Food Stamp Program: Failure to Comply With Federal, State, or Local Welfare Assistance Program Requirements

SUMMARY: This action proposes to amend Food Stamp Program regulations

to prohibit an increase in food stamp benefits when a household's

Federal, State or local welfare assistance payment decreases as a

result of a penalty for failure to comply with a Federal, State or

local welfare program requirement. The revision is necessary to more

fully implement congressional intent that the Food Stamp Program should

reinforce, not mitigate, another program's penalties.

DATES: Comments must be received on or before September 22, 1995, to be

assured of consideration.

ADDRESSES: Comments should be submitted to Margaret Thiel, Acting

Supervisor, Eligibility and Certification Regulation Section,

Certification Policy Branch, Program Development Division, Food Stamp

Program, Food and Consumer Service, USDA, 3101 Park Center Drive,

Alexandria, Virginia, 22302. Comments may also be datafaxed to the

attention of Mrs. Thiel at (703) 305-2454. All written comments will be

open to public inspection at the offices of the Food and Consumer

Service during regular business hours (8:30 a.m. to 5:00 p.m., Monday

through Friday) at 3101 Park Center Drive, Alexandria, Virginia, room

720.

FOR FURTHER INFORMATION CONTACT: Questions regarding the proposed

rulemaking should be addressed to Mrs. Thiel at the above address or by

telephone at (703) 305-2496.

SUPPLEMENTARY INFORMATION:

Executive Order 12866

This proposed rule has been determined to be significant for

purposes of Executive Order 12866, and therefore, has been reviewed by

the Office of Management and Budget.

Executive Order 12778

This proposed 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 that

conflict with its provisions or that 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 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 liabilities) or Part 283 (for rules related to

Quality Control liabilities); (3) for program retailers and

wholesalers--administrative procedures issued pursuant to 7 U.S.C. 2023

set out at 7 CFR 278.8.

Executive Order 12372

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

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

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

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

Program is excluded from the scope of Executive Order 12372 which

requires intergovernmental consultation with State and local officials.

Regulatory Flexibility Act

This proposed rule has also been reviewed with respect to the

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

94 Stat. 1164, September 19, 1980). William E. Ludwig, Administrator of

the Food and Consumer Service (FCS), has certified that this proposal

would not have a significant economic impact on a substantial number of

small entities. The changes would affect food stamp applicants and

recipients who intentionally fail to comply with other Federal, State

or local welfare assistance program requirements. The proposal would

also affect State and local welfare agencies which administer the Food

Stamp Program. State welfare agencies are reimbursed at a 50/50

matching rate for Food Stamp Program administrative costs.

Paperwork Reduction Act

This proposed rule does not contain reporting or recordkeeping

requirements subject to approval by the Office of Management and Budget

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

Background

The Food Stamp Act Amendments of 1982 (Pub. L. 97-2253, Subtitle E,

Sec. 164, Sept. 8, 1982) amended the Food Stamp Act of 1977, as

amended, (Act) to add a new provision (Section 8(d)) which prohibits

increases in food stamp benefits which are due to decreases in

household income resulting from a penalty levied by a Federal, State,

or local welfare assistance program for intentional failure to comply

with the other program's requirements. 7 U.S.C. 2017(d). As currently

written in the Food Stamp Program regulations at 7 CFR 273.11(k), the

prohibition only applies to penalty situations in which overissued

benefits resulting from such intentional noncompliance are being

recouped from the household's public assistance benefits which would

otherwise result in a reduction in countable income for Food Stamp

Program purposes.

The Department is proposing to expand the current regulations to

include all situations in which a decrease in public assistance income

occurs as a result of a penalty being imposed for intentional failure

to comply with a Federal, State, or local welfare program requirement.

This proposal stems from several incidents in recent years when States,

working with the Department in developing welfare reform proposals,

have asked that we not allow food stamp benefits to rise

[[Page 40312]]

when work sanctions are imposed on recipients of other benefits for

failure to comply with work requirements. Also, any other sanctions for

an intentional failure to comply with welfare program requirements

could not be used to allow food stamp benefits to rise.

When a recipient of the Aid to Families with Dependent Children

(AFDC) Program, for example, fails to comply with a Jobs Opportunity

and Basic Skills (JOBS) program requirement, the assistance unit is

sanctioned by excluding the individual's needs in determining the

unit's need for AFDC benefits and the amount of the payment. Unless the

JOBS requirement is ``comparable'' to a Food Stamp Employment and

Training (E&T) requirement, the household's food stamp allotment will

increase as a result of the decrease in income it sustains because of

the JOBS sanction. Raising the food stamp benefit level lessens the

impact of the penalty imposed by AFDC. If a comparable E&T requirement

exists, failure to comply with JOBS is treated the same as if the

individual failed to comply with an E&T requirement, and the individual

(or household) is ineligible for food stamp benefits for 60 days.

Because the Department does not have the authority to waive the

current restrictive provision at 7 CFR 273.11(k), the Department has

had to deny State requests to hold food stamp benefits constant when

sanctioning a person for noncompliance with another program's

requirements. The Department believes the current policy should be

broadened to more fully reflect Congressional intent which indicates

that the Food Stamp Program should reinforce, not mitigate, another

program's penalties (Sen. Rpt. No. 97-504, July 26, 1982, p. 44).

Accordingly, the Department proposes to amend 7 CFR 273.11(k) to

provide that when a recipient's benefit under a Federal, State, or

local means-tested welfare assistance program (such as but not limited

to Supplemental Security Income, Aid to Families with Dependent

Children, General Assistance) is decreased due to a penalty for

intentional noncompliance with a requirement under such program, food

stamp allotments will not increase as a result. This proposal more

fully reflects the Food Stamp Amendments of 1982. A penalty for

purposes of this provision is the amount by which a welfare assistance

payment has been decreased. The Department intends that the term

decrease for the purposes of this rule means a reduction, suspension or

termination. The language of the Food Stamp Act specifically addresses

a penalty which results in a decrease in income (termination or

reduction of benefits) as a result of a penalty.

It is important to note that some State welfare reform projects

have policies that cause the benefits of other programs to be held

constant even though changes in household circumstances occur that

would otherwise cause a rise in benefits. The Department is clarifying

in this proposed rulemaking that situations which result in a freeze on

the other program's current benefit level do not constitute a penalty

subject to the provisions of this proposal. Also, changes in household

circumstances which are not related to the penalty and result in an

increase in food stamp benefits shall likewise not be affected by the

provisions of this paragraph. For example, a household may be receiving

a reduced level of general assistance benefits for a 6-month period as

the result of a penalty imposed because one of its members refused to

comply with a work requirement of that program. The household's food

stamp benefits would not go up as a result of the decreased benefits.

However, if during the 6-month period another member of the household

suffered a reduction in nonassistance income, the food stamp benefits

could go up even though the penalty was still in effect. This is

because the factors resulting in the increase in food stamp benefits

were unrelated to the penalty.

This proposal does not imply that Food Stamp Program administrators

take a role in determining whether an individual's failure to comply

with another programs' requirements was intentional or not. That

determination is left to those responsible for administering those

other programs. Under this proposal, Food Stamp Program administrators

would only determine if a decrease in public assistance benefits is the

result of a penalty being levied for intentional noncompliance. If so,

Food Stamp Program eligibility workers would calculate food stamp

benefits in such situations by using the assistance payment which would

have been issued by the other assistance program if no penalty had been

imposed for the violation.

Implementation

The provisions of this rulemaking are proposed to be effective and

to be implemented by State welfare agencies on the first day of the

month following 120 days from the publication date of the final rule.

List of Subjects in 7 CFR Part 273

Administrative practice and procedures, Aliens, Claims, Food

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

recordkeeping requirements, Social security, Students.

Accordingly, 7 CFR part 273 is proposed to be amended as follows:

PART 273--CERTIFICATION OF ELIGIBLE HOUSEHOLDS

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

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

2. In Sec. 273.11, paragraph (k) is revised to read as follows:

Sec. 273.11 Action on households with special circumstances.

* * * * *

(k) Failure to comply with another assistance program's

requirements. The State agency shall ensure that there is no increase

in food stamp benefits to a household as the result of a penalty

imposed for intentional failure to comply with a Federal, State, or

local means-tested welfare program which distributes publicly funded

benefits. When a recipient's current benefit level under a Federal,

State, or local means-tested welfare assistance program (such as but

not limited to SSI, AFDC, GA) is decreased (by reduction, suspension or

termination) due to a penalty for intentional noncompliance with a

requirement under such program, the State agency shall identify that

portion of the decrease which is the penalty. The penalty for purposes

of this provision shall be that portion of the decrease attributed to

the repayment of benefits overissued as a result of the household's

intentional noncompliance or the amount by which the other program's

benefits have been otherwise decreased as the result of the intentional

noncompliance. The State agency shall calculate the food stamp benefits

using the benefit amount which would be issued by that program if no

penalty had been applied against the benefit amount. A situation which

results in the benefits of the other program being frozen at the

current level shall not constitute a penalty subject to the provisions

of this paragraph. Changes in household circumstances which are not

related to the penalty and result in an increase in food stamp benefits

shall likewise not be affected by the provisions of this paragraph.

[[Page 40313]]

Dated: August 2, 1995.

Ellen Haas,

Under Secretary for Food, Nutrition, and Consumer Services.

[FR Doc. 95-19525 Filed 8-7-95; 8:45 am]

BILLING CODE 3410-30-U