first issuance month for which no monthly report was submitted. Three

commenters supported the proposal. The provision at 7 CFR

273.21(r)(2)(i) is being adopted as proposed.

Additional Changes

For clarification, the Department proposed to delete the provision

on verification from 7 CFR 273.9(d)(5)(i), adding a reference to 7 CFR

273.2(f)(1), and adding the verification provisions for homeless

households to 7 CFR 273.2(f)(1). Two commenters supported the proposal.

The provisions at 7 CFR 273.9(d)(5)(i) and 7 CFR 273.2(f)(1) are being

adopted as proposed.

The Department proposed technical corrections and revisions to 7

CFR 272.1(g)(121)(iii), 7 CFR 273.2(j) and (j)(4)(iv)(A), 7 CFR

273.9(d)(5)(i) and (ii), 7 CFR 273.9(d)(6)(i)(A) and (ii)(C), 7 CFR

273.21(r)(1)(i) and (2)(ii), and 7 CFR 273.21(s). The Department

received one comment supporting these technical corrections and

revisions. The corrections to 7 CFR 273.21(r) have already been made by

the Federal Register. We are adopting the other provisions as proposed.

Implementation

The Department did not receive any comments on the implementation

schedule as proposed. The major provisions have implementation dates

required by law. The remaining changes are mostly technical in nature.

The Department proposed that those provisions without legislatively-

mandated effective dates would effective and must be implemented on the

effective date of the final rule.

Accordingly, this action amends 7 CFR 272.2(g) to add a new

paragraph to address implementation requirements for this final action.

The two-month EITC provision at 7 CFR 273.8(e)(12)(i) was effective and

must be implemented according to statute retroactive to January 1,

1991. The 12-month EITC provision at 7 CFR 273.8(e)(12)(ii) will be

effective and must be implemented on September 1, 1994. The prohibition

at 7 CFR 273.21(b) against establishing new monthly reporting

requirements for households residing on Indian reservations if no

monthly reporting system was in place on March 25, 1994, was effective

and should have been implemented on that date. The provision in 7 CFR

273.2(j) concerning categorical eligibility for GA recipients was

effective and must be implemented retroactive to February 1, 1992. The

remaining provisions are effective and must be implemented October 28,

1994.

State agencies were required to implement certain provisions of

this final rule by FNS implementing memoranda as follows:

1. The two-month EITC provision at 7 CFR 273.8(e)(12)(i) adopts the

corresponding provisions of the FNS implementing memorandum dated

February 22, 1991. For the period of January 1, 1991, through March 31,

1991, quality control reviewers did not code errors if the eligibility

worker had failed to implement the EITC resource exclusion for the

sample month. Quality control variances for this provision were

excluded for 60 days from April 1, 1991 in accordance with 7 CFR

275.12(d)(12).

2. The provision at 7 CFR 273.2(j) concerning categorical

eligibility for GA recipients adopts the corresponding provisions of

the FNS implementing memorandum dated December 27, 1991. Quality

control variances for this provision were excluded for 60 days from the

required implementation date of February 1, 1992, in accordance with 7

CFR 273.12(d)(12).

3. The provision at 7 CFR 273.21(b) against establishing new

monthly reporting requirements for households residing on Indian

reservations adopts the corresponding provisions of the FNS

implementing memorandum dated March 31, 1994. Quality control variances

for this provision are excluded for 120 days from the required

implementation date, in accordance with 7 CFR 275.12(d)(12), as

modified by 7 U.S.C. 2025(c)(3)(A).

No other variance exclusions are applicable for these provisions.

Quality control variances resulting from implementation of the

remaining provisions of this final rule will be excluded for 120 days

from the required implementation date, in accordance with 7 CFR

275.12(d)(12), as modified by 7 U.S.C. 2025(c)(3)(A).

List of Subjects

7 CFR Part 272

Alaska, Civil rights, Food stamps, Grant programs-social programs,

Reporting and recordkeeping requirements.

7 CFR Part 273

Administrative practice and procedures, Aliens, Claims, Food

stamps, Grant programs-social programs, Penalties, Reporting and

recordkeeping requirements, Social security, Students.

Accordingly, 7 CFR Parts 272 and 273 are amended as follows:

1. The authority citation of parts 272 and 273 continues to read as

follows:

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

PART 272--REQUIREMENTS FOR PARTICIPATING STATE AGENCIES

2. In Sec. 272.1:

a. Paragraph (g)(121)(ii) is revised.

b. Paragraph (g)(121)(iii) is amended by adding the word ``by''

after the word ``implemented''.

c. A new paragraph (g)(137) is added. The revision and addition

read as follows:

Sec. 272.1 General terms and conditions

* * * * *

(g) Implementation. * * *

(121) Amendment No. 336. * * *

(ii) The delegation of the responsibility for design of the monthly

report from (Sec. 273.21(h)(3) and Sec. 273.21(j)(1)(ii) of this

chapter) must be implemented by February 1, 1992.

* * * * *

(137) Amendment No. 350. The provisions of Amendment No. 350 are

effective and must be implemented as follows:

(i) The provision at Sec. 273.8(e)(12)(i) of this chapter is

effective and must be implemented according to statute retroactive to

January 1, 1991.

(ii) The provision at Sec. 273.8(e)(12)(ii) of this chapter will be

effective and must be implemented on September 1, 1994.

(iii) The provision at Sec. 273.21(b) of this chapter against

establishing new monthly reporting requirements for households residing

on Indian reservations if no monthly reporting system was in place on

March 25, 1994 is effective and must be implemented according to

statute retroactive to March 25, 1994.

(iv) The provision in Sec. 273.2(j) of this chapter concerning

categorical eligibility for GA recipients is effective and must be

implemented according to statute retroactive to February 1, 1992.

(v) The remaining provisions are effective and must be implemented

October 28, 1994.

PART 273--CERTIFICATION OF ELIGIBLE HOUSEHOLDS

3. In Sec. 273.2:

a. A new paragraph (f)(1(xi) is added.

b. The title of paragraph (j)(2) is revised.

c. Paragraph (j)(4)(i) is revised; and

d. Paragraph (j)(4)(iv)(A) is amended by removing the word

``eligible'' and adding the word ``ineligible'' in its place. The

addition and revisions read as follows:

Sec. 273.2 Application processing.

* * * * *

(f) Verification. * * *

(1) Mandatory Verification. * * *

(xi) Shelter costs for homeless households. Homeless households

claiming shelter expenses greater than the standard estimate of shelter

expenses (as defined in Sec. 273.9(d)(5)(i)) must provide verification

of these shelter expenses. If a homeless household has difficulty in

obtaining traditional types of verification of shelter costs, the

caseworker shall use prudent judgment in determining if the

verification obtained is adequate. For example, if a homeless

individual claims to have incurred shelter costs for several nights and

the costs are comparable to costs typically incurred by homeless people

for shelter, the caseworker may decide to accept this information as

adequate information and not require further verification.

* * * * *

(j) * * *

(2) Categorically eligible PA and SSI households. * * *

* * * * *

(4) * * *

(i) Certification of qualifying programs. Recipients of benefits

from programs that meet the criteria in paragraphs (j)(4)(i)(A) through

(j)(4(i)(C) of this section shall be considered categorically eligible

to receive benefits from the Food Stamp Program. If a program does not

meet all of these criteria, the State agency may submit a program

description to the appropriate FNS regional office for a determination.

The description should contain, at a minimum, the type of assistance

provided, the income eligibility standard, and the period for which the

assistance is provided.

(A) The program must have income standards which do not exceed the

gross income eligibility standard in Sec. 273.9(a)(1). The rules of the

GA program apply in determining countable income.

(B) The program must provide GA benefits as defined in Sec. 271.2

of this part.

(C) The program must provide benefits which are not limited to one-

time emergency assistance.

* * * * *

4. In Sec. 273.8, paragraph (e)(12) is revised to read as follows:

Sec. 273.8 Resource eligibility standards.

* * * * *

(e) Exclusions from resources. * * *

(12) Earned income tax credits shall be excluded as follows:

(i) A Federal earned income tax credit received either as a lump

sum or as payments under section 3507 of the Internal Revenue Code for

the month of receipt and the following month for the individual and

that individual's spouse.

(ii) Any Federal, State or local earned income tax credit received

by any household member shall be excluded for 12 months, provided the

household was participating in the Food Stamp Program at the time of

receipt of the earned income tax credit and provided the household

participates continuously during that 12-month period. Breaks in

participation of one month or less due to administrative reasons, such

as delayed recertification or missing or late monthly reports, shall

not be considered as nonparticipation in determining the 12-month

exclusion.

* * * * *

Sec. 273.9 [Amended]

5. In Sec. 273.9:

a. Paragraph (d)(5)(i) is amended by removing the word ``calendar''

in the first sentence, and adding the words ``in accordance with

Sec. 273.2(f)(1)(xi) of this chapter'' after the word ``verified'' in

the eighth sentence, and by removing the ninth and tenth sentences.

b. The title of paragraph (d)(5)(ii) is revised to read ``Household

shelter deduction''.

c. Paragraph (d)(6)(i)(A) is amended by removing the reference to

``(d)(5)(iii)'' and adding in its place a reference to

``(d)(5)(ii)(C)''.

d. The fourth sentence of the undesignated paragraph following

paragraph (d)(6)(ii)(C) is amended by removing the reference to

``(d)(5)(iii)'' and adding in its place a reference to

``(d)(5)(ii)(C)''.

6. In Sec. 273.21:

a. Paragraph (a)(4) is revised.

b. Paragraph (b) is revised.

c. Paragraph (f)(1)(iii)(D) is revised, a new sentence is added

following the first sentence in paragraph (f)(2)(i), and in paragraphs

(f)(2)(ii), (f)(2)(iii), and (f)(2)(iv) the words ``either

prospectively or'' are added before the word ``retrospectively''.

d. The second sentence in paragraph (i) is revised.

e. The introductory text of paragraph (j)(3)(iii) is revised.

f. The last sentence of paragraph (r)(2)(i) is revised.

g. In paragraph (s), the word ``of'' after the word ``same'' is

removed.

The revisions and additions read as follows:

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

(a) System design. * * *

(4) Budgeting waivers. FNS may approve waivers of the budgeting

requirements of this section to conform to budgeting procedures in the

AFDC program, except for households excluded from retrospective

budgeting under paragraph (b) of this section.

(b) Included and excluded households. The establishment of either a

monthly reporting or retrospective budgeting system is a State agency

option. Certain households are specifically excluded from both monthly

reporting and retrospective budgeting. A household that is included in

a monthly reporting system must be retrospectively budgeted. Households

not required to submit monthly reports may have their benefits

determined on either a prospective or retrospective basis at the State

agency's option, unless specifically excluded from retrospective

budgeting.

(1) The following households are excluded from both monthly

reporting and retrospective budgeting:

(i) Migrant or seasonal farmworker households.

(ii) Households in which all members are homeless individuals.

(iii) Households with no earned income in which all adult members

are elderly or disabled.

(2) Households residing on an Indian reservation where there was no

monthly reporting system in operation on March 25, 1994 are excluded

from monthly reporting.

* * * * *

(f) Calculating allotments for households following the beginning

months--(1) Household composition. * * *

(iii) * * *

(D) The State agency may add new members to the household effective

either the month the household reports the gain of a new household

member or the first day of the issuance month following the month the

household reports the gain of a new member. The benefits shall not be

prorated.

* * * * *

(2) Income and deductions. * * *

(i) * * * Such income shall be budgeted either prospectively or

retrospectively and shall not affect more benefit months than the

number of months in the period over which it is annualized or prorated.

* * *

* * * * *

(i) Verification. * * * The State agency may designate that

verification be submitted for any item that has changed or appears

questionable.

(j) State agency action on reports. * * *

(3) Incomplete filing. * * *

(iii) When a State agency requires verification for the item listed

and the household does not provide the verification, the State agency

shall take the following actions:

* * * * *

(r) Procedures for households that change their reporting and

budgeting status. * * *

(2) Households which are no longer subject to MRRB. * * *

(i) Procedures for households exempt from MRRB. * * * The State

agency shall begin determining the household's benefits prospectively

no later than the first issuance month for which a household has not

submitted a monthly report for the budget month.

* * * * *

Dated: August 2, 1994.

Ellen Haas,

Assistant Secretary for Food and Consumer Services.

[FR Doc. 94-21188 Filed 8-26-94; 8:45 am]

BILLING CODE 3410-30-M