# Food Stamp Program; Excess Shelter Expense Limit and Standard Utility Allowances

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## Record

- **Collection:** Federal Register
- **Document type:** Uncategorized Document
- **Published:** November 22, 1994

## Text

DEPARTMENT OF AGRICULTURE
7 CFR Part 273

RIN 0584-AB59

Food Stamp Program; Excess Shelter Expense Limit and Standard
Utility Allowances

AGENCY: Food and Consumer Service, USDA.

ACTION: Proposed rule.

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SUMMARY: This action proposes several changes in Food Stamp Program
rules relating to the limit on deductible excess shelter expenses and
use of standard utility allowances. The major change would implement a
provision of the Mickey Leland Childhood Hunger Relief Act as set forth
in the Omnibus Budget Reconciliation Act of 1993. The provision would
increase Program benefits to households that have no elderly or
disabled members by gradually increasing and then, in 1997, removing
the limit on the amount of excess shelter expenses these households can
deduct from their income to determine eligibility and benefits. The
changes in provisions for standard utility allowances would allow State
agencies to use allow use of additional standards and would simplify
requirements for determining entitlement to a standard.

DATES: Comments must be received on or before January 23, 1995 to be
assured of consideration.

ADDRESSES: Comments should be submitted to Judith M. Seymour,
Eligibility and Certification Regulation Section, Certification Policy
Branch, Program Development Division, Food and Consumer Service, USDA,
3101 Park Center Drive, Alexandria, Virginia, 22302, (703) 305-2496.
Comments may also be datafaxed to the attention of Ms. Seymour at (703)
305-2454. All written comments will be open for public inspection at
the office of the Food and Consumer Service during regular business
hours (8:30 a.m. to 5 p.m., Monday through Friday) at 3101 Park Center
Drive, Alexandria, Virginia, Room 720.

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

SUPPLEMENTARY INFORMATION:

Classification

Executive Order 12866

This proposed rule has been determined to be economically
significant and was reviewed by the Office of Management and Budget.

Executive Order 13272

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

Regulatory Flexibility Act

This rule has been reviewed with regard to the requirements of the
Regulatory Flexibility Act of 1980 (5 U.S.C. 601-612). Ellen Haas,
Under Secretary for Food, Nutrition, and Consumer Services, has
certified that this rule does not have a significant economic impact on
a substantial number of small entities. The changes will increase
benefits to food stamp recipients and simplify administration of the
Program by State and local welfare agencies.

Paperwork Reduction Act

This proposed rule does not contain reporting or recordkeeping
requirements subject to approval by the Office of Management and Budget
(OMB) under the Paperwork Reduction Act of 1980 (44 U.S.C. 3507).

Regulatory Impact Analysis

Need for Action
This action is required by section 13912(b) of Pub. L. 103-66,
which amended Section 5(e) of the Food Stamp Act to provide for
incremental increases in the excess shelter expense deduction in July
1994 and October 1995 and the elimination of the limit on the amount of
shelter expenses that may be deducted from the net income of a
household that does not contain an elderly or disabled member,
effective January 1, 1997.
Benefits
This action increases benefits to households with high shelter
expenses and simplifies administration of the Program by State and
local offices.
Costs
It is estimated that this action will increase the cost of the Food
Stamp Program by approximately $40 million in FY 1994, $125 million in
FY 1995, $190 million in FY 1996, $490 million in FY 1997, and $620
million in FY 1998.

Executive Order 12778

This rule has been reviewed under Executive Order 12778, Civil
Justice Reform. This rule is intended to have preemptive effect with
respect to any State or local laws, regulations or policies which
conflict with its provisions or which would otherwise impede its full
implementation. This rule is not intended to have retroactive effect
unless so specified in the ``Effective Date'' paragraph of this
preamble. Prior to any judicial challenge to the provisions of this
rule or the application of its provisions, all applicable
administrative procedures must be exhausted. In the Food Stamp Program
the administrative procedures are as follows: (1) for Program benefit
recipients--State administrative procedures issued pursuant to 7 U.S.C.
2020(e)(1) and 7 CFR 273.15; (2) for State agencies--administrative
procedures issued pursuant to 7 U.S.C. 2023 set out at 7 CFR 276.7 (for
rules related to non-quality control (QC) liabilities) or Part 284 (for
rules related to QC liabilities); (3) for Program retailers and
wholesalers--administrative procedures issued pursuant to 7 U.S.C. 2023
set out at 7 CFR 278.8.

Background

1. Excess Shelter Cap--7 CFR 273.9(d)(5) and 273.9(d)(8)

Under current rules at 7 CFR 273.9(d)(5), households are entitled
to a deduction from income for excess shelter expenses, i.e., shelter
expenses (including rent or mortgage and utilities) that exceed 50
percent of the household's net income remaining after all other
deductions. For households with an elderly or disabled member (as
defined in 7 CFR 271.2), all of the excess shelter expenses are
deducted. For other households, only excess shelter expenses up to a
limit are deducted. This limit, usually referred to as the ``shelter
cap,'' is adjusted annually to reflect changes in the shelter, fuel,
and utilities components of housing costs in the Consumer Price Index
(CPI-U) published by the Bureau of Labor Statistics for the 12 months
ending the preceding June 30. In FY 1994, the cap is $207 for the
contiguous 48 States and the District of Columbia, $359 in Alaska, $295
in Hawaii, $251 in Guam, and $152 in the Virgin Islands.
Section 13912 of the Mickey Leland Childhood Hunger Relief Act
(Leland Act), Chapter 3, Title XIII of the Omnibus Budget
Reconciliation Act of 1993, Pub. L. 103-66, enacted August 10, 1993,
107 Stat. 312), amended section 5(e) of the Food Stamp Act of 1977 (as
amended), (the Act) 7 U.S.C. 2014(e), to provide for incremental
increases in the shelter cap and for the elimination of the cap
according to the following schedule:

1. Effective July 1, 1994 through September 30, 1995, the excess
shelter expense deduction shall not exceed $231 a month in the 48
contiguous States and the District of Columbia, $402 in Alaska, $330
in Hawaii, $280 in Guam, and $171 in the Virgin Islands.
2. Effective October 1, 1995 through December 31, 1996, the
excess shelter expense deduction shall not exceed $247 a month in
the 48 contiguous States and the District of Columbia, $429 in
Alaska, $353 in Hawaii, $300 in Guam, and $182 in the Virgin
Islands.
3. Effective January 1, 1997, the limit on the excess shelter
expense deduction is removed.

According to the legislative history of the Leland Act
(Congressional Record, S10725, August 6, 1993), the changes in the
shelter cap are designed to provide more food stamps to families with
especially high rent and utility bills. To implement section 13912 of
Pub. L. 103-66, 7 CFR 273.9(d)(8) will be amended to add the
statutorily imposed increased shelter cap amounts effective in July
1994 and October 1995 and to indicate that the shelter cap will be
eliminated effective January 1, 1997. Those regulatory changes are
mandated by statute and, in accordance with 5 U.S.C. 553(b)(3)(A), are
therefore not subject to public comment.
This action proposes to amend the homeless shelter expense
provisions of 7 CFR 273.9(d)(5) to eliminate the reference to the
excess shelter cap. Current regulations provide that State agencies may
develop their own standard estimate of the shelter expenses of
households in which all members are homeless and do not receive free
shelter throughout the month. State agencies that do not want to
develop their own standards may use the estimate provided by the
Department. The regulations provide that this homeless shelter estimate
will be updated annually using the same method as is used to index the
excess shelter cap. Since the excess shelter cap will be set at the
amounts established by the Leland Act beginning July 1, 1994 and will
be removed in January 1997, we are proposing to amend 7 CFR 273.9(d)(5)
effective July 1, 1994 to provide that the homeless shelter expense
estimate will be revised each October 1 to reflect changes in the
shelter, fuel, and utilities components of housing costs in the CPI-U
for the 12 months ending the preceding June 30. The homeless shelter
estimate will be adjusted on October 1, 1994 and each October 1
thereafter. State agencies will be notified of the amount by memorandum
prior to each change. State agencies will still have the option of
developing and using their own estimates.

2. Standard Utility Allowances--7 CFR 273.9(d)(6)

The legislative history of the Leland Act (Congressional Record,
S10725, August 6, 1993 and House Report 103-213, p. 924, August 4,
1993) indicates Congressional intent that the excess shelter expense
deduction be simple to administer and that the standard utility
allowance facilitate, rather than hinder, program simplification. We
have reviewed the regulations governing shelter expenses and utility
standards to determine how they might be improved. As a result, we are
proposing to revise 7 CFR 273.9(d)(6) in its entirety.
In section 5(e) of the Food Stamp Act (7 U.S.C. 2014(e)), Congress
authorized use of a standard utility allowance (standard) in computing
a household's excess shelter deduction to reduce the burden on State
agencies and households of having to report, verify, and calculate
actual utility costs. However, subsequent legislation and numerous
regulatory revisions have resulted in increasingly complicated
requirements for use of the standards. State agencies have complained
that current regulations are confusing and, by their very complexity,
defeat the purpose of using standards.
Rules published October 17, 1978 (43 FR 47846, 47865-66) required
State agencies to establish a standard utility allowance which
households could include in claiming their shelter costs. Households
that incurred costs for electricity and fuel for heating, cooling, or
cooking were allowed to use the State agency's single utility standard
which included these costs. Alternatively, States were allowed to
develop separate standards for each utility. A household incurring a
cost for any of these utilities was allowed the option of claiming
actual costs or the standard in the calculation of benefits.
To give State agencies more flexibility in operating the Program,
the Omnibus Budget Reconciliation Act of 1982, Pub. L. 97-253,
(September 8, 1982, 96 Stat. 775-6), made use of a standard utility
allowance a State agency option. In doing so, the use of the standard
became more complex. Use of a single standard that included heating or
cooling costs was restricted to those households that incurred heating
or cooling costs separately from their rent or mortgage. However,
households in public housing who were billed only for excess usage were
prohibited from using this standard. These households were required to
use actual expenses. The law also required State agencies to prorate
the standard among separate households who lived together and shared
heating or cooling expenses.
Interim regulations implementing the provisions of Pub. L. 97-253
were issued on November 16, 1982 (47 FR 51551) and made final on June
21, 1983 (48 FR 28190). (Readers may refer to the preambles of these
regulations for a full explanation of the changes.) The rules
implemented the prohibition against use of a heating or cooling
standard by households in public housing. In addition, the rules
provided that renters in private housing could receive the heating or
cooling standard only if the amount of heating or cooling usage was
established through a separate meter. Households not entitled to the
heating or cooling standard could claim actual costs.
Legislation governing the Low-Income Home Energy Assistance (LIHEA)
program also has had an effect on use of the heating or cooling
standard by households receiving LIHEA and further complicated this
policy. The Low-Income Home Energy Assistance Act of 1981, Title XXVI,
Pub. L. 97-35, enacted August 13, 1981, (42 U.S.C. 8621, et seq.)
required State agencies to exclude LIHEA payments from income in
assistance programs, including the Food Stamp Program. Under the food
stamp rules, households that received direct LIHEA payments and still
incurred a heating or cooling expense in excess of the LIHEA payments
were allowed use of the heating or cooling standard. However,
households that received LIHEA assistance in the form of vendor
payments made to the energy provider were not entitled to the heating
or cooling standard. Section 273.10(d)(1)(i) provided that any expense
covered by an excluded reimbursement or vendor payment was not
deductible. As early as 1981, lawsuits were filed challenging the
Department's position on this issue. (See Schmeige v. USDA, 693 F.2d 55
(8th Cir. 1982), Idaho v. Block, 784 F.2d 895 (9th Cir. 1986); and
Seban v. Block, 626 F. Supp. 545 (S.D. Ind. 1985)).
The Food Security Act of 1985, Pub. L. 99-198 (December 23, 1985)
amended the Food Stamp Act to provide that households which incurred
out-of-pocket heating or cooling expenses over and above their LIHEA or
similar energy assistance payments were entitled to receive a standard
allowance for heating or cooling costs. In the context of entitlement
to a heating or cooling standard, out-of-pocket expenses are those that
exceed any energy assistance payments made to or on behalf of the
household. The law allowed State agencies to develop two standard
allowances including heating or cooling expenses: One standard for
households that did not receive indirect energy assistance payments and
a second standard for households that received indirect payments and
incurred out-of-pocket heating or cooling expenses. (The preamble to
regulations published May 21, 1986, 51 FR 18744, 18746, contains a
complete explanation of the provisions.)
The amendments to the Food Stamp Act made by the Food Security Act
of 1985 were nullified by the Human Services Reauthorization Act of
1986, Pub. L. 99-425 (September 30, 1986), which included a provision
affecting the treatment of LIHEA payments in calculating an excess
shelter expense deduction. Section 504(e) of that law provided that
LIHEA payments must be treated consistently regardless of how the
payments are distributed to the household and that the full amount of
the payments was to be deemed expended by the household for heating or
cooling expenses.
A final rule published February 23, 1987 (52 FR 5434) amended 7 CFR
273.9(d)(6) and 7 CFR 273.10(d)(1)(i) to require State agencies to
consider energy expenses covered by LIHEA payments made to the energy
supplier on behalf of the household (indirect payments) as deductible
shelter expenses. State agencies were required to consider all
households receiving LIHEA as eligible to claim the heating or cooling
standard whether or not the household had any out-of-pocket expense.
The rule eliminated a State agency's option to use a separate heating
or cooling standard allowance for those households which received
indirect LIHEA payments.
State agencies have indicated that the legislative conflict between
the desire to avoid reducing a household's food stamp allotment when it
receives energy assistance and the principle that the heating or
cooling standard should be allowed only when a household actually
incurs an out-of-pocket heating or cooling expense has resulted in
regulations that are error-prone and difficult to administer. Numerous
policy memoranda and clarifications have been issued to assist State
agencies in determining the circumstances under which a household is
entitled to a heating or cooling standard. However, State agencies
continue to raise questions concerning use of the standard.
Within the constraints of the Food Stamp Act and legislation
governing the LIHEA program, we are proposing to revise 7 CFR
273.9(d)(6) to assist State agencies in using a heating or cooling
standard and to provide greater flexibility in developing other
standards. Under this proposal, provisions relating to standard utility
allowances would be organized into the following areas: (a) Developing
and updating standard utility allowances, (b) entitlement to a heating
or cooling standard, (c) household option, and (d) sharing utility
costs. We are also proposing to add the last sentence of current 7 CFR
273.9(d)(6)(i) regarding allowable cooling costs to the list of
allowable utility costs in 7 CFR 273.9(d)(5)(ii)(C) so that all
allowable utility costs are listed in one paragraph. The proposed
changes are discussed below.
a. Developing and updating standard utility allowances. Current
regulations at 7 CFR 273.9(d)(6)(i), (iii), (iv), (v), and (vi) set
forth the requirements for developing standard utility allowances. They
allow State agencies to use seasonal standards; annual standards that
do not have to be adjusted seasonally; separate standards for each
utility expense; or single utility standards that include the cost of
heating or cooking fuel, cooling, electricity, water, sewerage, garbage
or trash collection, and the basic service fee for one telephone.
In an effort to ease confusion and clarify the rules regarding the
establishment of utility standards, we are proposing to consolidate the
current rules into a single, revised paragraph, 7 CFR 273.9(d)(6)(i).
At the same time, we are proposing several changes in existing policy.
The changes in policy are described below.
Several State agencies have requested and have been granted waivers
to use a combined standard for all nonheating or noncooling expenses.
As justification for their waiver requests, State agencies cite
difficulty in obtaining verification for utility expenses and,
consequently, increased errors relating to shelter costs when
certifying households. To provide greater State agency flexibility
without the need for waivers and to reduce the error-prone use of
actual utility expenses, we are proposing in 7 CFR 273.9(d)(6)(i) to
allow State agencies to develop standard utility allowances for
individual utilities and a combination of utilities. As provided in
current regulations, the allowances may be seasonal or annualized to
include costs for all seasons and may be varied by household size or
geographic location. Although the proposal for a combined standard is
not as broad as some standards currently in use, we believe it would
provide some additional flexibility to State agencies and would reduce
the number of cases in which workers must verify actual expenses
without greatly increasing Program costs.
As provided in current 7 CFR 273.9(d)(6)(i) and under our proposal,
State agencies would not be permitted to develop a separate standard or
decrease the heating or cooling standard for households that receive
LIHEA payments. However, a State agency would be able to develop and
use a separate heating/cooling standard for households that receive
energy assistance other than energy assistance provided under the Low-
Income Home Energy Assistance Act of 1981. In developing other standard
utility allowances, State agencies would be required to include only
the allowable costs identified in 7 CFR 273.9(d)(5)(ii)(C). No
additional costs could be added.
Therefore, under the proposed revision of 7 CFR 273.9(d)(6)(i),
State agencies would be allowed to develop the following standards: (a)
A separate standard for each type of utility expense; (b) a standard
that includes heating or cooling costs; (c) a telephone standard; and
(d) a combined standard that includes electricity, water, sewerage, and
garbage or trash collection and is available only to households that
incur the cost of electricity and either water or sewerage. State
agencies would be allowed to add the telephone standard to a separate
standard for electricity, for example, for households that incur both
expenses. The telephone standard could also be added to the combined
standard to allow use of a standard for households that incur costs for
electricity, sewerage or water, and telephone.
State agencies could use the heating or cooling standard for
households that incur a heating or cooling cost and an individual
standard for households that incur an expense for only one utility,
such as electricity. Because State agencies may develop a variety of
standards, the proposed rule specifies that no household shall receive
more than one standard for the same utility expense. For example, if
the State agency's combined standard includes the expense of a basic
telephone, a household that receives the combined standard would not
also be entitled to a separate telephone standard. Households whose
only utility expense is for a telephone would be entitled to the
telephone standard only.
The proposal would require State agencies that develop new standard
utility allowances to use FCS-approved methodologies. The State agency
would be required to review the standards annually and submit revised
amounts to FCS for approval. State agencies would be required to submit
methodologies used in developing and updating standards to FCS every 3
years. They would also be required to submit the methodologies when
they are revised or upon a request from FCS. We are requiring State
agencies to submit methodologies every 3 years so that we will be able
to monitor State agency development and use of standards.
b. Entitlement to a heating or cooling standard. Another complex
and confusing area of policy involving standard utility allowances is
determining who is entitled to a standard that includes heating or
cooling costs. We are proposing in revised Sec. 273.9(d)(6)(ii) to
clarify and simplify these rules. In doing so, we are attempting to
eliminate inequities that exist in the application of current policy.
Current regulations at 7 CFR 273.9(d)(6)(ii) provide that a heating
or cooling standard shall be made available only to households that
incur out-of-pocket heating and cooling costs separately from their
rent or mortgage and to households that receive LIHEA. Renters must be
billed on a monthly basis by their landlords for actual usage as
determined through individual metering to be entitled to use the
standard. Recipients of indirect energy assistance payments other than
LIHEA must incur expenses in excess of the payments during the
certification period to qualify for the heating or cooling standard.
Households in public or private housing with a central meter who are
billed only for excess usage are not permitted to use the standard. A
household not entitled to the standard can claim actual expenses.
As indicated above, provisions of interim regulations published
November 16, 1982 (47 FR 51551) and finalized June 21, 1988 (48 FR
28190) limited use of the heating or cooling standard by households in
public or private housing to those households whose costs could be
verified by separate metering. Previously, households in public or
private housing who could verify that they incurred heating or cooling
costs separately from their rent were entitled to use the heating or
cooling standard. Although these households were no longer entitled to
a heating or cooling standard under food stamp rules, they were
entitled to the heating or cooling standard if they received LIHEA.
Therefore, State agencies had to determine which households would or
would not receive LIHEA before food stamp eligibility and benefits
could be determined. This presented a problem for State agencies,
particularly when there was no easy method for exchanging information
with the LIHEA agency. Although this policy has been in effect for some
time now, State agencies still experience difficulty in anticipating
entitlement to a heating or cooling standard when a household is
entitled solely because of receipt of LIHEA payments.
Our first proposed change to the rules governing the use of a
heating or cooling standard is to provide direct entitlement to a
standard by households in private housing who have heating or cooling
costs apart from or in addition to their rent. Under the proposal,
these households would be entitled to use the heating or cooling
standard even if their actual utility usage is not determined by
separate metering.
The amount of the expense could be determined and verified by means
other than separate metering, such as a statement from the landlord.
If, in addition to rent, the landlord charges a flat amount for
utilities each month which includes the cost of heating or cooling, the
household would be entitled to the heating or cooling standard.
Regulations at 7 CFR 273.2(f)(1)(iii) do not require State agencies to
verify entitlement to a standard allowance. However, entitlement to a
standard may be verified if it is questionable, as provided in 7 CFR
273.2(f)(2)(i) or under 7 CFR 273.2(f)(3) as a State agency option. The
proposed rule retains the statutory prohibition against use of the
heating or cooling standard by households in public housing.
This proposed change would extend use of the standard to households
that live separately but share a utility meter. Under current policy,
if two households live separately but have one meter, the households
are prohibited from sharing the standard, and the State agency cannot
grant the standard to both households even though both incur heating or
cooling costs. Under the proposed change, the State agency would be
required to grant the full heating or cooling standard to both
households if both incur or anticipate incurring out-of-pocket heating
or cooling expenses separately from their rent or receive or anticipate
receiving LIHEA.
A second proposed change in the standard utility allowance rules
stems from numerous policy questions that have been raised regarding
when and how often a household has to incur an expense in order to be
eligible for an annualized heating or cooling standard. As indicated
above, State agencies currently may choose between seasonal heating or
cooling standards and an annualized standard that includes year-round
heating and cooling costs. State agencies have complained that
regulations and policy regarding use of an annualized standard are
confusing and difficult to administer. We are proposing in this rule to
simplify the regulations for determining when a household is entitled
to an annualized standard utility allowance that includes heating or
cooling costs.
Annualized standards represent the average monthly heating and
cooling costs for the entire year. This means that in some months
during the year, and perhaps during the certification period, the
household may not have any heating or cooling costs. For example, a
household that previously had no heating or cooling costs applies in
June and does not anticipate incurring any heating or cooling costs
during the summer months. However, the household will incur heating
costs in the fall. Regulations at 7 CFR 273.10(d)(4) provide that the
State agency shall calculate a household's expenses based on the
expenses the household expects to be billed for during the
certification period. Therefore, if the household above is certified
for three summer months and incurs no heating or cooling costs, the
household is not entitled to an annualized standard that includes
heating costs. If the household is certified for six months and
anticipates incurring heating costs in the fall, however, it is
entitled to the heating standard. State agencies have complained that
this policy is difficult to administer and can result in inequities.
To reduce the problems associated with determining when a household
is entitled to an annualized heating or cooling standard, we are
proposing in this rule that a household that currently incurs or
expects to incur out-of-pocket heating or cooling costs during the next
heating or cooling season (except a household in public housing with a
central meter where the household is billed only for excess usage) is
entitled to an annualized heating or cooling standard regardless of
when the certification period begins or ends.
This rule further proposes that the household shall continue to be
entitled to the standard until it no longer expects to incur heating or
cooling costs during the next heating or cooling season. The State
agency would be required to reexamine a household's entitlement to the
heating or cooling standard at recertification, when the household
moves, or when the household voluntarily reports a change affecting
entitlement to the standard.
Under this proposal, a household with no heating or cooling costs
which is certified for three summer months and which expects to be
billed for heating costs in the fall would be entitled to a heating or
cooling standard at the time of certification. Also, a household that
incurred no heating or cooling expenses in the past which moves to a
living arrangement where it will incur heating costs in the next
heating season would be allowed the annualized standard from the time
of the move. If a State agency uses seasonal standards, households
would be entitled to the appropriate seasonal standard if they incur or
expect to incur a qualifying expense (or receive or expect to receive a
LIHEA payment) during the season covered by the standard.
We believe this proposal is more equitable and easier to administer
than current policy. We would appreciate specific comments supporting
the proposal or pointing out any problems with the proposed change.
Although food stamp households are categorically eligible for
LIHEA, not all food stamp households receive the assistance, either
because they do not apply for it or because LIHEA funds run out before
all eligible households can be served. This makes it extremely
difficult for State agencies to know in advance whether or not a
household will receive LIHEA and be entitled to the standard. To grant
the standard beginning with the month the household reports receipt of
LIHEA would not meet the intent of the LIHEA legislation. Therefore, we
are also proposing in revised Sec. 273.9(d)(6)(ii) that the State
agency shall allow a heating or cooling standard to households that
receive or anticipate receiving LIHEA in the next heating or cooling
season. These households shall continue to be entitled to the standard
until they no longer receive or anticipate receiving LIHEA in the next
heating or cooling season. The State agency would consult with the
household concerning the household's intention to apply for LIHEA,
determine whether or not the household received LIHEA for the previous
season at the same address, and contact the LIHEA agency if necessary
to determine the availability of funds and the likelihood that the
household will receive energy assistance. The case worker would
document the case file to support the decision to allow or deny use of
the standard.
Current regulations at 7 CFR 273.9(d)(6)(ii)(C) require that
households incur recurring costs for heating or cooling in order to
qualify for a heating or cooling standard. The regulations are
confusing in that they specify that the household must be billed
regularly, but, if the household is not billed regularly, it may use
the standard between billing periods if it is otherwise eligible to use
the standard. Under this proposed revision, the regulatory provisions
for billing would not be needed. Entitlement to the heating or cooling
standard would be based on anticipated expenses. Most households that
are responsible for paying heating or cooling expenses have these
expenses on a recurring basis. Therefore, we are proposing to remove
the provisions regarding recurring costs from the regulations. We are
also proposing to remove the provisions in 7 CFR 273.9(d)(6)(ii)(C) and
7 CFR 273.10(d)(6) regarding households that incur out-of-pocket
expenses for heating or cooling in excess of non-LIHEA energy
assistance. These provisions would also be unnecessary under the
proposed revision of the regulations. Any household that receives LIHEA
or incurs an out-of-pocket expense for heating or cooling (except a
household in public housing billed only for excess usage) would be
entitled to an annualized heating or cooling standard.
We are also proposing a conforming amendment to 7 CFR 273.10(d)(3)
to provide that standard utility allowances shall be allowed in
accordance with 7 CFR 273.9(d)(6). This change is necessary because the
provisions allowing the averaging of fluctuating expenses and the
determination of entitlement to an annualized heating or cooling
standard based upon anticipated heating or cooling costs are exceptions
to the provisions regarding billed expenses in 7 CFR 273.10(d)(2) and
anticipating expenses in 7 CFR 273.10(d)(4).
c. Household option. Current regulations at 7 CFR 273.9(d)(6)(vii)
require State agencies to advise households at the time of
certification that, except for the telephone allowance, they may deduct
their actual verified utility costs or the standard allowance
throughout the certification period. The State agency is also required
to advise households that they may switch between the use of actual
utility costs and the standard at the time of recertification and one
additional time during each twelve-month period.
State agencies have pointed out that households may move from one
residence to another more frequently than once a year. Current policy
is that the household's eligibility for the heating or cooling standard
must be redetermined at the time of the move. We have granted waivers
to several State agencies to allow households to choose between actual
expenses or the standard when the household moves without having the
choice count as a ``switch.''
This rule proposes to include the provisions of current 7 CFR
273.9(d)(6)(vii) regarding the household option to use a standard or
actual costs in revised Sec. 273.9(d)(6)(iii). The proposed rule also
adds a provision requiring State agencies to give households that move
the option of actual expenses or a standard utility allowance based on
circumstances at the new address. When a household reports a move, it
would be the State agency's responsibility to redetermine the
household's entitlement to a standard and give the household the
opportunity to choose between actual costs and the standard, if the
household is entitled to the standard. Households that report a move
would be granted the standard on the same basis as applicants. If the
household anticipates that it will receive LIHEA or incur out-of-pocket
heating or cooling expenses during the next heating or cooling season
at the new address, it would be allowed use of the standard. The
household's choice of a standard or actual costs when it moves would
not be considered a switch.
Current regulations at 7 CFR 273.9(d)(6)(iii)(C) provide that the
State agency may mandate use of the telephone allowance even if actual
telephone costs are higher. This provision was included in the
regulations because of the concern of State agencies that use of actual
telephone costs would be extremely error-prone. We believe that use of
an adequate telephone standard increases the administrative efficiency
of determining a household's excess shelter expense without any
significant adverse effect on households. Therefore, we are proposing
to retain the provision of current 7 CFR 273.9(d)(6)(v)(C) concerning
the telephone allowance and incorporate it in revised
Sec. 273.9(d)(6)(iii).
d. Prorating standard utility allowances. Under section 5(e) of the
Food Stamp Act, State agencies are required to prorate a heating or
cooling standard among households that live together and share the
heating or cooling expense. Current regulations at 7 CFR
273.9(d)(6)(viii) require State agencies to prorate a standard
allowance among households that live together and share utility
expenses. It is not clear in the regulations whether proration is
limited to the heating or cooling standard or whether other standards,
such as a telephone standard, must also be prorated among the
households contributing to the payment of the utility cost. Questions
have arisen concerning proration of a heating or cooling standard when
one household pays for heat, for example, and another household pays
for the water. We believe it is equitable to prorate any standard among
the households sharing the expense included in the standard.
The current provision indicates that if the State agency is unable
to accurately determine the pro rata share of utility costs paid by the
parties, the State agency may use the actual utility costs paid by each
household. The regulations provide that under no circumstances shall
the total amount of utility costs used to determine the amount of the
deduction exceed the total amount of actual utility costs for the
residence.
Under this proposed rule, households would be able to share a
standard or claim actual verified costs. They would not be allowed to
use a combination of these methods in claiming a deduction for utility
expenses. That is, State agencies could not allow one household to
claim a share of the utility standard and allow another household
sharing the expense to claim actual costs. We believe that allowing a
combination of actual expenses and a share of the standard is
burdensome on State agencies.
Under this proposal, the total allowable deduction for the
residence would not exceed actual costs or one standard allowance. If
one household pays all the utility expenses, that household would be
entitled to the applicable standard or could claim actual costs. The
household that did not pay any utility costs would not be able to claim
any actual utility costs or any part of a standard. If one household
pays for heat and the other household pays another expense, such as
water, a standard that includes the costs of heating and water would be
prorated between the households according to a method established by
the State agency.
We propose to provide in revised Sec. 273.9(d)(6)(iv) of this rule
that the State agency shall prorate any utility standard among all
parties incurring an expense covered by the standard or allow actual
costs incurred by each party. The State agency would be able to
determine the proration method if a standard is prorated.

Corrections

We are taking this opportunity to correct the reference in the
first sentence of 7 CFR 273.12(a)(1)(i) to the joint processing
regulations. The correct citation is 7 CFR 273.2(j)(3).

Implementation

In accordance with the requirements of section 13971(b)(6) of Pub.
L. 103-66, this rule provides that the increase in the excess shelter
expense deduction to $231 in the 48 contiguous States and the District
of Columbia ($402 in Alaska, $330 in Hawaii, $280 in Guam, and $171 in
the Virgin Islands) will be effective and must be implemented on July
1, 1994; that the increase to $247 in the 48 contiguous States and the
District of Columbia ($249 in Alaska, $353 in Hawaii, $300 in Guam, and
$182 in the Virgin Islands) will be effective and must be implemented
on October 1, 1995; and that removal of the excess shelter deduction
limit will be effective and must be implemented on January 1, 1997. The
changes in provisions for the homeless shelter estimate in 7 CFR
273.9(d)(5)(i) will be effective July 1, 1994. State agencies are
required to adjust all cases on January 1, 1997 to reflect the
deduction for all allowable excess shelter expenses. Restored benefits
must be provided to all households whose cases are not adjusted on the
required implementation date. Variances resulting from implementation
of the final rule would be excluded from quality control consideration
for 120 days from the required implementation date in accordance with
section 13951 of Pub. L. 103-66.
We are proposing that the changes in requirements for standard
utility allowances made by this rule be effective and implemented 120
days after publication of the final rule. The affected regulatory
sections are: 7 CFR 273.9(d)(5)(ii)(C), 273.9(d)(6), 273.10(d)(3),
273.10(d)(6), and 273.12(a)(1)(i). State agencies would be required to
adjust the cases of ongoing households at the next recertification, at
household request, or when the case is next reviewed, whichever comes
first. Variances resulting from implementation of the provisions of the
final rule shall be excluded from error analysis for 120 days from the
required implementation date.

List of Subjects in 7 CFR Part 273

Administrative practice and procedure, Aliens, Claims, Food stamps,
Fraud, Grant programs-social programs, Penalties, Records, Reporting
and recordkeeping requirements, Social security, Students.
Accordingly, 7 CFR Part 273 is proposed to be amended as follows:

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

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

PART 273--CERTIFICATION OF ELIGIBLE HOUSEHOLDS

2. In Sec. 273.9:
a. the sixth and seventh sentences of paragraph (d)(5)(i) are
removed, and one new sentence is added in its place;
b. paragraph (d)(5)(ii)(C) and paragraph (d)(6) are revised; and
c. the fourth sentence of paragraph (d)(8)(i) is amended by
removing the word ``thereafter,'' and adding the words ``thereafter
through October 1, 1993,'' in its place and by adding three sentences
at the end of the paragraph.
The additions and revision read as follows:

Sec. 273.9 Income and deductions.

* * * * *
(d) Income deductions. * * *
(5) Shelter costs.
(i) Homeless households. * * * The Department will revise the
homeless shelter expense estimate each October 1 to reflect changes in
the shelter, fuel, and utilities components of housing costs in the
CPI-U for the 12 months ending the preceding June 30 and will notify
State agencies of the adjusted amount. * * *
(ii) Household shelter deduction. P* * *
(C) The cost of heating and cooking fuel, cooling (verifiable
expenses relating to the operation of air conditioning systems or room
air conditioners), electricity, water, sewerage, garbage and trash
collection, the basic service fee for one telephone (including tax on
the basic fee), and fees charged by the utility provider for initial
installation of the utility. One-time deposits shall not be included as
shelter costs.
* * * * *
(6) Standard utility allowances--(i) Developing and updating
standard utility allowances. A State agency may develop the following
standard utility allowances (standards) to be used in place of actual
costs in determining a household's excess shelter deduction: a separate
standard for each type of utility expense; a single standard for all
utilities that includes heating or cooling costs; a telephone standard;
and a combined standard that includes electricity, water, sewerage, and
garbage or trash collection that is available only to households that
incur the costs of electricity and either water or sewerage. The State
agency shall submit proposed standards to FCS for approval. The State
agency shall update the standards annually and submit revised amounts
to FCS for approval. State agencies shall submit methodologies used in
developing and updating standards to FCS for review every 3 years, when
there is a change in the methodology, and upon a request from FCS.
State agencies may use a heating or cooling standard, a combined
standard, and individual standards. However, they shall not allow
households the use of two standards that include the same expense. The
State agency may elect to use seasonal standards that include heating
or cooling costs or an annual standard that does not have to be
adjusted seasonally. The State agency may vary the allowance by factors
such as household size or geographical area. Only utility costs
identified in paragraph (d)(5)(ii) of this section shall be used in
developing standards. The State agency shall not use a reduced standard
for households that receive assistance under the Low-Income Home Energy
Assistance Act (LIHEAA) of 1981. Households shall be allowed to use
standards that include heating or cooling costs in accordance with
paragraphs (d)(6)(ii), (d)(6)(iii) and (d)(6)(iv) of this section.
Households whose only utility expense is for a telephone are entitled
to only the separate telephone standard if one has been developed by
the State agency.
(ii) Entitlement to a heating or cooling standard. A standard with
a heating or cooling component shall be made available to households
that incur heating or cooling expenses separately from their rent or
mortgage or expect to incur such expenses in the next heating or
cooling season, except households in public housing units which have
central utility meters and charge households only for excess utility
costs. Households that receive assistance under the LIHEAA but do not
incur out-of-pocket heating or cooling expenses are also entitled to a
standard that includes a heating or cooling component on the same basis
as households that incur such costs. Households that receive other
indirect energy assistance are entitled to a standard that includes
heating or cooling only if they incur out-of-pocket expenses for
heating or cooling costs. Entitlement to an annualized heating or
cooling standard shall continue until the household no longer incurs or
expects to incur a heating or cooling expense or no longer receives or
expects to receive a LIHEAA payment during the next heating or cooling
season. If the State agency elects to use seasonal standards, the State
agency shall ensure that a standard is provided only to households that
incur or expect to incur an expense that would entitle the household to
the standard or receive or expect to receive a LIHEAA payment during
the season covered by the standard.
(iii) Household option. The State agency shall advise a household
at the time of certification and whenever it reports a move that it may
deduct verified actual utility costs (for any allowable expense
identified in paragraph (d)(5)(ii)(C) of this section) it incurs rather
than the standard (except for the telephone standard) throughout the
certification period if actual expenses are more than the standard or
the household is not eligible for the standard. The State agency may
require use of the telephone standard for the cost of basic telephone
service even if actual costs are higher. The State agency shall also
inform the household that it may switch between use of actual utility
costs and the standard at recertification and one additional time
during each twelve-month period.
(iv) Sharing utility expenses. If a household lives with and shares
utility expenses with another individual, another household, or both,
the State agency shall prorate a standard among the household and the
other individual, household, or both, or allow the actual costs of each
household. The State agency shall determine the proration method if a
standard is used.
* * * * *
(8) Adjustment of shelter deduction. (i) * * * Effective July 1,
1994 through September 30, 1995, the excess shelter expense deduction
shall not exceed $231 a month in the 48 contiguous States and the
District of Columbia, $402 in Alaska, $330 in Hawaii, $280 in Guam, and
$171 in the Virgin Islands. Effective October 1, 1995 through December
31, 1996, the excess shelter expense deduction shall not exceed $247 a
month in the 48 contiguous States and the District of Columbia, $429 in
Alaska, $353 in Hawaii, $300 in Guam, and $182 in the Virgin Islands.
Effective January 1, 1997, the limit on the excess shelter expense
deduction is removed.
* * * * *
3. In Sec. 273.10:
a. paragraph (d)(3) is amended by adding a new sentence after the
first sentence.
b. paragraph (d)(6) is removed, and paragraph (d)(7) is
redesignated as paragraph (d)(6).
The addition reads as follows:

Sec. 273.10 Determining household eligibility and benefit levels.

* * * * *
(d) Determining deductions. * * *
(3) Averaging expenses. * * * Households shall be allowed to use
annualized standard utility allowances in accordance with
Sec. 273.9(d)(6). * * *
* * * * *

Sec. 273.12 [Amended]

4. In 273.12, the first sentence of paragraph (a)(1)(i) is amended
by removing the citation ``Sec. 273.2(j)(2)'' and adding in its place
the citation ``Sec. 273.2(j)(3)''.

Dated: November 15, 1994.
Ellen Haas,
Under Secretary for Food, Nutrition, and Consumer Services.
[FR Doc. 94-28830 Filed 11-21-94; 8:45 am]
BILLING CODE 3410-30-P

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A94-28830. Public record. Not legal advice.