Food Stamp Program: Benefit Delivery Rule

DEPARTMENT OF AGRICULTURE

Food and Consumer Service

7 CFR Parts 272 and 274

[Amendment No. 333]

RIN 0584-AB32

Food Stamp Program: Benefit Delivery Rule

AGENCY: Food and Consumer Service, USDA.

ACTION: Final rule.

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SUMMARY: This rulemaking finalizes three Food Stamp Program provisions

relating to benefit delivery. These regulations relate to the staggered

issuance of benefits on Indian reservations, combined or aggregate

allotments, and the issuance of benefits in rural areas where

households may experience difficulty in obtaining program benefits.

In addition to the regulatory changes described above, this rule

makes final three minor technical changes in current regulatory

issuance provisions which are deemed appropriate by the Department to

improve benefit issuance.

DATES: The amendments to Secs. 272.2(a)(2) and (d)(1)(xi), and

Secs. 274.2(a), (c), and (g) are effective February 1, 1992. State

agencies were instructed through an agency directive dated May 20,

1992, to implement these provisions on that date. The amendment to

Sec. 274.2(d)(2) is effective March 25, 1994. State agencies were

instructed through an agency directive dated March 31, 1994, to

implement this provision on that date. All remaining amendments are

effective September 1, 1995.

FOR FURTHER INFORMATION CONTACT: James I. Porter, Supervisor, Issuance

and Accountability Section, State Administration Branch, Program

Accountability Division, Food Stamp Program, Food and Consumer Service,

USDA, 3101 Park Center Drive, Room 904, Alexandria, Virginia 22302,

telephone (703) 305-2383.

SUPPLEMENTARY INFORMATION:

Executive Order 12866

This rule has been determined to be not significant for purposes of

Executive Order 12866 and, therefore, has not been reviewed by the

Office of Management and Budget.

Regulatory Flexibility Act

This action has also 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 final rule will not have a significant impact on a

substantial number of small entities. The requirements of the rule will

affect State and local agencies which administer the Food Stamp

Program, as well as food stamp applicants and recipients.

Paperwork Reduction Act

The provisions of this final rule do not contain record-keeping or

reporting requirements subject to approval by the Office of Management

and Budget 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 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'' section 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

set out at 7 CFR 273.15; (2) for State agencies--administrative

procedures issued pursuant to 7 U.S.C. 2023 and set out at 7 CFR 276.7;

and (3) for program retailers and wholesalers--administrative

procedures issued pursuant to 7 U.S.C. 2023 and set out at 7 CFR 278.8.

[[Page 20179]]

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 at 7 CFR part 3015, subpart V, and related Notice (48 FR 29115,

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

Order 12372 which requires intergovernmental consultation with State

and local officials.

Public Participation

Section 274.2(c) is simply a restatement of existing Food Stamp

Program regulations regarding the obligation of State agencies to

provide combined or aggregate allotments in certain circumstances and

makes no changes in existing policy. Section 274.2(d)(2) is the

regulatory adoption of Section 102 of Pub. L. 103-225 regarding the

availability of staggered issuance of benefits on Indian reservations.

Therefore, the amendments to 7 CFR 274.2(c) and (d)(2) are being issued

as final rules without prior notice and public comment. The language of

Sec. 274.2(d)(2) is the same as that employed in Pub. L. 103-225.

Section 102 of Pub. L. 103-225 is non-discretionary in that it makes an

existing policy, staggered issuance, available to Indian reservations

for at least 15 days per month at the request of the tribal governing

authority. Because of the non-discretionary nature of the amendments to

7 CFR 274.2(c) and (d)(2), the Department has determined, pursuant to 5

U.S.C. 553, that public comment on these provisions prior to

implementation is unnecessary as it would serve no practical purpose.

Background

The Mickey Leland Memorial Domestic Hunger Relief Act (Title XVII

of Pub. L. 101-624, enacted November 28, 1990) amended three provisions

of the Food Stamp Act of 1977, as amended, (7 U.S.C. 2011 et seq.) (the

Act), relating to the timing and method of benefit delivery (issuance).

These amendments related to staggered issuance of benefits on Indian

reservations, aggregate (combined) allotments to households applying

after the 15th of the month, and mail issuance in rural areas where

households experience transportation difficulties in obtaining

benefits.

The Department issued a proposed rulemaking and sought comments on

these three provisions of Pub. L. 101-624 on May 20, 1991, at 56 FR

23027. In the same publication, the Department also announced its

intent to make three minor technical changes to existing issuance

provisions deemed appropriate to improve benefit issuance. Comments

were sought on these changes as well. Each of the six regulatory

changes proposed on May 20, 1991, will be separately discussed in this

rulemaking.

The 1990 Amendments (Pub. L. 101-624): Comments and Analyses

1. Section 1728 of Pub. L. 101-624 amended Section 7(h)(1) of the

Act, 7 U.S.C. 2016(h)(1) to mandate the use of staggered issuance

throughout the month on Indian reservations. This provision reflected

the findings of a GAO audit (Recipient and Expert Views on Food

Assistance at Four Indian Reservations, GAO/RCED 90-152, dated June 28,

1990) in which auditors were told by recipients that each month certain

retail food stores authorized to accept food stamps on or near

reservations were increasing the prices of eligible food during the

week containing the one or more issuance days.

Subsequent to the publication of the proposed rule on this issue,

Congress enacted Section 908 of Pub. L. 102-237, delaying the

implementation of Section 1728 of Pub. L. 101-624 until April 1, 1993.

Section 908 of Pub. L. 102-237 directed GAO to report to Congress by

June 13, 1992, on the difficulties that residents on Indian

reservations experience in obtaining benefits. The study was to examine

prices at food stores, determine issuance-period preferences of

households, analyze any transportation problems that may exist, and

examine monthly reporting requirements.

On November 25, 1992, GAO released Letter Report RCED-93-70R

concerning the need for staggered issuance on Indian reservations. This

report summarized comments from 13 State agencies and two national

Indian organizations, but arrived at no conclusive recommendation.

Due in significant part to the inconclusive nature of the GAO

Report, Congress, on April 1, 1993, in Pub. L. 103-11, ``Food Stamp

Requirements on Indian Reservations: Delay,'' delayed implementation of

the mandatory staggered issuance requirement of Section 1728 of Pub. L.

101-624, until January 24, 1994. Implementation of Section 1728 was

further delayed until March 15, 1994, by section 1 of Pub. L. 103-205,

``Food Stamp Program on Indian Reservations,'' on December 17, 1993.

With section 102 of the Food Stamp Improvements Act of 1994, Pub.

L. 103-225, enacted on March 25, 1994, Congress amended Section 7(h)(1)

of the Act by deleting the mandatory requirement for staggered issuance

on Indian reservations, which had been provided for in Section 1728 of

Pub. L. 101-624, and making staggered issuance on Indian reservations

discretionary with each tribal organization. Section 7(h)(1) of the

Act, 7 U.S.C. 2016(h)(1), now provides that staggered issuance shall be

provided to tribal organizations by State agencies over a period of at

least 15 days each month if so requested by the organization exercising

governmental jurisdiction over the reservation.

In light of the amendment to section 7(h)(1) of the Act by section

102 of Pub. L. 103-225, making staggered issuance an Indian tribal

organization option, the Department believes that a lengthy discussion

of the public comments on the proposed rule, pertaining to the parts of

the statutory provision which were amended, is no longer necessary,

since the comments, while appreciated, are no longer relevant. The

Department also believes that the implementation of section 102 of Pub.

L. 103-225 does not require public comment. Congress has given the

Department and State agencies no discretion and no options with regard

to the use of staggered issuance on Indian reservations; the sole

discretion to be exercised is with Indian tribal organizations. Under

the notice and comment provisions of the Administrative Procedure Act,

5 U.S.C. 553, public comment on a regulatory change is not required if

that comment would serve no practical purpose. As a reflection of the

Department's absence of discretion in this matter, the Department

hereby implements as a final rule without prior notice and comment

section 102 of Pub. L. 103-225 in regulatory language identical to that

employed by Congress in the legislation. This provision will be located

at Sec. 274.2(d)(2).

2. In the May 20, 1991, rulemaking published at 56 FR 23027, the

Department sought comments on its proposal to implement section 1732 of

Pub. L. 101-624. That provision amended section 8(c)(3) of the Act, 7

U.S.C. 2017(c)(3), to change program requirements concerning aggregate

benefits (combined benefits for the month of application and the first

full month of benefit receipt) for eligible households applying after

the 15th of the month. Prior to the amendment, section 8(c)(3) required

that an initial allotment reflecting an aggregate of prorated benefits

for the application month and benefits for the first full month was

required if the application was made after the 15th day of the month.

Amended section 8(c)(3) made [[Page 20180]] the combined allotment a

State agency option for eligible households applying under normal

processing standards. Despite the amendment to section 8(c)(3),

combined allotments, however, remained mandatory for eligible

households that met the requirements for expedited service. This

program change was implemented by State agencies retroactively to

February 1, 1992, pursuant to an FNS directive dated May 20, 1992.

To implement section 1732 of Pub. L. 101-624 in the Code of Federal

Regulations, the Department proposed amendments to several paragraphs

of Sec. 274.2(b). Subsequently, it was determined that program

regulatory provisions regarding eligibility for combined allotments

would more appropriately be located in Sec. 273.2(i) of program

regulations, which deals with household application requirements. A

rule reflecting this redesignation, including the adoption as final of

the changes previously proposed for Sec. 274.2(b), will be published in

the near future. Comments received on this program change in response

to the May 20, 1991, proposed rule will be discussed in that

rulemaking.

The effect of the above-described modification will be to locate in

part 273 of the program regulations all provisions regarding

eligibility for combined or aggregate allotments. Section 274.2 will

contain only program provisions regarding State agency benefit issuance

requirements. To reflect this redesignation, the Department adopts as a

final rule an amendment to Sec. 274.2, paragraph (c), which simply

restates existing program policy with regard to State agency

obligations concerning combined allotments. As Sec. 274.2(c) summarizes

existing regulations and makes no changes to those regulations, the

Department, pursuant to 5 U.S.C. 553, deems prior notice and public

comment on this regulatory provision to be unnecessary.

3. Section 1738 of Pub. L. 101-624 amended section 11(e) of the

Act, 7 U.S.C. 2020(e), to require State agencies to use mail issuance

in rural areas where State agencies determine that recipients face

substantial difficulties in obtaining transportation to issuance

points. Amended section 11(e) provides an exception to mandatory mail

issuance for households which have experienced excessive mail issuance

losses. In addition, mail issuance is not required in localities where

the mail loss rates exceed standards set by the Secretary. This

amendment was prompted by concern that some eligible households in

rural areas have difficulty getting to issuance sites because they lack

cars or sufficient funds to hire someone to drive them (House Report

No. 101-569, pages 433-34).

Under the proposed rule, a State agency which is not currently

using mail issuance throughout the State must engage in an assessment

of transportation barriers which rural recipients may experience in

getting to issuance offices, and report both the assessment process and

its results as an attachment to its State Plan of Operation. Section

272.2 of the regulations is revised to add this requirement to the

State Plan of Operation. Section 274.2 is also revised to add a new

subsection describing the required content of this new attachment to

the State Plan of Operation.

In enacting Section 1738 of Pub. L. 101-624, Congress was concerned

with transportation problems that make it difficult for recipients to

obtain their benefits at issuance offices (House Report No. 101-569,

pages 433-34). These problems, rather than transportation problems in

general, should be the focus of the State agency's assessment of the

need for mail issuance. For example, mail issuance is not required

where electronic benefits transfer (EBT) removes the need for

transportation to an issuance office. As an alternative to mail

issuance, State agencies finding substantial transportation

difficulties could reduce or eliminate them by a variety of methods,

such as through the use of authorized representatives as provided for

in 7 CFR 274.5.

To implement the exception to mail issuance for individual

households that experience excessive mail losses, the Department

proposed to use the current standard at 7 CFR 274.6(c)(3)(ii), which

provides that households experiencing two losses or thefts of benefits

from the mail within a six-month period shall be placed on an

alternative delivery system.

To implement the exception to mail issuance in amended Section

11(e)(25) of the Act for localities with excessive mail losses, the

Department proposed to utilize the standards set by the mail issuance

loss tolerance levels provided at 7 CFR 276.2(b)(4). State agencies

would not have to use mail issuance where mail losses exceed, or could

reasonably be expected to exceed, the mail loss tolerance levels for

the reporting unit within which the particular rural area is located.

Section 276.2(b)(4) provides three separate mail issuance tolerance

levels. The applicable mail loss tolerance level depends on the size of

the reporting unit. In determining whether mail losses in a given rural

area would be excessive, State agencies without mail issuance in that

area may use the tolerance level associated with a hypothetical

reporting unit. Tolerance levels applied to any hypothetical reporting

area would have to be consistent with existing rules and any existing

reporting units. For example, States with some mail issuance in place,

and currently reporting issuance losses by project areas, could not

exempt a rural area without mail issuance from the mail issuance

requirements of amended Section 11(e)(25) on the basis of its losses

exceeding a State-wide tolerance. Similarly, a State agency that does

not have mail issuance would have to use the same tolerance levels in

assessing any rural areas subject to this rule; the State could not

exempt some areas because they would exceed the State-wide tolerance

level and other areas because they would exceed the project area

tolerance level. States which choose not to introduce mail issuance

based upon findings that losses would exceed tolerance levels will be

required to provide evidence to support such findings.

Three comments were received on these proposals. One State agency

was concerned that the provision requiring mail issuance would

eliminate the State's current practice of offering recipients either

mail issuance or direct delivery of benefits. This is not the case.

State agencies may accommodate individual household requests; the

requirement is to provide or offer mail issuance as a means of

overcoming transportation difficulties. Another commenter was concerned

that the proposed provisions might overturn established efforts and

procedures geared to reduce mail losses. It would subvert the purpose

of the legislation, namely to encourage mail issuance, if the

implementing rules prevented reductions in mail losses that in turn

created pressures to abandon mail issuance altogether. Therefore, the

Department will not require mail issuance in situations in which State

agencies can demonstrate that losses incurred in attempts to issue

benefits by mail in rural areas would be excessive. The third comment

came from a State agency which stated that it would not be affected by

the provision because the State currently has statewide direct-mail

issuance.

The wording in the first sentence of the proposed paragraph has

been revised slightly for conformity with the description of other

planning documents listed in 7 CFR 272.2(d). This minor change does not

alter the intent of the provision. [[Page 20181]]

Accordingly, with this final rule, the wording of the proposed

rule, with the exception noted above, is adopted.

Changes to Current Regulations

On February 15, 1989, at 54 FR 6990, the Department issued a final

rule constituting the first comprehensive review and modification of

food stamp issuance regulations since their adoption pursuant to the

Food Stamp Act of 1977 (Pub. L. 95-113).

This final rule makes changes to three of those provisions, in an

effort to clarify interpretive problems brought to the Department's

attention over the past three years. These changes were proposed on May

20, 1991, at 56 FR 23028-29.

4. In the May 20, 1991, proposed rule the Department suggested

changes to make clear that staggering may be used in any issuance

system and that the 40-day limit on intervals between issuances applies

to all issuance systems. Current rules at Sec. 274.2(c)(1) refer to a

40-day limit between ``mail issuances'' because, in the past, State

agencies staggered only mail issuance. The word ``mail'' is being

removed to make it clear that the 40-day limit applies to all staggered

issuance situations, and to remove any implication that staggering is

relevant only to mail issuance.

Whenever staggered issuance is utilized, the State agency must

ensure that the interval between any two issuances after the first full

month of participation is not longer than 40 days as required by

Section 7(h) of the Act, 7 U.S.C. 2016(h)(2). This applies to instances

in which a State agency changes its issuance system, is starting to

stagger within any issuance system, decides to no longer stagger within

a system, or is fluctuating the issuance schedule by a day or two

within a current staggered system. The only exception to the 40-day

limit occurs for some households which apply after the 15th of the

month and receive their first and second month's benefit as a combined

allotment. Since they may receive their benefits for the first and

second months of participation in the first month, more than 40 days

may elapse before they are put on a regular issuance schedule,

beginning with benefits issued for the third month.

Three commenters addressed this proposal. One stated that

households which are required to submit monthly reports may have to

wait as long as 50 days between issuances. Such an interval would only

be permissible in situations in which the State agency is required to

wait for the household to meet its monthly reporting requirement. The

40-day rule pertains to on-going households which have complied with

all reporting requirements and expect their benefits at about the same

time every month.

Another commenter was concerned that the Department is reading

something into the law which established the 40-day requirement that

Congress did not intend, and that more than 40 days should be allowed

under normal fluctuations within an established staggered issuance

system. The Department disagrees; intervals beyond 40 days between

normal issuances do not meet the requirement of the law and its

legislative history. The 40-day requirement is an extension of the

requirement at 7 CFR 274.2(c), which states that issuance schedules

shall be established so that households receive benefits on or about

the same time each month. The amendment gives State agencies room to

adjust issuance schedules when issuance systems are being changed,

rather than holding the State agency to the requirement that households

receive benefits on or about the same day each month. The Department

considers the amendment less restrictive, not more so.

The provision in this rule has been reworded to state more clearly

the situations to which it applies. This also addresses a third

commenter who said the 40-day rule is simply burdensome.

With this final rule, the Department adopts as final 7 CFR

274.2(c)(1) as proposed to indicate that the requirements of staggered

issuance are applicable to all issuance systems.

5. The regulations at 7 CFR 274.3(e) currently provide for validity

periods for issuances made in authorization document, direct access,

and direct delivery issuance systems. A validity period is the time-

frame during which a household may obtain benefits by transacting an

authorization document or receiving benefits at an issuance point. The

validity period begins the day a household is issued an authorization

document or is authorized to obtain its issuance at an issuance point.

The validity period for issuances ends on the last day of the month in

which authorization to receive benefits is made, with two exceptions.

First, for normal issuances made on or after the 20th day of the month,

the State agency must extend the validity or availability period at

least 20 days into the following month and may extend the validity or

availability period until the end of the following month; second, for

combined issuances for households applying after the 15th of the month,

the validity period must continue until the end of the month following

application since benefits for which the household is eligible are

intended for use during both months. States have pointed out that

Program administration would be simplified if normal issuances made

after the 15th of the month could have the same validity period as the

validity period for combined issuance made in the month of application.

The proposed rule addressed that concern by changing the issuance date

that initiates an extension for validity periods for normal issuances

from ``on or after the 20th'' to ``after the 15th'' of the month.

Three commenters addressed this provision. One simply stated the

amount of time (3 months) that would be required to make the necessary

computer changes, but made no statement for or against the provision.

Another commenter questioned whether the new trigger date would allow

State agencies to retain the option to extend the validity period for

normal issuances for 20 days or until the end of the following issuance

month. The answer to this question is that, as stated in the proposed

rule, State agencies will retain the option. The third commenter

suggested that the provision of having the validity dates coincide be

optional because of the time and expense required in modifying the

State agency's on-line issuance computer. Because this provision was

adopted in response to State agency requests as a means of easing the

Program's administrative burden, the Department is making this date

change an option for State agencies. The Department would also like to

clarify that when a combined allotment is issued with the use of two

documents in authorization document systems during the month of

application, the validity period for both documents must continue until

the end of the second month, as that is the period of intended use for

the combined benefits.

With this final rule, the Department adopts as final 7 CFR 274.3(e)

as previously proposed by making the proposed modification of the

validity period for normal issuances a State agency option.

6. In 7 CFR 274.11(a) a change was proposed by the Department to

clarify which issuance documents, including signature cards used by

direct-delivery agents, are required to be retained for three years in

order to provide an audit trail for accountability. The current

regulation at 7 CFR 274.11(a)(1) lists specific forms required to be

retained. However, as established issuance systems have changed and

newer ones have been implemented, the list has not been revised. The

Department proposed to replace the listing of specific forms with a

general retention requirement covering all issuance system documents

[[Page 20182]] which provide an audit record for accountability. An

additional change made the wording about the period of retention

conform to 7 CFR 272.1(f).

The one commenter responding to the Department's proposal stated

that the provision would not affect the program operations of that

State. Wording and punctuation within the first ten words in paragraphs

(a) and (a)(1) of 7 CFR 274.11 are revised slightly from the proposed

rule to make clearer the fact that the provision addresses four

separate groups of documents to be retained--issuance records,

inventory records, reconciliation records, and other records. These

latter changes do not affect the meaning or intent of the proposed

rule.

Therefore, the wording of the proposed rule, regarding sections 7

CFR 274.11(a) and (a)(1) with the exception noted above, is adopted as

final.

Dates

1. Effective. Section 1738 of Pub. L. 101-624 was effective

February 1, 1992. Section 102 of Pub. L. 103-225 was effective March

25, 1994. The effective date for the amendments to 274.2(d)(1),

274.3(e), and 274.11(a) is September 1, 1995.

2. Implementation. The implementation date for Section 102 of Pub.

L. 103-225 was March 25, 1994. The implementation date for Section 1738

of Pub. L. 101-624 was February 1, 1992. By that date, or soon

thereafter, States should have submitted to FCS, an approvable

amendment to the State Plan of Operation, for direct-mail issuance in

rural areas. The timetable for actual implementation of any new direct-

mail issuance system will be set by the State agency, with FCS

approval. The implementation date for the amendments to 274.2(d)(1),

274.3(e), and 274.11(a) is September 1, 1995.

List of Subjects

7 CFR Part 272

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

Reporting and recordkeeping requirements.

7 CFR Part 274

Administrative practice and procedure, Food stamps, Grant

programs--social programs, Reporting and recordkeeping requirements.

As stated in the Preamble, parts 272 and 274 of chapter II of Title

7, Code of Federal Regulations, are amended as follows:

1. The authority citation for parts 272 and 274 continues to read

as follows:

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

PART 272--REQUIREMENTS FOR PARTICIPATING STATE AGENCIES

2. In Sec. 272.1, a new paragraph (g)(140) is added to read as

follows:

Sec. 272.1 General terms and conditions.

* * * * *

(g) Implementation. * * *

(140) Amendment No. 333. The provisions of Amendment No. 333 are

effective and must be implemented as follows:

(i) The provisions relating to aggregated (combined) allotments to

households applying after the 15th of the month and mail issuance in

rural areas where households experience transportation difficulties in

obtaining benefits are effective and must be implemented by statute

retroactive to February 1, 1992.

(ii) The provision relating to staggered issuance on Indian

reservations was in place on March 25, 1994, is effective and must be

implemented according to statute retroactive to March 25, 1994.

(iii) The remaining provisions are effective and must be

implemented September 1, 1995.

3. In Sec. 272.2, a new sentence is added to the end of paragraph

(a)(2), and a new paragraph (d)(1)(xi) is added, to read as follows:

Sec. 272.2 Plan of operation.

(a) General purpose and content. * * *

(2) Content. * * * The Plan's attachments shall describe the State

agency's review of direct-mail issuance requirements in rural areas.

* * * * *

(d) Planning Documents.

(1) * * *

(xi) A plan to review direct-mail issuance requirements in rural

areas. State agencies using direct-mail issuance throughout the State

with exceptions only for individual households, shall simply state this

fact. State agencies which use methods of benefit issuance other than

direct-mail issuance in any part of the State shall submit an

attachment to their State Plan of Operation which includes the State

agency's procedure for reviewing direct-mail issuance requirements in

rural areas, and the results of applying that procedure for designating

parts of, or entire, project areas as requiring direct-mail issuance

because they are rural, and are areas in which benefit-eligible

households face substantial difficulties in obtaining transportation.

The requirements for this attachment to the State Plan of Operation are

described in Sec. 274.2(g) of this chapter.

* * * * *

PART 274--ISSUANCE AND USE OF COUPONS

4. In Sec. 274.2:

a. a new sentence is added at the end of paragraph (a);

b. the heading of paragraph (b) is revised;

c. paragraphs (b)(2), (b)(3), and (b)(4) are removed;

d. paragraphs (b)(1), (c), (d), and (e) are redesignated as

paragraphs (b), (d), (e), and (f), respectively;

e. two new sentences are added at the end of newly-redesignated

paragraph (b);

f. newly-redesignated paragraph (d)(1) is revised;

g. paragraphs (d)(2) and (d)(3) are redesignated as paragraphs

(d)(3) and (d)(4), respectively;

h. newly-redesignated paragraph (d)(3) is revised; and

i. new paragraphs (c), (d)(2) and (g) are added.

The additions and revisions read as follows:

Sec. 274.2 Providing benefits to participants.

(a) General * * * Requirements to assure timely and accurate

issuance of benefits to eligible households in rural areas are

described in paragraph (g) of this section.

(b) Availability of benefits. * * * For households entitled to

expedited service, the State agency shall make benefits available to

the household not later than the fifth calendar day following the date

of application. Whatever system a State agency uses to ensure meeting

this delivery standard shall be designed to allow a reasonable

opportunity for redemption of ATPs no later than the fifth calendar day

following the date of application.

(c) Combined allotments. For those households which are to receive

a combined allotment, the State agency shall provide the benefits for

both months as an aggregate (combined) allotment, or as two separate

allotments, with the same validity period, made available at the same

time, in accordance with the timeframes specified in Sec. 273.2 of this

chapter.

(d) Ongoing households * * *

(1) State agencies that use direct-mail issuance shall stagger

issuance over at least 10 days of the issuance month, and may stagger

issuance over the entire issuance month. State agencies using a method

other than direct-mail issuance may stagger issuance throughout the

month, or for a shorter period. When staggering benefit delivery,

however, State agencies shall not allow more than 40 days to elapse

between the issuance of any two allotments provided to a

[[Page 20183]] household participating longer than two consecutive,

complete months. Regardless of the issuance schedule used, the State

agency shall adhere to the reporting requirements specified in

Sec. 274.4.

(2) Upon the request of the tribal organization that exercises

governmental jurisdiction over a reservation, the State agency shall

stagger the issuance of benefits for eligible households located on

reservations for at least 15 days each month.

(3) When a participating household is transferred from one issuance

system or procedure to another issuance system or procedure, the State

agency shall not permit more than 40 days to elapse between the last

issuance under the previous system or procedure, and the first issuance

under the new system or procedure. The 40-day requirement does not

apply to instances in which actions by recipients, such as failure to

submit a monthly report, disrupt benefits. Transfers include, but are

not limited to, households being moved into or out of a staggered

issuance procedure, households on a fluctuating schedule within a

staggered system, and households being moved from a direct-mail

issuance system to an authorization document system. If the State

agency determines that more than 40 days may elapse between issuances,

the State agency shall divide the new issuance into two parts, with one

part being issued within the 40-day period, and the second part, or

supplemental issuance, being issued on the household's established

issuance date in the new system or procedure. The supplemental issuance

cannot provide the household more benefits than the household is

entitled to receive.

* * * * *

(g) Issuance in rural areas. State agencies shall use direct-mail

issuance in any rural areas where the State agency determines that

recipients face substantial difficulties in obtaining transportation in

order to obtain their food stamp benefits by methods other than direct-

mail issuance. Exceptions shall be made for households which have

exceeded the two allowable reported losses within a six-month period

and replacements set forth in Sec. 274.6 (b) and (g), and direct-mail

issuance is not required in those localities where the direct mail loss

rates exceed, or are likely to exceed, standards set by the Secretary

at Sec. 276.2(b) of this chapter. The State agency shall:

(1) Submit an attachment to the State Plan of Operation

(Sec. 272.2(d)(1)(xi) of this chapter) which describes the State's

exemption from this requirement, because the State agency uses direct-

mail issuance throughout the State, or

(2) Submit an attachment to the State Plan of Operation

(Sec. 272.2(d)(1)(xi) of this chapter) which describes:

(i) The areas designated by the State agency as rural;

(ii) The rural areas where direct-mail issuance will not be used

because:

(A) Recipients do not face substantial difficulties in obtaining

transportation to obtain their benefits, and/or;

(B) Direct-mail issuance losses exceed the loss tolerance levels,

or there is evidence which indicates that direct-mail issuance, if

used, would produce losses which would exceed the loss tolerance levels

established under Sec. 276.2(b)(4) of this chapter.

(iii) The State agency's criteria for designating an area as rural.

Such criteria may include, but are not limited to: the use of the

Bureau of the Census definition; the distances that recipients may need

to travel to reach an issuance office; or, other criteria described by

the State agency.

(iv) The State agency's minimum criteria for determining that

recipients in an area designated as rural do not face substantial

difficulties in obtaining transportation to obtain their benefits.

(v) The State agency's schedule for introducing direct-mail

issuance into any rural areas requiring direct-mail issuance because of

substantial transportation problems.

5. In Sec. 274.3, paragraph (e)(1) is revised to read as follows:

Sec. 274.3 Issuance systems.

* * * * *

(e) Validity periods. (1) State agencies shall establish validity

periods for issuances made in both authorization document and direct

access systems. A validity period is the time frame during which a

household may obtain benefits by transacting an authorization document,

or receiving the benefits directly at an issuance point. Generally, the

validity period coincides with the issuance month or the period of

intended use, which may or may not be a calendar month. However, in

instances in which authorization documents are distributed, or benefits

become available for ongoing households late in the issuance month, the

State agency shall extend the validity or availability period for

either twenty (20) additional days, or until the end of the following

issuance month, at the State agency's option. The State agency may also

choose one of two dates which will initiate this extension of the

validity or availability period. The State agency may choose to extend

the period for authorization documents distributed or for benefits made

available, on or after the 20th day of the issuance month or after the

15th day of the issuance month. Whichever date the State agency chooses

to initiate the required extension, the State agency must use the date

consistently for all extensions in this category. A household which

does not transact its authorization document, or obtain the benefits

directly from an issuance point during the issuance's validity period,

shall lose its entitlement to the benefits, and the State agency shall

not issue benefits to such a household for such a period.

* * * * *

6. In Sec. 274.11, the section heading, the heading and

introductory text of paragraph (a), and paragraph (a)(1) are revised to

read as follows:

Sec. 274.11 Issuance and inventory record retention, and forms

security.

(a) Availability of records. The State agency shall maintain

issuance, inventory, reconciliation, and other accountability records

for a period of three years as specified in Sec. 272.1(f) of this

chapter. This period may be extended at the written request of FNS.

(1) Issuance, inventory, reconciliation, and other accountability

records shall include all Agency, State, and local forms involved in

the State agency's receipt, storage, handling, issuance, and

destruction of coupons completed by contract agents or any other

individuals or entities involved in issuance or inventory, as well as

those completed by the State agency.

* * * * *

Dated: April 11, 1995.

Ellen Haas,

Under Secretary for Food, Nutrition, and Consumer Services.

[FR Doc. 95-10091 Filed 4-24-95; 8:45 am]

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