Food Stamp Program; Administrative Improvement and Simplification Provisions From the Hunger Prevention Act of 1988

SUMMARY: This action places into final form an interim Food Stamp

Program rule published on June 7, 1989. The interim rulemaking

implemented Food Stamp Program provisions contained in the Hunger

Prevention Act of 1988. The provisions of that Act addressed in this

rule are: (1) Expanding the definition of disabled; (2) optional

training for volunteer and non-profit organizations; (3) program

information for low-income households; (4) expanding hardship criteria

for waiving of in-office interview; (5) simplified applications; (6)

joint applications; (7) verification; (8) federally authorized

demonstration projects which cash out benefits in other assistance

programs; (9) telephone access to certification offices in order to

receive program information or to report changes; (10) annualizing

self- employment income and expenses from farming; and (11) resource

exclusions for farm households in transition from farming.

DATES: The provisions of this final action are effective and shall be

implemented as follows: (i) Those provisions in Sec. 271.2(11),

Sec. 272.1(g), Sec. 273.2(b)(3), Sec. 273.2(c)(5),

Sec. 273.2(f)(8)(i)(A), and Sec. 273.2(f)(8)(ii), which adopt the

interim provisions of the June 7, 1989 interim rule as final with some

changes, are effective May 6, 1994 and must be implemented no later

than September 5, 1994; (ii) all other provisions, which adopt the

interim provisions as final with no changes, are effective as of July

1, 1989.

FOR FURTHER INFORMATION CONTACT: Judith M. Seymour, Eligibility and

Certification Rulemaking Section, Certification Policy Branch, Program

Development Division, Food and Nutrition Service, USDA, 3101 Park

Center Drive, Alexandria, Virginia 22302, (703) 305-2496.

SUPPLEMENTARY INFORMATION:

Classification

Executive Order 12866

The Food and Nutrition Service is issuing this proposed rule in

conformance with Executive Order 12866, and has determined that it is a

``significant regulatory action.'' Based on information compiled by the

Department, it has been determined that this action: (1) Would have an

effect on the economy of less than $100 million; (2) would not

adversely affect in a material way the economy, a sector of the

economy, productivity, competition, jobs, the environment, public

health or safety, or State, local or tribal governments or communities;

(3) would not create a serious inconsistency or otherwise interfere

with an action taken or planned by another agency; (4) would not

materially alter the budgetary impact of entitlements, grants, user

fees, or loan programs or rights and obligations of recipients thereof;

and (5) would not raise novel legal or policy issues arising out of

legal mandates, the President's priorities, or principles set forth in

Executive Order 12866.

Executive Order 12372

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

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

rule and related notice(s) to 7 CFR part 3015, subpart V (48 FR 29115,

June 24, 1983), this Program is excluded from the scope of Executive

Order 12372 which requires intergovernmental consultation with State

and local officials.

Regulatory Flexibility Act

This final rule has been reviewed with regard to the requirements

of the Regulatory Flexibility Act of 1980 (5 U.S.C. 601 et seq.).

William E. Ludwig, the Administrator of the Food and Nutrition Service

(FNS), has certified that this final rule does not have a significant

economic impact on a substantial number of small entities. State and

local welfare agencies will be the most affected to the extent that

they may be required to modify application forms, add telephone access

information to their forms, and modify their verification procedures,

however the effect on these entities will be minimal. Participants and

applicants will be affected by changes to the application and to

procedures in reporting medical expenses.

Paperwork Reduction Act

The reporting and recordkeeping burden associated with the

certification and continued eligibility of food stamp households is

approved by the Office of Management and Budget (OMB) under OMB control

number 0584-0064.

The food stamp application, as approved under this OMB number,

already contains several important verification statements to the

household. The requirement in 7 CFR 273.2(c)(5) that State agencies

develop a separate written general ``Notice of Verification'' versus

including such information on the food stamp application or verbally

conveying such information to households does not alter or change the

methodologies used to determine the burden estimates approved under OMB

control No. 0584-0064.

The requirements in 7 CFR 272.2(a), 272.4(d), and 272.5 relative to

the submission and updating of an optional ``Program information

activities planning document'' as part of a State agency's Plan of

Operation have been submitted to OMB and have been approved under OMB

approval number 0584-0083. This rule amends the table at 7 CFR 271.8

``Information collection/recordkeeping--OMB assigned control numbers''

to reflect the OMB control number for the approval of burden associated

with 7 CFR 272.5 of this rule.

The remaining provisions of this rule do not contain any reporting

and/or recordkeeping requirements subject to approval by OMB under the

Paperwork Reduction Act of 1980 (44 U.S.C. 3507).

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 law, 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)(10) 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); (3) for program

retailers and wholesalers--administrative procedures issued pursuant to

7 U.S.C. 2023 set out at 7 CFR 278.8.

Background

On June 7, 1989 the Department published an interim rulemaking at

54 FR 24518, which implemented several of the food stamp provisions

contained in the Hunger Prevention Act of 1988 (Pub. L. 100-435).

Comments were solicited on the provisions of the interim rulemaking

through August 7, 1989. The Department received 13 comment letters from

State and local welfare agencies and public interest groups. All

comments received were reviewed and considered but comments which were

unclear or not pertinent to this rulemaking are not addressed in this

preamble. For a full understanding of the provisions of this final

rule, the reader should refer to the preamble of the interim rule. The

provisions of the interim rule addressing specified procedures for

claiming the medical deduction are not being finalized in this rule.

Those provisions will be addressed in a forthcoming proposed rule

entitled Simplification of Program Rules. Also, the provision of the

interim rule addressing the delivery of benefits to households which

apply after the fifteenth of the month is not finalized in this rule

but will be placed in final form in the forthcoming Benefit Delivery

final rule.

Definition of Elderly or Disabled--7 CFR 271.2

Section 350 of Public Law 100-435 added three categories to the

definition of elderly or disabled persons. These categories are: (1)

Recipients of interim assistance benefits pending the receipt of

supplemental security income (SSI); (2) recipients of disability-

related medical assistance benefits under title XIX of the Social

Security Act (SSA); and (3) recipients of disability-based State

general assistance benefits. Recipients of any of these benefits must

be treated as disabled persons for food stamp purposes provided the

eligibility to receive these benefits is based upon disability or

blindness criteria which are at least as stringent as those under title

XVI of the SSA. The Department amended paragraph (11) of the definition

of ``Elderly or disabled member'' in 7 CFR 271.2 in the interim

rulemaking to implement these provisions.

The Department received several comments suggesting changes to the

interim rule language. One commenter stated that it was unclear in the

rule language that receipt of interim assistance is involved in only

the first of the three new categories of disabled member. The

Department shares the commenter's concern and is amending paragraph

(11) of the definition of ``Elderly or disabled member'' in 7 CFR 271.2

in this rulemaking to more clearly indicate that receipt of interim

assistance as a condition of being defined as disabled for food stamp

purposes is only required for those persons who are interim recipients

of SSI.

Another commenter stated that it is unclear in the regulatory

language if it is only disability-based State general assistance (GA)

that must be based upon disability or blindness criteria at least as

stringent as title XVI of the SSA, or whether the ``at least as

stringent'' requirement applies to all three types of benefits. The

Department interprets the law to require that the ``at least as

stringent'' criteria apply to all three types of benefits. The

regulatory language at 7 CFR 271.2 is being amended to clarify this

point.

Another commenter pointed out that the definition of elderly or

disabled persons in 7 CFR 271.2 needs to be revised to clearly state

that it is State programs, not individual cases, which are to be

measured by the ``at least as stringent criteria as those under title

XVI of the Social Security Act'' requirement. The commenter argued that

the regulation, as it is written in the interim rule, appears to state

that the decision as to whether a GA program is based on criteria as

stringent as those under title XVI of the Social Security Act can be

made on a case-by-case basis. The commenter argued, however, that the

intent of Public Law 100-435 was for this decision to be made on a

State-by-State basis, not case-by-case. The Department agrees with the

commenter and is amending paragraph (11) of the definition to clarify

this point.

In order to further emphasize that State disability programs will

be measured by criteria at least as stringent as those under title XVI,

the Department has decided to further amend the definition of ``Elderly

or disabled member'' in this final rule to include in paragraph (11) of

the definition the specific citation to the SSA regulations

interpreting title XVI of the SSA. Including this citation will provide

State and local agencies with the information necessary to determine if

an individual applying for food stamps meets the definition of elderly/

disabled person as set forth in the Food Stamp Act.

Training--7 CFR 272.4(d)

Section 322(a) of Public Law 100-435 amended section 11(e)(6)(C) of

the Act (7 U.S.C. 2020(e)(6)(C)) to specifically require that training

for case workers provided by the State agency convey the goals of and

methods for promptly and accurately certifying eligible households. The

interim rule amended 7 CFR 272.4(d)(1)(i) to reflect this statutory

language. A commenter did not think it was necessary for the Department

to instruct State agencies to include this ``function'' of the Program

in their training programs. As the Department explained in the preamble

of the interim rule, this language was added to the regulations to

emphasize Congressional concern in this area as reflected by Public Law

100-435. The Department is adopting the interim provisions at 7 CFR

272.4(d)(1)(i) as final without change.

In addition, pursuant to section 322(b) of Public Law 100-435, the

interim rule added a new paragraph (d)(2) to 7 CFR 272.4 to allow State

agencies, at their option, to offer training and assistance to persons

working with certain volunteer or nonprofit organizations. In

conjunction with this new option, the interim rule added a new

paragraph (f) to 7 CFR 277.4 to provide that expenses (e.g., travel

costs, lodging, or meals) of the persons working with the volunteer or

nonprofit organization who receive this training and assistance would

not be reimbursed. A commenter was concerned that the interim rule

language appearing in 7 CFR 277.4(f) could be misinterpreted to mean

that travel expenses of State employees who work with organizations

that receive this training would not be allowable. The Department

agrees that the language could create this misinterpretation.

Accordingly, this final rule amends the interim provisions at 7 CFR

277.4(f) to clarify this distinction. The interim provision at 7 CFR

272.4(d)(2) is adopted as final without change.

Information for Low-Income Households--7 CFR 272.5(c)

Section 204(a) and (b) of Public Law 100-435 and 7 CFR 272.5(c) of

the interim rule allow State agencies, at their option, to inform low-

income households about the availability, eligibility requirements,

application procedures and benefits of the Food Stamp Program. Pursuant

to section 204(b) of Public Law 100-435, the interim rule also amended

7 CFR 272.5(c) to specify that State agencies, at their option, may

request reimbursement under 7 CFR part 277 for these outreach

activities. The interim rule contained a number of conforming

amendments necessitated by the addition of these outreach activity

provisions. 7 CFR 272.5(c) was amended to specify that if a State

agency elects to request reimbursement for Program informational

materials directed at low-income households, those materials must meet

any applicable bilingual requirements. 7 CFR 272.5(c) was further

amended to require that prior to claiming such outreach costs, State

agencies must receive approval from the Food and Nutrition Service

(FNS) of an appropriate amendment to their State Plan of Operations. In

addition, 7 CFR 272.2(a)(2) was amended to add a reference to the

optional ``Program informational activities plan'' as a component of

the State Plan of Operation, and 7 CFR 272.2(d)(1) was amended to add

the requirement that State agencies submit the optional ``Program

informational activity'' planning document to FNS for inclusion in

their State Plan of Operation. Lastly, the interim rule added a

conforming amendment to 7 CFR part 277, appendix A, to remove paragraph

C(14) which was made obsolete.

One commenter felt the requirement of 7 CFR 272.2(a)(2) which

mandates that State agencies submit a Program informational activities

plan is burdensome. The commenter suggested that the budget

justification contained on the form FNS-366A should be sufficient to

obtain the prediction of expenditures. The Department disagrees. As

State agencies begin to implement outreach under Public Law 100-435,

the Department wishes to make sure that controls are in place that

ensure cost-effective spending. The plans provide important information

on the kinds of activities and services being planned as well as the

sub-populations at which State agencies are targeting their efforts.

Having this information and the budget projection data will enable the

Department to assist State agencies in developing the most cost-

effective outreach programs possible. Therefore, this final rule adopts

the interim provisions pertaining to information for low income

households as final without change.

Waiver of the In-Office Interview--7 CFR 273.2(e)

In accordance with section 330 of Public Law 100-435, the interim

rule amended 7 CFR 273.2(e) to explicitly specify the circumstances

under which the in-office interview for an applicant household must be

waived. Consequently, current rules at 7 CFR 273.2(e) require that in-

office interviews be waived if requested by households which are unable

to send a household member to the food stamp office because they: (1)

Are elderly or disabled as defined in 7 CFR 271.2; (2) live in a

location which is not served by a certification office; (3) are

experiencing transportation difficulties as determined by the State

agency on a case-by-case basis; or (4) are experiencing other hardships

that the State agency determines warrants a waiver of the in-office

interview such as illness, care of a household member, hardships due to

residing in a rural area, prolonged severe weather or work hours. If

the in-office interview is waived, the State agency has the option to

conduct a telephone interview or a home visit.

The Department received one comment criticizing the interim rule

provision, stating that the provision made ``the obvious and thoroughly

unnecessary statement that granting waivers to in-office interviews

applied in rural areas''. The commenter felt that adding emphasis to

the regulations is not a decisive way to act when the Program has

operational problems. Furthermore, the commenter felt that problems

State agencies may have in applying the requirement to grant waivers of

in-office interviews should be dealt with by FNS regional office staff.

The Department understands the commenter's concerns, but the language

in the interim rule was not added to address operational concerns, but

rather was required by law. Public Law 100-435 clearly states that

waiving in-office interviews for households in rural areas is sometimes

necessary, and State agencies must do so when a household meets

specific criteria. The interim rule amended 7 CFR 273.2(e) specifically

to address Congressional concern that residency in a rural area not be

a barrier to participation in the Food Stamp Program. Therefore this

action adopts the interim provisions at 7 CFR 273.2(e) as final without

change.

The Food Stamp Application Form--7 CFR 273.2(b)

Pursuant to section 310 of Public Law 100-435, the June 7, 1989

interim rule amended several provisions of the regulations pertaining

to the food stamp application form. Prior to publication of the interim

rule, the regulations at 7 CFR 273.2(b) permitted State agencies to

deviate from the FNS-designed food stamp application in order to

process joint applications with other assistance programs, meet the

requirements of a State agency computer system or accommodate State

agency needs that are determined to be justifiable. The first provision

of section 310 of Public Law 100-435 amended section 11(e)(2) of the

Food Stamp Act to mandate that, in addition to its current criteria for

approving State agency application forms, FNS must also ensure that the

application is brief. Accordingly, the June 7, 1989 interim rule

amended 7 CFR 273.2(b) to include brevity as a condition for approving

deviations from the FNS food stamp application form.

The majority of comments received about the food stamp application

form concerned this provision. Commenters, while supporting the interim

rule's intent to shorten the food stamp application, wondered how the

Department intends to judge whether an application form is ``brief''

enough to meet the requirements of Public Law 100-435.

Senate Report No. 100-397 (p. 24) expressed Congressional dismay

over the length of multi-program application forms, i.e. application

forms for food stamps and Aid to Families with Dependent Children

(AFDC) benefits. The Department concurs with Congress on this issue.

The purpose of an application form is to obtain basic eligibility

information from the client (such as name, address, income, expenses,

etc.). Such information requires only a few pages of questions for

applicant households to complete. The Department also understands,

however, that limiting the length of applications can be a problem for

State agencies trying to administer a variety of programs. In December

1990, the Department completed a review of all State-designed

application forms. The review had been initiated because of the passage

of Public Law 100-435 and the ongoing concern that the food stamp

application not be a barrier to participation in the Program. The

reviewers found length to be the most disturbing problem with State-

designed multi-program application forms. The length of the forms

ranged from 3 to 44 pages, and the number of programs covered by the

forms ranged from 3 to 9. Of the multi-program applications reviewed, 8

forms were 1-10 pages long, 21 were 11-20 pages, 7 were 21-30 pages,

and 12 forms were over 30 pages long.

The Department realizes that the length of application forms is due

to a great extent to such demands as automation and the need to

administer a variety of programs. The Food Stamp Act, however, requires

the Department to ensure that application forms are easy to use,

readable, brief and written in simple terms. Therefore, the Department,

in reviewing State agency applications, attempts to balance the need to

reduce the burden on applicants and each State agency's need to

administer the many programs under its jurisdiction. The Department is

making no changes to the interim provision and is adopting that

provision as final.

The second provision of section 310 of Public Law 100-435 requires

that the Department, in consultation with the Department of Health and

Human Services (HHS), provide guidance to those State agencies

requesting assistance in the development of brief, simply-written

application forms, including forms that allow for simultaneous

application to participate in the Food Stamp, AFDC, and Medicaid

Programs. Accordingly, the June 7, 1989 interim rule amended 7 CFR

273.2(b) to advise State agencies of their option to request assistance

from FNS when developing their applications.

A commenter suggested that the Department reevaluate the FNS

application form and work with the Department of Health and Human

Services (HHS) to design a simpler, shorter form to be used for all

assistance programs. The Department has completed drafting a revised

version of the FNS Food Stamp Application Form (FNS Form 385), which is

available to State agencies. The Department believes, however, that

since many public assistance programs are administered by State

agencies and funded by a combination of Federal and State monies, State

agencies are better able to design a short, multi-program application

form that will enhance the administration of their public assistance

programs while lessening barriers to participation for food stamp

applicants.

Another commenter objected that there is no clear procedure to

request assistance from FNS in developing a new application form. The

Department disagrees. In the preamble to the June 7, 1989 interim rule

(54 FR 24521), the Department describes the procedure necessary to

request assistance. The procedure, which has not changed, is for State

agencies to request assistance through the Deputy Administrator for the

Food Stamp Program. The Deputy administrator, or the Deputy

Administrator's designee, would be responsible for overseeing the

review of an application form by FNS officials at the Regional level

and would coordinate the review of the application with HHS. Regional

officials will be responsible for coordinating between the State agency

and the National office.

Section 310 of Public Law 100-435 also requires that all

applications for food stamp benefits contain certain statements on the

front cover which advise the household of important information about

the application process. These required statements include: (1) A place

on the front cover where applicants can write their names, addresses,

and signatures; (2) instructions that advise the households of their

right to file the application without finishing all parts; (3) a

statement describing the expedited service procedures; and (4) a

statement that informs the household that benefits are provided only

from the date of application. Accordingly, the interim rule amended 7

CFR 273.2(b) to require that the food stamp application form contain

the above information.

Subsequent to publication of the interim rule, section 1736 of the

Mickey Leland Memorial Domestic Hunger Relief Act, Title XVII, Public

Law 101-624, 104 Stat. 3359, enacted November 28, 1990 (hereafter

referred to as the Leland Act) amended section 11(e) of the Food Stamp

Act to require that certain information previously mandated to be

displayed on the front cover of the application form must now be placed

``on or near'' the front page of the application form. There must

continue to appear on the front page of the application a place where

applicants can write their names, addresses, and signatures. However,

the instructions that advise the households of their right to file the

application without finishing all parts, the statement describing the

expedited service procedures, and the statement that informs the

household that benefits are provided only from the date of application

must now appear ``on or near'' the front page. The Department

implemented this provision in a final regulation implementing

categorical eligibility and application provisions of the Leland Act,

published at 56 FR 63611 on December 4, 1991, which amended 7 CFR

273.2(b)(1)(v), (b)(1)(vi), and (b)(1)(vii).

The changes mandated by the Leland Act and implemented in the final

rule published on December 4, 1991 have superseded the provisions of

Public Law 100-435 pertaining to mandatory information appearing on the

front page of the application form. For this reason, the Department is

not addressing any comments which discuss this provision of Public Law

100-435. Individuals with any questions about this provision should

refer to the December 4, 1991 final rule.

Section 310 of Public Law 100-435 and the interim rule mandate that

households be informed on the application of their right to file for

food stamp benefits with only their name, address and signature. This

is reflected in 7 CFR 273.2(b)(1)(iv) of the interim rule. A commenter

felt this requirement did not consider the impact on on-line

application systems which satisfy the intent of this provision in a

more sophisticated manner. Usually, an on-line application system does

not require applicants to complete any handwritten information on an

application form. The eligibility worker completes the on-line

application at the certification interview. When an applicant is unable

to complete the on-line application process, usually some sort of

``Intent to Apply'' application form is submitted to protect the filing

date. The applicant then returns to complete the on-line application

process at a later date.

The Department does not believe the interim rule conflicts with any

on-line system presently in operation. In the final rulemaking

implementing categorical eligibility and application provisions of the

Leland Act, published at 56 FR 63611 on December 4, 1991, the

Department amended 7 CFR 273.2(b)(3) to give FNS authority to review

and approve deviations from the FNS-designed application form,

including the use of on-line application forms. The Department believes

this oversight authority will ensure that on-line application forms

contain the mandatory information required by law. The Department is

therefore adopting the interim provision in 7 CFR 273.2(b)(1)(iv) as

final without change.

The Department also received a general comment which recommended

the final rule specifically indicate when the term ``applications''

refers to the applicant's initial request for certification only, and

when it refers to recertification. For food stamp purposes, the

Department does not differentiate between certification and

recertification. In both situations, a household must complete and

submit a food stamp application form, provide verification of

information and participate in an interview with an eligibility worker.

Therefore, the term ``applications'' in the interim rule and in this

final rule refers to both initial certification and subsequent

recertifications. The Department is, however, considering

differentiating between initial certification and subsequent

recertification. The Department is currently developing a proposed rule

to consider means to simplify program requirements, including

simplifying recertification procedures. In that rule, the Department

may propose introducing differences in processing initial applications

for certification and applications for recertification.

Joint Processing of Applications--7 CFR 273.2(j)

Section 352 of Public Law 100-435 reinstated joint application

practices that were previously required under the Food Stamp Act of

1977, as originally enacted, but subsequently were made optional by the

Omnibus Budget Reconciliation Act of 1982 (Pub. L. 97-253, 96 Stat.

763, Sept. 8, 1982). Accordingly, the interim rule, published June 7,

1989, amended 7 CFR 273.2 (j) and (j)(1)(i) to require State agencies

to join the application for food stamps with the application for public

assistance (PA) and general assistance (GA) and to notify AFDC

applicants of their right to file a joint application. The interim rule

also amended 7 CFR 273.2(j)(1) to add a new paragraph (j)(1)(v) which

specified that households whose PA/GA eligibility was terminated shall

not be required to file a new application, but shall have their food

stamp eligibility and benefits determined by available information from

the PA/GA casefile provided the information is sufficient for food

stamp purposes.

Comments on the mandate for joint processing of applications were

nearly evenly split between opponents and proponents. One commenter

recommended the final rule mandate development of a single, universal

application for all needs-based assistance programs. Another commenter

focused on the issue of whether the interim rule exceeded the

legislative intent of section 352 by requiring a single ``application''

for both food stamps and AFDC when only a single ``interview'' is

necessary. The commenter felt the interim rule should be amended to

mandate only a joint interview for food stamp/AFDC applicants, not a

joint application. Another commenter disagreed with the requirement to

include the application for food stamps in the application for GA

benefits because GA is a State-run program.

In regard to the first comment recommending the development of a

single, universal application, the Department has found that many State

agencies have already developed ``multi-program'' forms, i.e., one form

is used for food stamps, PA and GA, and medical assistance. The

Department feels State agencies are in a better position to design

application forms that enhance the administration of their benefit

assistance programs. For this reason, the Department believes mandating

a single, universal application form is unnecessary.

The Department disagrees with the premise of the second comment,

which stated that the interim rule exceeded legislative intent by

mandating a joint application for both food stamps and AFDC rather than

just a joint interview. Section 11(i) of the Food Stamp Act (7 U.S.C.

2020(i)), as amended by section 352 of Public Law 100-435, requires

that households in which all members are included in a federally aided

public assistance grant (such as AFDC) have their application for food

stamps contained in the public assistance application form. The

Department believes the law is clear in requiring a joint application

for food stamps and PA (as used here, PA is defined at 7 CFR 271.2).

In regard to the third comment, legislation passed subsequent to

Public Law 100-435 further defined the requirements regarding joint

applications for GA and food stamps. Section 1740 of the Leland Act

modified the combined application form requirement in section 11(i)(3)

of the Food Stamp Act to require a combined GA and food stamp

application form only in States that have a single statewide GA

application form. The Department implemented this provision in the

December 4, 1991, final rule (56 FR 63597) which implemented the

categorical eligibility and application provisions of the Leland Act.

A fourth commenter recommended that the Department withhold

approval of joint applications which require clients to answer

questions irrelevant to the Food Stamp Program if they are applying for

food stamps only. The commenter felt that clients must be informed that

answers to those questions are optional. The Department agrees that any

joint application must be clear enough to afford applicants the option

of answering only those questions relevant to the program or programs

for which they are applying. The Department is amending the regulatory

language at 7 CFR 273.2(b)(3) to add this requirement.

Application Process--Verification--7 CFR 273.2(f) and 273.21(j)

Section 311 of Public Law 100-435 and the interim rule published

June 7, 1989, implemented five provisions pertaining to verification of

application information supplied by the household. The interim

provisions required that State agencies: (1) Provide all applicant

households with a clear written statement explaining what the household

must do to cooperate in obtaining verification and completing the

application; (2) assist each applicant household in obtaining

verification and completing the application process; (3) not require

households to provide multiple sources of verification when the

household has already provided verification which adequately supports

statements on the application (although a State agency may require

households to provide additional verification when the State agency

determines that existing verification is incomplete, inaccurate or

inconsistent); (4) not deny an application solely because a person

outside of the household (who is not a person outside of the household

because of a specific disqualification action or ineligible status)

fails to cooperate with the State agency's processing of the

application; and (5) process applications, if a household cooperates by

providing information, by taking appropriate steps to verify

information otherwise required to be verified under the Food Stamp Act.

One commenter felt that clarification is needed regarding whether a

State agency must provide applicants with a general verification

statement or a specific verification statement tailored to each

applicant household (7 CFR 273.2(c)(5)). The Department believes the

preamble to the interim rule was quite clear in encouraging State

agencies to develop a general statement that could be given to all

applicant households, rather than a written statement which would need

to be tailored to each applicant household.

While the interim rule provided guidelines that must be used in

developing the general verification notice, the Department wishes to

promote greater conformity among State agency-designed notices to

ensure that applicant households are consistently informed of the

necessary documents needed for verification of information. Therefore,

this final action amends 7 CFR 273.2(c)(5) to add a requirement that

the State agency, at a minimum, include in the general verification

notice examples of the types of documents the household should provide

and an explanation of the period of time the documents should cover.

Another commenter correctly pointed out that the preamble of the

interim rule was incorrect in stating that current regulations require

that social security numbers must be verified prior to certifying any

applicant household for benefits. Current rules at Sec. 273.2(f)(1)(v)

state that the State agency shall not delay the certification for or

issuance of benefits to an otherwise eligible household solely to

verify the social security number (SSN) of a household member.

The same commenter correctly identified an inconsistency in the

interim regulation language at 7 CFR 273.2(f)(8)(i)(A) with respect to

the requirement for verification where the source of a household's

income has changed. The first sentence of that section correctly states

that ``the State agency shall verify a change in income or actual

expenses if the source has changed or the amount has changed by more

than $25.'' The final sentence inadvertently omits the requirement for

verification anytime the source of income changes, even if the amount

has changed by $25 or less. The same inconsistency exists at 7 CFR

273.2(f)(8)(ii). This final action amends 7 CFR 273.2(f)(8)(i)(A) and

(ii) to correct the inconsistencies.

Another commenter criticized the interim rule's interpretation of

section 311(D) of Public Law 100-435. Section 311(D) provides that a

State agency may not deny any application for participation solely

because of the failure of a person outside of the household to

cooperate with a request for providing verification. This provision

would not apply when the person refusing to cooperate would otherwise

be a household member but for the operation of any of the individual

disqualification provisions of subsections (b), (d), (e), (f), and (g)

of section 6 of the Food Stamp Act. These subsections require

disqualification for any person intentionally making a false or

misleading statement or committing any act which violates the Food

Stamp Act (section 6(b)); any non-exempt person who is physically and

mentally fit and is between the ages of 16 and 60 who refuses to

register to work (section 6(d)); any person who is a student enrolled

at least half-time in an institution of higher education (section

6(e)); any person who is not a resident of the United States, and is

not either a citizen or a lawful alien (section 6(f)); and any

individual who receives SSI benefits in a ``cash-out'' State (section

6(g)).

When amending 7 CFR 273.2(d)(1) to incorporate the mandate of

section 311(D) of Public Law 100-435, the Department added two more

categories to the list of persons outside the household who cause the

denial of an application for participation if they fail to cooperate

with a request for providing verification. These two new categories

were: Individuals disqualified for failure to provide an SSN, and

persons who fail to attest to their citizenship or alien status.

The commenter who criticized this provision felt that the

Department had exceeded its authority in excluding two new categories

of non-household members from the third-party verification rule.

The commenters correctly point out that the Department has

broadened the third party verification rule to include two additional

categories of persons who will cause the denial of an application to

participate if they failed to cooperate with a request to provide

verification. This was done to make this provision consistent with

other provisions in the regulations where ineligible or disqualified

persons are, in effect, deemed by program regulations to be a household

member for purposes of determining eligibility and benefit levels. FNS

believes this is appropriate as it is consistent with the desire to

simplify program requirements that was expressed by Congress in

adopting the Hunger Prevention Act (See, e.g., Senate Report No. 100-

397, p.25).

The interim rule also amended verification standards for households

subject to monthly reporting and retrospective budgeting (MRRB) at 7

CFR 273.21(i) (1) and (3). Those provisions are not being finalized in

this final rule, however, because they have been superseded by

amendments made in the final rule on Monthly Reporting and

Retrospective Budgeting Amendments and Mass Changes, published on

December 4, 1991, at 56 FR 63597. Individuals with questions about

verification standards for MRRB households should refer to this

December 4, 1991 final rule.

Demonstration Projects/Cash-Outs in Other Benefit Programs--7 CFR

273.9(c)(1) and 273.10(d)(1)

In accordance with section 340 of Public Law 100-435, the interim

rule amended 7 CFR 273.9(c)(1) to specify that in-kind or vendor

payments which would normally be excluded as income but are converted

in whole, or in part, to a direct cash payment under the approval of a

federally authorized demonstration project shall continue to be

excluded from income. These federally authorized demonstration projects

include demonstration projects created by waiver of the provisions of

Federal law.

However, conversion to direct cash payment does not change the non-

deductibility of the expenses paid with these funds. Accordingly, in

order to ensure that an excluded vendor payment which has been

converted to a direct cash payment is not excluded twice (once as

income and once as expenses) the interim rule amended 7 CFR

273.10(d)(1)(i) to specify that an expense covered by an excluded

vendor payment which has been converted to a direct cash payment under

the approval of a federally authorized demonstration project remains

non-deductible as a household expense.

The Department received no comments regarding these provisions of

the interim rule. Therefore, this action adopts the interim provisions

as final with no changes.

Reporting Responsibilities--7 CFR 273.12 and 273.21

Under section 323 of Public Law 100-435 and the interim rule, State

agencies are required to provide a household, at the time of

certification and recertification, with a statement describing the

household's reporting responsibilities. Moreover, State agencies must

provide all households with a toll-free telephone number or a number

where collect calls will be accepted in order for the household to

reach an appropriate representative of the State agency. The interim

rule amended 7 CFR 273.12(b)(1) to specifically require that the

``change report'' form include a statement describing the household's

reporting responsibilities. In addition, 7 CFR 273.12(b)(1) was amended

to specify that the ``change report'' form must contain the number of

the food stamp office and a toll-free number or a number where collect

calls will be accepted. (Reporting requirements remained unchanged for

households subject to MRRB provisions of 7 CFR 273.21.)

The interim rule also amended the provisions relative to the Notice

of Eligibility, the Notice of Denial, the Notice of Adverse Action, and

the requirements for bilingual notices. The regulations at 7 CFR

272.4(b)(3)(ii)(B), 7 CFR 273.10(g)(1)(i)(A), 7 CFR 273.10(g)(1)(ii)

and 7 CFR 273.13(a)(2), respectively, were amended to specify that

these notices must also include either a toll-free number or a number

where collect calls will be accepted for households living outside the

local calling area.

The Department received one comment on these provisions of the

interim rule. The commenter pointed out that the legislative intent of

the toll-free or collect telephone number was to increase households'

access to the State agency in order to obtain information or report

changes. The commenter felt this statement of purpose should be

incorporated into the rule itself to help guide State agencies'

implementation efforts.

The Department believes including a statement of purpose in 7 CFR

273.12(b) is unnecessary. Congress was clear that its intent in passing

the Hunger Prevention Act was to make it easier for eligible households

to apply and obtain benefits (Senate Report No. 100-397, p.25). On its

face, the implementation of this provision demonstrates its purpose

without additional explanation. The interim provisions are adopted as

final without change.

Special Provisions for Farm Households--7 CFR 273.8, 273.11, and 273.21

Pursuant to two provisions of Public Law 100-435, the interim rule

amended Program regulations to extend eligibility to farm households

which are in need of program assistance. Section 341 of Public Law 100-

435 specified that self-employed farm households which are subject to

MRRB have the option to annualize their self-employment income and

expenses over a 12-month period. This provision was implemented in the

interim rule by amending 7 CFR 273.21(f)(2)(i) and 273.11.

Section 342 of Public Law 100-435 affected farm households which

quit farming. Accordingly, 7 CFR 273.8(e)(5) was amended by the interim

rule to specify that property essential to self- employment of a

household member engaged in farming is excluded as a resource for one

year from the date the household member terminates self-employment from

farming. A conforming amendment to 7 CFR 273.8(h)(1)(i) specified that

any licensed vehicle which had been used over 50 percent of the time in

the self-employment of a household member engaged in farming continues

to be excluded as a resource for one year from the date the household

member terminates his/her self-employment from farming.

The Department received only one comment on the interim rule which

supported the one-year extension of the above exclusion. Therefore,

this action adopts the interim provisions as final without change.

Implementation--7 CFR 272.1(g)

Under the interim rule, the provisions addressed in this final rule

were retroactively implemented effective July 1, 1989. The Department

received several comments complaining about the short implementation

time for the interim rule. While we sympathize about the short lead

time given to State agencies to implement the interim rule, the

Department had no discretion in this matter and had to implement the

time frames mandated by Public Law 100-435.

The provisions of this final action which adopt as final without

change provisions of the interim rule or modify a provision of the

interim rule for clarity only are retroactively effective to July 1,

1989. The clarifications do not represent any change in policy and,

thus, do not require any special implementation efforts by State

agencies.

The provisions of this final action which require the alteration of

State procedures, are to be effective May 6, 1994. State agencies must

complete implementation efforts of new provisions no later than

September 5, 1994.

Any variance resulting from the implementation of the provisions of

this amendment shall be excluded from quality control error analysis

for 120 days from the required implementation date in accordance with 7

CFR 275.12(d)(2)(vii).

List of Subjects

7 CFR Part 271

Administrative practice and procedure, Food stamps, Grants

programs-social programs.

7 CFR Part 272

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

Reporting and recordkeeping requirements.

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.

7 CFR Part 277

Food stamps, Government procedures, Grant programs-social programs,

Investigations, Records, Reporting and recordkeeping requirements.

Accordingly, 7 CFR parts 271, 272, 273, and 277 are amended as

follows:

1. The authority citation of parts 271, 272, 273, and 277 continues

to read as follows:

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

PART 271--GENERAL INFORMATION AND DEFINITIONS

Sec. 271.2 [Amended]

2. The amendment to 7 CFR 271.2, as published at 54 FR 24527, June

7, 1989, which amended the definition of Elderly or Disabled Member by

adding a new paragraph (11) is adopted final with the following

changes:

a. Paragraph (11) is amended by adding the words ``a recipient of''

before the words ``disability related medical assistance'', and before

the words ``disability-based State general assistance''. Paragraph (11)

is also amended by removing the word ``those'' after the words

``eligibility to receive'', and replacing it with the words ``any of

these''. Paragraph (11) is further amended by adding the words

``established by the State agency'' before the words ``which are at

least as stringent as those'' Paragraph (11) is also amended by adding

the words ``(as set forth at 20 CFR part 416, subpart I, Determining

Disability and Blindness as defined in Title XVI)'' to the end of the

paragraph.

Sec. 271.8 [Amended]

3. The amendment to 7 CFR 271.8, as published at 54 FR 24527, June

7, 1989, to add an OMB Control Number for Sec. 272.5, paragraph (c), is

adopted final.

PART 272--REQUIREMENTS FOR PARTICIPATING STATE AGENCIES

4. The amendment to 7 CFR 272.1, as published at 54 FR 24527, June

7, 1989, to add paragraph (g)(110) is adopted final.

5. In Sec. 272.1, a new paragraph (g)(132) is added to read as

follows:

Sec. 272.1 General terms and conditions.

* * * * *

(g) Implementation. * * *

(132) Amendment No. 316. The provisions of this final rule that

amend 7 CFR 273.2(b)(3), 273.2(c)(5), 273.2(f)(8) (i)(A) and (ii), and

paragraph (11) of the ``Elderly or disabled member'' definition in 7

CFR 271.2 are effective as of May 6, 1994. The State agency shall

implement the provisions not later than September 5, 1994 for all

households newly applying for Program benefits on or after such

implementation date. The current caseload shall be converted to these

provisions at household request, at the time of recertification, or

when the case is next reviewed, whichever occurs first, and the State

agency must provide restored benefits back to the required

implementation date. If for any reason a State agency fails to

implement on the required implementation date, restored benefits shall

be provided, if appropriate, back to the required implementation date

or the date of application whichever is later. Any variances resulting

from implementation of the provisions of this amendment shall be

excluded from error analysis for 90 days from this required

implementation date in accordance with 7 CFR 275.12(d)(2)(vii).

Sec. 272.2 [Amended]

6. The amendment to 7 CFR 272.2, as published at 54 FR 24527, June

7, 1989, which added text to the seventh sentence of paragraph (a)(2),

and a new paragraph (d)(1)(ix) is adopted final.

Sec. 272.4 [Amended]

7. The amendment to 7 CFR 272.4, as published at 54 FR 24527, June

7, 1989, which amended paragraph (b)(3)(ii)(B), added a sentence to

paragraph (d)(1)(i), redesignated paragraph (d)(2) as paragraph (d)(3),

and added a new paragraph (d)(2) is adopted final.

Sec. 272.5 [Amended]

8. The amendment to 7 CFR 272.5, published at 54 FR 24527, to

revise paragraph (c) in its entirety is adopted final.

PART 273--CERTIFICATION OF ELIGIBLE HOUSEHOLDS

9. The amendment to 7 CFR 273.2, published at 54 FR 24528, June 7,

1989, which revised paragraph (b) in its entirety, redesignated

paragraph (c)(5) as paragraph (c)(6) and added a new paragraph (c)(5),

added two new sentences to the end of paragraph (d)(1), revised the

fourth sentence of paragraph (e)(2), added a new paragraph

(f)(1)(viii)(A)(6), revised paragraphs (f)(5)(i), (f)(8)(i)(A) and

(f)(8)(ii) in their entirety, revised the first two sentences of

paragraph (f)(8)(i)(C), amended the last sentence of paragraph (g)(2),

revised the first sentence of paragraph (h)(1)(i)(C), revised the first

and last sentences of paragraph (j) introductory text, removed the

first two sentences of paragraph (j)(1)(i) and added three new

sentences in their place, and added a new paragraph (j)(1)(v) is

adopted final with the following changes:

a. The second sentence of paragraph (b)(3) is amended by removing

the word ``and'' after the words ``understandable to applicants'' and

replacing it with a comma, and adding after the phrase ``easy to use''

the words ``, and, for multi-program applications, clear enough to

afford applicants the option of answering only those questions relevant

to the program or programs for which they are applying''.

b. The last sentence in paragraph (f)(8)(i)(A) is amended by

removing the comma after the words ``The State agency shall not verify

income'' and adding after that the words ``if the source has not

changed and if the amount is unchanged or has changed by $25 or less,

unless the information is incomplete, inaccurate, inconsistent or

outdated. The State agency shall also not verify''. Paragraph

(f)(8)(ii) is amended by removing the comma after the words ``the State

agency shall not verify changes in income'' and adding after that the

words ``if the source has not changed and if the amount has changed by

$25 or less, unless the information is incomplete, inaccurate,

inconsistent or outdated. The State agency shall also not verify''.

c. Paragraph (c)(5) is amended by adding one sentence to the end of

the paragraph to read as follows:

Sec. 273.2 Application processing.

* * * * *

(c) Filing an Application * * *

(5) * * * At a minimum, the notice shall contain examples of the

types of documents the household should provide and explain the period

of time the documents should cover.

* * * * *

Sec. 273.8 [Amended]

10. The amendment to 7 CFR 273.8, published at 54 FR 24529, June 7,

1989, which amended paragraphs (e)(5) and (h)(1)(i) is adopted final.

Sec. 273.9 [Amended]

11. The amendment to 7 CFR 273.9, published at 54 FR 24529, June 7,

1989, which added a new sentence to paragraph (c)(1) is adopted final.

Sec. 273.10 [Amended]

12. The amendment to 7 CFR 273.10, published at 54 FR 24529, June

7, 1989, which added a new sentence to paragraph (d)(1)(i), amended the

fourth sentence of paragraph (g)(1)(i)(A), and amended the first

sentence of paragraph (g)(1)(ii) is adopted final.

Sec. 273.11 [Amended]

13. The amendment to 7 CFR 273.11, published at 54 FR 24530, June

7, 1989, which added a new paragraph (a)(1)(v) is adopted final.

Sec. 273.12 [Amended]

14. The amendment to 7 CFR 273.12, published at 54 FR 24530, June

7, 1989, which amended paragraphs (b)(1)(ii) and (b)(1)(iii), and added

new paragraphs (b)(1)(iv) and (b)(1)(v) is adopted final.

Sec. 273.13 [Amended]

15. The amendment to 7 CFR 273.13(a)(2), published at 54 FR 24530,

June 7, 1989, is adopted final.

Sec. 273.21 [Amended]

16. The amendment to 7 CFR 273.21 published at 54 FR 24530, June 7,

1989 which revised the introductory text of paragraph (c) and paragraph

(c)(5), added a new sentence to the end of paragraph (f)(2)(i),

redesignated paragraph (h)(3)(iii) as paragraph (h)(4), amended newly

redesignated paragraph (h)(4), amended paragraph (j)(3)(iii)(B) is

adopted final.

PART 277--PAYMENTS OF CERTAIN ADMINISTRATIVE COSTS OF STATE

AGENCIES

Sec. 277.4 [Amended]

17. The amendment to 7 CFR 277.4, published at 54 FR 24531, June 7,

1989, which added a new paragraph (f) is adopted final with the

following changes:

a. Paragraph (f) is amended by removing the word ``the'' after the

words ``persons working with'' and replacing it with the words

``volunteer or nonprofit.''

Appendix A to Part 277--[Amended]

18. The amendment to Appendix A, published at 54 FR 24531, June 7,

1989, which removed paragraph C.(14) is adopted final.

Dated: March 24, 1994.

William E. Ludwig,

Administrator.

[FR Doc. 94-8063 Filed 4-5-94; 8:45 am]

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